Available May 21, 2026

Episode 024: The Growth Trap: What Scaling Reveals About the Human Side of Transformation

DURATION: 69 minutes
HOST: Kevin Novak | GUEST: Mike Peroni

SHOW: The Human Factor Podcast

COLD OPEN

Kevin Novak: It’s something that most transformation conversations get fundamentally wrong. They assume that transformation is something that organizations do when they’re struggling. When the market shifts, when the numbers decline, when the board starts asking uncomfortable questions. But there’s a form of transformation that is far more psychologically complex than a turnaround, and it happens inside organizations that are succeeding. It’s the transformation that growth itself demands. Because growth does not just change the numbers. It changes the identity of the organization. It changes what people were hired to do. It changes the implicit promises that were made about what working here would feel like. It changes the decision-making speed that the culture can tolerate. And it changes the relationship between the people who built the thing and the thing that it’s becoming. Every stage of growth creates a new crisis that can’t be solved with the approach that produced the original growth. And yet the instinct of every leader inside that growth is to do more of what is working, while not recognizing that what has and is working is about to become the biggest constraint.

Kevin Novak: I’m Kevin Novak, CEO of 2040 Digital, professor at the University of Maryland and author of the book The Truth About Transformation: Leading in the Age of AI, Uncertainty and Human Complexity, along with the Ideas and Innovations weekly newsletter. Welcome to the Human Factor Podcast, the show that explores the intersection of humanity, technology, and transformation, along with the psychology behind transformation success. This is Season Two.

Kevin Novak: Today’s guest spent 20 years inside the pressures of scaling organizations. Not theorizing about it, not consulting on it from the outside, actually building and operating inside organizations during the most intense periods of growth. From a startup that achieved sixteen times top line growth before being acquired by 3M, to the international expansion strategy that contributed directly to a $1.2 billion acquisition. He has been the person in the room when growth outpaces the organization’s capacity to absorb it. When the culture that attracted early employees starts to fracture under the weight of new arrivals. And when the systems that produce success at one stage become the obstacles at the next.

Kevin Novak: Mike Peroni is a revenue and go to market leader who has operated across startup, growth and enterprise contexts. He served as Chief Operating Officer at Hypervent Systems. He then served as COO at Content Raven during the early-stage startup phase. And most recently, he built ETQ’s first indirect sales channel and international expansion as VP of EMEA Sales, work that contributed to Hexagon’s $1.2 billion acquisition of the organization. What makes Mike’s perspective uniquely valuable for this conversation is not just the growth that he’s driven. It is the pattern recognition that comes from having been inside the human dynamics of scaling across multiple organizations at different stages. He has seen what breaks when an organization scales faster than its people can adapt. He has seen how early traction gets misread, how organizational identity cracks under the pressure of success and how the very capabilities that create growth become the constraints that prevent the next stage of evolution. And he has recently been articulating those patterns publicly. He’s been arguing that in the AI era, feature based differentiation is dead and that the only defensible advantage is proprietary insight, data, or execution velocity that compounds over time. Those are human systems.

Kevin Novak: Mike, welcome to the Human Factor Podcast. I want to start with something that most growth stage leaders never see coming because research predicts it, but the experience of being inside the growth makes it nearly invisible. In 1972, Larry Greiner published a paper in Harvard Business Review called Evolution and Revolution as Organizations Grow. It’s one of the most cited papers in organizational development research. Greiner demonstrated that organizations don’t grow smoothly. They pass through distinct stages, and each stage ends not with a gradual transition, but with a crisis. A crisis of leadership, a crisis of autonomy, a crisis of control, a crisis of red tape. The critical insight is that each crisis is produced by the success of the previous stage. The management approach that created the growth is the same approach that creates the current crisis. The founder’s vision that launched the organization becomes the bottleneck when it needs delegation. The delegation that freed the organization to scale creates coordination problems that demand completely new systems. The systems that created the order become bureaucracy that stifles innovation. You have been through multiple stages of this cycle, Mike, across Hypervent, Content Raven, and ETQ. Where have you seen the human dynamics of growth surprise leaders the most? Not the strategic challenges, but the people dynamics. The moments when the organization that the people have joined is no longer the organization they are inside. And the approach that got them there stops working.

