Governance Bites #121: The “3 Es” of sustainable change, with Dr Richard Carson

In this episode, Mark Banicevich interviews Dr Richard Carson on the “3 Es” of sustainable change—Performance Efficient, Cost-Effective, and Culturally Empowered. They explore how boards of directors can apply this model to drive meaningful transformation, overcome common organisational challenges, and achieve long-term success. With practical examples from large organisations and insights from years of boardroom experience, Dr Carson reveals how the 3 Es empower leaders to balance performance, cost, and culture. Whether you’re a director, executive, or governance professional, this episode offers actionable advice on leading sustainable change that truly lasts.
Richard H. Carson is a consultant, author, and academic researcher with a 40-year career focused on organisational change management. He is the CEO of Carson & Associates, a consultancy he established in 2017 to serve public-sector and non-profit organisations. The firm specialises in making organisations more performance efficient and cost-effective through services like strategic planning, human resources, and executive coaching.
Dr Carson’s has served as a senior policy analyst for three Oregon governors and held numerous public sector management roles. His doctorate research in organisational psychology at Washington State University resulted in his trademarked “People Sustained Organizational Change Management (PSOCM) model”, a comprehensive, three-phase, 10-step framework for managing workplace transformation.
Dr Carson authored “The Book of Change” (see https://www.bookofchange.com/ for a free PDF), a practical, step-by-step guide written for business and government executives, consultants, and students navigating organisational change. Dr Carson has also served on several boards, including the Oregon Development Network, the American Planning Association in Oregon and Washington, and Kit Carson Historic Museums.
#SustainableChange, #Leadership, #Governance, #BoardOfDirectors, #OrganisationalCulture, #FutureOfWork, #BusinessTransformation, #HighPerformance, #ChangeLeadership, #CorporateGovernance, #BoardroomInsights, #DirectorAdvice, #StrategyAndCulture, #PerformanceExcellence, #CostEffective

Transcript

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Well, my name is Rich Carson. I have about 45 years' experience as a manager, a consultant and academic, and I spent really the first 30 years as a manager kind of learning my executive management craft. I got into the field of organisational change management when I actually hired a consultant group to audit my organisation. I was actually asked to do this by the people that hired me. And I enjoyed that process so much that I went back to school and got my doctorate work in change management or organisational behaviour, and went to work for the company that I had hired. And they hired me, and I ended up doing another 10 years as a consultant, actually doing change management studies. So, I'm going to dig into your brain a little bit today. Sure. And you talked in particular about your expertise on your 3Es model of change. Yeah. So, I look forward to having a chat about that. Hi, welcome to Governance Bites. My name is Mark Banicevich, and today I have the pleasure of spending time with Dr Richard Carson. Richard, thank you very much again for your time today. Thank you. We have managed to make the time zones work. You're in Pacific Standard Time in the US [United States] and I'm in New Zealand Standard Time. So we made that work. Good afternoon. Yes. Our topic today is your 3Es model around performance efficient, cost-effective and culturally empowered. Can you start by briefly describing what those three Es are, please? Well, the simplest one to understand is cost effective. I mean, the three are cost effective, performance efficient, culturally empowered. Cost effective, whether you're public sector or private sector, is the bottom line cost of doing business. Performance efficient is a little different. It's really about more intangibles that may or may not affect costs, such as your delivery times, customer relations, response times. In other words, this is especially true in the government

