Thrive or Survive Mode? – the choice can cost you billions

A version of the choice between survival mode and thriving has transpired at Kraft Heinz since their 2015 mega-merger when the management team’s effort to restructure the company by implementing large-scale cost improvements stifled innovation and lead to disastrous results as elaborated by John P. Kotter and Gaurav Gupta recently on HBR.

Buy a company, trim the fat, then reinvest to facilitate growth, and make lots of money.  That’s been the recipe for company restructuring for decades.  But sometimes this recipe doesn’t work — and the story of Kraft Heinz is a prime example.

When companies focus on aggressive cost-cutting, they can significantly impair their ability to innovate and to keep up with the changing landscape. According to the article on Harvard Business Review, Kraft Heinz’s experience shows dramatically that traditional methods of restructuring are increasingly risky. Any effort that slows down or curtails a company’s ability to innovate can lead to disastrous results. And there’s psychology and neuroscience behind it.

For most people, company restructuring initiatives represent a threat, triggering a strong “survive” response in the brain.  Fear, uncertainty, and anger fuel distrust in management and narrow all focus to eliminating the threat — leaving no capacity for creative ideation.  If a management team fails to mitigate these feelings in the long-run, that’s a recipe for the kind of disaster that has caused the enormous loss at Kraft Heinz.  

Humans are biologically hardwired to respond to threats and opportunities, through two channels that trigger emotions, neurons, chemicals, and, ultimately, actions. We call these channels the Survive Channel and the Thrive Channel. As the famous biologist of Hungarian origin, Janos Selye observed we all go through 4 stages as we experience stress. First there is an “alarm reaction,” in which the body prepares itself for “fight or flight.” No organism can sustain this condition of excitement, however, and a second stage of adaptation ensues (provided the organism survives the first stage). In the second stage, a resistance to the stress is built. Finally, if the duration of the stress is sufficiently long, the body eventually enters a stage of exhaustion, a sort of aging “due to wear and tear.”

When the Survival Channel operates, we are in “fight or flight” mode, leveraging all our resources at protecting ourselves, and any attention to the real business problems and opportunities for growth can disappear. In extreme cases, as with Kraft Heinz, an overheated Survive Channel can activate a “freeze” response, fueled by feelings of despair and hopelessness — neither of which remotely fosters innovation and growth.

By contrast, the Thrive Channel is associated with opportunity-seeking and expansive thinking, which is the exact mindset that leads to innovation, creativity, and capitalizing on new opportunities. While both channels can be powerful, when Survive gets overheated, the noise and the disruption it creates tend to overwhelm Thrive.

How do you active the Thrive channel? It’s up to leaders to mitigate the survival responses of their employees by articulating what is happening and why. Articulating the higher purpose of what is happening and what stays the same in terms of vision and values is key. This often comes down to helping people zoom out to see the picture in a bigger frame. Giving employees healthy outlets to express their fears, frustrations, and questions can help manage and channel those emotions in productive ways. While it will not eliminate all the anxiety stirred up, when combined with a sense of fairness, generosity, consistency, reliability, and sincere concern for employees, it can calm an overheated Survive Channel and start activating the Thrive Channel.

Activating Thrive means filling an organization with much more focus on opportunities and cultivating a culture filled with positive emotions like passion, pride, happiness, and a sense of camaraderie.  Inviting people into a discussions and allowing them to participate in a restructuring initiative can shift the whole tone of a transformation, and hence can shift the focus on survival to active engagement with the challenges so that the restructuring is no longer a scary event happening to employees, but rather a journey that employees are a part of.