From the Sponsor’s Desk: Change Management Lessons from Brexit

On June 23, 2016, the United Kingdom (UK) voted to withdraw from the European Union (EU). The referendum, called by Prime Minister David Cameron, produced a 52% to 48% win for the Leave side.

Tellingly, the campaign has been dubbed “Brexit” by the Leave side, a contraction of British and Exit. If the UK chooses to honour the referendum results and proceed with the exit, the changes could trigger significant economic, social and political changes, within the UK, the EU and beyond.

Related Article: From the Sponsor’s Desk: Beware the Change Within a Change

Given the risks involved, one would think both sides in the debate would pull out all the stops and use whatever techniques were available to gain an advantage. One such practice, proven in the corporate world and on projects large and small, is the management of change. While change practitioners may differ in the approaches taken and the tools used, there are some common, proven themes that work across the change spectrum. In this post, we’ll look at how the Leave and Remain sides in the referendum applied change management practices and how that use contributed to the final result.

Thanks to P.S. for the background on the story.

The Situation

Britain, with a population of 65 million, has been a member of the EU for more than forty years. By some measures, the EU is the world’s biggest economy, almost five times the size of Britain’s, with a population of over 500 million.
As reported by Jaime Watt in the Toronto Star on July 3, “Britons have been deeply skeptical of the European project for decades. Wary of the undemocratic components of the European Union, skittish about the lack of control over immigration, and overwhelmed by strict regulations handed down from Brussels, many felt the negatives of the EU far outweighed the positives.”

There has been a national campaign in Britain for a referendum for over 25 years. Its most outspoken supporter has been the UK Independence Party (UKIP) under the leadership of Nigel Farage. In the last European Parliament elections in 2014, UKIP had an enormous share of the UK vote. It doubled the number of seats and ended up with more MPs in the European Parliament than either the Conservatives or Labour.

A number of risks were identified for a British exit from the EU. The UK could enter into a recession of indefinite length and uncertain severity. The UK relies on the EU for about 40 per cent of its exports whereas the EU relies on Britain for only 16 percent of its exports. An exit could also bring about the dismemberment of the UK, with pro-EU Scotland again seeking Scottish sovereignty and pro-EU Northern Ireland possibly seeking a merger with the Irish Republic. If you couple these concerns with possible additional departures from the EU and the impact on the European and world’s social, political and economic status, the stakes were very high.

In a speech in 2013, Cameron, then leader of a Conservative and Liberal Democrat Coalition Government, criticized the EU’s economic performance, lack of competitiveness, and excessive regulation:

“There is a growing frustration that the EU is seen as something that is done to people rather than acting on their behalf. And this is being intensified by the very solutions required to resolve the economic problems.

People are increasingly frustrated that decisions taken further and further away from them mean their living standards are slashed through enforced austerity, or their taxes are used to bail out governments on the other side of the continent.

We are starting to see this in the demonstrations on the streets of Athens, Madrid, and Rome. We are seeing it in the parliaments of Berlin, Helsinki and the Hague. And yes, of course, we are seeing this frustration with the EU very dramatically in Britain.”

David Cameron faced battles on several fronts. There were a large group of Conservative MPs sympathetic to UKIP. The Conservative Party had been committed to holding a referendum on the EU for over a decade. Cameron renewed that commitment in 2015, at a time when opinion polls suggested that a majority of the electorate would oppose leaving the EU. It looked like a very safe gamble at the time.

The Goal

The goal for the Leave side was to get sufficient support in the referendum to pull the UK out of the EU. For the Remain side, the goal was to gain a majority result to keep the UK in the EU.

The Project (The Referendum)

On February 20, 2016, David Cameron set June 23rd as the date for a referendum on Britain’s membership in the European Union.

A YouGov poll conducted in the run-up to the British referendum showed that the vote for Brexit was very much one of the old against the young. The older the voter, the more he or she was inclined to leave. Some 64 percent of the age group from 18 to 24 said they would vote for Remain; just 35 percent of those between 50 and 64 wanted to stay.

The Vote Leave campaign, headed by former London mayor and Conservative MP Boris Johnson and Conservative MP Michael Gove, focused on three popular themes: control over immigration, national sovereignty, and the economy. The campaign slogan was “Take Control”. The campaign literature cited the following reasons for leaving the EU:

1. 1. We stop handing over £350 million a week to Brussels.
2. We take back control of our borders and can kick out violent criminals.
3. We take back the power to kick out the people who make our laws.
4. We decide what we spend our own money on.
5. We free our businesses from damaging EU laws and regulations.
6. We take back the power to make our own trade deals.
7. We have better relations with our European friends.
8. We regain our influence in the wider world and become a truly global nation once again.