Mike Peroni: Like most things, Kevin, there’s good and bad. Positive and negative that comes from these situations. If we shift our focus to the challenges, there’s a ton of standard human behavior that you can almost predict in terms of what you’ll get for resistance or the challenges in organizing a group of people towards change, to some sort of destination. And so when I am in an organization where my job is to affect and lead through change, I’m very quickly trying to understand where the resistance is. There’s always this kind of resistance. And sometimes it can be disbelief. I don’t believe we can get where we’re going. I don’t believe these actions will get us there. People have opinions and beliefs. And so I first try to understand where people’s belief systems are. That’s the most challenging. And I think you even see it in today’s political climate, where there’s this bias towards confirmation. And so when people have a belief, they tend to go look for things that support that, and they reject things that are contrary. So I generally put a big spotlight on that and it becomes really clear where that resistance lies, where there is disbelief. Maybe it varies from person to person, but generally speaking, if you go through a process of understanding and getting them to admit a lot of what their beliefs or disbeliefs are, then you can better align the collective objective you have to their personal objectives. That’s where I see beliefs start to change. Where you can actually penetrate that shield of this is my belief system and therefore I’m going to do everything consistent with that and nothing inconsistent.

Kevin Novak: So how have you seen leaders handle that situation? Are there different techniques that you use to help break down that resistance, to better understand from people what that resistance is?

Mike Peroni: Great question. I think the very first thing that I’ve seen effective leaders do is work really hard, but also patiently, to ensure the vision, the so-called destination, is crystal clear to a person. And then once that is clear, I’ve seen them ask, and I’ve done this myself, start to solicit help. So here’s the vision. Here’s what I think we should do first. You bring everyone together and you lead the discussion towards how we’re going to do this. Both being a bit authoritative, I’m kind of the final judge and jury here, but also being very open to hearing different ideas and leveraging different perspectives among your team. And I think that does set the right tone with everyone. One, we’re doing this. Two, we do need to be very pragmatic about it. It’s not about wild swings or big strategies, which some people like to do. So bringing them down to a more grounded approach and then listening to the ideas and not necessarily quickly accepting or shutting them down, but to foster discussion. And I think a really strong leader is going to be very aware of where the room is emotionally. Is this scary? Is this exciting? Is it a mix of both? And then start to lead everyone towards that set of actions you think is going to make the group successful. And you’ll start to hear where there are perhaps better ideas. People are leaning in to actually focus on the problem creatively. You’ll also recognize where people seem to be leaning in through hard questions and challenges. But based on how effective those questions are, you’ll know if they’re resisting.

Mike Peroni: So I’ve seen that as the really good start. It’s to establish that framework. Here’s how we’re going to have the discussion. Here’s what’s non-negotiable. One, we’re doing it. Two, the vision. If you want to make it better, go for it. I’m open to ideas, but the vision’s the vision. So let’s rally behind that. And then of course ensure it’s grounded in a strong why for the business, and perhaps start to tie that to some professional growth that everyone can experience.

Kevin Novak: A couple of episodes ago with Ryan Vett talking about Gen Z, particularly, one of their biggest needs is to understand the why. So they’re good with authority, but they also need to understand the why so they themselves can rally behind it and better understand it. So that’s always an important point.

Mike Peroni: Yeah, for sure. I think it’s important to find your motivator to do anything. And so as a leader, it is important that you head down that path to help people find their motivation. Why is the best place to start. And then I think people will naturally start to apply that to their own personal why. How do these things align? And I do find that breaking off into more individual conversations after that is important because you can help people where maybe there is a gap between the group why and the personal why. It also helps because one of the outcomes of this early step, Kevin, is that you start to find that small group of champions. The core group that wants to propel this forward. And you may have people on the periphery that are going to either resist or be slow to join, but establishing that core group and letting it come up naturally, who it works for in terms of motivation, who it works for in terms of where they are in life, just let that happen naturally. That group is a tide that lifts all ships. And so you can double down on that segment of the group to help them connect that to their personal motivators early on. And that really does take on a life of its own.

Kevin Novak: So Mike, to the resistance. One of the things that I talk a lot about and write a lot about is Denise Rousseau’s research on the psychological contract of employment. Some information here: every employment relationship contains an unwritten set of mutual expectations that goes far beyond the job description or the compensation package. People join, and back to the comment about even Gen Z, they join because they’re seeking some alignment to the organization and the values that are aligned with their own values as an individual. So they join with implicit beliefs about what the culture will feel like, how decisions will be made, what the role will mean, and what growth looks like for them personally. So when an organization scales rapidly and goes through market transformation change, those implicit contracts are violated constantly. Not through anyone’s intention, but through the structural reality that the organization is changing faster than the promises that need to be maintained. So as someone who has lived through this several times across your career, how have you navigated that dynamic inside organizations that you’ve scaled?

