NEW YORK (TheStreet) -- In many industries a handful of companies account for most of the industry market share. For these companies, maintaining share means growing with the industry. But most industries do not grow fast enough to satisfy shareholders. In order to grow faster than the industry, high share companies must continually change their business models. Pushing harder on the same model is rarely sufficient to meet growth expectations.
Think of Apple. For decades it was a low-growth PC maker with a solid market share. Apple's recent growth came from a new business model that included: smart phones, iTunes and retail stores. But it took a new CEO to drive that change. Or Disney, a successful but low growth theme park company that changed its business model to include: resorts, cruise ships, and consulting services. Again, credit must go to Michael Eisner, the CEO who changed the model.
Why are big changes so difficult?
In 2005, the Nobel Prize for Medicine was awarded to Barry Marshall, an Australian physician. In 1984, Dr. Marshall found that ulcers were not caused by excess stomach acid from stress; ulcers were caused by bacteria. His work was rejected by academic journals and scientific colleagues again and again. He wrote, "When the work was presented, my results were disputed and disbelieved, not on the basis of science, but because they simply could not be true."
In frustration, Dr. Marshall drank the bacteria himself and within three days he had an ulcer. But it was not until 1994, a decade later, that the community officially accepted his conclusion.
Recall that Dr. Marshall stated that his scientist colleagues rejected his work, "... not on the basis of science, but because they simply could not be true." Did these scientists use their extraordinary analytical capabilities to assess his claims, or did they use their emotions?
Daniel Kahneman, a Nobel Prize winning psychologist, found that we all make quick decisions based on what we perceive as familiar. Our initial decisions are almost always emotional. Once we make our decision, we look for evidence to support it. Thus, we quickly accept ideas that fit our current view of reality and reject those that don't.
Let's move this theory into the world of work. A project team decides to reinvent leadership development. They change the development strategy from management training classes to on-the-job coaching through structured monthly business reviews. Yet, the executive decision maker cannot accept this new approach despite successful pilot projects and years of complaints that training classes don't improve leadership.
Just like the disbelieving scientists, corporate executives are also emotional human beings. And all too often, their emotions kill great ideas.
Tips for Selling Disruptive Change
When making a proposal, slowly build the business case before giving the answer. Throughout your presentation, ask the decision maker if he agrees. Lead him down your path:
First, describe the problem using examples the executive has used before. Try to use his exact words and state precisely when he said it.
Second, explain why the company made previous decisions. Show how each decision logically fit the environment at the time. Then, describe how today's environment is different and ask the decision maker how those decisions might work today.
Third, present the new proposal as simply building on past successes. Present it as if it was a simple version update -- even if it is actually a dramatically new approach. Use familiar words. Words matter.
Don't push too hard; paradigm changes rarely sell the first time. They are difficult to understand and are rapidly forgotten because there is no "fertile ground" for the seed -- the new idea -- to grow. Assume the decision maker will quickly forget. Plant the seed and come back again and again to add water until it begins to grow roots. Tell the decision maker your same story using the same words again and again. Be patient. Let the seed grow.
Passing a business school class in decision theory does not mean you make the grade as a rational decision maker. All humans are emotional beings. We live our lives in an emotional soup. Like most fathers, my children constantly questioned my decisions with, "But why? Give me a reason!" Typically, all I could come up with was, "Because I said so, and I'm the Dad." It kills me to admit that I also live in an emotional soup.
Making business model changes is difficult because we all resist challenges to our view of how things should work. We can complain about irrationality, but we cannot change it. So don't fight it. Understand it, accept it, and then design an influence strategy aligned with reality.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Hall was formerly Senior Vice President of Talent at ABN AMRO Bank in Amsterdam and IBM Asia-Pacific's executive in charge of executive leadership and organization effectiveness. During his tenure, IBM was twice ranked No. 1 in the world in Hewitt/Chief Executive magazine's "Top Company for Leaders." He is the author of
The New Human Capital Strategy
and has been an instructor in Duke Corporate Education's teaching network. Hall completed his Ph.D. in industrial-organizational psychology at Tulane University, with a dissertation on people management practices of Japanese corporations. He current resides in Shenzhen, China.