Successful Change Programs Begin with Results

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Leading Change

 

Why Transformation Efforts Fail

 

by John P. Kotter

 

 

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Article Summary

 

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Leading Change: Why Transformation Efforts Fail

A list of related materials, with annotations to guide further exploration of the article’s ideas and applications

 

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Further Reading

 

Leaders who successfully transform businesses do eight things right (and they do them in the right order).

 

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Leading Change

 

Why Transformation Efforts Fail

 

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The Idea in Brief The Idea in Practice

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Most major change initiatives—whether in- tended to boost quality, improve culture, or reverse a corporate death spiral—generate only lukewarm results. Many fail miserably.

Why? Kotter maintains that too many managers don’t realize transformation is a

 

process,

 

not an event. It advances through stages that build on each other. And it takes years. Pressured to accelerate the process, managers skip stages. But short- cuts never work.

Equally troubling, even highly capable managers make critical mistakes—such as declaring victory too soon. Result? Loss of momentum, reversal of hard-won gains, and devastation of the entire transforma- tion effort.

By understanding the stages of change— and the pitfalls unique to each stage—you boost your chances of a successful transfor- mation. The payoff? Your organization flexes with tectonic shifts in competitors, markets, and technologies—leaving rivals far behind.

To give your transformation effort the best chance of succeeding, take the right actions at each stage—and avoid common pitfalls.

Stage Actions Needed Pitfalls

Establish a sense of urgency

• Examine market and competitive reali- ties for potential crises and untapped opportunities.

• Convince at least 75% of your man- agers that the status quo is more dan- gerous than the unknown.

• Underestimating the difficulty of driving people from their comfort zones

• Becoming paralyzed by risks

Form a pow- erful guiding coalition

• Assemble a group with shared commit- ment and enough power to lead the change effort.

• Encourage them to work as a team outside the normal hierarchy.

• No prior experience in teamwork at the top

• Relegating team leadership to an HR, quality, or strategic-planning executive rather than a senior line manager

Create a vision

• Create a vision to direct the change effort.

• Develop strategies for realizing that vision.

• Presenting a vision that’s too complicat- ed or vague to be communicated in five minutes

Communicate the vision

• Use every vehicle possible to commu- nicate the new vision and strategies for achieving it.

• Teach new behaviors by the example of the guiding coalition.

• Undercommunicating the vision

• Behaving in ways antithetical to the vision

Empower others to act on the vision

• Remove or alter systems or structures undermining the vision.

• Encourage risk taking and nontradition- al ideas, activities, and actions.

• Failing to remove powerful individuals who resist the change effort

Plan for and create short- term wins

• Define and engineer visible perform- ance improvements.

• Recognize and reward employees con- tributing to those improvements.

• Leaving short-term successes up to chance

• Failing to score successes early enough (12-24 months into the change effort)

Consolidate improve- ments and produce more change

• Use increased credibility from early wins to change systems, structures, and policies undermining the vision.

• Hire, promote, and develop employees who can implement the vision.

• Reinvigorate the change process with new projects and change agents.

• Declaring victory too soon—with the first performance improvement

• Allowing resistors to convince “troops” that the war has been won

Institutionalize new approaches

• Articulate connections between new behaviors and corporate success.

• Create leadership development and succession plans consistent with the new approach.

• Not creating new social norms and shared values consistent with changes

• Promoting people into leadership posi- tions who don’t personify the new approach

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Leading Change

 

Why Transformation Efforts Fail

 

by John P. Kotter

 

harvard business review • january 2007 page 2

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Leaders who successfully transform businesses do eight things right (and they do them in the right order).

 

Editor’s Note:

 

Guiding change may be the ulti- mate test of a leader—no business survives over the long term if it can’t reinvent itself. But, human nature being what it is, fundamental change is often resisted mightily by the people it most affects: those in the trenches of the busi- ness. Thus, leading change is both absolutely es- sential and incredibly difficult.