Mike Peroni: Great question. Fundamentally, I think it’s built on culture. And I don’t mean kind of fluffy culture. I mean very specific: here’s what we believe are the behaviors that will lead us as a group to success. And then ensuring that and holding the team accountable to those behaviors but also making sure they have the tools and the access that they need to execute on that. And I think that does eliminate a lot of the ambiguity that can exist in these unwritten contracts. I find that happens a lot in personal relationships, not just business relationships. So it’s a very helpful skill to have, being able to communicate the behaviors that make it and tying it directly to success.

Mike Peroni: So I come from a go to market world. I’ve done operations before, but generally very revenue oriented. And so the cultures I’ve built have been, in almost all circumstances, I’m trying to build a culture of performance. And then obviously performance then allows people to take the success at work and then apply it in some way appropriate to them into their personal life. Success should be personal. It shouldn’t be an obligation that you work for a company. Of course that is true. But when the team starts to see the performance as a benefit to their personal lives, whether it’s to care for your family or to travel or whatever it means to you, once you tie that together, which often the group will start to do on their own, a culture emerges. And as a leader, it’s important to find ways to make that attainable. There’s also a set of behaviors that I usually call non negotiables. We believe this, and this isn’t me being authoritative. This is saying this is what we believe as a group are the behaviors that will lead to success. Therefore, we’re going to hold ourselves accountable.

Kevin Novak: So Mike, to the question around that, as you’re coming in and helping a company grow. To an earlier point that I made where an organization is what it is related to its processes and so forth. And all of that is why they got to where they’re at. But now they want to excel. So the wheels may fall off the car because new wheels need to be put on to go faster or to be more adept. So how do you manage the changes related to what that performance was versus what the expectations of performance now are?

Mike Peroni: It starts with transparency and documenting it. And usually what you’ll find is once you establish what good looks like, or perhaps in this case what the new good looks like, that’s change, period. And change for many is very difficult. And so I think being very transparent about what the opportunity is, that’s based in realism, what the challenges and risks are, but also to start to separate what we have control over, meaning we should focus on that, from what we don’t have control over, so let’s not spend time there. I have found as a tactic that separating signal from noise is an area people need help in. But also that clarity of direction does minimize the internal turbulence that one can experience. So that’s kind of how I approach that. Very transparent about what the current state is. Very transparent about the challenges and sometimes the risks that stand between us and that success that we all want to achieve. And then that can serve as an onslaught of things we should do. And being able to prioritize those and do it with the team so they have a sense of ownership is how I manage those situations where we are setting new performance goals, setting new activity expectations that we believe will lead to those, setting behavior standards that we are going to be disciplined and accountable to, to a person, including myself. And so that layer of transparency and clarity helps you achieve that. People also take personal responsibility for it. You don’t want to manage through these periods. You want to lead. Of course some management is required, but when you give people the tools to be self-directed in concert with the goals and in concert with all of these standard operating behaviors that we’ve agreed to, people can then stop worrying about that. And then they put their focus on what they’re perhaps uniquely qualified for. And so now they’re accretive to the process versus being more of a drag where you’re trying to pull them with you.

Kevin Novak: Do you find that as you’re seeking the scale and there’s a lot of change and there’s maybe often acceleration of those changes, are there people that get lost in that process? Are there people that simply wind up unable to shift from that early stage, in many ways mid stability, to another round of growth, that they sort of throw their hands up?

Mike Peroni: Short answer is yes. People do get left behind, unfortunately. Sometimes that’s a function of the change. There’s no longer a fit. So you can take today’s AI context. Roles are changing very rapidly. And so perhaps there isn’t a new role for you in an organization, and you do get left behind despite your good intentions and attitudes. However, what I find is the people that get left behind are the ones that have some sort of fixed mindset. They’re not embracing the change. They’re trying to prevent the change or they’re trying to hide from the change versus embracing it and then ultimately finding their way to influence it in an aligned way. Good for the company, good for my boss, good for my peers and really good for me. And so if you have a kind of fixed mindset on that, the chances of you getting left behind are much higher.

Kevin Novak: So let me shift into something that I think relates. You’ve been writing publicly that connects directly to identity, which we talk a lot about on the show and in my writing. You’ve argued that feature-based differentiation is no longer a defensible moat in the AI era. That capability, which once took months to build, can now be replicated in days. And that the only sustainable advantage is proprietary insight, data, or execution velocity that compounds over time. That argument is presented as a market strategy, obviously from a go-to-market guy. But underneath it is one of the most profound organizational identity challenges any company can face. And Clayton Christensen’s research on the innovator’s dilemma demonstrated that organizations develop capabilities, processes and values that define who they are. And those three elements become precisely what prevents them from adapting to disruptive change. Capabilities are embedded in what the organization knows how to do. Processes are embedded in what people become because of fixed mindset. And the values are embedded in what it decides it’s worth doing. So when disruption arrives and you come in as the go to market guy who’s about the scale of business, all three elements are conspiring to keep the organization doing what it’s always done because that is what its identity is built around. So when you tell an organization that their product features are no longer their moat, you’re not just delivering a strategic insight. You’re threatening their organizational identity. You’re telling them that the thing they believe made them special no longer makes them special. How have you seen organizations respond to that kind of identity threat, and individuals as well? And what does the response reveal about the relationship between identity and the capacity for transformation?

