Life in Change Management is never dull. Even if you’re addressing age-old problems, a different context, and the specifics of individual organisations always create new challenges and require a different approach.
I’ve just completed a major transformation at ERS, a Lloyds-based specialist motor insurer. It was a big change initiative – a root and branch restructure, re-engineer and re-platform initiative to turn the company around and save it from liquidation. Following the completion of the project I’ve been reflecting on what I learned this time around and which models, approaches and techniques helped us most as we successfully drove through this challenging agenda over a 3 year period.
As is so often the case, it’s the tried and tested approaches that stand up to the trial by fire which the reality of a major transformation project. New light is shed upon them, and you come to understand and apply them in a new way. This has been especially true in my experience for John Kotter’s 8 reasons “Why transformation efforts fail”. Originally published in HBR in Mar-Apr 1995, it was expanded into the book “Leading Change”, published by the Harvard Business School Press in 1996. The inside flap of the jacket starts with the quote
“The rate of change is not going to slow down any time soon. If anything, competition in most industries will probably speed up even more in the next few decades”.
A pretty prescient statement given the timing. And he was, or course right! The framework that he developed, however, has remained solid despite the increasing speed, scale, scope and nature of change, and it has served me well in executing in my transformation initiatives, especially at ERS.
In his book, Kotter expands his 8 reasons for failure into 8 phases through which Transformations must travel if they are to hope to be a success in anything other than the short term. This is not a “cookie cutter” approach. Rather it’s an encapsulation of the activity that organisations have shown to be critical to long-term successful transformation. Interestingly he emphasises that the phases can’t be rushed, and that they can’t be tackled in the wrong order. Not so fashionable a view today, but borne out in experience I think. Also interesting is his take on culture change. Culture change is not what you do to transform the organisation. It’s what you do when you’ve finished changing things and can institutionalise that new way of working into a new culture – itself a tough ask. You don’t change the culture to change the organisation. That comes last.
So the 8 phases :
- Establish sense of urgency. Change is a response to a threat. If the threat isn’t real, or taken seriously, then no change will be effectively embedded. There’s got to be a burning platform. If you know that change is required, and no-one else sees the burning platform, then take a look at what you’re standing on, and consider setting fire to it. Kotter suggests that “enough” urgency has been created when 75% of the executive realise that the status quo is not sustainable. An important question here is what you spend time talking about in your meetings. Who’s tasked with digging out and highlighting the unpleasant facts and getting these discussed? Or is it more a case of (with apologies to the Lego Movie) “everything is awesome”?
- Create a powerful guiding coalition. You can’t delegate change to a low-powered committee, or have it led by a single individual. Both of these will fail. You must have a broad based set of senior executives with the expertise and position power too be taken seriously. They must spend the time to build trust and create a common goal. Time and resource must be committed. It rarely is beyond the early phases and the project launch.
- Develop a vision and a strategy. A clear vision is not just a communication tool. It’s critical to success because ; it clarifies the direction of change, short-cutting and simplifying thinking and decision making for the organisation; It motivates everyone on the organisation to move the right way; It co-ordinates the actions of people across the organisation, even if they are disparate geographically or functionally. A vision that people can picture, that is attractive, can be seen to be achievable, and focuses attention, will create the kind of momentum and engagement that is critical to transformation efforts. This must become the mantra of the leadership and they must all be singing off the same hymn-sheet (if I’m not mixing my metaphors too badly.)
- Communicate the change vision. I’d be prepare to bet that every employee survey in history provides the feedback that communication could be improved. This is a critical part of change efforts. However, Kotter emphasises the 2-way nature of communication. If your message isn’t getting across, just shouting it louder and more often will not improve the situation. The tactics for communication must be considered, especially because change is emotionally challenging as well as intellectually challenging. Just because people understand the need to, say, cut costs, doesn’t mean that they’ve fully heard it or engaged with it. So pictures rather than words, repetition, variety and leadership by example are all critical ways of ensuring that the message gets across. Oh, and don’t forget to listen. It’s just possible that someone other than you has some great ideas.
- Empower employees for broad-based action. Empowerment is possibly “buzz-word of the decade”. We know what it means but we don’t consider what’s really required if an organisation is to embrace it. If staff are going to really act in line with the change vision we need to identify and remove all barriers to that action. The barriers can be :
- structural – I want to change a process but it’s in a different function;
- systemic – I can’t change that process, because I’m evaluated on it’s successful completion;
- skills-based – I know we need to do that differently, but I don’t know how to tackle the problem;
- organisational – I could change it, but my boss won’t let me.
All of these barriers, and many more, must be identified, called out and removed to really engage your people. If you don;t take the time to do this, then it’s far more likely that people will work against you rather than with you.
- Generate short term wins. Let’s be clear – huge, multi-year complex projects to deliver transformation are a thing of the past. We know that they don’t work. We lose control, the scope moves, benefits are delayed, costs spiral and projects stall. The only way to tackle this is not to work harder at controlling everything – you can’t. Better to face up to it. Instead, make a virtue out of necessity and reduce the benefit horizon. Projects must be broken into deliverable chunks which are specifically structured around short term horizons which deliver tangible, measurable benefit. This won’t happen by accident. It has to be a specific planning goal. If you get it right you build confidence, momentum, prove your solution and broaden the base of engagement. It’s critical.
- Consolidate improvements and produce more change. And once you’ve delivered the short term win, don’t stop. This is not the time for a company conference to celebrate success. Just recognise that you’re on the right path, and turn up the gas. It’s a myth that change gets easier once it’s started. It doesn’t. It gets harder. Why is this?
- You’ve usually tackled the easier constituency first
- The early adopters have the benefit of involvement, engagement and kudos
- Early adopters are more likely to work through and around problems and issues
- Smaller groups are easier to communicate to and to manage compliance and consistency
- Pilot engagements can suspend BAU priorities for a time to deliver short term goals. These have to be reintegrated into the roll-out groups
As you extend the scope of the roll out you encounter all of the problems of complexity, as well as reaching a completely different audience who have had so much less involvement up to now. You have to recognise the implications of addressing processes that are deeply embedded in the organisation because they’re inter-dependent with other processes, people, roles, functions. Inertia gets stronger, and only if you have developed the energy and momentum through your earlier efforts and are now prepared to redouble them, are you going to get through it.
- Finally, anchor new approaches in the culture. Finally we’ve reached culture! Culture is a set of shared values, and accepted ways of working that persist over time through an organisation because they are “handed on” throughout the organisation. This often happens not explicitly but through informal processes, relationships and procedures. They’re difficult to spot, and therefore very difficult to change. They can be put on one side for a while (during a pilot for example) but will reassert themselves, crushing the effects of change, unless tackled. Once the new ways of working are established, it’s essential that the old ways are explicitly identified and “retired” to be replaced with new ones that are aligned with the new ways that the company s working and delivering value.
So there you have it. Old wisdom on change, still compelling and relevant in a substantially changed context, and still helping change practitioners get the job done, as I can personally testify. Use them as a litmus test for your transformation project. Have you gone through the phases and are you seeing the impact of doing / not doing so? It’s not too late. Take a breath and fill the gap. You will reap the benefits from doing so.