This series focuses on real business scenarios and learnings shared by Quantiphi leaders and experts.
When asked about the difference between management and leadership, I often quote one of my favorite leadership theorists, Warren Bennis, who is credited with saying that “Managers do things right; Leaders do the right things”. This is a nuanced statement that has been the subject of books but in a statement, I explain it this way: Managers are expected to ensure that the policies and procedures are followed, consistently, and to get work done on time and on budget without deviation. In other words, as I explain to my grandkids, color within the lines. Leaders, however, redefine the lines and are expected to continually question where the lines are drawn. Therefore, they must continually review the policies and procedures and challenge the status quo. Leaders are continually on guard for what Clay Christensen warned is the “innovator’s dilemma” or other disruptors that, left ignored, will disrupt the leader’s business. At the core of any good leader is a change expert. So to lead change, you need to have a change strategy that is proven and validated.
While we deal with technology in every solution, it is notable that the technologies will change. However, while the technologies change, they all involve people, who are the most complex part of the solution development and adoption process. To ignore the need for organizational change management (OCM) as part of your digital transformational journey is a fool's errand. In fact, a McKinsey Quarterly report (2002) indicated that if OCM is included the the plan, the average ROI on a project was 143% compared with 35% for projects that ignored the need.
If you perform a literature search on change management or leading change, a number of theorists will pop up including Lewin, Black & Gregerson, DeCaluwe, Cameron & Quinn, and Rogers, among others. And their excellent theories have some overlaps too. However, the approach that has been most researched and generally most quoted is John Kotter’s Eight-Stage Process for creating change. Let’s take a deep dive into his strategy and examples of how the recommendations may be implemented.
John Kotter’s Eight-Stage Process of Creating Major Change
Kotter refers to some of his eight steps slightly differently, depending on the publication or interview. The following list, taken from an interview with Professor Kotter in 2008, will be used because of its goal in step eight of creating a new change culture. Kotter highlighted his belief that skipping or rushing any one step will result in a less-than-positive outcome (Kotter, 1995). Additionally, in support of the thesis that change will only accelerate over time, there is a need to create a change-friendly culture that is not about episodic change but about embracing change on a continuous basis. This is a critical component in managing change in the 21st century. It is noteworthy that leaders in these organizations are continually looking at ways to counter complacency in the workplace through examples of where change is needed. Kotter’s eight steps for change management are as follows:
STEP 1: Create a sense of urgency
This is where over 50% of companies fail. You need to create a call to action and there needs to be a clear sense of urgency! This may be done by planting an emotional hook that is viscerally felt by the participants and that can be used to demonstrate why anyone should spend their valuable time working on the project. Without proving to them that the work effort deserves an investment in their time, successful engagement will not be achieved and ignition of the change management process will be doomed from the start.
Although there is some conflicting information in the literature concerning those who create a contrived sense of urgency that borders on unethical and disingenuous (Nur, 1998), Kotter dispels the concept that leaders need to create an artificial crisis in order to create a sense of urgency (Shrader, 2008). Kotter is frank with his observation that, without motivation, companies tend to move to a state of entropy or equilibrium so that minimal energy is expended (Shrader, 2008) and the difficult effort to change will not occur. This natural progression by organizations needs to be countered vigorously. He recommended against the laborious business plan approaches that no one reads or the endless PowerPoint slides mapping out the plan. Instead, Kotter and Cohen (2002) advocate for a more personal approach that may take the form of a client video or a story from a customer having a problem with the firm’s products or services or some other visible demonstration of an existing problem that needs to be solved.
Kotter, in an interview, discussed the concept of “bringing the outside in” (Heffes, 2009, p. 22) so that the company can understand what is going on outside of its view of the world. This first step is meant to help others to see, feel, and recognize the problems that exist and that they need to correct. Customers are a great way to help the company focus on what is really important.
STEP 2: Build your guiding team
To do this right you need to get the “right people” on your guiding team. It is important to include “champions” who have the necessary clout, either formal or informal, to make change happen. The group must “appoint a champion”, or a champion of champions, whose primary purpose is to obtain buy-in from the other members and increase awareness of the issues. Consider using social media or other communications strategies to involve employees as an extension of the guiding team in order to build trust using empathetic means. Inside the actual team, it is critical to build team trust. Without trust, honest communication will not occur. Without honest communication, the root cause of problems is often missed.
In personal communications with entrepreneurs, one important concept that is discussed frequently is the ability of members of the guiding team to argue and disagree, sometimes passionately. The trick is for the members of the group to be able to leave the meeting with no hard feelings afterward. Without an understanding that disagreements are necessary and healthy and that such discussions will be protected by the group, the real issues will not be addressed and improvements will not occur. During this step, team members must be cognizant of the employee incentives that are in place that will help them, or impede them, in implementing their recommendations. Underestimating the need for a strong team may also signal early failure. If the team is not perceived as having the necessary clout to lead the effort, the team’s recommendations will be ignored (Kotter, 1995). Likewise, if the team is strong, social pressures to follow the in-group’s direction and to ‘get on the bus or be left behind’, will become apparent (Dawson, Mighty, & Britnell, 2010).
STEP 3: Form your vision and strategy
In this step, Kotter (2002) cautioned that teams frequently against setting ambiguous, unclear, or non-sensible visions. He explained that visioning is a creative process that needs to “appeal to the heart and motivate anyone” (p. 69). As part of this process, leaders need to paint a picture of how things will be in the future. The story needs to be compelling and needs to draw in a wide constituency. There is great value in writing a vision statement that can serve the change process moving forward.
