One of the likely outcomes of a deep dive on strategy is the need to make changes – organizational, product/service, skills etc. - to transform your organization. With that in mind, we’ve summarized some of the key lessons from one of our favourite books on the subject Leading Change by John P. Kotter.
This classic book gives a practical toolkit on how to lead change in any type of organization, illustrated by real life examples. The most important lesson is that change needs leadership, not merely management.
The 8 Common Reasons Change Fails to Happen
The author starts with eight common reasons firms fail to make change.
Error 1: Allowing Too Much Complacency
The biggest mistake when trying to change organizations, according to the authors, is to charge ahead without creating a high enough sense of urgency in managers and employees.
When complacency levels are high, transformations never achieve their objectives. Without a sense of urgency, people won’t put in the extra effort that is usually essential. You need to create a sense of urgency while avoiding the impression of anxiety or panic. You may see a crisis looming, but others may not feel the urgency, hence the need to create this feeling.
Error 2: Failing to Create a Sufficiently Powerful Guiding Coalition
In successful transformations, you need the head of the organization to be an active supporter, but he or she also needs a set of leaders with power, committed to improvement, to pull together as a team and drive the change.
Error 3: Underestimating the Power of Vision
A sensible vision has a major role in delivering useful change. It does this by helping to direct, align and inspire action on the part of large numbers of people. The vision driving the change initiative needs to be straightforward and capable of being quickly communicated, understood and absorbed. To find out more about creating a Vision Statement check out our Ultimate Guide to Vision Statements.
Error 4: Undercommunicating the Vision by a Factor of 10 (or 100 or Even 1,000)
Major change is usually impossible unless most employees are willing to involve themselves. They need to believe the potential benefits of a change programme are attractive and that the transformation can be achieved. Without credible communication, and a large amount of it, early and often, employees’ hearts and minds are never captured. The leadership team needs to “walk the talk” – show their commitment by their example and actions.
Error 5: Allowing Obstacles to Block the New Vision
New initiatives fail when people feel disempowered by huge obstacles in their way. These obstacles may be the organizational structure – narrow job roles, compensation and incentives etc. They may be as simple as people’s fears of the future. These obstacles must be confronted and removed.
Error 6: Failing to Create Short-Term Wins
Real transformation is a long process. Most people will lose faith in a change programme if they don’t see improvements within six to eighteen months. As part of planning your transformation, you must consciously look for ways to achieve clear performance improvements in the short term, achieve these improvements, and visibly reward the people who deliver these for you.
Error 7: Declaring Victory Too Early
After a lot of hard work, people can be tempted to declare victory after the first major performance improvement. It is a grave mistake to allow any suggestion that the job is mainly completed. You must keep going till the job is fully done.
Error 8: Neglecting to Anchor Changes Firmly in the Corporate Culture
An important lesson from the book Strategy That Works by Leinward and Mainardi is that transformation needs to become embedded in company culture. Change sticks only when it becomes “the way we do things around here”. Two things are important – the first is showing people how specific behaviors and attitudes have improved performance. The second is to ensure that the upcoming generation of managers lives the new approach.
The Consequences of Making These Mistakes
- Professor Kotter points out that the consequences of these eight errors are:
- New strategies are not implemented well
- Acquisitions do not achieve synergies expected when the new company is acquired
- Re-engineering takes too long and costs too much
- Downsizing does not get costs under control
- Quality programmes do not deliver the results expected of them
He contends that these errors are not inevitable. With awareness and skill, they can be avoided or at least greatly mitigated
What Drives the Need for Strategic Change?
Kotter describes the forces that drive the need for strategic transformation and change. A number of these boil down to the globalization of markets and competition. That has ripple effects even down onto small, local, companies. These result in more hazards – more competition and increased speed of change, but also more opportunities – bigger markets and fewer barriers to trade.
