Innovating Leadership:
Co-Creating Our Future

Resources:

Paul’s book, The Science of Organizational Change, is available in paperback at https://amzn.to/4wMwlNY. 

The book Nudge he referenced, by Thaler & Sunstein, about changing behaviors is available in paperback at https://amzn.to/4fPeEHE, and as an audiobook at https://amzn.to/4g0AeaP.   

Our host Maureen Metcalf posts a newsletter every week on LinkedIn. You can subscribe here.  

Maureen’s latest book is Innovative Leadership & Followership in the Age of AI. You’ll find details about it at https://bit.ly/LeaderInAI, or check out the Kindle version at https://amzn.to/44buVz8 . The audiobook version is now available at  https://amzn.to/4dTCleZ. 

Her other 10 books are available on Amazon here. 

Other episodes with Paul you’ll enjoy: 

• Finding Meaning, Joy, & Purpose in What You Do with Paul Gibbons
• Leadership Myths & the War on Truth with Paul Gibbons

Guest(s):

Guest(s) Bio:

Paul Gibbons is an AI-adoption strategist, leadership thinker, author, and keynote speaker working at the intersection of artificial intelligence, organizational change, and human behavior. During more than three decades in strategy, leadership, and transformation, he has held roles with IBM Consulting, Deloitte, and PwC and advised organizations including Google, Microsoft, HSBC, Barclays, Comcast, and KPMG. He founded Future Considerations, a prominent European leadership-development firm, and wrote The Science of Organizational Change, which introduced behavioral science more fully into change-management practice. His current work focuses on people-first AI adoption, leadership capability, behavioral governance, and helping organizations adapt continuously as technology evolves. His latest book is Adopting AI: The People-First Approach.

Transcript
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Maureen: [00:00:00] Hi. I’m your host Maureen Metcalf, and today we’re joined by Paul Gibbons. Paul’s book, The Science of Successful Organizational Change, is hailed as a must-read by anyone serious about driving large-scale business change. 

Paul will talk about his book, focusing on large-scale change, and also on the concepts of agility and anti-fragile. 

So Paul, thank you for joining us. 

Paul: Well, thank you, and thanks for inviting me to be on the show. 

I began to become passionate about change when I was a strategy consultant for PricewaterhouseCoopers, and I had one of these experiences that was so horrible that it shapes one’s path for the rest of one’s life. We were called into an investment bank to help them design a way that they should manage their risk. 

Over the course of six months, and at a cost of about $4 million in fees to the clients, we wrote 12 volumes of recommendations on risk management to this well-known British bank, Barclays Bank. We [00:01:00] paraded the findings of our 12 volumes around the bank from the chairman and the board to the chief executive and his team, and everyone was enthusiastic and approved all of the thinking and all the recommendations in the report. 

So I bumped into one of the executives from Barclays a few months down the road and asked him how implementation was going, and he said that they had done absolutely nothing at all with the recommendations. I was extremely distraught. 

So that’s part of how I got passionate and interested in the change world. And as a corollary story, I, in my own life began as a cigarette smoker in 1974. And in 1979, I was doing cancer research at the University of Wisconsin, and one of the things I was doing was using a carcinogen from cigarette smoke in experiments with little white mice. So I was watching on a daily basis mice die from one of the extracts from cigarette smoke. 

And then on every single [00:02:00] break, I would run down to the parking lot and smoke two Marlboro cigarettes. Despite the fact that I was producing firsthand research on the harm that cigarettes caused people who smoked, I, too, was unable to make the changes that were required in my own life. 

So I became very interested in how human beings and organizations change. That’s how I got into the game, if you will.  

Maureen: You and I have slightly different paths, but certainly a passion around organizational change and watching good people, good companies invest in being progressive, and yet not being able to figure out how to implement the recommendations that they want to implement. 

Paul: For human beings to change and for businesses to change, there need to be more than just good reasons. It needs to be more than facts. 