sector: 2:35

how long does it take you to get back to somebody who's contacted you? Just as an aside, you know, in my last organisation I had a 24-hour call back rule. You know, instead of getting back two, three, a week later, within 24 hours we tried to get back to the person who contacted us. The other one is cultural empowerment, which really means, in the process of change management you involve everybody, externally and internally. It's very important to involve the staff, from the front counter staff — the people that are in contact with the customers — all the way up to your managers. And your stakeholders could be vendors, you know, the people that are supplying you. In the public sector, of course, it's voters; they are the consumer. So cultural, you know, a lot of times what you don't want to do, and what I've seen happen is, a board of directors basically thinks that something needs to be changed. They go to the manager, the director, executive director or CEO [Chief Executive Officer], and say,"This is what you need to change." Well, that may not be the actual problem. So the process of change management is really to do an assessment to try and get to what the real underlying issues are, and they may be what the board of directors thinks and it may not. What is the relevance? Now, you've just briefly alluded to this in your answer there, but I'll ask you to expand on this a little bit more. The relevance of the 3Es model to the board of directors, or to boards of directors generally. Well, I think it's important, just like I said with the last one, in terms of cultural empowerment. They, you know, they may just think that what the staff thinks is irrelevant — the staff really is the problem. So it's really important for them to understand the change management process and why those three aspects of the process will add value to the recommendations, and it won't be, it may not be what they think. I've had a couple of cases. I've had at least one nonprofit where they didn't like it. They were almost insulted by it. In other words, they were the problem, and they basically took the document and put it on the shelf, and no one, and told me in no uncertain terms,"I never want to see it have the day, you know, light of day." So, what the board thinks should happen, and it's just important that they understand the process, and it's important for, you get buy-in from the board, from the executive director/CEO, and everybody down to the vendors and the line staff. Everybody needs to really buy into this. A lot of times, especially with the staff, people don't like change, let's put it that way. People resist change, and it's very important to get them to understand that the process is not only, will not only benefit them, but will include them. And once, I basically in some cases actually set up work groups around specific topics and said to the folks, "Look, we want you, because"you know best how this piece of the process works, to tell us what"you think works and doesn't work." And once you get that buy-in from the line staff, then you really get a good product. Right. So we're talking about an organisation that is not necessarily aligned with where it needs to be going. A board of directors is often at a very high level, stepping into the organisation for very short periods, once a month, once a quarter, once every six weeks, and they'll get an idea of what's going on, but the idea of what's going on may not be correct. And it's about really getting into the organisation itself to identify what the need for change is. Exactly. And where the 3Es model can help that you've described is by helping the organisation understand what the grassroots problems are, and then make the change to get the organisation in the direction it's going. Yes. Yes. And it's important that the leadership buys into it first. First and foremost, they buy into the process. Once you've explained the 3Es, what the process is, how it works, and where it might end up, they really need to buy into that. If they don't buy into it, then basically what they're saying is we're — and I've had this happen, I've talked to other people where this has happened — where the purpose of hiring a consultant is to do their dirty bidding, right. And that way, "Well, it wasn't us. It's"this guy over here. He said to do this." Well, if that's the case, then I mean, personally, I don't want anything to do with it. If they're not ready, you know, if they don't buy into the process and basically they want me to do their bidding for, because they have a personal agenda, right. Then there's no point in going down that road. Yeah. It needs to be an honest desire to find the problem and change, and sort, resolve the problem. Yeah. You've written about this model in your book, "The Book of Change". Yes. What I'd like to do, if I may, is just dig into each of the Three Es in a little bit more detail. So we'll just take them one at a time, and if I can just ask you to describe a little bit about it and maybe dig into a little bit of detail starting with performance efficient. What do we mean? What do you mean by performance efficient, and can you give us a couple of examples? Well, performance efficiency was something that was really kind of founded, I think, by [W] Edwards Deming, and the idea is coming up with metrics that you can