Mike Peroni: Great question. And let me preface it with the fact that we’re in early days here as the software industry transforms in the era of AI. So I don’t state these things as absolute conviction, rather the foundation from which we can all start to learn. I think it’s not a surprise to many organizations that differentiation is changing and that the software industry as a whole is changing, so we therefore must adapt. So a bit of a unique situation in this one, Kevin, because I think people are braced for it. However, I’ve been meeting with CEOs and founders from AI companies and SaaS companies that now have agentic or some other type of AI capability. It’s been a mix, but I have recognized a little pattern as to their response. And it seems very correlated to the maturity of the company. Younger companies that are really at the start of building their customer base, I think they’ve already adopted this identity that we are going to differentiate differently. We’re going to try to find a new way to solve an existing business problem better, faster, cheaper. And so a lot of ideas and trends are emerging from that. Larger companies where they have an install base, their leaders are a bit more cautious and questioning, rightfully so. In fact, some of the best conversations that I have had have come out of that natural difference of opinion or the cautiousness that they’re exploring and how incredulous they are about some of the outcomes that are predicted. And what I found is that every company is a bit different. And so as you start to drill into their specific world, their specific competitive landscape, their specific development and release pattern and their specific ability to extract domain knowledge or innovation from its customer base, once you drill into that level of specificity, there is usually some obvious low-hanging fruit or concern that can get them started on that. And so instead of trying to gain belief in the bigger picture that everything is changing about your organization, you can narrow it down to the one, two or three most obvious priorities. And that really just starts the ball moving. So they are starting to affect change. It’s an obvious thing that everyone’s going to agree needs to change. And then that will start to move you down the path where you’ve already loosened up that identity. Maybe with some more easy-to-implement, high-return situations. That’s where I do kind of a Gartner grid, like what’s the top right? It’s the most impactful and the easiest to execute on. Once you pick those, it just nudges the organization in that direction. I do find that they typically start to lose that hold on identity.

Kevin Novak: A few weeks ago I used Block and several other companies to bring up the AI hype in the market, where companies and organizations are taking the opportunity to downsize and then using AI as an example catalyst. In your conversations that you’re having with different CEOs, are you seeing that there’s recognition that some people are taking or using AI as the opportunity and the excuse as opposed to the reality of what they may believe their company is able to transition to?

Mike Peroni: I think the answer to that lies fundamentally in the gap leaders are seeing between what the role is today and if we make that role 80 percent automated, how are we going to use 80 percent of their time? I don’t know how to repurpose this resource. And so I haven’t heard a lot of companies using it as an opportunity to cull the herd, so to speak. I did speak to one resource margin-constrained company that was going to take advantage of that to automate some things and then eliminate some headcount that would bring their P and L back in line, at least conceptually. But more often I’m hearing from CEOs that they want to know how to gain competitive advantage from this increased bandwidth. These are now available resources. And so they’re not even sure really how to do that yet, let alone how to make the change from their current set of roles and skills gap to where they can start to add value. So we’re really early in that from my conversations, but I think most people are just trying to figure out how to leverage it, not necessarily how to use it to create less expenses.

Kevin Novak: So let me put this forward to you because you hit on the signal thing earlier. It connects to something called Weick’s research on organizational sensemaking. He demonstrated that leaders do not perceive reality and then respond to it objectively. They construct a version of reality through retrospective interpretation and then respond to the version that they constructed. Which means that when the market signals suggest that the old model is eroding, leaders inside that model are least equipped to see it clearly because their sensemaking apparatus is built to confirm what they already believe. You’ve written about how early traction is often misread, that the gap between a promising market signal and a truly scalable business is where most companies quietly lose ground. So how does the psychology of early validation distort decision-making inside growth organizations? And what does it take to maintain intellectual honesty when the pressure to believe your own story is enormous?

