|O organization today -- large
or small, local or global -- is immune to change. To cope with new technological,
competitive, and demographic forces, leaders in every sector have sought
to fundamentally alter the way their organizations do business. These change
efforts have paraded under many banners -- total quality management, reengineering,
restructuring, mergers and acquisitions, turnarounds.
Yet according to most assessments, few of these efforts accomplish their goals. Fewer than 15 of the 100 or more companies I have studied have successfully transformed themselves. The particulars of every case vary, but I have found that the change process involves eight critical stages (see box). Mismanaging any one of these steps can undermine an otherwise well conceived vision, but four mistakes in particular are the source of most failures.
Managing Multiple Time Lines
O establish a sense of urgency and avoid declaring premature victory leaders must manage a key strategic resource -- time. Responding quickly while also accepting the long-term nature of the change process sounds like a paradox. But effective leaders make it clear that meaningful change takes years. At the same time, they create shorter term wins and continuously remind people that the need for change is urgent precisely because it takes so long. When, for example, Konosuke Matsushita started the Matsushita Institute of Government and Management -- his graduate school for people who want to go into public service -- he explained that his vision was to help Japanese politics become less corrupt and more visionary. When a skeptical reporter asked how long that would take, he said, "In my judgment, about 400 years -- which is why it's so important that we start today."
The best leaders that I have known balance short-term results with long-term vision. (When it comes to organizational change, I define short-term as six to 12 months.) They engage directors, investors, employees, and other constituents in the excitement of delivering both long- and short-term results. They operate in multiple time frames. Results and vision can be plotted on a matrix that has four dimensions (see figure). Poor results and weak vision spell sure trouble for any organization. Good short-term results with a weak vision satisfy many organizations -- for awhile. A compelling vision that produces few results usually is abandoned. Only good short-term results with an effective, aligned vision offer a high probability of sustained success.
Some leaders fear they have too little time to manage long-term change and therefore focus only on quarterly or annual results. Yet many now reach senior leadership positions at age 50 or younger and have an opportunity to lead a number of transformations necessary to long-term leadership. Jack Welch, for instance, has led at least three major change visions at GE. Of course, he had the benefit of starting early and keeping his job a long time -- but he has kept the job precisely because he made organizational change an ongoing, multiphase process.
Transforming an organization is the ultimate test of leadership, but understanding the change process is essential to many aspects of a leader's job. Two skills in particular -- building coalitions and creating a vision -- are especially relevant to our times.
N today's less hierarchical but more complex organizations, leaders must win the support of employees, partners, investors, and regulators for many types of initiatives. Because you are likely to meet resistance from unexpected quarters, building a strong guiding coalition is essential. There are three keys to creating such alliances.
Engaging the right talent. Coalition building is not simply reaching out to whoever happens to be "in charge" of a department, organization, or other constituency; it is assembling the necessary skills, experience, and chemistry as well. A coalition of 20 people who are decent managers but ineffective leaders is unlikely to create meaningful change -- or much else that is new. You don't necessarily start with the president or CEO as your partner; it may be the executive vice president who brings more to the party, and yet still connects you to the line organization. The most effective partners usually have strong position power, broad experience, high credibility, and real leadership skill.
Growing the coalition strategically. Like a good board of directors, an effective guiding coalition needs a diversity of views and voices. Once a core group coalesces, the challenge is how to expand the scope and complexity of the coalition. It often means working with people outside your organization -- even for an internal change effort. Leaders must not only reach beyond the confines of their enterprise but also know where and how to build support. That may mean, for instance, giving others credit for success, but accepting blame for failures oneself. It means showing a genuine care for individuals but a toughmindedness about results -- getting results being the best way to recruit allies.
Working as a team, not just a collection of individuals. Leaders often say they have a team when in fact they have a committee or a small hierarchy. The more you do to support team performance, the healthier will be the guiding coalition and the more able it will be to achieve its goals. Especially during the stress of change, leaders throughout the enterprise need to draw on reserves of energy, expertise, and, most of all, trust. Personnel problems often lurking beneath the surface of a team -- all too easily ignored during placid times -- come to the fore during times of change. The pressures of transformation make a strong team essential. Beyond the customary team-building retreats and events, real teams are built by doing real work together, sharing a vision, and commitment to a goal.
Creating a Vision
For example, this narrowly defined but effective change vision was developed by the operations group of a financial services company: "We want to reduce our costs by 30 percent and increase the speed with which we respond to customers by 40 percent. When this is completed, in approximately three years, we will have ... better satisfied customers, increased revenue growth, more job security, and the enormous pride that comes from great accomplishment."
Traits of Effective Leaders
EADERS exist at all levels of an organization. At the edges of the enterprise, of course, leaders are accountable for less territory. Their vision may sound more basic; the number of people to motivate may be two. But they perform the same leadership role as their more senior counterparts. They excel at seeing things through fresh eyes and at challenging the status quo. They are energetic and seem able to run through, or around, obstacles.
