For a company to significantly change its performance pattern, instead of merely incrementalising it, a radical change of behaviour is warranted. Unfortunately most companies, like human beings, have a hard time changing. Even if they know they must. The excuses are available on tap: It requires too much of an effort, it monopolises mental time and resources and, worst excuse of all, things are plodding along OK so why bother? In years of tracking and analysing the evolution of public and private companies, we've observed that a minority of managers are more adept than others at bringing about change. The skills and tools they draw on have surprisingly less to do with style, charisma or instinct. The bottom line is that effective change management is more a science than an art.
Sad but true, most companies could be categorised as "satisfactory underperformers", not particularly eager to take major leaps or shake things up. However shareholders in this unforgiving age grow impatient with such an attitude and can pull out without notice or remorse. Witness the relative sharp decline in the price of some telecommunication companies.
By the same token, shareholders can also be exceptionally rewarding vis-à-vis those companies who demonstrate an ability to break out of the "average" mould. In fact they are actively seeking out these types of organisations. In today's executive lore, the true heroes are the CEOs and management teams who can transform a company "doing OK" into an outstanding one-as Michael Dell and his team did with Dell Computer-not those who salvage a disastrous outfit by raising it to an average level.
The truly successful change managers we've observed share some strong habits, summarised below.
THE VISION THING
Effective Change managers are able to clearly define, and communicate, their company's point of arrival. They take great care to define their objectives as clearly as possible along two axes: qualitative and quantitative. The former paints a convincing and inspiring new reality of where the company will be when it "arrives". While the quantitative definition explains, using tangible facts and figures, what reaching that vision will involve.
What's more, the successful change manager can answer every employee's most heart-felt question "what's in it for me?" by emotionally connecting both the quantitative and the qualitative definitions to the lives of each individual. He can translate, in enthusiastic terms, what life will feel like-for each group of persons-when the company gets to where it ultimately needs to be. He can also convey this in terms of new budgets, promotion prospects, financial rewards but also quantifiable sacrifices. In short, he can take the clear, corporate vision and extract the implications it will have on a personal and collective level.
The effective change manager can realistically assess the precise point of departure of his company today and communicate it to employees without offending anyone on a personal level or making them feel negative. He can draw up a real inventory of the company's organisational skills and capabilities without condemning or criticising any individual's performance.
When Lou Gerstner took over IBM he realistically assessed the strength of IBM without destroying the collective and individual pride of the people who had spent their careers with the company. He then mobilised the company around its historical strength and corrected weaknesses where appropriate.
Successful change managers realise how difficult it is to migrate from the company's current state to its point of arrival. They do not go into denial over it and they make no pretence of masking or downplaying this difficulty to their teams.
As a result they are willing to selectively over-invest the resources it takes to achieving the vision. They over-compensate, rather than skimp, on at least three levels:
· They over-allocate resources to designated areas of improvement
· They over-allocate money to specific activities
· They generously over-reward performance on an on-going basis
In many instances, the amount one has to invest in Year 1 of a Change Programme represents roughly 10-15% of the annualised improvement. This can feel like a gamble when a company is investing ahead of profits, and downright painful when it becomes clear that the investment will not yield any returns in the first year. Yet the effective change manager understands that investing skimpily never works and isn't afraid of going into deficit for a year.
Another characteristic habit of good change managers is decisiveness. The ability to decide, very quickly, which people will not be able to carry the ball will influence the success of the Change Programme. Breaking out of the mould is a demanding exercise and not everyone in the company has what it takes to play. Which is why effective change leaders must make some hard choices by firing, promoting or retaining certain individuals.
Less effective change managers let their so-so people "try" in the hope that things will work out. But in the majority of cases they don't and, by the time they've realised this, they've lost precious time and resources.
Popular belief perpetuates the myth that Change Managers tyrannise their executives with sweeping decisions, force organisations to take giant leaps at warp speed, and generally forge ahead without looking at their feet. The reality is that good change managers act small and pay attention to some of the tiniest steps. They are prepared to go very deep, down to the lowest levels of the organisation to identify even the smallest accomplishments. They maintain an inspiring level of involvement.
Effective change managers understand the importance of celebrating every success. They realise that this will fuel the stamina needed to generate future successes. And they do this while keeping the "big picture" in mind. Just like the marathon runner who knows where the finish line is but takes the race one mile at a time, the effective change manager is not afraid of letting the short-term concerns of the coming months occupy the forefront of his mind. He knows the over-all vision is always there, at the back of his mind.
Successful managers realise what an important role communication plays and tend to over-invest in everything linked to communication. They draw on every tool of mass psychology available and on a full range of media tools to achieve connectivity, going from simple one-to-one meetings to live television. In extreme cases, some change managers achieve TV celebrity status, arguably taking their endeavour one step too far. Powerful change managers typically spend roughly one third of their time communicating with all their constituencies: shareholders, employees, unions and management. The messages aimed at these constituencies often overlap.
As with weight loss, when it comes to significant, long lasting change there is no magic pill. The Change Manager who can adopt all six habits, and remain true to them, stands a strong chance of succeeding in his change management effort. Acquiring only two or three of these is not good enough. Change campaigns are never easy. They may even be one of the hardest things a CEO has to contend with in his career. But undertaking it with the right attitude, by fully embracing at least five of the key habits, could lay the foundation for sustainable and profitable growth, and extraordinary rewards.