Creative approaches that draw the employees into the “to-be” or “future” state include the production of a before and after video of a targeted process that needs improvement. This can be used to spur creative discussions and helps to cement the vision in a dramatic fashion. Importantly, it may be an enjoyable process that forces the group to think outside of where they are today. This approach also helps them address the “so-what” factor. If the viewers of the video are not impressed with the “to-be” picture, the team needs to rethink the importance of the initiative or examine ways to refine the message.
Another excellent test of the clarity of the vision is the elevator pitch test. If the vision cannot be explained in 30 seconds or less, chances are that the vision is too complex and will be lost on the rank-and-file employee. Additionally, there is a need to create a specific timeline and identify the resources needed to deploy the strategy. The importance of addressing the issue of resources cannot be understated. Ignoring the issue of resources may emasculate any potential change efforts.
STEP 4: Enlist buy-in
Step four, which aims to achieve buy-in is an excellent acid test for the relevance of the vision, is also a great way to assist in helping others understand the importance of the project. During this step, the distribution of the video or the elevator pitch from step three is performed, and feedback is received. Kotter (2002) suggested that questions and answers (Q&A) be prepared by the leadership group. The purpose of the Q&A is to anticipate potential concerns.
Slogans and reminders of the change process need to be promoted in such things as screen savers, company portal updates, company electronic bulletin boards, newsletters, text updates, and emails with periodic updates on progress. It is recommended that stakeholders need to seize any available opportunity to remind others of the initiative. Kotter (2002) warned that authenticity and honesty in communications are of paramount importance. Loss of credibility reflects poorly on the overall change initiative. Additionally, Kotter (1995) discussed the need for leaders to reinforce the messages by “walking the talk”; in other words leaders need to live and act by example.
STEP 5: Enable and empower
Empowering action in step five discusses the need to remove barriers. Kotter (1996) argued that it is not often that individuals are the barriers, instead, the barriers are usually associated with the corporate systems. He, however, identified that superiors may inadvertently discourage the implementation of the new vision. Corporate structures such as policies, procedures, information systems, or incentive systems may interfere. Lack of support systems or employee skills may restrict the employee from participating.
It has been argued that individuals are not inherently resistant to change. When individuals do resist, it is often due to “loss of status, loss of pay, or loss of comfort, but these are not the same as resisting change” (p. 26). Incentives should be created for employees in order to overcome system barriers. Reduction of policies and procedures that interfere with the implementation of the change may be required. Open and honest communication is required. In my experience, senior leadership must give the innovation group a “hall pass” on company policy. In other words, instead of being crushed by the bureaucracy of the normal processes of the regular business, the group must be given permission to follow a streamlined approval process on deal approval, investments, and marketing endeavors. This exception process permits the group to trial new go-to-market opportunities without disrupting the core business functions. Such concepts may also be useful in ‘greasing the skids’ for change groups to reduce organizational friction in order to move ahead.
STEP 6: Generate and celebrate wins!
The creation of short-term wins in step six is supportive of the adage that success breeds success. Individuals rally around a winner. In the case of the overall change process, the celebration of early wins also functions to provide positive feedback to the group that has undertaken the difficult work of change. These wins add needed momentum and motivation to the participants at a time when some extra support will be needed. A possible analogy might be training wheels on a bike for a child learning to ride or bumpers in a bowling alley for someone learning to bowl. Instead of dealing with the discouragement of falling off the bike or rolling a gutter in bowling, gratification is accelerated so that satisfaction may be tasted. The psychology is that when one tastes how good the success is, they will desire more of it. Short-term wins provide the team and other participants with a taste of success. It has been recommended that such celebrations should remain brief and not prolonged. Kotter (2002) also cautioned that the group protects itself from false pride.
STEP 7: Sustain and don’t give up
Step seven addresses not letting up on the selected change activity. Just as it is very difficult for a winning Super Bowl team to repeat their feat in a consecutive year or the same team to win back-to-back World Series or a World Cup, the change team will find it difficult to repeat its early successes without constant vigilance, work, and urgency.
Kotter (2002) recommends that the workgroup streamline processes, learn from past mistakes, and reduce work that is no longer necessary. John C Maxwell is famously quoted as saying, “Fail early, fail often, but always fail forward”, which has been the war cry for Silicon Valley in their efforts to innovate iteratively. The group needs to continue to look for success and celebrate them. And, the change team must continually look at recruiting new stakeholders.
STEP 8: Institute and make change stick
Lastly, anchoring new approaches in the culture (Kotter, 1996) to making change stick (Kotter & Cohen, 2002) in the new culture (Shrader, 2008) is the final step. This appears to support the concept that change is not episodic but continuous. The identification and management of change cannot be reduced to the latest management fad but must be viewed as a necessary way of doing business. Ways to make it stick include deliberate hires of management that personify the new company change management approaches, and succession planning for individuals that support the new regime (Kotter, 1995). Other mechanisms include the creation of objectives and incentives to reinforce the need to improve continually and to never be comfortable or satisfied with the current position of the organization.
Successful digital strategies are difficult to pull off. But with adequate planning, your chances for a successful outcome are far better. In order for an organization to continue to be successful, effective management of organizational change is essential. The eight-stage process described is widely regarded as one of the most effective methods. Business leaders can be far more successful at managing and leading change in the 21st century if they follow this process end-to-end.