A number of organizations also worked in support of the Leave campaign, including Leave.EU, Grassroots Out (with Nigel Farage, the UKIP leader) and Labour Leave. As John Cassidy reported in the New Yorker, “Officially, Farage played no role in the Leave campaign. He and his party have such a toxic reputation that the Conservative “Eurosceptics” who led the official campaign didn’t want anything to do with them.”

David Cameron, the British Prime Minister, was the face of the Remain campaign, officially called “Britain Stronger in Europe”. Jeremy Corbyn, the leader of the Labour party, was supposed to be supporting the Remain side. He didn’t. According to one commentator “Corbyn showed nothing but the vaguest of interests. No passion, no speeches, no action.”

The Remain campaign presented the following ten reasons for staying:

1. As part of Europe, British businesses have free access to sell to 500 million consumers. If we left the EU, our trade would face tariffs and barriers.
2. Independent experts have found that over 3 million jobs in Britain are linked to our trade with Europe.
3. A strong economy means households are better off in Europe. If Britain were to leave Europe, the hit to the economy would be equivalent to £4,300 for each UK household.
4. Being in the EU means a stronger economy, which means more investment in public services. Leaving would mean spending cuts of £36bn.
5. 44% of the UK’s international exports are to EU countries, worth £229 billion in 2014.
6. Between 2004 and 2014, the average investment from European countries every year was £24.1 billion – that’s over £66 million a day in investment from Europe.
7. The cost of holidays are cheaper in the EU, for example because the price of flights has come down 40% because the EU changed the rules to allow low-cost airlines like EasyJet to set up in Europe.
8. Over 200,000 UK students have spent time abroad on the Erasmus exchange programme. Students who have undertaken placements on the Erasmus programme are 50% less likely to experience long-term unemployment than their counterparts.
9. Workers’ rights are protected by EU legislation, including entitlements to paid holiday of at least four weeks a year, maximum working hours, anti-discrimination laws and statutory paid maternity and paternity leave.
10. Our access to the European Arrest Warrant (EAW) has meant over 1,100 suspected criminals have been arrested in the EU and returned to Britain to face justice. Also under the European Arrest Warrant, Britain has sent 7,400 suspected criminals who had fled here back to the EU.

There were a number of other organizations supporting the Remain campaign, including Labour In for Britain, Conservatives In for Britain and Another Europe Is Possible.

Over four months, the two campaigns covered Britain with leaflets, brochures, and canvassers. There was even a naval engagement, with Leave and Remain flotillas sailing down the Thames River. And then came June 23, 2016 and the vote. The question on the ballot stated, “Should the United Kingdom remain a member of the European Union or leave the European Union?” The options were:

• Remain a member of the European Union
• Leave the European Union

The Results

As we now know, the Leave option received the majority of votes, 52% to 48% for the Remain side. As Jennifer Wells reported in the Toronto Star on June 26, “That a vote of such momentous importance was run like an election for seats on an acidly tempestuous borough council was, as many have noted, an epic miscalculation.”

Following the vote, David Cameron, the current Prime Minister, announced his resignation. Boris Johnson, the heir apparent to Cameron, bowed out of the leadership race and Michael Gove, who had previously expressed no interest in succeeding Cameron, threw his hat in the ring and then finished third in the in the vote to replace him, and out of the race. The next British PM will be a woman, either Theresa May, the longest-serving Home Secretary in more than 50 years, and pro-Remain or pro-Brexit energy minister Andrea Leadsom.

Leslie Jamison wrote in the New Yorker, “With the exceptions of London, Scotland, and Northern Ireland, every major region of the UK voted to exit the E.U. The Remain vote was particularly weak in the West Midlands and the Northeast of England, two areas that have been hit hard by de-industrialization. But even in the relatively prosperous Southeast of the country, if you subtract London from the results, a majority of people voted to leave.”

John Cassidy wrote in The New Yorker the day after the vote, “What has certainly happened is that decades of globalization, deregulation, and policy changes that favored the wealthy have left Britain a more unequal place, with vast regional disparities. It’s the shape of our long lasting and deeply entrenched national geographic inequality that drove differences in voting patterns.”

Torsten Bell, the director of the Resolution Foundation, a bipartisan think tank, attributed the result thus: “The legacy of increased national inequality in the 1980s, the heavy concentration of those costs in certain areas, and our collective failure to address it has more to say about what happened last night than shorter-term considerations from the financial crisis or changed migration flows.”

