Irma, why does change continue to be such a topic of relevance within the business community?
That's a very good question. Unlike some topics which are the ‘fad of the month,' I think change continues to be at the top of the list of issues because the pace and depth of change at the latter half of the 20th century, and the beginning of the 21st century, is unprecedented.
Whether you're looking at technology, biotechnology or communication, we are quite literally wiping out technology on a monthly basis and new things are coming in. These are forcing businesses to change and shift in an ever more rapid way.
Yet, at the same time, there has been a lot of publicity of how companies' attempts to change and adapt have failed. Given that, and given the scrutiny that companies have in the business press and the popular media, why would any company voluntarily subject itself to changing its strategy, changing its partnerships, changing its way of doing business?
Because they have no choice. Change will come, whether companies do anything or not. Unless they're proactive, they're going to be run over – they're going to be obliterated.
I was reading an article in the paper in which the Wall Street analysts, despite the profits that Home Depot was making, were not enthusiastic about the company because they were saying, “Too much change too fast.” They thought this would eventually come back to haunt the company.
In some ways, the analysts are getting more sophisticated; they're understanding that if you don't manage change well, and you don't manage its impact on people, eventually it will effect the bottom line. So, it's not just changing that keeps a company healthy, it is managing that change and channeling that change and helping people who have to implement it understand it, buy into it and move with it that will determine the company's profitability.
I'd like to pursue both of those thoughts: about what happens when change efforts fail and what happens when they succeed. First, when you see change efforts that are failing, can you tell me more about what you see these companies are missing?
Well, let me give you a couple specific examples of clients who have come to us, to Ki ThoughtBridge, with challenges. I think I'll take 3 very different examples. Let's say there's a school district – and you know they're in the midst of major reform; there are two companies who have merged – or are trying to merge; and there is a company that is totally changing its business model to deal with new market realities.
To start with the school district: this is a very top-notch school district; people there saw that the old method of simply educating the children of the middle-class who come well-equipped to compete in school was no longer a viable alternative.
Not only because we're entering the knowledge age when having citizens who are able to learn and grow is important, but also because expectation and requirements from state and federal governments, and from parents, has changed dramatically. So they brought in a ‘turn-around artist,' if you will, as a superintendent, a man who was known for his ability to take faltering and failing schools and turn them around. This person was brilliant and able, but while making major change in the middle of his third year, he started losing people left and right – some of his best people were leaving.
Not only that, but he found that a critical part of change involved collaboration and cooperation with a group of people who were used to having fiefdoms and turf. Now, he needed these people to cooperate and collaborate, and they didn't know how to do it. So he found he had on his hands a demoralized team, and things that should have been going faster at getting completed were not getting done.
We had a long talk about leadership styles he needed to lead his organization through change, and what style is needed in a stable, in a fairly predictable work environment. We discovered most of the people on his team had what we call the “Pacesetter Style.” When you are in the midst of change or an emergency, that's great, when you have little time and a lot at stake; but if you want to build a long-term viable team that's going to take you where you want to go, you need a variety of leadership styles. And you need to equip people with new tools to manage change. None of these people had even thought about that.
So, he finally said to me, “Yes, we are pacesetters, but at what cost? We've lost a lot.” He decided it was important to slow down, equip his team with the tools necessary to manage change and begin to build for the long term, not just respond to the immediate emergency.
One of the things I find is: people are brought in to make change – they are good at it, they hit the ground running but they don't see that they need to get 2000, or 3000, or however many others understanding that and moving with them. That is one of the big challenges leaders have. Not that they don't have the vision – perhaps the vision and strategy is a very good one – but they haven't thought about, “What is the impact of what we're about to do on the team we have? How do we equip them for the journey we're about to make?”
Another, probably less happy story, is of the person in HR who called regarding two companies that merged. Or have merged at least on paper. Now two units within the two companies have to come together and the people responsible for bringing them together are saying things like – “Well, we're the biggest, we have all the leadership positions, and there's no problem. We simply tell them what to do and they'll have to do it. What's the issue?”