Perhaps nobody understands the anatomy of organizational change better than retired Harvard Business School professor John P. Kotter. This article, originally published in the spring of 1995, previewed Kotter’s 1996 book

 

Leading Change

 

. It outlines eight critical suc- cess factors—from establishing a sense of ex- traordinary urgency, to creating short-term wins, to changing the culture (“the way we do things around here”). It will feel familiar when you read it, in part because Kotter’s vocabulary has entered the lexicon and in part because it contains the kind of home truths that we recog- nize, immediately, as if we’d always known them. A decade later, his work on leading change remains definitive.

 

Over the past decade, I have watched more than 100 companies try to remake themselves into significantly better competitors. They have included large organizations (Ford) and small ones (Landmark Communications), companies based in the United States (Gen- eral Motors) and elsewhere (British Airways), corporations that were on their knees (Eastern Airlines), and companies that were earning good money (Bristol-Myers Squibb). These ef- forts have gone under many banners: total quality management, reengineering, rightsiz- ing, restructuring, cultural change, and turn- around. But, in almost every case, the basic goal has been the same: to make fundamental changes in how business is conducted in order to help cope with a new, more challenging market environment.

A few of these corporate change efforts have been very successful. A few have been utter failures. Most fall somewhere in between, with a distinct tilt toward the lower end of the scale. The lessons that can be drawn are interesting and will probably be relevant to even more or-

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ganizations in the increasingly competitive business environment of the coming decade.

The most general lesson to be learned from the more successful cases is that the change process goes through a series of phases that, in total, usually require a considerable length of time. Skipping steps creates only the illusion of speed and never produces a satisfying result. A second very general lesson is that critical mis- takes in any of the phases can have a devastat- ing impact, slowing momentum and negating hard-won gains. Perhaps because we have rela- tively little experience in renewing organiza- tions, even very capable people often make at least one big error.

 

Error 1: Not Establishing a Great Enough Sense of Urgency

 

Most successful change efforts begin when some individuals or some groups start to look hard at a company’s competitive situation, market position, technological trends, and fi- nancial performance. They focus on the po- tential revenue drop when an important patent expires, the five-year trend in declining margins in a core business, or an emerging market that everyone seems to be ignoring. They then find ways to communicate this in- formation broadly and dramatically, especially with respect to crises, potential crises, or great opportunities that are very timely. This first step is essential because just getting a transfor- mation program started requires the aggres- sive cooperation of many individuals. Without motivation, people won’t help, and the effort goes nowhere.

Compared with other steps in the change process, phase one can sound easy. It is not. Well over 50% of the companies I have watched fail in this first phase. What are the reasons for that failure? Sometimes executives underestimate how hard it can be to drive peo- ple out of their comfort zones. Sometimes they grossly overestimate how successful they have already been in increasing urgency. Sometimes they lack patience: “Enough with the prelimi- naries; let’s get on with it.” In many cases, exec- utives become paralyzed by the downside pos- sibilities. They worry that employees with seniority will become defensive, that morale will drop, that events will spin out of control, that short-term business results will be jeopar- dized, that the stock will sink, and that they will be blamed for creating a crisis.

A paralyzed senior management often comes from having too many managers and not enough leaders. Management’s mandate is to minimize risk and to keep the current system operating. Change, by definition, requires cre- ating a new system, which in turn always de- mands leadership. Phase one in a renewal process typically goes nowhere until enough real leaders are promoted or hired into senior- level jobs.

Transformations often begin, and begin well, when an organization has a new head who is a good leader and who sees the need for a major change. If the renewal target is the en- tire company, the CEO is key. If change is needed in a division, the division general man- ager is key. When these individuals are not new leaders, great leaders, or change champions, phase one can be a huge challenge.

Bad business results are both a blessing and a curse in the first phase. On the positive side, losing money does catch people’s attention. But it also gives less maneuvering room. With good business results, the opposite is true: Con- vincing people of the need for change is much harder, but you have more resources to help make changes.

But whether the starting point is good per- formance or bad, in the more successful cases I have witnessed, an individual or a group al- ways facilitates a frank discussion of poten- tially unpleasant facts about new competition, shrinking margins, decreasing market share, flat earnings, a lack of revenue growth, or other relevant indices of a declining competi- tive position. Because there seems to be an al- most universal human tendency to shoot the bearer of bad news, especially if the head of the organization is not a change champion, ex- ecutives in these companies often rely on out- siders to bring unwanted information. Wall Street analysts, customers, and consultants can all be helpful in this regard. The purpose of all this activity, in the words of one former CEO of a large European company, is “to make the sta- tus quo seem more dangerous than launching into the unknown.”