measure. One of the things you can do with performance efficiency is to do surveys, you know, kind of front end and backend surveys. It could be attitudinal. In other words, when you do the initial survey in terms of performance efficiency, what do your customers think works and doesn't work? And once you set up recommendations, to go back and actually either do kind of perception surveys or have real metrics in terms of, well, like I said, if you want people to get back to their customers within 24 hours, you can actually have staff keep phone logs of when people called, who called, when, you know, and report those statistics on a monthly basis. I actually did that and made a contest out of it. Because I had, maybe, I had seven work groups reporting to me, and I would, you know, once a month I would let everybody know in a management meeting and then broadcast it through kind of an internal newsletter who was doing well and who wasn't. It isn't anybody got punished, but it got to a point where people wanted to do better. Yes. Yeah. They wanted to look like they were doing better. Right. Yeah. That's interesting. I mean, because Deming's work originally started out of manufacturing, right. Which led to the huge change in Japan in the 70s [1970s]. Yes. And so we've had to adapt that kind of manufacturing performance efficiency mindset to more of a service model, as you describe in terms of core volumes and things. And a lot of businesses these days have the technology to automatically collect those data. If they don't, then collecting it manually can be very valuable, and it, and the first step towards improving efficiency, is understanding the current efficiency, for which you need data. You need to analyse data and find out where you're currently at, set some goals and move your way forward. Yeah. I mean, the famous saying is what gets measured gets done. Yes. And that's very true. In other words, it's called accountability. It's one thing to tell somebody, "Well, this is"what you need to do," but one of the things that's very important is, if you're going to make a recommendation, you need to provide timelines and resources to do that. It's one thing just to say, "Well, okay, I want you to do this," but they really need a structure that you say, "Well, I'm going to give you"X amount of resources." Could be dollars, could be people, could be consultants, whatever it may be, and you need to accomplish these tasks within this time frame with this result. And that accountability is really, really important. That really does summarise what we mean by performance efficiency, doesn't it. It's quality output over time. Yep. So, let's move on then to cost effective, because you're then adding another element to this concept of how much money it's costing you to deliver this. Can you dig into that a little bit more? Well, it's the same thing in terms of metrics. You need to look at where you are, what's your baseline, and then you work with the individual work groups in terms of what their goal is, and basically, I mean, just trying to get to the bottom line, whether it's in the public sector or the private sector, there's a cost of doing business. And the idea basically is, especially, governments went through a lot of this in terms of, the, one thing I was going to mention is in the private sector you've got economic cycles, okay. In the public sector you've got election cycles. And so every four years you may have a whole new group of people with a lot of preconceived ideas about what needs to be done. And in the public sector, it always comes down to"You need to be more cost effective." Right. Period. I mean, you get complaints from the customers in terms of "the fees are too high," "you're taking too long,""it's costing me too much," you know, that kind of thing. So cost effective is very much in the eye of the beholder. Right. So, with the first two metrics we've talked about, essentially time efficiency and then cost efficiency — the first case, it's the performance efficiency is around time, and the cost effectiveness is then around money — and the third element you're adding to it with culturally empowered is around people. Yeah. So can you dig into that one a little bit more for us? Yeah, this is one that's really overlooked. Organisations are made up of people, okay. And so all organisations have a culture, whether it's a mom and pop shop or whether it's IBM or what, they all have their own culture. But cultural empowerment is that if you're going to have successful change, it has to come from the bottom up. It's not enough to say,"Okay, we're going to make these changes whether you like it or not." And like I said, people resist that kind of thing. Their attitude is, "Well, we've always done it this way. Why would we do it differently?" So cultural empowerment is basically empowering the employees to come up with changes that are needed, and if they come up with those changes, then they won't resist it, basically. You know, they will help you implement the changes. Otherwise, not only, well, they might resist it, they might sabotage it. In terms of the change. Your people are often, they're closest to the problem, so they're often in a position to be more effective at identifying solutions to the problem, and as you say, they then get greater buy-in. So, across the model, we've got

