WHY TRANSFORMATION EFFORTS FAIL

Leading Change

By: Group 4

Outline

The research

Eight common mistakes

Lessons to be learned

The research

More than 100 companies with different characteristics have been studied.

The efforts have gone under many names.

The result of changes

The research

In almost every case the basic goal was

“To make fundamental changes in how business is conducted in order to help cope with a new, more challenging environment”

Error #1: Not establishing a great enough sense of urgency

How most successful changes begin.Existing and impending crises, competition,

changing trends and technologies or potential business opportunities.

Over 50% have failed in phase 1, because of: Underestimating the need for motivating

people. Overestimating their success. A lack of patience. Demotivation effect due to downside

possibilities. Paralyzed senior management

Error #1: Not establishing a great enough sense of urgency

The need for a leader, CEO or division manager to sense urgency.

Bad results are both a blessing and curse in first phase.

An almost universal tendency to shoot the bearer of bad news.

Manufacturing urgency

In one case a CEO deliberately engineered the largest accounting loss in the company’s history, creating huge pressures from Wall Street in the process.

This led to increased sense of urgency within the organization to bring about a change.

When is urgency enough?

Urgency rate is high enough only when at least 75% of the company’s management is convinced that the current scenario is not sustainable any longer.

Anything less may put the organization’s future in jeopardy.

Error#2: Not creating a powerful enough guiding coalition

Error#2: Not creating a powerful enough guiding coalition

In most successful cases a coalition is always pretty powerful.

Most of the senior management always forms the core of the group.

More than a high sense of urgency is required like providing a full assessment of the company’s problems, off-side retreats etc. to build trust and effective communication.

Error#2: Not creating a powerful enough guiding coalition

The guiding coalition members, are expected to work outside of formal boundaries and protocol.

This may sound awkward, but is clearly necessary.

Error#2: Not creating a powerful enough guiding coalition

Reasons for failing:

No history of teamwork at top. Lack of conviction in the need for change

process. Lack of a strong line leadership. Expecting the team to be led by a staff

executive.

Error#3: lacking a vision

Error#3: lacking a vision

In every successful cases the guiding coalition develops a picture of future.

A vision says something that helps clarify the direction in which an organization needs to move.

In failed transformations, you often find plenty of plans, directives, and programs but no vision.

Error#4: Undercommunicating the vision

Error#4: Undercommunicating the vision

Three patterns with respect to communication: Holding a single meeting or sending out a single

communication. Making speeches to group of employees. Misbehaviour of senior management

Walk the talk, nothing undermines change more than wrong behavior by important individuals.

The net result is that cynicism among the employees goes up, while belief in the communication goes down.

Error#5: Not removing obstacles to the new vision

Error#5: Not removing obstacles to the new vision

Emboldened employees to try new approaches.

Obstacles for employees: Narrow job definitions. Organization Structure. Compensation and appraisal systems.

Action is essential both to empower others and to maintain the credibility of change effort.

Error#6: Not systematically planning for and creating short term wins

Error#6: Not systematically planning for and creating short term wins

Most people go on a long march unless…In one or two years you should find:

Quality beginning to go up. Statistically higher customer satisfaction

rating. Decline in net income stopping. Product introduction. Upward shift in market share.

In successful cases managers actively plan to achieve objectives. They don’t hope for.

Commitments to produce short-term wins helps keep urgency level up.

Error#7: Declaring victory too soon.

Error#7: Declaring victory too soon.

New approaches are fragile and subject to regression.

Ironically, it is often a combination of change initiators and change resistors that creates the premature victory.

What, instead of declaring premature victory?

Error#8: Not anchoring changes in the corporation’s culture.

change sticks when it becomes “ the way we do things around here”

Two factor in institutionalizing change: To show people, the effects of new

approaches. Make sure that next generation of top

management will personify the new approach.

Lessons to be learned…

Change process goes through a series of phases.Critical mistakes in any of the phases can have

devastating impacts if not handled with care.What is needed: A simple vision to guide people. Effective communication. Short-term goals to keep the momentum up. Constant appraisal of the work done Not giving up till change becomes the norm.A fewer errors can spell the difference between

success and failure.

Video

Be-the-change-that-you-want-to-see-in-this-world

Reference

John P. Kotter, “Leading Change, Why Transformation Efforts Fail”, HBR , April 1995.

Thank You…