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The Case for Real Change

Strategy and Leadership Magazine, Jan/Feb 2006, Volume 34, Issue 1

By Omar Khan

A common strategic dilemma challenging leaders is how to ignite change. Corporate change programs are expensive adventures that rarely deliver the vision behind them. Even when change programs are compelled by a major crisis, the final results are usually far more prosaic than the exhortations, incurring damaging cynicism and disbelief.

As a coach and facilitator of a number of highly successful change efforts, I’ve discovered a few key applications that can make all the difference. A creative look at the many hurdles in implementing change can provide leaders with a clear indicator of whether or not to proceed with a major effort or, instead, to save credibility and aim instead at more focused operational improvements.

The five cardinal sins of misleading change efforts are:

1. TOO MUCH HYPE, NOT ENOUGH ACTION

Many change efforts begin with a major internal PR campaign that often eerily resembles a National Political Convention complete with pomp, ceremony, empty speeches, lots of photo ops and evocative music. All of these accompaniments can be powerful as long as they garnish—instead of substituting for the substance. One client came to us for help after the company’s overproduced “rock concert-like” change effort elicited nothing more than company-wide cynicism and a tab of millions of dollars.
Let’s hype the actions we’re actually taking, not just our intentions and plans.

2. OVER-ADVERTISE HOW “MASSIVE” THE CHANGE WILL BE, THEN DELIVER ONLY ITERATIVE “TWEAKING”

This same transnational, guilty of too much noise and hype, terrified everyone in the organization by telling them that the upcoming change in their way of working would revolutionize everything. Structures would change, policies would transform, and a value-based evaluation of all elements would occur.
After being jolted awake by the loud, pompous blast, people found that their energy and belief in the undertaking had collapsed. They saw the same things happening as always, with perhaps a few incremental shifts. As a result, they shut down mentally and dug into their old status quo behaviors with even greater zeal. Not surprisingly, this well-known brand name ended up being merged with another company.
Let’s make a change, and simultaneously talk about it. After several preliminary changes have been felt and experienced, we can use the value they’ve delivered to make the larger case.

3.CREATE A FRENZY AND THEN JUST SPEND ALL YOUR TIME IN COMMITTEES AND MEETINGS

After hyping all that really needs to happen, after trumpeting the true magnitude of the changes and transformations, a good campaign creates some frenzy. People who have been whipped up” now expect not only action, but decisiveness, speed and urgency. Instead they encounter endless meetings, Power Point slideshows and committees debates on the wording of various banners.

Confusion rises and frustration flourishes as these committees invariably create training sessions and busy work that build up the appearance of action, but neglect all the really challenging aspectss. Unfortunately, such committees have neither been empowered nor held accountable.
Let’s create instead some fast-action teams that represent a cross-section of the organization, make them accountable, and ask them to deliver. And let’s have them demonstrate the value and relevance of every recommendation, course and initiative required to deliver the change.

4.MAKE NO CHANGES IN SENIOR LEADERSHIP

The old way of working, the one we’re now deriding and lampooning, was created by our current leaders. Hence, either they have to demonstrate and explain passionately how they will change, or else a number of them will have to be replaced by people who are clear exemplars of the new way of working.
Our client, who came to us too late for a rescue operation, had a highly controlling and inflexible Chief Executive. The overwhelming feedback when we asked around about him was: “It’s like Woody Allen telling you to get over your neuroses, or Winston Churchill telling you that cigars are bad for you.” Moreover, his chief lieutenants were hand-picked “yes men.” The CEO was a charming and beguiling communicator so, when his global bosses insisted on transformation, he took up the “marketing” cudgel with alacrity. Alas, the “reality” bit got in his way.

When younger leaders responded to the verbal gauntlet he threw down by taking on the responsibility that was being asked of them, he stopped them in their tracks for daring to step out of bounds. A few such encounters and all the speeches in the world are dead in the water.

