Christine Hudson, Ronica Roth & Ryan Martens

Hi everybody. Hello. I'm Christine Hudson, and I'm joined today by Ronica Roth — hello — my co-founder at The Welcome Elephant, and by Ryan Martens of Manifest AI. And we're going to be talking to you about some specific ways to help more of your change efforts succeed.

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There are some really funny things about humans. It's these funny things about humans that keep our change efforts from succeeding.

Humans — we do not like to talk about hard things. We hide bad news. We avoid conflict. We tell ourselves stories about why things are happening, why things are not happening. We tell ourselves stories about people's behavior, and especially about people's motivations for their behavior.

Humans — we resist, ignore, or just put off things we're not good at. We gauge value and ownership in some unexpected ways that are not well leveraged by most change efforts, and we're going to talk about those today.

Humans — we tend to think that our decisions are much more rational than they often turn out to be. We often resist even the most positive change if these funny things aren't addressed.

So it's these funny things about humans that cause so many business change efforts to fail. And so lots of change efforts still fail. By change efforts, I mean anything that updates your business: product updates, infrastructure updates, programs, projects, AI rollouts, AI adoption efforts, the associated organizational and process changes.

You've probably used organizational change frameworks like Kotter or ADKAR. We heard a couple of people mention those this morning, and we have too. They're great, but they're still not sufficient. By some estimates, the failure rate of organizational change projects is as low as 50% — low as 50% — and by some estimates as high as 90%. So this high failure rate is after decades of research and practice and implementation by smart humans like you and me, and lots of researchers in all types of companies, in all sizes of companies.

Now, some of this failure is to be expected. We live in exciting, volatile times for markets and technology, and some of that failure is to be expected because every change effort is a little bit of an experiment with lots of variables. But a lot of that failure rate is still due to the funny things about humans. We're going to talk about those.

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There are three missing ingredients in dealing with the funny things about humans at work, even if you're already using organizational change frameworks. Ronica and I address all of those in our book Practice Makes Culture. And today we're going to delve deeply into one of them — about creating a sense of ownership: to understand why and how, and kind of what we mean by creating a sense of ownership and why it's helpful.

Let's delve into a few of the funny things around value and ownership and how that affects your change efforts.

As humans, our sense of ownership is not tied to things that we physically or legally own — and this will make tons of sense. If you look at James, and think: if James sits in that same bus seat every day, he thinks of it as his bus seat. This extended sense of ownership is often referred to as psychological ownership, and it isn't just restricted to tangible things like bus seats. It's ideas and concepts too. I mean, I bet you've thought or heard someone say, "Hey, that was my idea," or "that's my part of the codebase."

A sense of psychological ownership comes way more easily than most people think. When I say a sense of ownership, most people jump to control — that first box. But let's take a project as an example. Of course, having some control of the project creates a sense of ownership. But also, if you invest time and effort into that project, you come to have a sense of ownership even if you don't control it.

There's a third key factor that creates a sense of ownership that is not as intuitive. Simply knowing a project deeply can create a sense of ownership — knowing more details, coming to understand why those details are important. Depth of knowledge can create a sense of ownership.

And it turns out that these three activities or states — having some control, and/or investing time and effort, or having intimate knowledge of the subject — any of these things can individually or in combination create that sense of ownership.

Now, another funny thing about humans is that we place a higher value on things we think or feel we own. So which guitar do you think is of higher value — the one on the left, the used one, or the new one on the right? Well, of course, now you know that it matters whose guitar it is and who we're asking. As humans, if we place higher value on the things that we feel are ours — that we own — the guy on the left owns that used guitar. He thinks it is of much higher value. Everyone else, unless that guy is famous, someone we really look up to, will probably buy the new guitar for much more than we would pay for the used one.

This concept of placing higher value on things we own is often referred to as ownership bias, which is closely related to something I bet you guys have heard of: it's called loss aversion. But it's worth revisiting how that manifests. With loss aversion, it's the study of how we feel the pain of losing something more deeply than we appreciate gaining something of equal value.