It needs to be more than science. And so even though my book is called “The Science of Organizational Change”, the epiphany for me in is it takes more than facts to influence people and to change behaviors  

One of the features we’ll get to in the book [00:03:00] later on is control of habits, and one needs to rearrange the cues, and also the routines, and also rearrange the rewards . 

So there are three elements of the habit cycle. Unless you tackle those, it doesn’t necessarily matter very much what you think about something. You’ll be unable to break the habit. People in organizations wrestle day in and day out with changing the routines. Habits evolve for a very good reason, of course, because this automatic scripting that we have allows us to deal with the complexity of the world and to respond very rapidly to stimuli without having to consciously walk through everything that we have to do in our lives. 

I can walk without having to calculate the amount of weight that I have to put on each foot. A baseball player can catch a fly ball that’s traveling at 100 miles an hour. They can do that, and they don’t have to calculate at each step along the way the trajectory of the ball and all the differential equations that tell you where the ball’s gonna land. 

So we have these [00:04:00] incredible habits that we develop in our lives that make life livable. But one of the things that’s important for us as human beings and as a society and in businesses is to determine a way how to break up the routines which are getting in the way of prosperity and human flourishing. 

So habits is one of the things I became really passionate about. 

Maureen: It has a physiological grounding as well as behavioral, right?  

Paul: It does indeed. Um, uh, psychologists talk about schema which are psychological scripts that run automatically. 

It also links into another topic, of course, that I pick up in the book, which is mindfulness, because in order to be conscious, you need to moment by moment bring a level of consciousness to what you’re doing in order that you’re able to alter the trajectory of what you’re doing, whether that might be driving to work, but it also might be behavioral stuff around eating or around smoking, but it also can be around executives and around leadership. 

You need to bring, in a sense, all of the automaticity that has been your friend up until then, you need to be able to [00:05:00] disrupt that, and to have that choice, you need to have awareness. So we sometimes say that choice follows awareness. You cannot choose where you’re not aware of the behavior or not conscious of it. 

So a lot of the interesting research on mindfulness has shown that it allows people to, in a sense, disrupt that automaticity more easily, and to identify that they might be making a wrong choice.  

Maureen: Why did you write the book?  

Paul: I set out to write a book in three or four months that would be the ABCs of change management. What began as a very ABCs book on change management really became a tour through what I think are the most important writers in the last decade. How can I take all of the great learning that we have from the behavioral sciences and help the dark arts of change management catch up? 

That was what the book became, was my attempt, if you will, to bring change management into the 21st century with all the great science we’re discovering about human beings.  

Maureen: What are the [00:06:00] biggest ideas from the book that you want our listeners to pay attention to? 

Paul: Let me start with cognitive biases. 

So what’s a cognitive bias? It’s a systematic mistake that human beings make in solving problems, if you want. One of the chapters in the book is devoted to how executive teams, by becoming more conscious of their cognitive biases, can make better leadership decisions.  

Maureen: How is that different from or aligned with mindfulness? 

Paul: One of the benefits of mindfulness is increased in-the-moment choice. But in addition to having that choice, you need to know the ways in which you’re systematically making mistakes. So for example, one of the biases that human beings talk about, and I think every single listener will be familiar with, is called the planning fallacy. 

And so we all grotesquely underestimate in our day-to-day lives how long something is gonna take. And that happens all the time. And we live in this world [00:07:00] where the effect of that planning fallacy is due to something called the sunk cost fallacy, which is: once we’ve invested effort in something, we do not want to, no matter how badly things are going, abandon our efforts. 

So for example, the sunk cost fallacy takes us to the Vietnam War, where it was clear that it was gonna be a losing proposition for the United States. However, the argument was that to leave the Vietnam War would be doing a disservice or an injustice to the men who had already given their lives. From a rational point of view, those men have already departed. We can’t do anything about that. The important calculation is how many more will be lost and the other costs of war in the future. And so human beings do that all with investments, for example. So once an investment falls, human beings are less inclined to sell it than they are to take a profit. 

