Corporate change is hard. BCG research has shown that only a quarter of transformations successfully create value. As a result, change is a favorite subject of management scholars and consultants, who have suggested a wide array of best practices to follow.

No universal formula for successful change exists because change is not monolithic: it is not one type of problem requiring one type of solution. Thus, relying on best practices or replicating approaches that were successful in the past is insufficient. Instead, we argue that the most effective approach to change is contingent on the situation the company finds itself in and the challenge it is facing. In other words, leaders should reconceive change as a strategic challenge, rather than a management exercise.

So how can you identify which factors matter, and how should you account for them? You can’t afford trial and error in your next change situation, so we built an agent-based model to simulate how companies adopt change.
(See “About Our Research”)

Simulating Successful Change

One factor to account for is org structure. Consider how Microsoft and Spotify reacted to the emergence of cloud computing technology—each with its own recipes for success. Microsoft’s pivot to a cloud-first business model was initiated by its then-new CEO Satya Nadella, who made transitioning to the cloud his top mission—relying on established hierarchies to drive change across the company.^[1]Satya Nadella with Greg Shaw and Jill Tracie Nichols, Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone, Harper Business, 2017. Meanwhile, Spotify, seeking to put the cloud at the center of its operating model, pursued a different strategy: across its flat and decentralized organization, it identified and promoted champions of change—a group of highly respected and well-connected engineers. Both companies succeeded by tailoring their change strategies to their organizational setup, not by implementing a one-size-fits-all solution.^[2]Scott Carey, “How Spotify Migrated Everything from On-premise to Google Cloud Platform,” Computerworld website, July 30, 2018.

In our model, agents represent employees, each with unique characteristics—such as their openness to change and their receptiveness to peer or leadership influence. These employees can be organized into different types of networks, mirroring the organizational structure of firms.

Once the network is established, we introduce a change to it, such as a new technology or behavior that leadership wants to see adopted. Each agent then continuously updates its behavior according to individual preferences and the actions of peers. To investigate how different change strategies influence the degree and speed of adoption, we can test an array of potential interventions, like the introduction of incentives, as the simulation unfolds.