In a few of the most successful cases, a group has manufactured a crisis. One CEO deliber- ately engineered the largest accounting loss in the company’s history, creating huge pressures from Wall Street in the process. One division president commissioned first-ever customer satisfaction surveys, knowing full well that the

 

Now retired,

 

John P. Kotter

 

was the Konosuke Matsushita Professor of Leadership at Harvard Business School in Boston.

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results would be terrible. He then made these findings public. On the surface, such moves can look unduly risky. But there is also risk in play- ing it too safe: When the urgency rate is not pumped up enough, the transformation pro- cess cannot succeed, and the long-term future of the organization is put in jeopardy.

When is the urgency rate high enough? From what I have seen, the answer is when about 75% of a company’s management is hon- estly convinced that business as usual is totally unacceptable. Anything less can produce very serious problems later on in the process.

 

Error 2: Not Creating a Powerful Enough Guiding Coalition

 

Major renewal programs often start with just one or two people. In cases of successful trans-

formation efforts, the leadership coalition grows and grows over time. But whenever some minimum mass is not achieved early in the effort, nothing much worthwhile happens.

It is often said that major change is impos- sible unless the head of the organization is an active supporter. What I am talking about goes far beyond that. In successful transfor- mations, the chairman or president or divi- sion general manager, plus another five or 15 or 50 people, come together and develop a shared commitment to excellent perfor- mance through renewal. In my experience, this group never includes all of the company’s most senior executives because some people just won’t buy in, at least not at first. But in the most successful cases, the coalition is always pretty powerful—in terms of titles,

EIGHT STEPS TO TRANSFORMING YOUR ORGANIZATION

Establishing a Sense of Urgency

• Examining market and competitive realities • Identifying and discussing crises, potential crises, or major opportunities

Forming a Powerful Guiding Coalition

• Assembling a group with enough power to lead the change effort • Encouraging the group to work together as a team

Creating a Vision

• Creating a vision to help direct the change effort • Developing strategies for achieving that vision

Communicating the Vision

• Using every vehicle possible to communicate the new vision and strategies • Teaching new behaviors by the example of the guiding coalition

Empowering Others to Act on the Vision

• Getting rid of obstacles to change • Changing systems or structures that seriously undermine the vision • Encouraging risk taking and nontraditional ideas, activities, and actions

Planning for and Creating Short-Term Wins

• Planning for visible performance improvements • Creating those improvements • Recognizing and rewarding employees involved in the improvements

Consolidating Improvements and Producing Still More Change

• Using increased credibility to change systems, structures, and policies that don’t fit the vision

• Hiring, promoting, and developing employees who can implement the vision • Reinvigorating the process with new projects, themes, and change agents

Institutionalizing New Approaches

• Articulating the connections between the new behaviors and corporate success

• Developing the means to ensure leadership development and succession

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information and expertise, reputations, and relationships.

In both small and large organizations, a suc- cessful guiding team may consist of only three to five people during the first year of a renewal effort. But in big companies, the coalition needs to grow to the 20 to 50 range before much progress can be made in phase three and beyond. Senior managers always form the core of the group. But sometimes you find board members, a representative from a key customer, or even a powerful union leader.

Because the guiding coalition includes mem- bers who are not part of senior management, it tends to operate outside of the normal hier- archy by definition. This can be awkward, but it is clearly necessary. If the existing hierarchy were working well, there would be no need for a major transformation. But since the current system is not working, reform generally de- mands activity outside of formal boundaries, expectations, and protocol.

A high sense of urgency within the manage- rial ranks helps enormously in putting a guid- ing coalition together. But more is usually re- quired. Someone needs to get these people together, help them develop a shared assess- ment of their company’s problems and oppor- tunities, and create a minimum level of trust and communication. Off-site retreats, for two or three days, are one popular vehicle for ac- complishing this task. I have seen many groups of five to 35 executives attend a series of these retreats over a period of months.