And because psychologically [00:08:00] what we require is some justification that we were right in the first place, none of us likes to admit we are wrong. So with the sunk cost fallacy and the planning fallacy together, you have two things that are very interesting if you’re undertaking major change, and sometimes change might be as small as a million dollar or two million dollar project. 

And sometimes, change programs are a decade long and cost twenty or thirty billion dollars. So these two things, the sunk cost fallacy and the planning fallacy are extraordinarily costly to organizations and of course, in people’s own lives. So those are two of the important biases in the book. 

Maureen: So I’m thinking of instances where I’m working on a project that at, at the outset seemed like a brilliant idea. But as a competitor introduces a new product or something hugely significant like a recession hits, then my direction also needs to pivot. 

And what I hear you saying is, my cognitive bias will cause me to stay the course when in fact I should [00:09:00] be changing course pretty quickly.  

Paul: Yeah. You’ll double down rather than run for cover. I mean, people do it in relationships too. 

People do it with, uh, money pit houses and money pit cars. You know, I can’t possibly sell this thing ’cause I just put $1,000 into it. And of course, what you ought to do is sell a lousy car because they do become money pits. But if you’ve just spent $1,000 on a new brake, so you think, “Oh, well, I’ll j- just drive it a little longer.” 

So that sunk cost calculation happens also in relationships and happens in projects. And, um, it can be very emotionally challenging to let go of something where you’ve made a big investment. But from a rational point of view, what matters is what you’re going to get out of it, not what you’ve put into it. 

And so what you’ve done already, the investment history should be discounted, but human beings have a hard time doing that psychologically.  

Maureen: What are some of the other big ideas?  

Paul: One of the things that I’ve, uh, come across time and time again in organizations is when I’ve gone in as a change guy, as a change doctor, what I’ve [00:10:00] discovered is an organization that’s so fatigued from previous change initiatives, there’s so much different change coming up against a manager in their day-to-day job, it’s almost an exhaustion, and that a new change project isn’t often something that’s received with enthusiasm and energy and innovation and passion. 

Nobody goes, “Oh my God, we got…” So my question is, how do we get organizations to a place where every change that they undertake leaves them more prepared, in a sense, for the next change that comes in, leaves them more enthusiastic? You know, in the way we want with our children as they’re developing, as they’re learning to walk or they’re learning to read, but all of the different learning journeys that we see with young people when they have joy, when they celebrate from overcoming challenges. You know, the way change is managed in organizations and led in organizations right now, it’s not seen in most places as something that’s welcome. 

So anyway, that leads me to the concept of [00:11:00] change agility: how do you create workforces and organizations where change isn’t something that an organization has to endure sometimes at great psychological cost and sometimes at the cost of efficiency. So change agility is one of my signature concepts.  

Maureen: And the idea of change saturation is something that’s really seems like it’s one of the biggest challenges going into an organization that, as you point out, is absolutely exhausted. 

Paul: Well, here’s an interesting thing the paradigm around change right now is that change is the exception, that organizations are static and then change comes along, and that’s just not the reality. 

So the reality is it’s all change always. From a new member of a department to someone retiring to a reorganization to someone getting promoted to the micro level changes all the way up to billion dollar change programs, right? Change is part of every manager’s day job. And, uh, and it might be inaccurate to say that 80% of every manager’s job is change, but certainly [00:12:00] 80% of the headaches of every manager are dealing with organizational changes. 

I think most people would nod at that. They say, uh, 50% of statistics are made up on the moment. So in a way that’s not empirically justified, but when you talk to managers day in and day out, most of what keeps them awake at night is how do they cope with changes or how do they enact changes themselves. 

So here’s our question: why are we teaching managers that change is the exception? Because if something is supposed to be an exception to the norm, it’s received as a disruption to the status quo. But in a sense, we don’t have a status quo. It’s all change always. The philosopher Heraclitus said, “You cannot step into the same river twice.” 

