Ready for Change?

Change is everywhere. Pervasive and ineluctable, it is the essence of life and progress. But embracing change is not an easy endeavor. Neither for individuals nor for organizations, be it firms, institutions, or the broader society. For this special In-Depth dossier of Knowledge@HEC, we went around all departments of HEC Paris to understand how our faculty has been thinking about change, through a series of research pieces, teaching initiatives, and events.

Change offers an inspiring research topic for many HEC professors. This is the case, for instance, of Itzhak Gilboa (Economics & Decision Sciences) and Olivier Sibony (Strategy & Business Policy), who joined forces to understand how decision theory can help us face the hundreds of decisions, big and small, that set the direction we take in our professional and private lives.

Change is also at the core of my research discussing how firms can use the art of storytelling to prevent resistance to change and garner support for it. And what about the benefits of change for society as a whole? Shirish Srivastava (Information Systems and Operations Management) looks at radical changes in information and communication technologies, by examining the role of e-government in the fight against corruption.

Aware of the difficulties associated to anticipating change and embracing it, our faculty has also been active in designing a series of teaching initiatives that enable leaders to manage change. This is the main idea behind the Executive Master in “Consulting & Coaching for Change”. Directed by Matthis Schulte (Management & Human Resources), the master enables participants to develop change leadership, and handle new or difficult situations creatively and with confidence. Our Digital Learning Team has also put together an overview of some of the online courses we have developed for those who want to foster change, anticipate it, and lead through it.

Over the last months, our campus hosted a series of events focused on the opportunities and challenges associated to change. Peter Ebbes (Marketing), Christophe Pérignon (Finance), and Ludovic Stourm (Marketing) joined forces to organize the “Big Data Day” to discuss how Big Data are revolutionizing our approach to research and practice. Daniel Martinez and Dane Pflueger (Accounting & Management Control) gathered a vibrant community of international scholars to discuss how contested markets force change at the individual, organizational, and institutional level.

And if you think you have no role to play in this context, take a look at the recent book by Alberto Alemanno (Tax & Law), who advocates for a role of citizens in lobbying for change and creating a better society. So that we can all be the change we wish to see.

Find all the article of the dossier Ready for Change here.

Happy reading!

Every business has a story. Some are clear-cut journeys from start-up to multinational. Others are more intricate and include mergers, takeovers, acquisitions, and dramatic changes in company direction. Not everyone spends time reflecting on their company’s journey, but could this be a big oversight? Stories allow people to reflect and to learn, and telling them can strongly influence how company stakeholders interpret change. “Companies can use storytelling as a learning tool to increase their productivity,” says Associate Professor Giada Di Stefano. “It can also be used to implement successful company transformations - to make sure that everybody is on board and excited about change.” See the video: “A universe of stories: Mobilising narrative practises during transformative change”, created by the Imperial College Business School.

Master storytelling at Alessi 

There is no better example of a company that has used storytelling to successfully navigate its strategic transformation than the case of Italian housewares and kitchen utensil company, Alessi. From 1979 to 2010, CEO Alberto Alessi mastered the art of storytelling to lead his firm through a successful repositioning. The company went from being a manufacturer of steel serving tools for bars and restaurants to a world-renowned industrial design game-changer.

Companies can use storytelling as a learning tool to increase their productivity. 

Over that time, Alessi produced iconic items so special that they have been featured in museums as objects of art. This evolution was documented in over 30 internally produced books. These allowed the firm to distribute stories to all its stakeholders, including the employees, customers, retailers, and visitors to Alessi’s exhibitions. They influenced both outsider and insider perceptions of the company’s trajectory. According to Di Stefano of HEC Paris and her colleague Elena Dalpiaz of Imperial College London, Alessi’s books provide an exceptional example of what happens when an organisation uses storytelling to reflect on its actions.

Three narrative practices increase impact

The duo conducted a thematic and narrative analysis of Alessi’s chronicles to understand how they were used, and how they changed, over time. They found that the books tell a coherent story, despite being written over three decades and by different authors with different goals. “Alessi’s story is like a woven fabric made by interlacing distinct sets of threads,” says Di Stefano. “Our analysis uncovers three narrative practices that enabled Alessi to create a single piece of fabric and tell the coherent story of a successful transformation.” 