Mike Peroni: The pressure is enormous. And in the right culture, it’s a culture of fail fast. If you’re an early-stage and you are about to make long-term investment decisions based on something, it is really prudent to double click on that and actually try to break it. However, that’s not necessarily a muscle that many established organizations have. I’ve started companies, co-founded companies. I’ve worked for some that were on the verge of product market fit, some that were post. The more mature the company is, the less I’ve seen an interest in trying new things, understanding you’re going to fail, but the outcome is not the success, it’s to take one step closer to how do we succeed. So I guess the first part of the answer is it depends on the maturity of the company. And then secondly, when you are in the midst of change, I think you need leaders that understand change. And for those that try to repurpose existing leadership that don’t have a muscle for change, they’re more of the type where here’s how we operate with discipline. Leaders really need to take a step back and say, do I have the right team? And if I don’t, how do I augment them? And that’s a hard question because I don’t think the answer is so black and white. I think it’s muddled and gray.

Kevin Novak: So Mike, as the leaders are getting these signals and they’re taking action on what they believe the reality is, and that’s often historical and experiential, have you seen any leaders being successful with putting that aside to realign what the reality actually is? The market is dynamically changing. We can even use tariffs as an example. Tariffs were in place. Now some tariffs aren’t. And companies are trying to make an assessment of what reality is. And some of them haven’t been here before. So that reality that they’re pulling from isn’t a match.

Mike Peroni: I’ve seen it both ways. I’ll give you an example. I spoke to one CEO. They’re a platform that leverages machine learning and they sell to pharmaceutical manufacturers. So heavily regulated. And he was of the belief that agentic AI and probabilistic AI in general does not work, is not compliant in this heavily regulated space. And therefore they went down a machine learning path, which is deterministic. And so they’re able to remain in compliance while still giving its customers added horsepower around this new capability. I think he’s dead on and being really realistic about it. And he’s not getting overly excited about how to use agentic capabilities because he knows that space. That space isn’t going to change. I think that’s a really good constraint that he’s put on the organization. And it makes a lot of sense for the market they serve.

Mike Peroni: Conversely, I spoke to a CEO of a platform that works in basically the retail space and how to maximize retail real estate, meaning planograms and the such. It was a kind of integrated retail real estate management. And by real estate I mean shelves, not buildings. And so they’ve got a decent customer base and as expected, this CEO is very cautious about where they’re headed. However, I did kind of get the sense he was downplaying how disruptive new agentic capabilities could be and hadn’t really been following some of the trends of the bigger software companies like Salesforce, who was trying to protect their base by becoming something else. They were an application layer, and we know the application layer is becoming a bit commoditized, but what Salesforce does really well is this kind of integrated full workflow. And so workflows and data are critical to organizations, especially in pillar systems like ERP or CRM. And this CEO wasn’t aligned to where these bigger software vendors were going to think differently about it. A lot of the conversation was referencing what he knew, his customer base and what they do. But the question that hadn’t been asked or answered is, how are they thinking differently? How is the customer thinking differently? And so that was my ultimate recommendation, that you go outside of your own four walls to understand where your customer is headed.

Kevin Novak: Let me build on that because you hit on something exactly I wanted to ask you about. There’s something that you said in describing your work at ETQ that I want to explore because it challenges one of the most deeply held assumptions in organizational leadership. You took strategic positioning directly into a live customer environment rather than validating it theoretically. And you said the biggest value didn’t come from confirming the proposition, but from what you discovered in the field. That insight that the most powerful value propositions are forged in the field as opposed to being designed in the boardroom is a direct challenge to what we see with many organizations, particularly from a board perspective, where they know the organization and have such deeply rooted beliefs about it. And it relates to Chris Argyris, who spent decades studying the gap between what he called espoused theory and theory in use. The theory in use is what their behavior actually reveals about what they believe. So what is it about the distance between leadership’s understanding of their market and what the field actually reveals that consistently produces misalignment? And in your experience building go to market systems across multiple organizations, where does that misalignment create the most damage?

Mike Peroni: That’s a great question. In my experience, including at ETQ, what I was doing was I was an entrepreneur. I was a startup guy within an established environment. And so naturally there is a different mindset there. But I don’t know that it’s necessarily a mindset problem in my experience. I think people have objectives and they’re busy. And they’re constantly trying to prioritize and they’re constantly being asked for stuff from other parts of the organization. At the leadership level at the time, this was pre-acquisition. The board directive was to have the company meet the company metrics that they knew would get the valuation they wanted. And so there’s this maniacal focus on that. And so when you introduce a new idea that is incremental to what exists, there was a lot of resistance, and rightfully so. I didn’t necessarily take it personally, but there was a lot of resistance because it was additional to what we were already trying to do and people are really busy.

Mike Peroni: So to start to explore this, it really took me a while to get the executive backing from the various functions that I needed. The CEO was totally on board because he was starting to have acquisition talks. He understood the value of defining this. But when I went to my marketing leader at the time, she was great, she was also very amenable to it. She had a penchant for it. She liked doing this stuff. But when we got past the go to market teams to the delivery and customer teams, that’s when they’ve got a really heavy workload. And for me to get some resources to actually execute on this test, I’m asking to disrupt things that are creating utilization, billable hours, customer satisfaction numbers. These are the things that I could tend to threaten by asking for help.