The HR person understands what they've got – they have no trust, they have no common history, no clear strategy that they've all bought into, and a lot of work needs to be done. Even though from a business perspective the merger makes sense, unless they deal with people issues, they will not produce.
So, when you look at mergers that have failed, what I think you'll find is that they did a great job on due diligence, and the lawyers have worked out the financials and negotiated the terms and conditions well. But then they say, “OK, done!” When, in fact, the hardest point remains – which is, “How do we now get these two entities to work as one?” as opposed to wasting time and resources.
The third organization I'm thinking of simply shifted gears. They went from being a not-for-profit research organization, with some of the best scientists in the country, to a profit-making entity. They brought in a new CEO, they brought in a new CFO – all people who hadn't been a part of this organization before – and started saying to the scientists, who are producing the products they sell to clients, “OK, you need to watch your bottom line – you've got to manage costs.”
They told them to do lots of things these scientists had no training and preparation for. Some of the scientists had won prizes, international prizes, and after 3 years they had to get a new CEO, and a new CFO. They called us to take a look at: “Why aren't we moving?”
So, we facilitated some meetings with the scientists. and in one meeting the CFO laid out the plan: where they were, what the challenges were, where they had not accomplished what they needed to. When he finished speaking, one of the scientists said, “You know, I didn't get an MBA. I don't understand half the words you're saying, and you're asking me to be responsible for the bottom line. That's not my training and background.”
That's the third thing I see – not only do organizations not slow down, but also they don't equip people. They're smart people, they're able people, but being asked to do new things in different ways, and companies aren't taking the time to say, “We understand we're asking you to do things you've never done before. Part of our preparation for this is to support and equip you with the skills you're going to need to do the job.”
So, it's a matter with a real sense of urgency, which is what John Kotter says – every organization needs that on the part of the leaders, but they're not conveying that sense of urgency, and the support and help to the people who actually have to implement it. I think that is responsible for a lot of the failures we see in change efforts.
If those are some of the barriers you've seen, what have you seen companies or organization leaders do well?
What I've seen leaders do well is understand they cannot lead this process alone. They put together a team of key people from every level of the organization to help them look back and understand where they have come from, have a candid look at where they are now, and engage them in the process of creating the vision for the future. So that's the first thing to do: Establish the team, and get that team on some sort of level playing field. They need to understand the sense of where they are, why they need to move, and where they're going.
The second thing I've seen effective leaders do, then, is to say, “Now that we understand this, how do we get this to the people throughout the organization?” And they use their team to convey the information out into the organization and to bring back information so there's a communication process set up that enables and informs the leaders at the top, but also engages and informs the people in the organization.
I think the other thing I've seen leaders do well is to acknowledge the different challenges that lie ahead. Often leaders take sort of 3 approaches: “Here's the vision, take that hill;” or “This is going to be wonderful; it's good for the company, we're going to be so successful;” or finally, when people still aren't moving, they restructure, downsize, get rid of the dead wood, eliminate people.
I think the more effective leaders of change have acknowledged: we're about to enter a phase that will often be chaotic. There are going to be points at which answers are not clear. Often we're building the plane, as it were, as it's heading down the runway. Leaders need to be able to say, “These are the stages we'll go through as we move to the future. And here's what we are going to be doing to support and help you get there.”
No one would ever think of taking a group of people on a mountain climbing trip without saying, “Here's the map. Here's where it's going to be dangerous and difficult, here's what we're going to do to help you be prepared to handle it. At times it's going to be difficult, but we'll get there.” People do that, very, very concretely, for a mountain climbing trip. I think they need to do it just as concretely for change. And it is critical to think of change as a process, not an event.
In thinking about change, how would you describe your philosophy of helping organizations successfully manage change?
Well, my philosophy is to help organizations recognize that whenever they institute change they set off a series of dichotomies, of paradoxes. I think if they understand those paradoxes and manage those paradoxes, they will be successful.
For example, here you are at the point in your company where you need to speed up and go fast, the paradox is: to be successful, initially you'll need to slow down. Here you are in a time where you want everybody on board, focused on the future and working effectively together. The paradox is: by instituting change, you've actually increased the frequency and depth of conflict that will happen in your organization.