I have found that people who provide great leadership are also deeply interested in a cause or discipline related to their professional arena. A leader in a pharmaceutical firm, for example, might have a passion for reducing suffering. He or she may have watched a parent or loved one suffer, and be motivated by deep emotions, not just intellect. Such leaders also tap deep convictions of others and connect those feelings to the purpose of the organization; they show the meaning of people's everyday work to that larger purpose.
|Great leaders continue to take risks.|
Leaders invest tremendous talent, energy, and caring in their change efforts, yet few see the results they had hoped for. But there is a good reason why so few organizations have transformed themselves. Today's leaders simply don't have much practice at large-scale change. Thirty years ago few organizations were thinking about radical reinvention, so there is little practical experience to be passed on to a new generation of managers. The good news is, the percentages are bound to improve. The kinds of changes routinely undertaken by today's organizations -- producing ever better products, more quickly, at ever lower cost -- were unimaginable 30 years ago. Over the next decade, thousands of leaders will guide equally remarkable changes. That is more than a safe prediction; it is a social and economic necessity. All institutions need effective leadership, but nowhere is the need greater than in the organization seeking to transform itself.
|Eight Steps to Transform Your Organization|
|1. Establish a
Sense of Urgency
Examine market and competitive realities
Identify and discuss crises, potential crises, or major opportunities
2. Form a Powerful Guiding Coalition
Assemble a group with enough power to lead the change effort
Encourage the group to work as a team
3. Create a Vision
Create a vision to help direct the change effort
Develop strategies for achieving that vision
4. Communicate the Vision
Use every vehicle possible to communicate the new vision and strategies
Teach new behaviors by the example of the guiding coalition
5. Empower Others to Act on the Vision
Get rid of obstacles to change
Change systems or structures that seriously undermine the vision
Encourage risk taking and nontraditional ideas, activities, and actions
|6. Plan for and
Create Short-Term Wins
Plan for visible performance improvements
Creating those improvements
Recognize and reward employees involved in the improvements
7. Consolidate Improvements and Produce Still More Change
Use increased credibility to change systems, structures, and policies that don't fit the vision
Hire, promote, and develop employees who can implement the vision
Reinvigorate the process with new projects, themes, and change agents
8. Institutionalize New Approaches
Articulate the connections between the new behaviors and organizational success
Develop the means to ensure leadership development and succession
|The Ways Change Happens|
of necessity and for a variety of reasons. But the single
biggest impetus for change in an organization tends to be a
new manager in a key job. These change leaders range from the
middle to the top of an organization; it is often a new
division-level manager or a new department head -- someone
with fresh perspective -- who sees that the status quo is
While there is no single source of change, there is a clear pattern to the reasons for failure. Most often, it is a leader's attempt to shortcut a critical phase of the change process. Certainly, there is room for flexibility in the eight steps that underlie successful change -- but not a lot of room.
|When people say, for
instance, "We're going to empower employees to act
entrepreneurially -- but we don't need to spend a lot of time
changing our whole organization," they are almost bound to
Producing change is about 80 percent leadership -- establishing direction, aligning, motivating, and inspiring people -- and about 20 percent management -- planning, budgeting, organizing, and problem solving. Unfortunately, in most of the change efforts I have studied in the past 20 years, those percentages are reversed. Our business schools and work organizations continue to produce great managers; we need to do as well at developing great leaders.
|Copyright © 1998 by John P. Kotter. Reprinted with permission from Leader to Leader, a publication of the Drucker Foundation and Jossey-Bass, Inc., Publishers. To subscribe, contact Jossey-Bass Publishers, 350 Sansome Street, San Francisco, CA 94104, 1-888-378-2537 or 1-415-433-1767. For reprints, call 1-800-217-7874 or 1-612-582-3800. Permission to copy: Send a fax (1-212-850-6008) or letter to John Wiley & Sons, Inc., Permissions Department, 605 Third Avenue, New York, NY 10158. Include: (1) The publication title, author(s) or editor(s), and pages you'd like to reprint; (2) Where you will be using the material, in the classroom, as part of a workshop, for a book, etc.; (3) When you will be using the material; (4) The number of copies you wish to make. [Further information on permissions is available from the Wiley Web site http://www.wiley.com/about/permissions/.] Available on the Drucker Foundation web site, http://www.pfdf.org/leaderbooks|
About the Foundation | Nonprofit Innovation | Hesselbein Fellows
Conferences | Publications | Leaderbooks | Join Us / Subscribe
Contact | Links | Search / Site Map | Home
|THE PETER F. DRUCKER FOUNDATION|
FOR NONPROFIT MANAGEMENT