Companies that fail in phase two usually un- derestimate the difficulties of producing change and thus the importance of a powerful guiding coalition. Sometimes they have no history of teamwork at the top and therefore undervalue the importance of this type of coalition. Some- times they expect the team to be led by a staff executive from human resources, quality, or strategic planning instead of a key line man- ager. No matter how capable or dedicated the staff head, groups without strong line leader- ship never achieve the power that is required.

Efforts that don’t have a powerful enough guiding coalition can make apparent progress for a while. But, sooner or later, the opposition gathers itself together and stops the change.

 

Error 3: Lacking a Vision

 

In every successful transformation effort that I have seen, the guiding coalition develops a

picture of the future that is relatively easy to communicate and appeals to customers, stock- holders, and employees. A vision always goes beyond the numbers that are typically found in five-year plans. A vision says something that helps clarify the direction in which an organi- zation needs to move. Sometimes the first draft comes mostly from a single individual. It is usually a bit blurry, at least initially. But after the coalition works at it for three or five or even 12 months, something much better emerges through their tough analytical think- ing and a little dreaming. Eventually, a strat- egy for achieving that vision is also developed.

In one midsize European company, the first pass at a vision contained two-thirds of the basic ideas that were in the final product. The concept of global reach was in the initial ver- sion from the beginning. So was the idea of be- coming preeminent in certain businesses. But one central idea in the final version—getting out of low value-added activities—came only after a series of discussions over a period of several months.

Without a sensible vision, a transformation effort can easily dissolve into a list of confus- ing and incompatible projects that can take the organization in the wrong direction or nowhere at all. Without a sound vision, the reengineering project in the accounting de- partment, the new 360-degree performance appraisal from the human resources depart- ment, the plant’s quality program, the cul- tural change project in the sales force will not add up in a meaningful way.

In failed transformations, you often find plenty of plans, directives, and programs but no vision. In one case, a company gave out four-inch-thick notebooks describing its change effort. In mind-numbing detail, the books spelled out procedures, goals, methods, and deadlines. But nowhere was there a clear and compelling statement of where all this was leading. Not surprisingly, most of the employ- ees with whom I talked were either confused or alienated. The big, thick books did not rally them together or inspire change. In fact, they probably had just the opposite effect.

In a few of the less successful cases that I have seen, management had a sense of direc- tion, but it was too complicated or blurry to be useful. Recently, I asked an executive in a midsize company to describe his vision and re- ceived in return a barely comprehensible 30-

If you can’t communicate the vision to someone in five minutes or less and get a reaction that signifies both understanding and interest, you are not done.

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minute lecture. Buried in his answer were the basic elements of a sound vision. But they were buried—deeply.

A useful rule of thumb: If you can’t commu- nicate the vision to someone in five minutes or less and get a reaction that signifies both un- derstanding and interest, you are not yet done with this phase of the transformation process.

 

Error 4: Undercommunicating the Vision by a Factor of Ten

 

I’ve seen three patterns with respect to com- munication, all very common. In the first, a group actually does develop a pretty good transformation vision and then proceeds to communicate it by holding a single meeting or sending out a single communication. Having used about 0.0001% of the yearly intracom- pany communication, the group is startled when few people seem to understand the new approach. In the second pattern, the head of the organization spends a considerable amount of time making speeches to employee groups, but most people still don’t get it (not surpris- ing, since vision captures only 0.0005% of the total yearly communication). In the third pat- tern, much more effort goes into newsletters and speeches, but some very visible senior ex- ecutives still behave in ways that are antitheti- cal to the vision. The net result is that cynicism among the troops goes up, while belief in the communication goes down.

Transformation is impossible unless hun- dreds or thousands of people are willing to help, often to the point of making short-term sacrifices. Employees will not make sacrifices, even if they are unhappy with the status quo, unless they believe that useful change is possi- ble. Without credible communication, and a lot of it, the hearts and minds of the troops are never captured.

This fourth phase is particularly challenging if the short-term sacrifices include job losses. Gaining understanding and support is tough when downsizing is a part of the vision. For this reason, successful visions usually include new growth possibilities and the commitment to treat fairly anyone who is laid off.