1. “Memorializing”: to create a shared understanding and memory of change over time, by identifying moments, persons, and events key to the transformation. 

2. “Revisioning”: to rewrite the company’s past to ensure consistency with the current direction – and ensure that story is interesting, exciting, and inspiring.

3. “Sacralising”: to present the change as a transcendent endeavour, depicting the change leader as a prophet, organizational artefacts as icons, and the old strategy as conservative, or orthodox. 

How storytelling and reflection lead to successful change 

These three narrative practices were used consistently in Alessi’s books to prevent resistance to change, garner support for it, and mobilize advocacy. The strategy seems to have worked, as the transformation was widely supported, and even embraced, inside and outside the organization. “We ascribe many of the reasons for Alessi’s success to the fact that it kept reflecting on its actions and on changing its trajectory, making sure all relevant audiences were on board,” Di Stefano says. “The exceptional, 30-year long Alessi case provides us with the unique opportunity of observing how telling a story can help a firm thrive during times of change, in slow-motion. We don’t suggest that other firms should follow exactly the same path, but we are sure they can learn something from it.”

Is it worth insuring my house against hurricane damage? Which route will help me beat traffic? Should I invest in this stock? Latte, black, cappuccino, mocha or vanilla? Every day, we are faced with hundreds of decisions, some big, some small, some tough, some easy. Sometimes we follow our instinct, sometimes our intellect, sometimes we just go with habit. But more important than how we choose between various options, is the question, how should we choose? 

Decision theory offers a formal approach, often seen as a rational way to handle managerial decisions. While this theoretical framework has not lived up to early expectations, failing to provide the “right” answer in every case, a trio of researchers says not to throw the baby out with the bathwater just yet.

Decision making has been formalized and useful, but…

Decision making has been formalized since the age of Enlightenment, a famous early example being Blaise Pascal's wager about the existence of God. Decision theory and its key concepts (utility, or desirability of an outcome, states of the world, or possible scenarios, etc.) culminated in the mid-20th century with the invention of game theory and the development of mathematical tools of analysis. 

“In the 1950's there was the idea that mathematical models could automate decisions,” says Itzhak Gilboa, professor of decision science at HEC Paris. “There has been a measure of success, with applications to logistics, or, for example, to route optimization with Google Maps.” 

And yet, today, decision theory is all but dismissed, including in business circles. Olivier Sibony, who worked as a management consultant for 25 years before joining HEC Paris to teach strategy, says he literally never encountered decision theory in those 25 years, either in words or practice, the exception being within a minority of financial institutions. “It's shocking,” he muses, “because it is taught in business schools as a sensible way to make decisions.” 

…Decision theory has its limits 

The textbook model of decision theory, however enticing and elegant it may be, has a number of limitations that prevent it from being widely used by managers.

The theoretical model raises some very practical challenges. Probability is often hard to calculate due to lack of data about the same past problems. Similarly, the desirability of an outcome, such as career choice for example, is hard to quantify because of the wealth of criteria by which it is judged: income, prestige, work-life balance... 

What’s more, behavioral psychology has shown that human beings, far from being the rational agents assumed by economic theory, are hopelessly irrational. Confirmation bias makes us prone to disregard negative data about the option we are considering; overconfidence makes us consistently overestimate our chances of success; mental accounting makes us value equivalent outcomes differently depending on the way they are framed; and on and on.

The list of psychological biases we suffer from is so long, it's a miracle that we haven't blundered ourselves into extinction, as a race. “But we are teetering on the brink of just that!” counters Olivier Sibony. 

The list of psychological biases we suffer from is so long, it's a miracle that we haven't blundered ourselves into extinction, as a race.

And just because the world functions relatively well doesn't mean we have been good at making decisions, including in business, where success often boils down to sheer luck. “Even a billionaire like Warren Buffet acknowledges the role of luck in his success,” adds Sibony. “We do observe a lot of failures; after all, millions of years of evolution have prepared us to recognize rotten food, but not rotten counterparties,” joke both HEC professors. 

For a rehabilitation of the basic tools of decision theory

Recognizing all the limitations of decision theory, the specialists nonetheless believe that certain tools can be helpful. 