So this sense of ownership is also related to something called effort justification. These things around ownership and value and effort justification — we find that if we've invested time, money, or effort into something, we unconsciously inflate the value of it. We think it is worth more if we have spent time on it.

These things probably have evolutionary roots. It makes sense: early humans overvaluing resources we already possessed, protecting our food, tools, and shelter, likely helped us avoid unnecessary risk.

So let's bring these concepts together — the concepts around ownership and value — and come back to the idea of using them to help our change efforts succeed. If we have some control over the change effort, or if we've invested time and effort into it, or if we just come to know and understand the effort deeply, we feel a sense of ownership of that effort and we value it more.

Okay, so these three things that I'm talking about that create the sense of ownership — it turns out that these things also address another funny thing about humans. When you have one of those items that create the sense of ownership, it also helps reduce anxiety in the humans undergoing the change.

So all of this removes friction from our change efforts. This combination of humans valuing things we own more, and it being relatively easy to create a sense of ownership — it goes beyond removing friction. It actually causes us to invest more time and effort in the change effort ourselves, additional time.

So you can leverage this in your change efforts. You can help your humans feel a sense of ownership of the change you're trying to create and be a little less anxious about it.

And it's simple. So let's do a simple example. You can invite people to a session around your change effort. Ask them to invest a bit of time and effort. Ask them to learn deeply about the change proposal and the problem space, to poke holes, to ask questions. When I say "ask them," I really want you to expect them — make it their job to come and help you poke holes in the change effort. Ask them to create that depth of knowledge that we know helps create that sense of ownership.

So if you have a big change effort, I really suggest — based on what we've seen over the last couple of decades and studied — that you invite a large group of people to come poke holes in your change effort.

Now, to most leaders that sounds really painful. Sounds like it'll slow things down. Sounds awful. Turns out though, we're removing friction from the system. Savvy leaders have learned that by giving those humans a chance to feel a sense of ownership of that change and engage deeply earlier on, you're way more likely to have success.

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Now, that was a setup. I'd like to hear some stories from my esteemed colleagues who have been putting this into practice for a couple of decades — we all have. So first we're going to hear about Rally Software, a company that Ryan helped found, and that Ryan and Ronica helped build over the last decade. And we're going to start with Ronica.

I would love to hear your perspective. You saw a lot of these sessions at Rally that helped create a sense of ownership — first as an individual contributor, then as a leader, and then you helped design and facilitate these at Rally and beyond. So I thought that would be a cool perspective. Can you tell us a little bit about how it looked and felt to be in one of these sessions?

Ronica Roth

Absolutely. We had a lot of ways of creating ownership, but my absolute favorite at Rally was definitely our company quarterly steering meetings. And they were absolutely magical. I think of it as the experience that started me on the journey to helping write our book.

So in these quarterly steering meetings, basically they're designed to bring together a good portion of the company to evaluate the current state of the business and the work of all the departments, to analyze the implications of our current set of results, and then to brainstorm, scope, and select our next change efforts so that we could commit every quarter to making the company better.

And in terms of how it feels — I remember just walking in on the first morning of a quarterly steering meeting. It was totally energizing, with always this buzzy atmosphere as we gathered. About a hundred people are coming in and finding a seat at a small group table, immediately picking up a Sharpie and a Post-it pad ready to dig in. The walls were plastered with flip chart sheets ready for us to capture ideas and proposals. So we're all ready to go.

And then the morning of day one was dedicated to creating that deep understanding you were talking about — of the business results, of department activities and successes and struggles, and the state of current strategy and change work. And we were asked to listen for risks, listen for opportunities, for surprises, and for puzzles.

This was no passive readout session where you multitask. We were listening hard, paying attention. And every few updates, we were asked to turn to our neighbor and kind of evaluate what we were hearing. And then we'd talk as a small group table to decide — to choose which big question or idea or opportunity or risk we wanted to bring into the whole room.