Let’s admit that past leadership, not “employee-ship,” caused many of our current problems. Let’s show how senior leaders are transforming themselves first and are willing to be accountable. Let’s make sure those who respond visibly and viably are recognized and celebrated and given bigger roles to play.

5.INVOLVE NO CUSTOMERS, IGNORE THE MARKET

The change we’re igniting lives or dies by producing market value. Hence customers are a marvelous sanity check. If we can involve them in our design, in our brainstorming, in our idea generation and in our assessment of leaders, we’ll have a remarkable impact.

We worked with a Johnson & Johnson operation on a vision challenge. After articulating a compelling vision, with our help they brought in their suppliers, business partners, some distributors and major customers. These outside people, coupled with J&J team-members, looked at the current reality and the gap between it and the vision. “How well are we living this vision today?” was the question posed. Invariably, customers and suppliers saw the success of the implementation of the vision very differently from the corporate cheerleaders.

By the time the session concluded, we had received both wonderful affirmation on some fronts (what they were already doing very well), and a bracing manifesto for improvement on the other. Having gone public, it was far easier to get going and to drive the priorities.

The more external engagement there is, the more freshness there will be in our ideas and the greater the urgency and the excitement to not only initiate meaningful action but also to sustain it.
If we consider the five elements above, we can use them to help us make better decisions as to whether or not to engage in a full-fledged change effort. We should do so if, and only if, the following conditions are satisfied.

  1. We really have to take action. Inaction is clearly counter-productive. The need for action is such that we can make that case both passionately and factually. Moreover, the rewards for taking early action are fantastic, and the downside of not acting could be demonstrably catastrophic.
  2. The actions required are dramatic enough in and of themselves to need very little hyping.
  3. The change we’re asking for addresses some of the most common and pervasive frustrations experienced by the company, externally (customer experience) and internally (our own team’s priorities.) That way, there is a real willingness and enthusiasm to take on the battle.
  4. Three to four great first steps are evident and have been aligned. And we’re taking them as we’re beginning to talk publicly about them
  5. We are willing to enroll customers and other partners to help us make the plan workable, profitable, and valuable to all concerned. The interaction points have been clearly identified and everyone has committed to them.
  6. Our leaders demonstrate changes in their own work style and behavior before asking for it in others. They are willing to take decisive action to change key leadership so that those who are true ambassadors of this new way of working and creating value become heroes and winners. Their tolerance for “snipers,” for people dragging their feet or defending old turf or yesterday’s priorities, is zero.

If the answers to the above are not affirmative and unequivocal, then it is more likely then not that your company needs to make an operational improvement. Do not give big speeches. Instead, stick to highly focused communication and galvanize people around that discrete change.

When Jeff Immelt wanted to add to Jack Welch’s extraordinary legacy in a transformational manner and help GE return to its innovation roots and be more customer intimate, he had to push for wide-scale change. Given the fact that acquisitions couldn’t fuel growth in the future as they had in the past, his decision was excellent and his communication and actions followed suit. When James McNerney helped 3M revitalize itself by tightening up its quality, expanding its leadership and strengthening new markets, he was shifting the behavior of an iconic company. Just improving processes, or reducing waste, or connecting better with one customer segment, wouldn’t do it. Something dramatic and far-reaching was required. Hence, this was another clear case for transformation.

You can see the need for visionary change in the above two examples. We’ve worked extensively with various Unilever operations, as they attempt to separate out brand innovation from sales and distribution globally. Creating global brand teams that can influence their country operations, work effectively with their global supply chain colleagues, and still understand the various markets in order to deliver the right innovations is highly challenging. One of the teams that have made the most impressive strides at Unilever is the Asia Hair Category Team which in Asia alone amounts to more than $1.4 billion per annum.
The Unilever team realized that they had to establish the credentials of the new structure, not wait for someone from the head office to tell them what to do. They’ve hyped very little and acted decisively and early. They’ve enrolled each other. They have shifted key leaders around. Each of their senior teams is working with one of our coaches, and they have actively begun coaching their own teams. They have connected with customers and have spent intensive time visiting each of their markets to get consumer insight. They are partnering with their country colleagues as customers of their brand strategies. They have been willing to move fast, prototype the functioning of a Category team and invent the rules for this new structure and opportunity as they go. As such, not only has there been an impressive business turnaround relative to Hair in various countries, but also top talent from across the organization is lining up to join the team. Additionally, they are being treated as a model by many of the other teams that are still organizing themselves, giving speeches, analyzing everything to death and promoting personal allies rather than people inspired to make a difference.

