The three paradoxes of change capability

The speed and scale of change today are unparalleled. Instead of relying on traditional change management, organizations should focus on building their change capability. In this article, we cover the three paradoxes that you need to be aware of to drive successful change.

The operating environment of many organizations is currently changing at an unprecedented speed and scale due to technological development, geopolitical uncertainty, cost pressures, and increased regulation, among other factors.

Traditional, project-focused change management is no longer sufficient – it’s like racing to put out one fire after another in a linear fashion.

Instead, the key to success is building your organization to be change-capable. According to our extensive research, Finnish leaders are nearly unanimous in stating that change capability is a prerequisite for organizational competitiveness.

There are, however, three paradoxes associated with developing change capability that challenge renewal and the systematic implementation of changes.

1. The paradox of focus and agility

Organizations face an overwhelming number of change needs, making it unrealistic to address all of them simultaneously.

Change needs emerge from many directions:

• Regulation has increased, with new requirements related to climate work, data protection, artificial intelligence, and economics, for example.
• Geopolitical tensions increase uncertainty, and the importance of risk management is emphasized. For instance, production and supply chains are being restructured worldwide.
• Customer expectations and needs have also undergone rapid changes, partly due to the still observable effects of the pandemic.
• AI and automation create entirely new disruptive opportunities but require investments and changes to operations.

While the number of change imperatives has increased significantly, the resources available for implementing them have remained largely unchanged. Facing significant economic pressures further complicates the situation.

It's now critically important for organizations to focus on the most essential change initiatives. Without proper prioritization, change efforts become spread too thin, diluting results and yielding projects with little practical impact.

In a volatile operating environment, the risk of misallocating focus is high. A high degree of change capability enables organizations to concentrate on what truly matters while retaining the ability to adapt to fast-moving circumstances.

2. The paradox of technology and transformation

Technology is a central component of nearly every major change. However, simply investing in a new system and training users is an insufficient strategy for realizing its full potential. At worst, new technology is used to replicate old processes, meaning the theoretically saved time isn't leveraged for increased efficiency or innovation.

In addition to technology, organizational development must also be considered, including changes to practices and processes. How can we best leverage human capital alongside new technology? This is how we build new ways to create value for customers.

This type of organizational development is significantly more challenging than simply acquiring technology. It requires longer-term investments and new kinds of tools. However, it's essential to move in this direction to gain more benefit from investments – such as those related to artificial intelligence – and to be able to respond to change needs.

A successful digital transformation is a multifaceted process and demands a systematic understanding of change at every level.

3. The paradox of human capital

The human element is the primary reason most transformations fail. Without the genuine commitment of its people, an organization cannot achieve meaningful change or realize its pursued benefits.

People will only champion transformation when there is a high degree of psychological safety and a firm trust that their skills will remain valued. Building this kind of environment is a strategic investment in procedures, leadership, and culture.

Managing employee well-being through turbulent change is critical. Organizations must find ways to enhance their people’s capability for change and ensure they can participate in a manner that supports, rather than depletes, their well-being.

The question of workplace wellbeing is significant not only for the organization but also for society as a whole. It will also become an even tougher competitive factor in the future when organizations compete for the best talent.