Mike Peroni: So I did have to negotiate that. And the first thing I had to do was to eliminate the black and white. We’re doing it my way, or we’re not doing it at all. That wasn’t going to succeed. But instead, I tried to articulate the value to the company to them, and then obviously tie it to them. And these are all shareholding executives. The outcome of an acquisition should be really important to them. And so when I was able to articulate why it was important to the company and how it could directly affect them, I then opened the door to say, if you can’t give me what I’m asking for, please help me solve the problem that exists. And through that, I was able to find various pockets of interest that I probably could never have predicted. But that’s where I think leaders have this big gap. If it’s working, why fix it? And so when you can surface above that noise and actually have a real reason for the change, then people will start to come along.

Kevin Novak: From the perspective of velocity, so you’re affecting change even in the startup mode, and where most founders are so committed to what they perceive the product and the value of that product is. To my earlier point about the market dynamics changing so quickly, when there’s information coming from the field that may change what that value proposition is, how did the founders and the leadership handle that perception shift? It rattles what they believe versus what the market is actually saying the value is.

Mike Peroni: Great question. So I do find founders are typically far more flexible. They don’t care about anything except succeeding. And whether that’s a financial position or whether it’s because they have a mission, they’re trying to help people or companies, whatever their belief system is, they’re also highly adaptable in the ways you can get there. If my mission statement is to make the lives of 100,000 people better, I don’t care how it gets done. My idea of the way to get that done, I don’t have so much stock in that. What I do have a lot of stock in is the outcome. So founders aren’t the greatest example of where that resistance is. What I do find is when leaders come from one environment that’s a bit more fixed, and his or her job has been keeping people on that track, not letting them deviate left or right, that’s a muscle that they have. And they will exercise that muscle instinctually.

Mike Peroni: So it does have a lot to do with the leader and the mindset. If you are trying to affect change, and I’ve seen leaders do this, which brings other leaders with them, there are certain tactics you can use. Have you ever read the book Switch? It’s by Chip and Dan Heath. They have a couple of concepts in there that I’ve put into practice, but I’ve also seen put into practice by others. And one of the principles there is to shrink the change. What is the smallest possible change you can make that will have a measurable outcome in the quickest amount of time? And so I think when you make the change not so dramatic and it’s just small shifts every day, that’s where I see leaders actually start to embrace it a lot more if they don’t come from that kind of change management background.

Kevin Novak: That’s actually something that I have practiced over the years. And it was a lesson I learned in practice, working with very large complex organizations and like you being the entrepreneurial guy that was brought in to effect major transformation. And I learned that it was better and more productive to release things slowly. Even though the vision would be in my mind, I couldn’t share that vision in its entirety. I couldn’t even share the end result of where we were going. In periods where I had done that, there was significant resistance because they went from zero to 90 very quickly mentally, but they couldn’t see going from one mile an hour to 89. There was no in between on how we get there, despite explaining it. It was almost more than what they could handle.

Mike Peroni: Kevin, you’re making me think of another thing that I think is really important in the midst of change. And this can help leadership or it can be strong leadership kind of pushing it down. But you have to promote successes within an organization. So others start to gain that belief we were talking about earlier. And so if you have a leadership gap where they’re looking at things through their own lens, not through objective reality, but through their own lens, and they’re not seeking out contrary opinions to test, they’re not actively trying to test and challenge it, they’re looking for people to agree with them, success stories for those that are affecting change do help move that needle to start to break down that resistance and that disbelief.

Kevin Novak: You’ve argued that continuous automation should be operationalized as a core organizational capacity rather than treated as a one time transformation initiative. That requires new roles, new structures and teams embedded close to revenue and customer workflows. So what have you learned about how organizations build that kind of adaptive culture, because you spoke about culture before, where field intelligence actually reaches the people who need it? And where does the resistance to that kind of transparency come from?

Mike Peroni: You’ve got to have a communication strategy and a cadence at an organization. And fundamentally that’s where I go first to inject any change that needs to happen. So in times of high change, that cadence will be more frequent. And what I’ve personally done in the past is obviously to communicate what’s changing this week, what do we need to do differently this week, and also what have we been changing over the last two weeks? Therefore we can come back and say, is the change sticking? Is it working? Sometimes you can accelerate that because the change you wanted had immediate positive results and people just start eating it up and they run with it. In other cases, you need to hold back. I can’t introduce something new today because this one didn’t stick. But you are looking for that edge where it’s almost too much, but it can be swallowed. Creating that pace, and I think when people start to embrace that pace, you’re going to see change be adopted and adapted really much sooner.