Inevitably, as the tables read out their number ones, somebody would bring up some hard thing. "Are you thinking about this likely event? How are we gonna handle that risk?" Because we were putting a lot of effort into really understanding where we were at, so we knew where to go next.

Then we took all that context to propose new change efforts. We called them rocks, and anyone could propose a rock. And then we spent most of the rest of the two-day meeting gathering in small groups to scope those rock proposals. And because we had multiple levels of leaders in the room, we had the humans there who could make good decisions about what this could be or shouldn't be, so we could create really good proposals.

And we did that work with so much passion. We cared so much about making an impact with our business — working with each other, debating, discussing: what would it take to improve that process, or what would it take to be ready for that next customer need? So we'd have excited conversations in every corner of the room, and then all those ideas would get read out and improved together as a whole, with more asking of hard questions.

And then we would have too many rocks — by design — because we could only deliver on two or three rocks a quarter, usually three, never more than three. And so we would eventually vote. I think it was pretty rare at that time and certainly very new to me: we conducted a consensus vote. Those hundred people chose. And so we had a sense of control over our future as to what we'd work on next.

I would say those sessions, and the sense of ownership that they brought, had a really big impact on me personally. They engendered an ever-deepening love for the company. And that sounds funny to say maybe, but I would say that pretty much everyone who was in those sessions would agree when they say we loved Rally, and we worked hard to try to make it better by choosing these rocks.

And then we kind of learned — I don't know how long this took, maybe not very long — that people in the field didn't get to have that experience, and so they couldn't have that same feeling. And we knew that just telling the story — "no, no, really, it's a great idea, we all worked on it" — doesn't work. And so we would cycle people from the field, like salespeople, consultants, and whatnot in through these meetings so that they could have the sense of ownership and participate, and come out with the same feeling and dedication, and then bring that to our customers and bring that out into the world so that at the end we were all working on the right things together for the good of the whole.

And for me, on a practical level, my sense of ownership meant that I volunteered for rocks, which means I was in more than a hundred percent — giving 110% actually turns out to be possible. And it meant a lot. So yeah.

Christine Hudson

Thank you. And Ryan, as you and Rally's co-founder Tim worked to create this sense of ownership over time, can you tell us a little bit about how you did that — whether intentionally or unintentionally — and beyond stock options?

Ryan Martens

We thought about it really hard and came up with this answer — how many of you believe that you shouldn't?

My co-founder and I — he was unemployable. I had worked with him on an earlier company and he knew he couldn't work for anybody else. So he kind of naturally had entrepreneurship in his background. But when we worked together at the earlier company, we were kind of fascinated by Jim Collins' work on creating disciplined people and disciplined action. And we had a few core values at that earlier company — which was ultimately acquired by BEA Systems — that were about creating your own reality and meeting commitments, and really trying to create a culture of adult ownership in the company.

I think a lot of it came from Tim, because he would usually come to work with the statement, "I've come to work today vowing to do nothing." And literally he would come vowing to do nothing. I obviously — it gets a little bit of a laugh from people — and then he would say, "I failed miserably and I'm gonna double down on that tomorrow." And he literally did that for twenty years of me working with him.

What that did is it actually pushed all of that work onto other people and allowed them to take ownership for the things that were going on in the business. Tim was way better at that than I was. I always thought I was kind of goofy. I was too much of an engineer, and I went to MBA school too, so they kind of forced that kind of creative thinking out of me. Tim skipped all that and just went straight into business after a few other nefarious things that happened in his life. But — sailing.

So we kind of stumbled into it would be the right answer. And then a mentor of all of ours, a woman by the name of Jean Tabaka, came into our organization in the middle of the 2005 time period and really taught all of us about what it meant to do big room planning, what it meant to provide ownership to the team that was in the room, what it looked like when you had collaborative cross-functional teams working together to effectively solve the problems — which you may have seen in what's called big room planning in many situations. She brought that to us along with some of the Jim Kahan stuff. And it was great coaches like Ronica and Christine who whittled away at this process over years, that made it to a place where we brought customers in.

