Change Management for Startups & SMEs (Part 1):Why Most Changes Fail
- Nhi Hong
- 16 hours ago
- 4 min read
By: Nhi Hong
.....and Why It’s Rarely Just About Your People
If you’re running a startup or a growing SME, you’ve likely faced situations like these:
Performance doesn’t improve, even after new processes are introduced.
The team agrees in meetings, but daily behavior doesn’t change.
Some employees struggle to adapt as the company grows.
You realize certain hires are no longer the right fit.
Budget limits prevent you from building the “ideal” team.
In practice, most founders quickly arrive at the same conclusion:
“People are the problem.”
And to be fair, people-related challenges are almost always present during any change.
You may be dealing with:
uneven performance
limited experience
fixed mindsets
early hires who don’t scale
family or referral employees
cultural mismatches
or simply the reality of constrained hiring budgets
These are very real situations in startups and SMEs.
However, focusing only on individuals rarely leads to sustainable change.
Because while people issues show up on the surface, they usually reflect something deeper:
the system people operate in,
how leadership sets direction,
and how work is structured day to day.
This is where Change Management begins.
Change Management Is Not About Blaming People
Many founders approach change with good intentions:
They see gaps in execution, productivity, or ownership and want to fix them.
So they introduce:
new workflows
clearer SOPs
tools and dashboards
training sessions
These steps matter.
But on their own, they rarely change behavior.
Why?
Because Change Management is not mainly about adding structure.
It’s about helping people transition from one way of working to another.
That transition involves:
habits
confidence
clarity of roles
sense of responsibility
trust in leadership
and psychological safety
If these elements are not addressed, even well-designed processes struggle to take root.
A helpful way to think about it: Individual performance is often a reflection of the system around it.
Strong systems elevate average performance.
Weak systems make even capable people inconsistent.
Why Change Feels More Difficult in Startups and SMEs
Compared to large organizations, smaller companies operate with much tighter constraints.
Most startups and SMEs have:
flat structures
limited middle management
fast hiring cycles
founders deeply involved in operations
little margin for error
This means:
Each hire has a bigger impact.
Each role carries more responsibility.
Each change directly affects daily execution.
When something doesn’t work, founders feel it immediately: in revenue, customer experience, or workload.
That’s why change often feels personal and urgent.
And that’s also why taking a structured approach becomes especially important.
Common People-Related Challenges During Change
Let’s look at three patterns that frequently appear in growing companies.
1. Performance gaps
As companies evolve, roles become more complex.
Some team members adapt quickly. Others struggle with increased structure or responsibility.
This doesn’t always mean they lack capability.
Often, it points to:
unclear expectations
roles that no longer match strengths
insufficient feedback
or missing support during transitions
Addressing performance requires more than instructions, it requires redesigning how work and ownership are defined.
2. Resistance to new ways of working
You may hear:
“This is how we’ve always done it.”
“It’s too complicated.”
“We don’t have time for this.”
This isn’t unusual.
People naturally gravitate toward familiar routines, especially under pressure.
Resistance usually signals uncertainty, not unwillingness.
Understanding this helps founders respond with structure and clarity rather than frustration.
3. Hiring realities
Many SMEs navigate:
early employees who don’t scale with the business
referrals hired quickly to fill urgent gaps
family members in operational roles
budget-driven hiring decisions
Over time, misalignment becomes visible.
These situations are complex, emotionally and practically.
They also play a major role in how smoothly change can be implemented.
A More Useful Perspective: People, System, and Leadership
Yes, people challenges are real.
But sustainable change rarely comes from focusing on individuals alone.
Instead, it helps to look at three interconnected layers:
People
Skills, mindset, motivation, and experience.
System
Processes, roles, KPIs, incentives, decision flows, tools.
Leadership
How direction is communicated, how consistently it’s reinforced, and how leaders model the change themselves.
When change struggles, it’s usually because these three are misaligned.
Improving only one layer rarely works.
Where Founders Often Get Stuck
Across many startups and SMEs, we see similar patterns:
Expecting mindset change without adjusting structure
Asking for ownership while keeping decision-making centralized
Introducing new processes/technologies without removing old ones
Moving too fast without allowing time for adaptation
Delaying difficult people decisions
Continuing to operate in the same way while expecting the team to change
These are not leadership failures, they are common growth-stage challenges.
Recognizing them early makes a significant difference.
Change Management, Simply Put
At its core, Change Management is about guiding people through uncertainty in a structured way.
It involves:
clarifying why change is needed
defining what “better” actually looks like
supporting people as they adapt
reinforcing new behaviors through systems and leadership
It’s not a one-time announcement.
It’s an ongoing capability.
Before You Begin Any Change
Take a moment to reflect on these questions:
What problem am I really trying to solve?
How will this change affect daily work?
Who will feel uncertain or uncomfortable?
What do I need to do differently as a leader?
Do I have the time and attention to guide this properly?
Clear answers here create a much stronger foundation for what comes next.
Final Thought
People challenges are part of building any company.
But meaningful change happens when founders look beyond individuals and work across:
people
systems
and leadership
What This Series Will Cover
In the following articles, we’ll explore:
When to change — and when to wait
How to identify resistance early
How to map stakeholders realistically
A practical change playbook for startups and SMEs
Why many changes fade after launch — and how to sustain them
All grounded in real operational contexts.
In Part 2, we’ll focus on timing because even the right change, introduced at the wrong moment, can slow your business down instead of moving it forward.
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