The axioms of rational decision making are especially important in the context of strategic decisions made by managers and executives, who might need to present and justify decisions to their superiors or boards. 

Decision theory is not a magic wand for a final answer. It should be used as a conceptual framework, or tool, rather than as a theory that is directly applicable.

Decision theory is not a magic wand for a final answer. It should be used as a conceptual framework, or tool, rather than as a theory that is directly applicable. The researchers outline 3 different types of decisions and how decision theory can potentially serve in each of those cases: 

1. In the first type of decision, outcomes and probabilities are clear and all relevant inputs are known or knowable, which means that finding the best solution is simply a matter of using mathematical analysis based on classical decision theory. Simple computing power can find the single best solution (optimize a route or, in the case developed in the research article, allocate sales reps to territories according to travel costs). The decision maker needs not even know the details of the algorithm that the software uses. 

2. In the second type of decision, the desired outcome is clear but not all of the relevant inputs are known or knowable. In this case, decision theory cannot provide a single best answer but can test the consistency of the reasoning by formulating the decision maker’s goals, constraints, and so on, to check whether the reasoning makes sense. 

3. In the third type of decision, either because data is missing or because the logic of the proposed decision cannot be articulated, even the desired outcome is unclear. In such a case, the problem cannot be described in the language of decision theory. But, while theory cannot provide a “correct” answer, it can still serve to test the intuition and logic of the decision maker.

There may be no objective way to assign precise probabilities to different scenarios, or even to identify all the possibilities, but the theory can still potentially challenge underlying assumptions or processes. 

“If you want to be in a certain market just for your ego, fine, but it's my job to uncover it!” says Itzhak Gilboa, comparing the process to “sitting down with a shrink before you press the button”. The idea is simply to understand one's own motivations for a decision and to be comfortable enough with them to explain the rationale to one's own boss. The researcher likes to think of the approach as a “humanistic project”, improving decisions in a way that will ultimately be useful to society – “even if business decisions are rarely life and death matters!”

And after?

Launched on Coursera in February 2015, the French MOOC « Devenir entrepreneur du changement » ("Becoming an entrepreneur of change") has become the French-speaking MOOC with the most numerous participants. What have they become? Thank you to the three entrepreneurs who chose to testify: Thomas Lemasle, Anne-Sophie Macabeo and Kylia Claude.

Knowledge@HEC: What lead you to choose this MOOC? 

Thomas Lemasle: I took this MOOC because I harbored two driving forces: an entrepreneurial spirit and the will to “do good”. I felt that this MOOC would help me appropriate my intuition and solidify my beliefs.

Anne-Sophie Macabeo: I heard about this MOOC at a Groupe Renault CSR event in June 2017 during which Matthieu Dardaillon from Ticket for Change came to speak and present the course. With the work that I do, I have always wondered: how can I transform my ideas into meaningful projects. I started the MOOC end of 2017 ready to leave Renault for a different, more purposeful adventure and finally realized that it was by changing things internally—by being an intrapreneur—that I could have the most impact. Since the course is free and accessible to all, it allows people to start it with confidence. 

Kylia Claude: I have always found the idea of assimilating positive impact with strong economic activity very attractive, which is exactly what the MOOC taught us. The course showed students how to view business and social actions through an entrepreneurial prism. I also appreciated that it was certified by HEC Paris and Ticket for Change.

K@HEC : How did these courses help you to materialize or further develop your project?

Thomas Lemasle: The MOOC first allowed me to put my finger on the cause closest to my heart: ecology. It then showed me how to put my talents to good use, which could very concretely serve this cause and more. I could bring together a team guided by shared values. In creating PinotBleu, this is exactly what I did: I built a business that serves the common good, with the primary mission of respecting the planet and biodiversity through the promotion of sustainable viticulture.

Anne-Sophie Macabeo: Overall, the MOOC allowed me to define a project that makes sense for me. With the innovative and operational tools given to us, I was able to reassess my career, make the link between professional and personal investment, identify a project to promote within the company, and acquire the tools to promote it. Consequently, the MOOC showed me how to reposition myself as an intrapreneur of change within the company for which I already worked. I now carry out meaningful projects that will likely change the rest of my life.