And by that he meant that everything is always changing, that life is a series of flows and fluxes, and this notion of stability or this notion of equilibrium , they’re fantasies. Yeah. The world isn’t like that. And so when our mindset is fixed on the notion that life should be different than it is, [00:13:00] life should be static, I shouldn’t have this project to deal with, we are not equipping people psychologically. 

We’re also not equipping them, Maureen, in terms of the education we give managers. So one of the things I did in the book was study MBA programs to see what’s the level of change education. Let’s take a 35-year-old senior manager or a 40-year-old young director… How much change education have they received by the time they get to these important places in their organization? 

If you look at a Harvard MBA, there are 16 mandatory modules, and there are 100 electives. And of all of that, only one of those is a brief module on change management, if you want, or leading change. Now, I find that an extraordinary thing because if you accept the hypothesis that 80% of what managers do is manage or lead change, then to have it be a fraction, less than 1% of what’s a standard management education, a standard business school education, we’re equipping people very, very poorly. 

And I think, again, we’re [00:14:00] treating the business world as if it’s a static entity, and that change is episodic. Whereas I say it’s constant, and we need to be equipping every manager in every organization with a minimal set of change competencies so that they can, in a sense, create this agile organization because change management, the firefighting that I’ve done when I’ve been called into a project, usually a year after the project’s begun, and people are walking out and downing tools with anxiety or anger at some change that’s not going particularly well, they often ask somebody like me to come in and sprinkle my change pixie dust on the workers to make them happier with the changes that the senior execs are trying to drive through. 

And in a way, I’m a Band-Aid to help leaders and managers do things that they ought to be good at doing by themselves. A 35-year-old senior manager or a 40-year-old young director ought to be competent at leading his team and leading his organization for change. 

They ought to be competent at managing that kind of complexity. And we ought to be giving people the tools to manage conflict, [00:15:00] to negotiate, to engage st-stakeholders, to inspire stakeholders. All of the things that are in the day-to-day armory of change experts, such as yourself ought to be in the armory of the standard, you know, work-a-day 35-year-old manager. 

And so that’s part of the answer, I think, to change agility, is we want to equip the whole organization with the sorts of skills that now only reside with specialists. So that’s rather a long-winded answer to your question there. I hope you don’t mind.  

Maureen: No, I think that’s really helpful. This idea, that as the world is changing, what we learned in MBA school, especially of those of us who got it a long time ago, needs to be refreshed. 

So Paul, let’s go into now neo-behaviorism.  

Paul: Behaviorism or old behaviorism was the idea in psychology that humans were like rats in a maze. Basically, it was stimuli and responses. And the architects of behaviorism, two of the 20th century’s most famous psychologists were B.F. Skinner and J.D. Watson. [00:16:00] And they thought that the feelings and thoughts and beliefs that are part of our mental life were irrelevant to understanding human behavior. 

And this may seem a fairly quaint concept, but any time you give a kid a time out or a naughty step, as we call it in England, or any time you talk about carrots and sticks, any time you talk about these strategies that people talk about in organization, you’re endorsing a behaviorist view of the world, which is that to change behavior, somehow some sort of punishment or reward will get it done. 

And to make a long story very, very short, punishment almost never works. So I was speaking to a famous criminologist the other day, and I said, “What is the evidence in the criminal justice system?” And he says, “Whatever the criminal justice system does in terms of punishment and reward, it’s exactly the opposite of what science would tell you is the right thing to do.” 

We have this notion that longer [00:17:00] sentences or three-strike rules will change behavior, and we have now several decades of evidence that that doesn’t happen. And it’s not just in criminal justice, I just use that in one example, but it also applies to punishment in organizations and punishment with children. 

