Change management & change leadership: Why HR must deliver both for the new era of work

Whether you are a seasoned HR professional or a line leader, you are familiar with the role of change in business execution.

You’ve likely been in the position to drive others to change and adapt the way they work or face impactful consequences. Today, that mandate is constant. With every mention of AI as “the biggest transformation of our lifetimes” comes a familiar chorus: Adopt it and adopt it fast to become more efficient, agile, innovative, or all of the above.

Before jumping in, consider these points:

1. Tools don’t drive transformation. People do.
2. You can’t change behavior until you change beliefs.
3. People love shiny tools, until you ask them to change how they have worked and led for decades.
4. Change management and change leadership are not the same—and confusing them contributes to high failure rates.

Differentiating change management and change leadership

Change management addresses structure. Change leadership addresses the emotional and psychological toll that comes with disruption, whether it be M&As, layoffs, reorganizations, adopting large-scale tools and systems, or the 100% sudden shift to remote work when a pandemic unfolded.

Unaddressed psychological stressors can derail change. Change leadership diagnoses the individual psychological impacts of the actions unfolding and provides guidance and support to create a path forward. It breaks down the programmatic and impersonal challenges inherent in most change management plans and focuses on the specific personal needs of those who the change impacts.

This distinction isn’t new. Decades of research and thousands of case studies have confirmed it. Yet many leadership teams continue to ignore it. I studied this in graduate school to understand why data-driven leaders disregard this specific data that predicts failure. Thirty years later, I’m still observing the pattern. My hope is that our collective AI journey will be different.

The critical role of change management & change leadership in AI adoption

There is no question that AI offers a rare and phenomenal opportunity. Almost 90% of leaders anticipate that deploying AI will drive revenue growth in the next three years. But securing that growth entails corporate transformation, and businesses have a poor track record in this area. Nearly 70% of all transformation efforts fail.

Both change management and change leadership will be critical in AI transformation. The definitions still haven’t changed. Neither has what separates the 70% who fail from the 30% who succeed.

The differentiator will be how seriously leaders take these principles this time. Will leaders step outside of their comfort zones and lead change in a new way?

There is a word for those who will continue to do what the 70% who fail do, but assume they will have a different result: Hubris.

Excessive pride or overconfidence that leads to a disregard for consequence. A belief in one’s sufficiency, even when ill-equipped for the challenge.

Where we’ve been…

The modern People Leader role and the structures we still rely on were born during the 2nd Industrial Revolution. The Manager's role was to enforce efficiency, discipline, and process; the first corporate organizational chart, created in 1854, mirrored a factory’s hierarchy.

In the Third Industrial Revolution, companies scaled globally, and the org chart exploded in complexity: more boxes, more dotted lines, more layers. Reorganizations multiplied, all aimed at taming complexity through structure.

By the late 1990s and early 2000s, many leaders recognized the problem: our system, designed for predictability and control, no longer fit the evolving world. But few leaders pursued reinvention. Most rearranged boxes and added layers, trying to retrofit the old model for new demands: complexity, cross-functional collaboration, and fractured communication, which resulted in fractured clarity for the employees.

For years, we all sensed the Industrial Management Era was dying. Yet real change has been rare.

…Where we are now…

Today’s org structures offer a false sense of control. We tolerate inefficiencies because we’ve grown used to them. As junior employees, we complained about the bureaucracy and frustrations. As leaders, we adapt to it and then reinforce it as the optimal structure to best accomplish our work.

But we’ve always known the truth, even if we couldn’t articulate it: Value is created through collective intelligence across functional barriers and not through top-down control via vertical boxes.

Now, the pace of change is exponential. Technology and knowledge are advancing faster than ever, and humans are struggling to keep up. Silos and hierarchies built for mechanical systems are holding us back. They were never designed for human creativity, adaptability, or speed.

Meanwhile, high performers, the real catalysts of innovation, have always operated around the org chart, not through it.

These high-performing, networked employees have always bypassed formal processes and intuitively navigated the informal power structure. That is also at the core of what makes them high potentials. They ask for forgiveness, not for permission, and get better and faster results. Ironically, we reward them for breaking the rules we say we need.

This contradiction is no longer sustainable.

Both change management and change leadership will be critical in AI transformation

… And where we’re going next

Why have all of us who lead and have had the power to change things clung to an organizational design structure for over 170 years?

Is it the change management part? Because, structurally, leaders couldn’t come up with more agile and effective designs?

Or is it the change leadership part? Because psychologically, leaders were afraid and uncomfortable to let go of their power, the vertical hierarchical columns?

Perhaps they feared losing control and the ability to predict outcomes, those original leadership and managerial responsibilities dating back to the 2^nd Industrial Revolution. Maybe they simply couldn’t trust their people.

If you’re a leader reading this, it’s time to reflect honestly:

1. Are you ready to challenge everything you have experienced up to today about organizational design?
2. Are you bold enough to release outdated mental models and start experimenting?
3. What might hold you back from embracing what’s next?
4. Are you committed to leading your people through this transformation with honesty, clarity, and realistic optimism?

If you are in the people or HR profession, these are the questions you should be asking your leaders to help them get ready (quickly) for what is about to happen and help them work through the psychological and emotional challenges that will slow this transformation down. It is the ultimate change leadership request, and it is a tall order. But nothing is more critical, more urgent, or more exciting.

Next steps to ponder: Change leadership starts now

From a structural and change management perspective, leaders and HR need to mentally let go of how work has been organized in the past. Start thinking about alternative models and ideas tied to emerging trends:

1. Horizontal structures are overtaking vertical structures. Less hard, formal boundaries like specific functions will improve workflow and speed.
2. Hierarchy is not fixed but fluid. Today, authority, communication, and decision-making power are formally given to someone within the hierarchy, as reflected in titles and job descriptions, and rewarded through compensation. Instead, start thinking of hierarchy as communication and decision-making power being associated with employees or AI Agents closest to the work, based on the project they are working on or the problem that needs to be solved, with the system of organization continuously moving.
3. Networks are a major driver of productivity and human success, and social capital or personal power is more effective than positional power.
4. Removing Spans of Control as a measurement of efficiency and productivity.
5. Small teams are banding and disbanding.
6. AI as a teammate, not a tool. Consider what Human + Humanoid (AI) collaboration means and how to best enable it, including AI agents in leadership roles.
7. Entry-level employees are stepping into roles that experienced leadership has been doing for decades.

From a change leadership standpoint, the psychological impact of the above includes leaders wrestling with letting go of power, not ‘sitting at the top’ of an organizational structure they spent decades getting into and now being in a new spot within the structure.

Exhibiting curiosity and vulnerability as they unlearn old skills that got them where they are today and learn new skills and behaviors for today’s world will be crucial for success. Marshall Goldsmith’s 2007 book ‘What Got You Here Won’t Get You There’ has never been more accurate.

This is the work of leadership in our time. Are you in?