Kevin Novak: Part of the question was really around those people that are more in line with engaging with the customer. A lot of the research now shows that millennials are the ones who are leading most AI implementations because they’re in that middle management layer that is just trying to help their team along and then meet the demands that are coming from above them for that change and transformation, that adaptation to a new technology. In your experience, do you see differences in that communication with how those things are being received dependent on where you are within an organization?

Mike Peroni: Absolutely. Let me preface it with this. If you are a leader and you are not acknowledging that we’re in a period of tremendous change, not to hype it up, but we are going through tremendous change and a lot of questions are left unanswered at the moment, that’s the reality. So let’s assume that we’re talking only about people that at least recognize we’re in a period of change. That dynamic between, let’s call it generations and perhaps it’s not a generational thing, it’s where you sit in the organization and what your perceived role is. I think a leader who is not as technology savvy as perhaps the generation after him or her, there’s still the need for strong business acumen and fundamentals. And so if someone is exploring innovation and has a knack for that, they’re going to tend to be very creative. And that’s important. And if I had someone working for me that was in charge of an AI implementation, I don’t think it’s necessarily a generational thing, I think it’s a where you are in your career thing, which obviously does correlate. I’m giving that person more rope because they’ve maybe grown up in an environment where that stuff’s just more native to them. Whereas I’m trying to process it through my Gen X brain to give them that freedom. But I would be the steward of outcomes. That is the way that I could coach and mentor a person that has a stronger technical capability than I do, to still bring them back to what the outcomes are and then test their resolve and their belief to achieve those outcomes with what they’re saying. And obviously that gives them a lot of freedom and creativity. So they’re going to dive deep into that knowing that I couldn’t match their skills there. Yet they will also respect and appreciate when I bring them back to what does success look like and how are we going to achieve that. Because at the end of the day, a fun project that doesn’t have outcomes isn’t going to be good for them. And so they tend to really start to appreciate that I’m looking out for our mutual success.

Kevin Novak: I want to close with the question that I ask every guest. And I want to frame it specifically around your unique vantage point. You’ve been inside the pressures of scaling at Hypervent, at Content Raven during the chaos of the startup phase, and at ETQ during international expansion. Each of these contexts demands fundamentally different human operating systems. Different decision-making cadences, different relationships between leaders and teams, different tolerances for ambiguity and speed. So after 20 years of building inside those distinct pressure situations, what have you learned about organizational change that surprises people? What do leaders consistently underestimate about the human side of growth and transformation? And what would you tell a founder or CEO who’s about to take their organization through a period of rapid scaling?

Mike Peroni: Great questions. So oddly, it still surprises leaders as to the resistance they’ll get. It just somehow they go into it with this vision, they stand behind it, they start kind of mandating we head in this direction. And that obviously does not push down responsibility and accountability and ownership to the organization. So that’s one thing that I think surprises, the importance of driving ownership down to the team rather than trying to architect it and then dictate what people will do and then holding them accountable to some level of activity that they haven’t really signed up for. So that always surprises me. And it’s not that they can’t handle it, because once they recognize that that’s the case, they usually course correct. But I just don’t see it as the starting point for many leaders.

Kevin Novak: To build on that, if they’re somewhat unprepared to recognize that what they’re putting forward is resulting in resistance, and with the assumption that most leaders of mature organizations are coming with 10, 20, 30 years of experience, is there something now, environmentally or from the market perspective, that has dismissed or had them dismiss their own experience and feeling resistance in other situations?

Mike Peroni: Good question. It would be speculative because I haven’t necessarily asked that question of the leaders where I saw them surprised that there was resistance. If I had to guess, there’s a human element where you’ve got a vision and you’re so excited to share that with everybody and you’ve got what you think is the path to do it, but it turns out it’s just a bunch of ideas. Some are good, some are bad. And you’re so excited to get going and you’re so impatient to start that journey that they often will skip this early step to say, how do I architect a dialogue, not a statement? And that dialogue is going to result in something better than I can come up with myself. So I don’t know if it’s excitement. Maybe that’s the pattern, but the root cause is different for leaders. Some are maybe ego driven, which you’ve got to kind of tone that down. Some is passion, you’re just so excited about it and you just assume everyone’s there. A lot of times, and I make this mistake often and I have to constantly be on the lookout for it, but I assume people are where I am. I make this assumption that informationally and emotionally, people are already where I am. And so when people are here and you’re starting here, you’ve never connected with anyone. They’re still at the bottom because you started at a place they weren’t. And so I think that’s another reason. People just internalize their own experience and then project that onto everyone else. And that’s such a human emotion that it’s hard to miss.