Kylia Claude: The pragmatic pedagogy pushed us towards inspiration and introspection, which then allowed us to lay the groundwork for our project and to go in the right direction. Ultimately, we created and developed the Canva business model.

A new chapter in the social history of cannabis

Recently, however, a new chapter in the social history of cannabis is being written. The decades long ‘War on Drugs’ is increasingly understood to have failed and public opinion is shifting in favor of decriminalization. In France, for instance, one 2016 poll suggested that 85% of the surveyed sample considered that current laws are not effective for combating trafficking and cannabis use. 

This new chapter, however, is not so much about decriminalization as it is about marketization. What is definitively new is that various jurisdictions—U.S. states such as Colorado, Washington, and California, and countries such as Canada—are seeking to create state-sponsored and regulated markets for cannabis production, sale, and consumption. 

Decriminalization and legalization, as Mark Kleiman once said, are “very different propositions.” To decriminalize cannabis, one needs to change laws or relax enforcement—a movement that has been underway in some places like Amsterdam for a long time. To construct a legal market from scratch requires more indeed, particularly if it is to rival and replace the existing illegal markets while also raising revenue and protecting public health. 

What is required to construct an effective contested market?

On the one hand, it requires that we think critically and proactively about what is required to construct a functioning and effective market. The prevailing view since Adam Smith’s (1776) Wealth of Nations  has been that markets emerge spontaneously and naturally from the “propensity to truck, barter, and exchange.” But the marketization of cannabis requires more than this. It requires that policy-makers and regulators become highly skilled market designers, and that voters and political leaders become deeply discerning critics of market designs. 

Myriads of design choices involved in marketization affect the kinds of markets that emerge.

Indeed, myriads of design choices involved in marketization—from the accreditation systems, to the tax basis, testing requirements, capital sources, reporting requirements, etc. —affect the kinds of markets that emerge. Small and often highly technical design choices like these will determine who will be able to participate in tomorrow’s cannabis markets, where the financial rewards will accrue, what kind of qualities will be valuable, and even the kinds of cannabis products available to consumers. Currently, however, these market design questions are often overshadowed by simplified debates about whether or not cannabis itself is good or bad. 

Cannabis markets provide “hybrid forums”

On the other hand, this new chapter in the social history of cannabis provides the opportunity to question and address wider issues about the relationship between business and politics, and between economy and society. These experiments in market design allow us to reflect on the limits of the received wisdom that business and politics, and economy and society do not (and should not) mix. Cannabis markets provide what Michel Callon has described as “hybrid forums”: public spaces where economic, political, and social problems overflow their ‘traditional’ boundaries and come in contact with each other. 

Indeed, in contested markets like those for cannabis, the economic, political, and social values will continually and explicitly interact. It is necessary that we learn from these interactions. Enterprising economists (like Albert Hirschman) and sociologists (like Mark Granovetter and Viviana Zelizer) have drawn attention to these interactions. However, too often questions about the economy are handled by economists and questions of sociology are handled by sociologists. Good policy, and “effective” markets, will require that these traditional silos are broken down. 

More than business: a need for interdisciplinarity

Debates about a new approach to cannabis governance are raging, and demands for change are afoot. As France looks to soften its laws against cannabis use, it is important to debate what the next chapter in the social history of cannabis will entail. We argue that this requires thinking through cannabis in both senses of the term. 

Interdisciplinarity will be central to these two movements. In order to learn from the experiments currently underway and inform public debate, economists, political scientist, sociologists, medical and business students, etc. will all need to be deeply engaged. 

These disciplines, however, will need to push and transform the boundaries of their domains, perhaps to uncomfortable degrees. Business school scholars will need to understand business to be about far more than maximizing revenues and building shareholder value; they will need to redefine the very domain of business as social and political.

The “Contested Markets Workshop” convened at HEC Paris on the symbolically-important 18th June reminds the "Appel du 18 joint" and represents a first attempt to think through cannabis in France. Live tweets here.

Knowledge@HEC: Why this book, and why now?

Alberto Alemanno: After “liking”, marching and voting, the time has come for citizens to lobby. Indeed, many democratic societies are experiencing a crisis of faith. Citizens are making clear their frustration with their supposedly representative governments, which instead seem driven by the interest of big business, powerful individuals and wealth lobby groups.