Why'd we bring customers in? Because as you heard from our employees, they felt a sense of ownership. They felt some real buy-in. They felt some real love for what we were doing — and who would we rather transfer that to than our customers? And obviously the space we worked in, in the agile space, both in project management and portfolio management, many of our customers were interested in large-scale portfolio and how this would roll into the business. And that was something we went public on — on business agility.

I can say, looking back on it now, I don't think anybody's really achieved that. It's really been a hope and a dream, and there are pockets of it — thanks to people like you two, right. People have made some progress. But it was kind of optional. The development teams had to move forward on it for lots of reasons: the software was getting more complex, DevOps was coming and making things move faster, all kinds of things were pushing on that, digital transformations needed to go faster — but the business didn't have the same driver.

I don't know that we've really achieved that. I salute you two for pushing on it real hard and bringing this book to this group, where the problem here is a human transformation. It's not a technical transformation. Many people have brought that up a number of times today.

The only change effort framework that I can kind of remember in my head — you know, the Kotters and all these kinds of things — was Switch: direct the Rider, motivate the Elephant, and shape the Path. We do a crappy job of motivating the Elephant. And that's what this is about — motivating the mass to move in a way that you want to. And if you can't do that on day one, you're in for a long ride.

Christine Hudson

Yeah, what Ryan's talking about with that particular elephant is that emotional side of humans that's less rational than we think we might find. Ryan and Tim did a great job of motivating that over time and iterating on that with us to show how we could create a greater sense of ownership in these sessions.

Ryan Martens

Not totally true — he won't take compliments on stage.

About three years into the journey, I got to a place where there was this phrase that rang around in the hallway that I started hearing. I thought I'd learned it from Tim, but I hadn't. The phrase was, "Ryan said." As the CTO and early founder, you're like, oh, doesn't that feel good? That kind of straightens your ego. Everybody's worried about it. But it was the hugest demotivator I've ever had in my life. It meant I was really failing as a leader. I had failed to be able to pass the shared vision and shared responsibility into the organization. People were coming to me as opposed to acting on their own behalf.

And I spent an entire year transferring the shared vision of the product into our product organization, into our product marketing organization, and into our services organization — so I could get the heck out of that job and come to work every day saying, "I vow to do nothing."

So it worked a little bit.

Christine Hudson

He did great. When he did step back like that, it took conscious effort to create ownership in the others. I still remember seeing him in the room — people would look towards Ryan, and Ryan would be like, "No."

Ryan Martens

This is true. I ended up running those meetings as the executive sponsor and basically shaping the container. I had really no role to play in those meetings whatsoever, except for ushering customers in and thanking people.

Christine Hudson

So Ryan has taken these learnings around creating that sense of ownership, and he's now working on a new effort to help create AI fluency — improve AI fluency in communities. Right now he's working especially with women in tech in this new venture, to help more amazing humans stay above water. You guys heard some great stories about these community learning circles that Manifest AI is using earlier this morning. So I really want to tap into Ryan again and hear a little bit more about how you're creating this sense of ownership in these community learning circles through Manifest AI.

Ryan Martens

I wouldn't be doing it without Christine and her help, and another one of our peers, finding the way into a couple of organizations and communities that were really interested in this.

Obviously the AI wave that we've all been talking about through the morning and yesterday and into tomorrow is unprecedented in size, scale, and speed. I got to come here to Las Vegas for my first tech conference in 1985 to come to Comdex, when there were a hundred thousand people showing up here in the IT land to celebrate one conference a year, kind of thing. So I've seen a bunch.

A number of the engineers we worked with — we were one of the first websites on the internet back in '95, a company that went to BEA Systems early on, a software development company, and then into the agile development space. But this wave is different than those other waves. It's really monumental in scale. We are both researching it and incrementally delivering, and starting to understand what the hell this means to us and how we should change our ways of working. Every six weeks we get a new drop attack.