I guess I think the third paradox is that you've got to include a wide variety of people in the process of planning, designing and implementing change. The more people you have, the more diverse points of view, again the more conflict you may have. But if you include those diverse voices then you will have credibility, buy-in and initiative from the ground up.
So those are the things I think companies need to recognize: when they institute change they institute conflicting dynamics, and they've got to be prepared to manage those paradoxes or they will spin their wheels and go nowhere.
You know, I think I would say that if you think about change as having some phases to it, from an organizational point of view, the first one is, “Let's figure out a new vision and strategy.” I think companies do really well on that. But at “OK, now let's implement it,” that's where I think the problems come. And so it's the people implementation part that our work focuses on. How do you integrate this into an organization?
At the risk of over simplifying, what would you identify as the single-most important stepping stone to successfully managing a change effort in an organization?
The single most important stepping stone is to make sure the people responsible to lead that process understand the dynamics of change and their impact on people. And they will have to get buy-in, commitment and motivation for the change. That to me is what Kotter says about building a common sense of urgency.
First assemble the team, then create a common reality, and then recognize the impact the change will have and therefore what must be done. You need to get to a point where everyone says, “Oh yeah, they told us this was coming, we'll do what we've learned to do and move forward.”
I read Peter Senge's Dance of Change and he looked at the research that's been done on the success of change. He said most change efforts grind to a halt. I think that grinding is a direct result of the people in the organization – not the leaders – not understanding what's happening, coming up against obstacles. People haven't been prepared or equipped for the challenges, and then they give up. Or simply sit still, out of fear and not knowing what to do next.
Let's talk about the people who don't know how to do something next or what to do next. What about the people who just will not change? What do you do with them in an organization?
Well, again, if you slow down and lay the proper foundation, you provide an avenue for people who really get it: “Hey, this is going to happen; the rules are changing, and if I'm going to stay, I'll either change with the rules or I need to leave.” So you give people a graceful way to exit, and you explicitly make that available. There will be people who will say, “We're not sure what exactly this is going to look like.” At some point, as things become clear, they may find, “Hey, this isn't what I signed up for. I want to leave.” And so people can leave.
For those who really don't want to change, that's when you equip your managers with the tools and skills to sit down with those people and offer them counseling, give them some options to leave. But all too often what happens is, at the very beginning of the change process you've got most of your people saying, “Hmmm, I'm not sure I want to go there, what is this and why do we need to change?” And all too often they get labeled as dinosaurs and blockers, when in fact with the proper planning you can keep the good people. And those who need to leave will figure out for themselves that they need to go.
What is the role, then, of an external firm, an external consultant in helping organizations effectively manage change?
Well, I think external consultants can play several important roles. First, I think that as the outsiders, they can help the company assess where it is in the change process, and where its people are. They can help the company assess where they're stuck and why they're stuck if the change effort is in trouble. They can help the company understand what it needs to do to equip its people – its leaders and its line people – with the skills and tools they need to manage change.
I think more importantly external consultants can hold up the mirror so people in the company can recognize that where they are in this is a direct result of actions taken or not taken, and there are specific things to do to move forward. I just got an email from someone who went through a workshop I did on the stages of change and the role of the leader, and she said, “You know, I went back and I showed these ideas to my folks, and for the first time they said, ‘We're in the confusion stage, and we think, like professionals, we'll work our way through and figure this out, but right now there aren't any clear answers to the challenges we're facing.'”
She said they're much more comfortable now that they understand where they are, and that there's a way out of that. “Before,” she said, “they kept coming to me with lots of ‘Well, why?' and ‘What's this?'” They wanted all the answers and now they understand there's some answers they won't have until much later in the process.
So she's given them confidence that if they proceed as professionals, with the skills and tools they need, they'll get there. They still have confusion, but now they understand that it's a normal part of the process.
Irma Tyler-Wood is founder of Ki ThoughtBridge where she consults nationally and internationally with corporate, government and other public sector clients in resolving complex, high stakes disputes.