Thankfully, the world and how we think about punishment is slowly beginning to change in some domains. On the idea of rewards, ideas are changing much more slowly. And again, this is a very complex topic, but rewards don’t work the way they would work in rats in a maze pushing a lever. So for example, if I need to move some boxes into my attic, and I say to my next-door neighbor, “Come and help me move some boxes into my attic. Would you mind, uh, doing me a favor?” 100% of neighbors will say, “Sure, I’d love to do so.” But if I went to my neighbor and said, “Look, I wanna move some boxes into my attic. Can I give you five bucks to help me out?” They’d look at me as if I were from Mars. So clearly there’s something there where I’ve broken some sort of social understanding with my neighbor [00:18:00] about some sort of reciprocity arrangement. 

So rewards, in a sense, would make them less likely to do that. So that’s in a sense a trivial example of a very big problem because a lot of the world is organized around executive compensation being based around rewards and stock options based around rewards. And if you examine the research, it doesn’t work nearly as well or nearly as consistently or nearly as accurately as we’d like. 

So that’s the problem with old behaviorism, and it’s sewn through the fabric because of the powerful influence of those two psychologists in the 20th century. It’s sewn through the fabric of how we think about incentives in our world. So neo-behaviorism basically is how do you incentivize people without coercing them to change behavior, without either using sticks or carrots? 

And I’m just gonna draw the listeners’ attention to a book called “Nudge” by two academics, Thaler and Sunstein, who talk about basically handing over control of behavior to the environment. In a [00:19:00] very brief way, what we can do is structure people’s choices so that they are free to choose — so they’re not free to choose when you coerce — so they’re free to choose, but we can organize choices in such ways they make the right choice. And so one example is, for example, trying to change the behavior around people in cinemas, people who buy popcorn. And one of the things that affects popcorn consumption is unsurprisingly the size of the container. 

And so it may seem a trivial example, but it was the most important thing. You know, when people are on diets, they say use smaller plates. And again, you’re using a sort of behavioral method to change how much you eat. You’re not changing your beliefs, so you’re not changing your mindset. All you’re doing is changing the environment to try and produce a change. 

It’s such an interesting area that there have been entire government bodies set up to explore the way that this can be used in public health. But very few people in the world, our world, Maureen, [00:20:00] of organizational change, are talking about choice architecture. And choice architecture is one of the neo-behaviorist concepts, and there are several others, but one of them is behavioral safety, and, and one of them we talked about at the beginning of the program is habit change. 

And so there are new ways of looking at behaviorism, because what we want in organizations and societies is we don’t wanna just change the way people think. We wanna change behaviors. And so while we care very deeply about what people think and feel, what we really need is behavioral change. You know, we need behavioral change in organizations, and we need be- behavioral change in societies to create the kind of world that we want to create. 

And so how you do that without coercing people is one of the most fascinating and important topics, I think, for the twenty-first century. So that’s neo-behaviorism. I talked a little bit about evidence-based management. I think one of the things we need to do is we need a greater level of accountability, particularly in the world of human resources and organizational change. 

We need greater accountability for results. And there was a [00:21:00] revolution in medicine in nineteen ninety-eight with the publication of a paper on evidence-based medicine, which basically says that an idea that will seem so uncontroversial if you say it, but the work that we do in organizations or the work that we do if we were doctors should be based on what evidence says works. 

But that’s not what we do in organization. We do things in organizations because a guru proposes that it might be the right thing, or we do things in organizations because we’re good at them, or we do things because they’re a habit in organizations. And so evidence-based management is, in a sense, a clarion call to start to evaluate empirically the results of our interventions in organizations so that we’re making better and better choices. 

So it originated in medicine, but now there’s a whole field of evidence-based policy, and I’m excited to say there’s a field now of evidence-based management, which looks at the effectiveness of our policies so that we can make better choices. And people say, “Well, what are the bad choices [00:22:00] we’re making?” 

I’ll give a very easy example. The way we select workers, I’ve been interviewed for jobs that pay large six-figure sums, and largely the method that they use to select workers is something called the unstructured interview or the chat interview. And that has almost no predictive power. So organizational psychologists have studied this in enormous detail, and those conversations, which are at the meat of most of how people are hired, are almost unpredictive of how successful someone will be in role. 