It's not creating some kind of a big roller that's gonna push you into the harbor. It's much more choppy waters, would be the words I'd use. I don't know what the rest of you think, but choppy waters from a sailing perspective — I grew up sailing little 14-foot boats — choppy waters is hard sailing. Usually you can just sit back there and basically follow a straight course to where you're headed. But when the waters are constantly ebbing and flowing around you, you have to steer all the time. You cannot hit a wave straight on. You've gotta come up on it, you've gotta slide down the backside, and you are constantly moving that boat to be able to make it through those waters.

I would say that's what has to happen to all of us in this sense. We are constantly steering. And the AI-native companies — that's what they're doing really well. And for the enterprises, that's a big challenge.

But I think you all know from this conference and from others like it — and you've produced a whole bunch of success stories around automating the heck out of the DevOps cycle, being able to ship faster to reduce cycle times and reduce risk in the business. So you know what it looks like to be able to do that, and you know what the benefits of that are. You can describe it — it's visceral, it's in the tech organizations you're at.

And so I think that's the great motivator, as long as you can figure out — as other people have said at this conference — this wave's different because it's gonna affect everyone. This isn't limited to the tech organization. It's steamrolling marketing, legal, HR, finance, all at the same time. If you're not going to build yourself into an agile business, you're just going to get replaced by one of the AI-native companies — that's what I think is going to happen.

So what I heard from an earlier talk is: the jobs that we're going to have are related to new innovation, to finding things that we should be building; building capacity in the organization — like you all do in the DevOps organization — to bring more capabilities to the business, to remove the constraints and the bottlenecks that had to do with the IT front; and then the last one is figuring out how to orchestrate all this stuff. What Ronica and Christine are talking about is how do you orchestrate the change effort and the people and bring everyone along to that piece.

What we're trying to do at Manifest is do that for individuals and communities. We're real early — we won't be anything visible in the marketplace for months to come — but we're doing some work in the background, thanks to an amazing group of women called Women in AI, as part of the Colorado Rocky Mountain AI Interest Group. There are about 7,000 people in the group and almost a thousand in the Women in AI group.

And we're trying to use the concepts of: how do you bring agency? How do you bring your best self? How do you up your creative practices? How do you run experimentation cycles faster? How is it that you can up your discernment practices? How is it that you can do that together with a group and learn from your peers horizontally?

I think that's the same thing you all are trying to talk about at the organizational level and at the team level. So I think the dynamics are darned near the same. And I don't think anybody's going to survive this wave without steering their way through this cycle continuously — both themselves and their teams. So yeah, that's what we're seeing.

Christine Hudson

That's super fun. It's a big, huge change, and you need your friends with you.

So if it's not clear, the community circles that we're talking about — it's humans who are just using AI in their own community ways, in their own creative ways, in their own work ways. They're coming together to share what they're learning, and then they're also sharing that centrally. So you heard that same pattern, because whenever there is change that's this rapid, we can't learn about it centrally — we've gotta learn about it in every part of our business. We've gotta encourage those humans to help us learn.

So those community learning circles — we're especially interested in hearing about how you're leveraging those in your business.

Which brings us right into our asks. So please come talk to Ryan later today, or me or Ronica later this week. We are going to be running some experiments at the Grace Hopper Celebration of Women in Computing in November. So we'd love to bring your additional ideas into that, to help raise AI fluency for 10,000 amazing women in tech.

And Ronica and I would like to request that you consider pre-ordering our book Practice Makes Culture — and definitely, definitely taking these concepts and thinking about creating some ownership in your change effort, so that you help more of your change efforts succeed.

Ryan Martens

They won't say it, but you need to pre-order their book.

Christine Hudson

Thank you! Because everybody needs — all right, that's all right. Thanks everybody. We do hope this helps you go make your change efforts successful.