Why Firms Fail (S10)

8/7/2019 Why Firms Fail (S10)

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WHY FIRMS FAIL?


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Even a fish wouldnt get into trouble if he'dkeep his mouth shut!


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The reasons why change manage ment does not succee d in comp an ies.What care shoul d be taken to make sure that change succee ds?


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E rror #1: A llowing too much comp lacencyE rror #2: F ailing to create a suff iciently powerful coalit ionE rror #3: U nderest imat ing the power of visionE rror #4: U nder comm un icat ing the vision by a facto rof 10 or moreE rror #5: P ermi tt ing the obsta cles to block the new

visionE rror #6: F ailing to create sho rt te rm winsE rror #7: Declaring victo ry too soonE rror #8: N egle ct ing to ancho r changes f irm ly in the

corporate cultu re


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C omp lacen cy means feel ing sat isf ied; despite knowing that problems do exist

The biggest mistake peo ple make when they try to change organ izat ions without esta blish ing a high enough sense of urgen cy in

fello

w manage

rs an

de

mployees


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O verest imate howmuch they can force change

Underest imate howha rd it is to drive

peo ple f rom the ircomfort zones

Do not recogn ize how the ir act ions

can reinforce status quo

Lack pat ience


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Peo ple may become defens ive

Morale & sho rt te rm results sta rt slipping

Peo ple C onfuse urgen cy with anx iety

Anxiety results in more res istan ce to change


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Too much past success

Lack of visible crisisLow perform ance stan dards

Insuff icient exte rnal fee db ack


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Reeng inee ring bogs down

New st rateg ies fail to be

imp lemente d

c uisit ions not properly

ass imilate d

Downsizing not effe ctive

Quality prog rams become talk rathe r than

bu siness

sub stan ce


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Major change is imp oss ible unless the hea d of the organ izat ion is an active supp orte rIndividuals alone never have all the assets nee ded to overcome tradition and ine rtiaE fforts that lack a suff iciently st rong gu iding coalition can make app arent prog ress for a while, but soone r or late r, counte rvailing forces

und

ermi

ne the

in

itiat

ivesE ven when comp lacency is relat ively low, f irms

with little histo ry of transfo rm at ion or tea mw ork often undervalue the nee d for such a tea mC hange must be led by line manage r


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V ision plays a key role in producing useful change by helping to direct, align, and inspire act ions on part of large numb ers of peo ple. Without an appr opriate vision, a transfo rm at ion effo rt can

eas ily dissolve into a list of confus ing, incomp at ible, andt ime consu ming projects that go in the wrong direct ion ornowhe reIn many failed transfo rm at ions, plans and pr og rams are seen as playing the role of a vision (examp le on p.8)

In unsu ccessful transfo rm at ion effo rts, manage ment somet imes does ha ve a sense of direct ion, but it is too comp licate d or confus ing to be usefulAs a rule of thu mb: w hene ver you cannot describe the vision driving a change init iat ive in f ive minutes or less and get a rea

ction

that

sign

if ies

both

un

de

rstan

ding

an

d inte

rest,

you

are in for trouble


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Major change is usually imp oss ible unless most emp loyees are willing to help, often to the point of making sho rt te rm sacrif icesPeo ple will not make sacrif ices, even if they are unha pp y with the status quo, unless they th ink the potent ial benef its of change are att ract ive and unless they believe that a transfo rm at ion is poss ible. Without credib le comm un icat ion, and a lot of it, emp loyees hea rts and minds are never captu red.


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Patte rns of ineffe ct ive comm un icat ion

PP

First Pattern

the groupdevelops goo dvision

holds only a fewmeet ings

sen ds out only a

few memos (less use of comp any s comm un icat ion)

Aston ishe d when peo ple do not understan d

S econd Pattern

hea d spends cons iderable time talk ing ;but manage rs remain quiet.

C omm i s more but volume is st ill less

Th ird Pattern

cons ists of more ne wslette rs andspee ches but some visible

individuals opp ose the vision result ing in cynicism andless belief in the

change


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C omm un icat ion comes both in words anddee ds. The latte r is gene rally the most

powerful form (walk the talk ). Noth ing undermines change more than beha vior by imp ortant individuals that is incons istent with the verbal comm un icat ion


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New init iat ives fail far too often when emp loyees, even though they embr ace a new vision, feel disemp owered by huge obsta cles in the ir paths. O ccas ionally the road b locks are only in peo ple s hea ds and the challenge is to convince the m that no exte rnal barriers exist.Somet imes the obsta cle is the organ izat ional

st ructu re: comp ensat ion syste m , supervisor who refuses to adapt to new circumstan ces. (examp le p.10)Whene ver smart and well intent ione d peo ple avoidconf ront ing obsta cles, they disemp ower emp loyees

and undermine change


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Transfo rm at ion takes t imeThe rest ructu re effo rts will go waste if the re

are no sho rt te rm wins to meet and celebrate. When cultu ral change effo rts take t ime, the urgen cy levels usually dropSho rt te rm wins can help kee p comp lacen cy down and en courage the deta iled analyt ical th inking that can usefully clarify or revise transfo rm at ional visions


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Peo ple declare victo ry in a majo r change effo rt with the f irst majo r perform ance

impr ovementUnt il changes sink down dee ply into the cultu re, ne w appr oaches are f rag ile andsubject to reg ress ionC ombi nat ion of ideal ist ic change init iato rs and self se rving change res isto rs often create th is problem


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C hange st icks only when it becomes the way we do th ings aroun d he reUnt il new beha viors are roote d in social no rm s andsha red values, they are always subject to deg radat ion as soon as pressu res asso ciate d with a change effo rt are removedTwo facto rs are imp ortant in ancho ring newappr oaches ; the f irst is a cons cious atte mp t to sho w

peo ple how specif ic beha viors and att itudes have helped impr ove perform ance Secondly, the real izat ion that changes require suff icient time to be ancho red f irm ly so that next gene rat ion of manage ment does person ify the newappr oach

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Why Firms Fail (S10)