Lobbying is not only legitimate but is also essential in a democracy

Elections have become tightly controlled performances, which are increasingly dependent on data-driven political marketing via social media. No surprise that we have also become more cynical about the value of democracy as a political system, thus throwing into doubt the belief our actions can influence public policy. This largely explains our growing feeling of powerlessness. 

Yet, if there’s anything we have learned from recent events – from Macron’s Presidential victory to the #MeToo Movement going through the Brexit referendum –, it’s that citizens have a growing desire to contribute to the political debate through unconventional means of participation, and that they deserve the means to do so.

Research supports this claim by demonstrating that societies that enable citizens to be assertive and critical of public authorities tend to have governments that are more effective and accountable. What better way then to render citizens assertive than to turn them into lobbyists? 

So citizen lobbying is the new theory and practice for active citizenship?

Yes. While most people associate lobbying with “bad guys” such as Big Tobacco or powerful financial interests, I believe that lobbying can be a powerful force for good. Citizen lobbying might sound like an oxymoron. Surely, lobbyists represent the interests of the few rather than the many. That needn’t be the case.

Organised interests, notably corporations, have historically monopolised lobbying, but the same factors that have prompted the rise of direct democracy movements and online petitions mean lobbying itself can be democratised. Indeed, thanks to the information revolution on internet, lobbying is no longer the prerogative of well-funded groups with hundreds of thousands of members and myriad political connections. 

How can we lobby as a citizen?

A citizen lobbyist taps into the repertoire of techniques generally used by professional lobbyists to promote a cause they care about deeply. It is more than merely voting, donating, or signing a petition. Here, citizens set the agenda and prompt policymakers to act, or react to a policymaker’s agenda with potential solutions.

Thus, a citizen concerned about fracking of shale gas might go to a protest or campaign meeting, but to think like a lobbyist means filing requests for access to documents to learn government plans, identifying key decision-makers to lobby, and preparing an advocacy plan to counter lobbying from corporate interests. 

This new, bottom-up form of lobbying is illustrated by several successful instances in the UK, Europe and around the world that are narrated in the book.

Think of Max Schrems, the Austrian student who challenged Facebook’s use of private data and won. My own students at HEC Paris have got involved too. They petitioned the EU Commission to put to an end to mobile roaming charges in 2012, adding their voice to a growing clamour that eventually forced a change in policy. 

Learn more in this short filmed interview.

Why should we lobby as a citizen?

Lobbying by citizens can provide the missing, trust-based feedback mechanism to their elected representatives. For this to occur, lobbying needs to be demystified. 

Much of the political engagement we see is about eliciting clicks and driving emotions; lobbying, by contrast, is rooted in genuine and meaningful efforts to meet achievable goals.

First, lobbying is not only legitimate but is also essential in a democracy - contrary to conventional wisdom. Although we have never enjoyed (at least on paper) so many opportunities to participate directly in local and national affairs, my book demonstrates that there exist multiple avenues of participations – ranging from public consultations to requests for access to documents, from administrative complaints to strategic litigation – open to citizens today. Yet, they remain little known and largely underused, and what is worse, often mobilised by major corporate powers in forms of astroturfing.

Second, citizen lobbying plays an equalizing role. Indeed, assertive citizens may counter the undue influence of a few special interest groups on policy process by helping decision-makers to better identify public interest. 

Third, such lobbying has pedagogical function. By gaining exposure to the policy process, citizen lobbyists learn how government works and become aware of the inherent complexity and numerous trade-offs decision-makers make. 

At its heart, citizen lobbying is not really about giving everyone an equal voice but about delivering a plausible, legitimate form of civic participation that complements rather than antagonises representative democracy. Much of the political engagement we see is about eliciting clicks and driving emotions; lobbying, by contrast, is rooted in genuine and meaningful efforts to meet achievable goals.

I predict that should citizen lobbying emerge as a successful model of participation, it could act as a credible, effective and powerful antidote to growing populism and pave the way to a new voter-representative relationship. Ultimately, turning yourself into a citizen lobbyist will help you not only revive our fragile civic life, but also give more meaning to your personal life.

Lobbying could act as a credible, effective and powerful antidote to growing populism and pave the way to a new voter-representative relationship.