So that’s a fascinating thing. That means 90% of what we’re doing in the recruitment process is a waste of time and money. And as I said, in my own experience, I’ve been interviewed for dozens of very big ticket jobs. And almost all of the selection procedure has been based around something that’s no more predictive than astrology. 

And so that’s in a sense the opposite of evidence-based management. How do we continue to do things that fly in the [00:23:00] face of what organizational science says is the right thing? It’s one of the great things, the great hopes for the 21st century is running more efficient organizations based on what science tells us is the correct way to proceed. 

And with that, I’m gonna take a breath, Maureen.  

Maureen: Thank you. So the evidence-ba- based idea i- is I talk about leaders innovating how they lead. 

And yet, as organizational leaders, we don’t yet have an efficient way to, to deliver this evidence in a way that I can integrate in addition to doing all the things I’m already doing for, you know, 12 to 16 hours a day at work. So I wonder if you have a quick answer to: as a leader, how might I be more evidence-focused and not have to over-invest in figuring out which evidence I care about? 

Paul: Ah, yes indeed. Evidence-based management asks us to call into question [00:24:00] what we take as truth or what we take as gospel in the work we do as organizational leaders or as organizational change practitioners. 

And one of the things that we can do is try and stomp out pseudoscientific thinking in organizations. And I’m not gonna go through a catalog now, it’d be more time than we have available, but I spent a lot of time talking about organizational pseudoscience and stuff that quite frankly has no more predictive validity than astrology. 

Stomping out pseudoscience and anti-science thinking. Anti-science thinking is basically, when I’m presented with evidence, I discount the evidence in favor of my own opinion or in favor of some preconceived bias that I have. 

So those are two, if you will, ideas is stamping out anti-science and pseudoscience in organizations.  

Sorry if that’s not a very detailed answer, uh, Maureen. It’s a huge topic.  

Maureen: It sounds like you’re talking a lot in the book as a theme that weaves through is, is this idea [00:25:00] of better thinking, addressing biases, addressing anti-science. It’s a shift in my mindset, driving a shift in my thinking, driving a shift in my behavior, all in service of being more rigorous. 

Paul: And more accountable, yep, absolutely. 

Maureen: I realize you can’t summarize all of Taleb’s work on Antifragile, but at least introduce the concept to us.  

Paul: Well, that’s a fascinating thing. Taleb is a statistician, and he’s written four books which are effectively on applied statistics. 

And I think most of your listeners who are unfamiliar with his name would let out a great big yawn or wanna run for the hills. How dry and how irrelevant to the day-to-day practice of management could someone who’s a statistician be? His books are bestsellers, and they’ve sold as a million, and they’re worth every penny because he really is a radical thinker who’s shaking up the business establishment. 

But one of his great ideas is antifragility, and he contrasts three different types of organizations. [00:26:00] One is fragile, one is robust, and one is antifragile. So fragile is an intuitive concept. We all know a champagne glass cracking under stress. A robust organization is what we try and do, and that’s an organization that can bounce back. 

An antifragile organization will prosper from stresses. And so this happens in ecosystems. But he says when we try and make things robust, in a sense protect them from the volatility of the world, we make them more fragile. So we try to make them robust, we make them more fragile. And what we need to be thinking about is how to make organizations antifragile. 

So how to make organizations that prosper from stresses. And so to give one example, when we go to the gym and we lift weights, what we’re doing is breaking down muscle tissue. However, what we’re doing through that destructive process, is building a more robust muscle mass for our body. 

Maureen: So Paul’s book is “The Science of Organizational Change”. Takeaways [00:27:00] I have from this book is antifragile being one of the most important. As we are in a time of multiple concurrent changes, how do I build an organization that has the ability to prosper from stress? 

And characteristics in that are building agility, helping people think and expect change, addressing their cognitive biases, being more scientific in their thinking, more evidence-based. So a lot of wonderful constructs and frameworks and tools in Paul’s book to help you update your ability to transform organizations. 

Thank you very much for joining us, and we’ll be with you again next week.