Suppose, however, that you do need operational change. Given the report card we’ve provided above, that will be the case more often than not. So let’s say an examination indicates a discrete area that is dysfunctional. Perhaps though important, the problem is relatively localized, and it is tangible, material and definable. It’s not akin to an overall cancer (like a defunct technology, or an outdated industry paradigm) that’s spreading. The problem is it’s issue-specific, perhaps resulting in a devastating underperformance or chronically missed opportunities for profit growth.

In that case, the steps are as follows:

  1. Identify the shortfall at the current time and the value-opportunity once the change is realized.
  2. Analyze, with a wide cross-section of the team, the root cause, from as many perspectives as possible.
  3. Invite multiple viewpoints and stakeholders to generate ideas, ranging from the radical to the humble. The greater the possible impact and value, the lower the cost and the risk, the bigger the swing should be. Otherwise, start small, and expand the improvement aspiration from there.
  4. Test various ideas and ask people to suggest further improvements for the most promising ones. Avoid falling prematurely in love with good ideas. Instead, take good ideas and make them better.
  5. Measure the improvements as new approaches are tested and create (map and design) a new process. Train people in the new process; create champions, dashboards, and accountability. Integrate this into your tracking and performance management system.
  6. Make the changes, continue to measure and improve.

Continuous improvement is classic Kaizen and it does not require a cultural or leadership transformation of the company as a whole. Engendering a more radical redesign over an entire process becomes re-engineering.

We’ve worked with numerous companies who have realized millions of dollars of benefit from something similar to the above: either by removing waste or non value-adding steps from key processes or by realizing new potentials, improving design and finding an enhanced way to deliver better service. Because these are highly and immediately measurable, and still very much involve aligning and energizing a team, they often help make us “fit for change.” In other words, they can build our internal confidence and capacity for more widespread, transformational change in the future.

The fundamental challenge of change is that it finally depends, as does all leadership, on relationships and communication. Whether aiming for an operational breakthrough or for the re-invention of the company, remember that it is the depth and breadth of the relationships that are fostered and the quality of the conversations that take place that enables change.

The biggest reason for change efforts to falter is that the relationships aren’t strong enough. It has been noted: “Nothing can be built that is greater than the relationships on which it is based.” And if the relationships don’t transform and evolve, the rest of the process certainly won’t. If you detect that the quality of listening and interaction is not consistent with the expressed change agenda, then solving that problem has to be the first priority.

For change to succeed, all leaders must:

  1. Have a leadership vision and overall values in common. Bridges can be built across other differences, but rarely over this one.
  2. Believe that they can personally help lead and deliver what they are asking of others.
  3. Understand that their daily priorities and behavior have to anchor and validate the change.
  4. Be coachable and open to feedback, as a way of modeling that requirement for others.
  5. Know that they would be proud to realize this change.
  6. Achieve personal satisfaction from achieving their goal together with their colleagues and teams.

When the six conditions for igniting a transformation process are fulfilled, and are coupled with these six requisites of leadership engagement, real change will occur. For operational breakthroughs of any magnitude, these six leadership demonstrations and commitments are non-negotiable.

Let’s not tilt at windmills. Let’s pick our battles and make sure we win them…together. Let’s leave the PT Barnum-type antics to hucksters. Real leaders helping to produce real value for great teams have to go for change selectively, constructively, personally and, above all, credibly. The passion of their example and the sizzle of the actions have to be where the real ad campaign emanates.