Major change will not happen for a long list of reasons, some of which we have already covered. Professor Kotter describes an eight-stage process for making lasting, effective change. His experience shows that you need to go through these stages in sequence; you cannot miss some out or change the order. They need leadership, as distinct from management. Leadership is about establishing direction, communicating direction so that people understand and buy into the transformation vision and, finally, motivating and inspiring people to overcome barriers and act on the vision.
The 8 Stage Process for Change
1. Establish a Sense of Urgency
Making change is hard work and requires from many people great cooperation, initiative and willingness to make sacrifices. You need to create a sense of urgency to get the transformation energised.
As Rahm Emmanuel, President Obama’s chief of staff, said in an interview “You never want a serious crisis to go to waste. And what I mean by that [is] it's an opportunity to do things that you think you could not do before”. You may not have a crisis – it is easier if you have – but you do need a sense of urgency in order not to arrive at a crisis, and to combat complacency.
The book gives a number of ways to create a sense of urgency, including making the changes in the current and emerging competitive environment clear to everyone, identifying and discussing crises, potential crises and major opportunities.
2. Create the Guiding Coalition
To make significant change you need a strong team who will work together. Nobody, not even you, can drive change alone. Get the right people on board – senior people with power, expertise and credibility with the workforce. These people need leadership and management skills, especially leadership. The team members need to trust each other, and you might have to build that trust if it doesn’t already exist. You and the team need to create a common goal that is sensible and emotionally appealing.
3. Develop a Strategy and Vision
Vision paints a picture of the future, with compelling reasons why people should strive to create that future. A good vision does three things – makes clear and simple the general direction for change, motivates people to action, and coordinates the actions of many different people in a fast and efficient way. A good vision is imaginable, desirable, feasible, focused, flexible and easy to communicate. The author’s rule of thumb is “If you cannot describe your vision to someone in five minutes and get their interest, you have more work to do in this phase of a transformation process”.
4. Communicate the Change Vision
The real power of a vision is only unleashed when most of those involved and affected have a common understanding of its goals and direction. Keep the messages clear and simple and repeat them often. As you will have seen, the most successful politicians keep their messages simple and repeat them over and over again. Use every vehicle possible to constantly communicate the new vision and strategy – company newsletters, group meetings, memos, posters, webinars, informal one-on-one talks. When people get the same message from several different directions, the message sinks in. Encourage two-way communication to allow your guiding coalition to understand how the message is coming across and how to improve it.
5. Empower Employees for Broad-based Action
Even when you have communicated a sensible vision to employees, and they have bought into it, there may still be obstacles that you need to remove. You may need to change how you are organized to align with your vision, provide training in any new skills needed and change information and personnel systems to support the vision. Finally, you may need to remove managers or supervisors who are preventing people taking initiative.
6. Create Short-term Wins
Your transformation plan should actively plan to achieve quick wins that support your change. People quickly get tired of a “jam tomorrow” message. Short-term wins create momentum and reinforce the vision. They show people, mainly employees but also senior stakeholders, that short-term sacrifices are worth it, and give recognition to the people who have delivered the quick wins. They provide positive feedback that builds morale. Short-term wins give feedback that the strategy is viable, and may even indicate the need for some fine tuning.
7. Consolidate Gains and Produce More Change
Don’t slacken before the whole job is done. Use the increasing credibility provided by quick wins to change systems and structures that no longer fit with the vision. Hire and promote people who can implement the transformation vision. Refresh the change process with new projects and initiatives.
8. Anchor New Approaches in the Culture
Culture refers to norms of behavior and shared values among a group of people. Once your change is achieved, it is critical to embed it in the company’s culture to avoid falling back on old ways of working which would lose the benefit of the change you have made. Most alterations in norms and shared values come at the end of the transformation process. They get absorbed into a culture only after it is very clear that they yield results and are better than old methods.
Making transformational change is hard work but the rewards are worth it. Learn from those who have done it successfully, as described in the book.
Another, more academic, book on Change Management which we would recommend if you want to read further on this subject is The Theory and Practice of Change Management, by John Hayes. It gives a good balance of theory and practice.
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