Executives who communicate well incorpo- rate messages into their hour-by-hour activi- ties. In a routine discussion about a business problem, they talk about how proposed solu- tions fit (or don’t fit) into the bigger picture. In a regular performance appraisal, they talk

about how the employee’s behavior helps or undermines the vision. In a review of a divi- sion’s quarterly performance, they talk not only about the numbers but also about how the division’s executives are contributing to the transformation. In a routine Q&A with em- ployees at a company facility, they tie their an- swers back to renewal goals.

In more successful transformation efforts, executives use all existing communication channels to broadcast the vision. They turn boring, unread company newsletters into lively articles about the vision. They take ritualistic, tedious quarterly management meetings and turn them into exciting discussions of the transformation. They throw out much of the company’s generic management education and replace it with courses that focus on busi- ness problems and the new vision. The guiding principle is simple: Use every possible channel, especially those that are being wasted on non- essential information.

Perhaps even more important, most of the executives I have known in successful cases of major change learn to “walk the talk.” They consciously attempt to become a living symbol of the new corporate culture. This is often not easy. A 60-year-old plant manager who has spent precious little time over 40 years think- ing about customers will not suddenly behave in a customer-oriented way. But I have wit- nessed just such a person change, and change a great deal. In that case, a high level of urgency helped. The fact that the man was a part of the guiding coalition and the vision-creation team also helped. So did all the communication, which kept reminding him of the desired be- havior, and all the feedback from his peers and subordinates, which helped him see when he was not engaging in that behavior.

Communication comes in both words and deeds, and the latter are often the most power- ful form. Nothing undermines change more than behavior by important individuals that is inconsistent with their words.

 

Error 5: Not Removing Obstacles to the New Vision

 

Successful transformations begin to involve large numbers of people as the process progresses. Employees are emboldened to try new approaches, to develop new ideas, and to provide leadership. The only constraint is that the actions fit within the broad parameters of

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the overall vision. The more people involved, the better the outcome.

To some degree, a guiding coalition empow- ers others to take action simply by successfully communicating the new direction. But com- munication is never sufficient by itself. Re- newal also requires the removal of obstacles. Too often, an employee understands the new vision and wants to help make it happen, but an elephant appears to be blocking the path. In some cases, the elephant is in the person’s head, and the challenge is to convince the indi- vidual that no external obstacle exists. But in most cases, the blockers are very real.

Sometimes the obstacle is the organizational structure: Narrow job categories can seriously undermine efforts to increase productivity or make it very difficult even to think about customers. Sometimes compensation or performance-appraisal systems make peo- ple choose between the new vision and their own self-interest. Perhaps worst of all are bosses who refuse to change and who make demands that are inconsistent with the overall effort.

One company began its transformation pro- cess with much publicity and actually made good progress through the fourth phase. Then the change effort ground to a halt because the officer in charge of the company’s largest divi- sion was allowed to undermine most of the new initiatives. He paid lip service to the pro- cess but did not change his behavior or encour- age his managers to change. He did not reward the unconventional ideas called for in the vi- sion. He allowed human resource systems to remain intact even when they were clearly in- consistent with the new ideals. I think the of- ficer’s motives were complex. To some degree, he did not believe the company needed major change. To some degree, he felt personally threat- ened by all the change. To some degree, he was afraid that he could not produce both change and the expected operating profit. But despite the fact that they backed the renewal effort, the other officers did virtually nothing to stop the one blocker. Again, the reasons were com- plex. The company had no history of confront- ing problems like this. Some people were afraid of the officer. The CEO was concerned that he might lose a talented executive. The net result was disastrous. Lower-level managers concluded that senior management had lied to them about their commitment to renewal, cynicism grew, and the whole effort collapsed.

In the first half of a transformation, no orga- nization has the momentum, power, or time to get rid of all obstacles. But the big ones must be confronted and removed. If the blocker is a person, it is important that he or she be treated fairly and in a way that is consistent with the new vision. Action is essential, both to empower others and to maintain the credi- bility of the change effort as a whole.

