Leading Change

1. Leading Change Why Transformation Efforts Fail Adapted from a presentation by Hooman Mehrdadi

2. Outline • The research • Eight common mistakes • Lessons to be learned

3. The research • More than 100 companies with different characteristics have been studied. • The efforts have gone under many names. • The result of changes

4. The research • In almost every case the basic goal was: “to make fundamental changes in how business is conducted in order to help cope with a new, more challenging environment”

5. Error #1: Not establishing a great enough sense of urgency • How most successful changes begin. • Crises, potential crises or great opportunities. • Over 50% have failed in phase 1, because of: • Underestimating the need for motivating people. • Overestimating their success. • A lack of patience. • A paralyzed senior management.

6. Error #1: Not establishing a great enough sense of urgency • The need for a leader, CEO or division manager to sense urgency. • Bad results are both a blessing and curse in first phase. • An almost universal tendency to shoot the bearer of bad news. • When is the urgency high?

7. Error#2: not creating a powerful enough guiding coalition • In most successful cases a coalition is always pretty powerful. • Senior management always forms the core of the group. • More than a high sense of urgency is required. • Reasons for failing: • No history of teamwork at top. • Expecting the team to be led by a staff executive.

8. Error#3: lacking a vision • In very successful cases, a coalition develops a picture of future. • A vision says something that helps clarify the direction in which an organization needs to move. • A list of confusing and incompatible projects. • A useful rule of thumb.

9. Error#4: Undercommunicating the vision • Three patterns with respect to communication: • Holding a single meeting or sending out a single communication. • Making speeches to group of employees. • Newsletters and speeches. • Particularly challenging in case of short term sacrifices. • Walk the talk, nothing undermines change more than wrong behavior by important individuals.

10. Error#5: not removing obstacles to the new vision • Emboldened employees. • Obstacles for employees: • Narrow job definitions. • Compensation and appraisal systems. • The action is essential both to empower others and to maintain the credibility of change effort.

11. Error#6: not systematically planning for and creating short term wins • Most people go on a long march unless… • In one or two years you should find: • Quality beginning to go up. • Decline in net income stopping. • Product introduction. • Upward shift in market share. • In successful cases managers actively plan to achieve objectives. They don’t hope for. • The benefits of commitments to produce short-term wins.

12. Error#7: declaring victory too soon. • New approaches are fragile and subject to regression. • Ironically, it is often a combination of change initiators and change resistors that creates the premature victory. • What, instead of declaring premature victory.

13. Error#8: not anchoring changes in the corporation’s culture. • In the final analysis change sticks when it becomes “ the way we do things around here” • Two factor in institutionalizing change: • To show people , the effects of new approaches. • Make sure that next generation of top management will personify the new approach.

14. Lessons to be learned • Change process goes through a series of phases. • Critical mistakes in any of the phases can have devastating impacts. • A fewer errors can spell the difference between success and failure.

15. Reference • John P. Kotter, “Leading Change, Why Transformation Efforts Fail”, HBR , April 1995. Thanks for your attention