Kevin Novak: I have written so often over the years about active listening. And it confounds me sometimes. We all don’t do it. We get very excited about something. We make assumptions. And sometimes it’s hard to take a pause. And I’ve seen leaders not do this, not read the room, not take a step back and say, is what I’m saying really resonating here? Or am I watching a bunch of head nods? Am I watching a bunch of glassy-eyed people? Or am I watching facial expressions that are begetting fear or even anger out of it? And there are people who just don’t have that emotional intelligence to recognize that.

Mike Peroni: I think the challenge there, and this is something I’ve experienced myself, is that it’s sometimes really hard to remember that not everyone feels the way you do and interprets the world the way you do. It’s really hard. And I go back to earlier in my career, and this is always enough of a reminder for me to take a step back and understand people. But there was a point in my career where I avoided feedback because it felt like criticism. It just felt like criticism. And I had this overwhelming expectation of myself that I was going to be the solution for everything that I was responsible for versus understanding that my job is to shepherd this toward success and leverage my own skills when appropriate but then fill in your gaps. When you have gaps in your skill set, fill them in. And that actually, until that started to feel like I was doing something unique and good, like I’m actually recognizing where I’m weak and I’m getting help, that felt terrible in the beginning. So that personal experience where it’s like, I used to avoid feedback because it felt so much like criticism. Now I’ve retrained my brain to where I feel naked without feedback. And that was really important in a startup culture and what we were speaking about earlier where it’s like, how do you actually get to a point where you’re trying to prove yourself wrong versus the opposite, prove yourself right? And so that is my personal lighthouse that I will always refer back to in these circumstances to remember I felt very differently about something that is now somewhat of a superpower. And that’s actually true for active listening as well.

Mike Peroni: I’m ADD, a massive ADD, so my brain goes so fast and it serves me really well in some circumstances and really poorly in others. And I’ve mentioned one, which is where my brain is here and the group is back there. I haven’t even introduced the subject yet. And I’m already taking off with all the ideas and the work streams that are in my head. And certainly the criticism piece falls into that. But fundamentally what I think is really important is to realize that you’ve got a variety of states people are in and really take that step back and recognize it. Go into the conversation knowing some people are feeling very unclear. Some people are worried about their job. Some people are overly excited about this and about to spend 39 of their 40-hour work week doing stuff that doesn’t matter because they’re too excited about it. So you just have to recognize that everybody’s in different places and more systematically introduce the ideas and the change. And then you start getting that snowball.

Kevin Novak: Mike, that’s all the questions I have. I just want to thank you for being on the Human Factor Podcast.

Mike Peroni: This was a lot of fun. I really appreciate it.

Kevin Novak: I want to close by connecting what Mike shared to the broader arc of the season. Every guest we have had has illuminated a different dimension of why transformation fails at the human level. We have examined the organizational immune system, the psychological contracts that bind people to the status quo, the governance structures that neutralize change, the structural silence that prevents leadership from hearing what it most needs to hear. And the patterns that repeat across organizations regardless of size or industry focus. What Mike has shown us today is something different. He has shown us what happens when transformation is not imposed from outside by crisis or decline, but transformation demanded from inside by prior and current success. Growth itself is a transformation engine, and it creates human dynamics that are among the most intense and least understood in organizational life. The psychological contracts that break when the organization outgrows what it promised. The identity crisis that occurs when the thing that made the organization special stops being so special. The cognitive biases that distort how leaders read their own success. And the structural distance between the field and the boardroom that ensures the information leadership most needs is the information it’s least likely to receive. If your organization is growing, these dynamics are active right now. The question is not whether they exist. The question is whether you can see them before they become the constraints that prevent your next stage of evolution.

Kevin Novak: If you found today’s episode valuable, subscribe to the Human Factor Podcast wherever you watch or listen to podcasts. Leave a rating and a comment and share this episode with your leadership team. Subscribe to the Ideas and Innovations newsletter at 2040digital.com or on Substack for weekly frameworks and research on why change succeeds or fails. Connect with me on LinkedIn where I post regularly about the psychology of transformation. Until then, remember, transformation doesn’t fail because of the technology, strategy, or the market conditions. It fails because of people. And the more deeply you understand the human factor, the more likely your change or transformation is to succeed. I’m Kevin Novak. Thanks for watching or listening.

END OF EPISODE

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Upcoming: Episode 025: Transformation IN Practice Series Episode 5 of the Series with Guest Eric Hoplin, CEO of NAW

Season 2, Part 2 began May 1, 2026

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