 

Error 6: Not Systematically Planning for, and Creating, Short-Term Wins

 

Real transformation takes time, and a renewal effort risks losing momentum if there are no short-term goals to meet and celebrate. Most people won’t go on the long march unless they see compelling evidence in 12 to 24 months that the journey is producing expected results. Without short-term wins, too many people give up or actively join the ranks of those peo- ple who have been resisting change.

One to two years into a successful transfor- mation effort, you find quality beginning to go up on certain indices or the decline in net in- come stopping. You find some successful new product introductions or an upward shift in market share. You find an impressive produc- tivity improvement or a statistically higher cus- tomer satisfaction rating. But whatever the case, the win is unambiguous. The result is not just a judgment call that can be discounted by those opposing change.

Creating short-term wins is different from hoping for short-term wins. The latter is pas- sive, the former active. In a successful transfor- mation, managers actively look for ways to ob- tain clear performance improvements, establish goals in the yearly planning system, achieve the objectives, and reward the people involved with recognition, promotions, and even money. For example, the guiding coalition at a U.S. manufacturing company produced a highly visible and successful new product introduc- tion about 20 months after the start of its re- newal effort. The new product was selected about six months into the effort because it met multiple criteria: It could be designed and launched in a relatively short period, it could be handled by a small team of people who were devoted to the new vision, it had upside potential, and the new product-development team could operate outside the established de- partmental structure without practical prob- lems. Little was left to chance, and the win

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boosted the credibility of the renewal process. Managers often complain about being forced

to produce short-term wins, but I’ve found that pressure can be a useful element in a change effort. When it becomes clear to people that major change will take a long time, urgency levels can drop. Commitments to produce short-term wins help keep the urgency level up and force detailed analytical thinking that can clarify or revise visions.

 

Error 7: Declaring Victory Too Soon

 

After a few years of hard work, managers may be tempted to declare victory with the first clear performance improvement. While cele- brating a win is fine, declaring the war won can be catastrophic. Until changes sink deeply into a company’s culture, a process that can take five to ten years, new approaches are frag- ile and subject to regression.

In the recent past, I have watched a dozen change efforts operate under the reengineer- ing theme. In all but two cases, victory was de- clared and the expensive consultants were paid and thanked when the first major project was completed after two to three years. Within two more years, the useful changes that had been introduced slowly disappeared. In two of the ten cases, it’s hard to find any trace of the re- engineering work today.

Over the past 20 years, I’ve seen the same sort of thing happen to huge quality projects, organizational development efforts, and more. Typically, the problems start early in the pro- cess: The urgency level is not intense enough, the guiding coalition is not powerful enough, and the vision is not clear enough. But it is the premature victory celebration that kills mo- mentum. And then the powerful forces associ- ated with tradition take over.

Ironically, it is often a combination of change initiators and change resistors that creates the premature victory celebration. In their enthu- siasm over a clear sign of progress, the initia- tors go overboard. They are then joined by re- sistors, who are quick to spot any opportunity to stop change. After the celebration is over, the resistors point to the victory as a sign that the war has been won and the troops should be sent home. Weary troops allow themselves to be convinced that they won. Once home, the foot soldiers are reluctant to climb back on the ships. Soon thereafter, change comes to a halt, and tradition creeps back in.

Instead of declaring victory, leaders of suc- cessful efforts use the credibility afforded by short-term wins to tackle even bigger prob- lems. They go after systems and structures that are not consistent with the transformation vi- sion and have not been confronted before. They pay great attention to who is promoted, who is hired, and how people are developed. They include new reengineering projects that are even bigger in scope than the initial ones. They understand that renewal efforts take not months but years. In fact, in one of the most successful transformations that I have ever seen, we quantified the amount of change that occurred each year over a seven-year period. On a scale of one (low) to ten (high), year one received a two, year two a four, year three a three, year four a seven, year five an eight, year six a four, and year seven a two. The peak came in year five, fully 36 months after the first set of visible wins.

 

Error 8: Not Anchoring Changes in the Corporation’s Culture

 

In the final analysis, change sticks when it be- comes “the way we do things around here,” when it seeps into the bloodstream of the cor- porate body. Until new behaviors are rooted in social norms and shared values, they are sub- ject to degradation as soon as the pressure for change is removed.