Thomas Friedman wrote in the New York Times on June 29, “Because although withdrawing from the EU is not the right answer for Britain, the fact that this argument won, albeit with lies, tells you that people are feeling deeply anxious about something. It’s the story of our time: the pace of change in technology, globalization and climate have started to outrun the ability of our political systems to build the social, educational, community, workplace and political innovations needed for some citizens to keep up.”

Barrack Obama, in a speech to the Canadian Parliament on June 29, summed up the results thus: “If the benefits of globalization accrue only to those at the very top,” he said, “then people will push back.”

How Change Management Could Have Changed the Result

Let’s be honest, implementing change in a democracy on a national or international scale is orders of magnitude more complex than implementing change within an organization, or even across a company. The numbers of stakeholders are on a different plane entirely – millions versus thousands. In addition, the authority of the change sponsors is vastly different – from elected officials counting on engaged citizens on the one hand to senior executives in usually authoritarian, hierarchical structures on the other.

Yet, proven change management practices are still relevant, if somewhat more challenging to apply. Let’s use John Kotter’s 8 Step Change Model to assess the two campaigns. Kotter is a Professor Emeritus at the Harvard Business School, a best-selling author, the founder of Kotter International and a well-known thought leader in the fields of business, leadership, and change. His 8 Step Change Model has been used widely and successfully across a wide range of industries and situations. It encapsulates the key change management principles in an easy to apply framework.

1. Create a Sense of Urgency

Often, the sense of urgency is expressed as the “burning platform”, the situations or circumstances that force a change to a new future state.

The Leave side has been agitating for action for decades. Their burning platform was the perceived loss of British sovereignty and the growing power and influence of UKIP. David Cameron’s burning platform was the increasing pressure from within his own Conservative party. The EU’s performance contributed to the burning platform, including the austerity measures enacted in response to the 2008 financial crisis and subsequent tepid economic performance and its handling of the refugee crisis.

2. Build a Guiding Coalition

The Leave campaign committee included twelve Conservative MP’s. Twelve! The Remain campaign committee included just one Conservative MP. How could Cameron have ever imagined that his Remain campaign could win if he couldn’t even convince members of his own party that the benefits of remaining in the EU exceeded the negatives?

3. Form a Strategic Vision and Initiatives

Kotter’s describes this step thus: “A vision must be bold, concise, authentic and evoke a clear future state. Initiatives must have defined goals and link directly to the strategy designed to create that future state.”

The Leave side painted a vision of an independent Britain, in charge of their own destiny. Not surprisingly, they didn’t talk about what would be lost in the exit and what the future relationships with the EU would look like. The Remain campaign focused as much on the negative consequences of leaving as they did on the benefits of the status quo. What they didn’t present was any future vision that addressed British concerns with that status quo.

The referendum question echoed that binary Leave or Remain choice exactly, a terribly simplistic choice for a very complex question. David Cameron has commented on numerous occasions about the need to reform the EU, to make it more competitive, responsive and less bureaucratic. Why were those options not reflected in the ballot?

Interestingly, neither side bothered to talk about the Initiatives that would be needed to achieve the vision.

The remaining five steps deal with change implementation. They describe the steps the Remain side should have taken years ago to address the issues that were made apparent up to and during the referendum and by the referendum results. The remaining five steps also describe the actions that absolutely need to be addressed for the Leave process to be executed effectively to deliver a better future for everyone.

This wasn’t a referendum on staying within the EU. It was an assessment of how the past forty or so years of EU membership had served the U.K. Had the Remain camp recognized that fact and responded accordingly, with proven change management practices to guide them, the results of the referendum could have been very different. The referendum result is a poignant message to whichever candidate earns the right to be Britain’s next Prime Minister – do a better job of looking after the needs of your citizens. That message should resonate with all leaders, public and private enterprise alike.

So, if you find yourself in a similar situation, put these points on your checklist of things to do in future endeavours so you too can be a Great Leader. And remember, use Project Pre-Check’s three building blocks covering the key stakeholder group, the decision management process and Decision Framework best practices right up front, so you don’t overlook these key success factors.

Finally, thanks to everyone who has willingly shared your experiences for presentation in this blog. Everyone benefits. First-time contributors get a copy of one of my books. Readers get insights they can apply to their own unique circumstances. So, if you have a project experience, good, bad and everything in between, send me the details and we’ll chat. I’ll write it up and, when you’re happy with the results, Project Times will post it so others can learn from your insights. Thanks