three points essentially: 15:54

time, money, and people. Yeah. How can boards of directors then use this model, the 3Es model, to drive positive change within their organisations? You've talked before about they have to be bought into it, they have to actually be wanting to make change. So imagine you've got a board of directors in an organisation that has some problems. They want to find out what these problems are and resolve them. They're really passionate about getting that right. How do they then use the 3Es model to do that? I think what really needs to happen is, it has to do with their ability to make sure that the changes are implemented. In other words, a lot of times it becomes, "Well, here it is. We got the recommendations." It becomes a shelf document, and that's all that happens. And what needs to happen is that the changes — and I think that change is something that is ongoing, not change for the sake of change, but change needs to be something that is revisited over time. What you need to do is to implement organisational change through a strategic plan, and it needs to be a three- to five-year plan, mainly because you don't always have the resources to do it all at once. So you phase the recommendations and the implementation over time through multi-year budgeting. So you say, "Okay, we think that these recommendations are like tier 1,"and we'll do it in the first year. Here are the resources you need."Here's the money, the people, the infrastructure to do it, and here's"the timeline you have. So go to it." But there are other things, tier 2, 3, 4, whatever, that can't be done right away because you really don't have the resources, but you don't think they're as important or as much of a priority, let's put it that way. You prioritise the recommendations over time. So, strategic planning, multi-year budgeting, that's the board's job. Once they know what needs to be changed, it's up to them to make sure it happens. Yes. Right. I remember when I was consulting, a really useful model that we'd use for all of the possible, all the desired changes, which you'd have two axes. One would be how complex they are to implement in terms of time and money, and the other one would be the impact on the business. Yeah. So using that metric, you'd be able to identify a few quick wins that would have fairly high impact and very low cost. Get those done very quickly. And then you'd also be looking at trying to start work on some high impact and high cost ones at the same time. So you're delivering some positive impacts so that the organisation can see that it's working while you're chipping away at the large ones. And then the other thing that you have to keep in mind is interdependencies between those projects. So there may be some precedents where Project A has to be done before Project B can be started. So get those metrics in place and yes, plan your timeline and get underway. Yeah. In the private sector, you might prioritise in terms of profitability. In the public sector, it can be much more a matter of perception. You know, what is, what did the voters, the public, in the assessment process tell you was the problem, and it's not always money. It could be, like I said, it could be timelines. Especially, let's say, in the development industry, time is money. The longer their process, you know, they may not have a problem paying the fee, but if the process drags out for months after months, their interest payments really mount up. So, in the public sector, it could be a matter of perception. Like I said, just how long does it take you to get back to a citizen? One of the things that a lot of, that I call, I call it "the culture of no". A lot of times, a citizen will come into the front counter and say, "Well, I want"to do this. I want to add on to my house or want to do this or do that." And somebody will say to them, "No, you can't do that. Just"go away. No, you can't do that." Well, in reality, in the public sector, there's always a way to do what you want. It may be very onerous. It may be expensive, maybe timely, but there are always just a process. You can change ordinances, you know. So one of the things I tried to do in the public sector was just stop people from that kind of just blowing people off. Yep. That's understandable. Simply a matter of perception. There's no money associated with it, but how you treat people is very, you know, and the public, the private sector understands that much better than the public sector. Yes. Indeed. Can you give an example of where a large organisation's used the 3Es model to drive a major successful change? Sure. I'll use myself as an example. When I took this job and I, managing about 165 people, I had a $17 million annual budget. I was hired and they told me,"Look, your organisation is really dysfunctional. You need to fix"it. That's your job. You need, that's why we're hiring you. You"need to fix it." And I had a, at the time, the County Auditor had just got elected, and he was telling people that he was going to change things. He was going to do performance audits. So, I went to him. I said, "Look, would you audit me?" And he looked at me like I was nuts. You know, it's like, "What?" I said,"I'm a new guy. You're a new guy. If you do this performance audit of me"now, it'll be to my credit. If you do it of me three years from now,"I might get fired." And he goes,"Well, okay, that makes sense." So he brought in a consulting company that had done some work that he knew of, did performance audits, and that's where I learned about the 3Es. It was experiential, okay. Right. I learned about it because there was a lot of complaints from developers basically that it was too expensive, it wasn't cost effective. The public — citizens not developers, but the other side of this equation — citizens were saying, "Look, no one ever calls me back. I never hear back from"anybody, or if I do, their attitude really sucks," you know. And the last part was, I learned about cultural empowerment because basically I needed to bring my managers and staff on board, and I spent a lot of time talking to the consultants about this, and they, you know, they were pretty savvy about that. So, what I did is I set up work groups, and I said,"Look, this is what we're being told is a problem. I want you to look at"this within your realm and tell me how you could improve it. What you"think can be done or can't be done." So I really learned about the 3Es the hard way, by experience, experiencing all three and what worked and what didn't work. And the important thing was, in the beginning, was to really do an assessment of the issues. Really talk to people on staff, to citizens, to vendors, about what the real issues were beyond what the board — it was a county board — it was beyond what they thought was the issue. And a couple of them were brand, two of the three were brand new. And one of the things I've noticed over time: I've worked in numerous city, county, regional and state agencies. I worked for three governors in the State of Oregon, and every time there's an election, somebody comes in and wants to change something, because that's what they ran on. Whether it's rational or not, it's just like, you get to the point where,"Oh, here it comes. We got the"election, we know what's going to happen." So you learn, you learn to kind of manage it. The odd thing is that as these people who came on hellbent on making changes, maybe five, six, seven years later, they start to understand how things work. I've got one final question for you. Yes. Yes. You've worked at a large number of boards. What is the advice you find yourself most commonly giving to directors? Well, there are two. Well, first of all, I've worked, I've been on five different nonprofits, and one of the biggest problems is that, what's really needed is change on the board. And I firmly believe that term limits are the answer. Because what happens is that a lot of boards have been there forever. The people have been there forever. And a lot of times I've had a, couple of times — I mean it's the directors who come to me and kind of say, "Well, I have a problem. It's them. Is there some way that"we can engage them in this change management process?" And change on a board is important. You really need new blood, new ideas to make change happen. So, one of the things I've tried to get boards to understand is, first and foremost, is that change is a good thing; that they should have both a person on the board and on the staff who is a change manager — the person whose whole job, I mean, usually when you have a board, you have people who are that handle the budget, maybe personnel, they'll have people in terms of programmes, things like that. But you really rarely have somebody who is a change manager in that kind of position. And in my last job, I actually had a person. Once we were done with the whole change management kind of assessment process, recommendations, I had one person whose sole job was being the change manager, and her job was to basically go around to the different work groups and basically say, "Look, we gave you"these resources, we gave you these timelines, we gave you these"products, how are you doing?" And you really, in other words, you have a person who's really on top of that. Yeah. The other, in terms of cultural empowerment, I had a human resource manager, and I put her in the office right next to mine, because I needed somebody who was a sounding board in terms of cultural empowerment to make sure that people were on board. And, you know, it isn't that I'm an insensitive guy, but I needed somebody to kind of bounce things off of and say, "Well, look, what if we do this or what if we do that?" So she would kind of evaluate those kind of ideas from both a legalistic point of view, but also how well it would be received and how better it could be delivered. Richard, that's been really great. Thank you very much for your time. I appreciate it. Thank you. I'll look forward to catching up again soon. And I'll see you next episode. All right. Thank you. Thank you for watching this episode of Governance Bites. We have more episodes on YouTube and your favourite podcast channel where I interview directors and experts on various topics relating to boards of directors and governance. We'd love to see you back, and please like, subscribe, and share the videos and podcasts.