Two factors are particularly important in in- stitutionalizing change in corporate culture. The first is a conscious attempt to show people how the new approaches, behaviors, and atti- tudes have helped improve performance. When people are left on their own to make the connections, they sometimes create very inaccurate links. For example, because results improved while charismatic Harry was boss, the troops link his mostly idiosyncratic style with those results instead of seeing how their own improved customer service and productiv- ity were instrumental. Helping people see the right connections requires communication. In- deed, one company was relentless, and it paid off enormously. Time was spent at every major management meeting to discuss why perfor- mance was increasing. The company news- paper ran article after article showing how changes had boosted earnings.

The second factor is taking sufficient time to make sure that the next generation of top management really does personify the new

After a few years of hard work, managers may be tempted to declare victory with the first clear performance improvement. While celebrating a win is fine, declaring the war won can be catastrophic.

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Leading Change

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approach. If the requirements for promotion don’t change, renewal rarely lasts. One bad succession decision at the top of an organiza- tion can undermine a decade of hard work. Poor succession decisions are possible when boards of directors are not an integral part of the renewal effort. In at least three instances I have seen, the champion for change was the retiring executive, and although his successor was not a resistor, he was not a change cham- pion. Because the boards did not understand the transformations in any detail, they could not see that their choices were not good fits. The retiring executive in one case tried unsuc- cessfully to talk his board into a less seasoned candidate who better personified the transfor- mation. In the other two cases, the CEOs did not resist the boards’ choices, because they felt the transformation could not be undone by their successors. They were wrong. Within

two years, signs of renewal began to disap- pear at both companies.

 

• • •

 

There are still more mistakes that people make, but these eight are the big ones. I realize that in a short article everything is made to sound a bit too simplistic. In reality, even successful change efforts are messy and full of surprises. But just as a relatively simple vi- sion is needed to guide people through a major change, so a vision of the change pro- cess can reduce the error rate. And fewer er- rors can spell the difference between success and failure.

 

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Further Reading

 

A R T I C L E S

 

Building Your Company’s Vision

 

by James C. Collins and Jerry I. Porras

 

Harvard Business Review

 

September–October 1996 Product no. 96501

 

Collins and Porras describe the glue that holds a change effort together. Great compa- nies have a clear sense of why they exist— their core ideology—and where they want to go—their envisioned future. The mecha- nism for getting there is a BHAG (Big, Hairy, Audacious Goal), which typically takes 10 to 30 years to accomplish. The company’s busi- ness, strategies, and even its culture may change, but its core ideology remains un- changed. At every step in this long process, the leader’s key task is to create alignment with the vision of the company’s future, so that regardless of the twists and turns in the journey, the organizational commitment to the goal remains strong.

 

Successful Change Programs Begin with Results

 

by Robert H. Schaffer and Harvey A. Thomson

 

Harvard Business Review

 

January–February 1992 Product no. 92108

 

Although a change initiative is a process, that doesn’t mean process issues should be the primary concern. Most corporate change programs have a negligible impact on opera- tional and financial performance because management focuses on the activities, not the results. By contrast, results-driven im- provement programs seek to achieve spe- cific, measurable improvements within a few months.

 

B O O K S

 

The Heart of Change: Real-Life Stories of How People Change Their Organizations

 

by John P. Kotter and Dan S. Cohen Harvard Business School Press 2002 Product no. 2549

 

This book is organized around Kotter’s eight- stage change process, and reveals the results of his research in over 100 organizations in the midst of large-scale change. Although most organizations believe that change hap- pens by making people think differently, the authors say that the key lies more in making them feel differently. They introduce a new dynamic—“see-feel-change”—that sparks and fuels action by showing people potent reasons for change that charge their emo- tions. The book offers tips and tools to you apply to your own organization.

 

Leading Change

 

by John P. Kotter Harvard Business School Press 1996 Product no. 7471

 

This book expands upon the article about why transformation efforts fail. Kotter addresses each of eight major stages of a change initia- tive in sequence, highlighting the key activities in each, and providing object lessons about where companies often go astray.

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