Leading AI change: emotions and incentives

Julia Dhar, Managing Director at Boston Consulting Group and founder of the firm's Behavioral Science Lab, joins us to discuss why most organizational change efforts fail and what leaders can do differently. Drawing on behavioral science and her work advising major organizations, she explains why the challenge of change is rarely about strategy alone and more often about human behavior.

Julia begins with a simple but powerful discipline used by many successful consultants: asking two questions repeatedly. First, "what is true about this situation?" and second, "what do I believe is true because of my perspective?" Confusing facts with assumptions is one of the most common causes of poor decisions, especially when leaders begin to treat their own expectations as evidence.

The conversation explores why roughly seventy percent of organizational change efforts fail to reach their stated objectives. Julia explains that many leadership teams concentrate on defining the strategy but devote far less attention to the conditions required for people to adopt new behaviors. Successful organizations focus on the "how" of change: shaping incentives, clarifying expectations, and reinforcing specific behaviors that make a strategy real in daily work.

Several practical insights emerge from the discussion:

Leaders often overestimate how comfortable employees are with change. In surveys, executives typically report feeling positive about change, while most employees feel neutral and a meaningful portion feel anxious. Recognizing this gap is the first step toward leading change effectively.

Emotions and incentives must be addressed together. People rarely adopt behaviors that conflict with their incentives, and fear or anxiety makes sustained change unlikely. Leaders who want durable change must create optimism about the future, give people agency in shaping how change unfolds, and offer clarity about expectations.

Behavior must be defined precisely. Broad goals such as "be more accountable" or "be more customer centric" are not actionable. Effective change requires specifying the exact behaviors expected and creating routines that make those behaviors repeatable.

Recognition plays a powerful role in shaping behavior. Leaders who identify and praise specific actions reinforce the habits they want to see more frequently, often at little cost and with lasting effect.

Organizations frequently underestimate the value of listening. Employees are usually willing to provide feedback, but they become disengaged when their input leads to no visible response. Closing the feedback loop—demonstrating that input leads to action—builds credibility and energy for change.

Julia also discusses the pressures executives face as organizations adopt new technologies such as artificial intelligence. Rather than framing the challenge as a threat to relevance, she argues that automation may free leaders to focus on neglected responsibilities, including understanding frontline work and strengthening human relationships across the organization.

Throughout the discussion, she returns to a broader principle: effective strategy requires an equally disciplined approach to human behavior. Leaders who combine clear strategy with attention to emotions, incentives, habits, and feedback loops dramatically increase the likelihood that change will succeed.

Julia closes with a perspective that reflects both her research and her experience advising organizations around the world. In any team or company, every individual has the ability to "bring joy and inspire hope." That ability, combined with the belief that people and organizations remain capable of change, is often the most powerful force available to leaders.

Get Julia's book, How Change Really Works, here: https://tinyurl.com/2zb4p63d

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