The 5 Laws of Change

This article is part of a series on Value Creation. 

It’s pretty much a universal rule: People hate change. In fact, research shows that most people will tolerate a lot of pain with the status quo before switching. That’s why part of the Value Creation and Winning in the Global Arena program is dedicated specifically to change. If you want to grow your market share and create more value for more people, you have to convince people to change.

Thunderbird Marketing Professor Douglas Olsen describes the comprehensive change model (shown below) and explains the five laws that have to be met in order to tip the scale from the status quo to the new option. 

“If you want to grow your market share and create more value for more people, you have to convince people to change.” – Click to tweet

The 1st law: There must be superior value

Superior value is a subject we addressed in a recent Knowledge Network article, Value Creation: It Is ALL About Your Customer. From creating your products and services to selling them, only one thing matters at the end of the day: the value you’re creating for the customer. People have many incentives not to change, and unless the alternative clearly offers superior value, they will have no incentive to change.

The 2nd law: The stability of the existing option must be reduced

While value creation is essential, it isn’t enough. You have to destabilize existing options and minimize the level of fear and uncertainty around the new alternative.

Stability is driven by seven key factors:

1. Complacency (how much do people really care that there is a superior alternative)
2. Contractual constraints (is it even possible for people to change)
3. Un-portability (what will get left behind – e.g., related products, expertise, history)
4. System removal constraints (costs associated with changing)
5. Breadth and depth of current use (how many people use the status quo, for how many purposes)
6. Technical adequacy (how reliable is the status quo)
7. Relationships in place (with products, companies, brands, and/or individuals)

Two examples of services that are particularly ‘sticky’ – that is, people are reluctant to change – are healthcare and banking, both of which are affected by many of those seven factors. Unsticking people from the status quo, then, requires chipping away at those stability factors.

The first step is to ask: Are people aware of alternatives? What am I asking them to give up? Have there been recent changes? Are there constraints to removing the existing system? Do people really understand the shortcomings of the existing system? What important relationships are in place? Addressing those questions will help you reduce the stability of the existing option.

 “While value creation is essential, it isn’t enough. You have to destabilize existing options and minimize the level of fear and uncertainty around the new alternative.” – Click to tweet