A checklist for change

Success in transforming a business is rarely a matter of applying the latest breakthrough techniques or jargon. It usually requires common sense from experienced management. But applying that common sense during a disruptive culture change to an organisation is unfortunately rare, argue Gary Neilson and Jack McGrath.

by strategy + business
Last Updated: 23 Jul 2013

Starting with the CEO, transformations involve a change to business as usual and a collective leap of faith by employees as they let go of traditional working practices, without knowing for certain what the outcome will be.

Organisations that fail to achieve large-scale change usually falter in several predictable ways. The writers argue that there are 10 critical factors CEOs need to keep in mind during such a process that can make all the difference to success. These factors may be well known but they are worth repeating:

1.    The CEO makes a strong case for change by clearly and persuasively articulating the factors that are driving it. Stakeholders will support large-scale change if they are truly convinced that it is essential because of changes in the business climate the company is operating in. This does not have to have every last statistical detail. In fact it is better to get across the key reasons why change is inevitable.

2.    Senior leaders set an aggressive, enterprise-wide target. A bold, market-driven target sends the message that change requires a fundamental rethink of current priorities, market position and strategic intent. Aggressive targets may seem brutal, but incremental targets enable people to deny the extent of peril facing the organisation while encouraging them to find reasons to exempt their unit of division from the effort.

3.    Senior management is firmly aligned. Every individual in the leadership team needs to have a stake in the transformation effort as a whole, not just their own narrow function. As one CEO said: “Everyone has to own the problem, even if they don’t like doing so. They’ve got to understand it, believe it, suck it up, and move ahead.”

4.    An integrated enterprise-wide programme for change is put in place. To make sure everyone understands why the transformation is relevant to them, the organisation has to mix things up, putting a finance person in charge of new footprints, a plant manager into a product launch team, and so on. Cross-organisational teams should be aggressively recruited and participation presented as an upward career move.

5.    Senior leaders focus on augmenting capabilities along with cutting costs. Because of the demotivating prospect of cost cutting, efforts to massively change the cost structure of an organisation must always be set within the positive framework of building new skills. Articulating a commitment to developing new capacity provides a much greater incentive for people to support change that improving the bottom line.

6. Moments of Truth are recognised and shared in order to demonstrate commitment.
A revelatory incident or event, be it deliberately engineered or unanticipated, often highlights what needs to change in an organisation. Such moments of truth are most powerful when they shatter taboos by acknowledging the proverbial elephant in the room, so that people can step back and recognise an aspect of the business that went unnoticed until then.

7.    A detailed plan provides the blueprint. After outlining the vision for change, leaders must start work developing a comprehensive guide to the changes ahead. This includes outlining the steps needed to meet targets, aggressive but achievable timelines, and change management issues that must be addressed at each stage. Roles for different people in the organisation must be identified.

8.    Enabling triggers are built in from the start. The detailed map for the transformation should identify in advance triggering events that will clearly be important in moving the process of change forward. This may involve planning for the obsolescence of product lines or encouraging people to take early retirement. This can’t happen too early, or it will compound stress and confusion.

9.    Communication is proactive and ongoing. Internal and external communication should be linked to the strategic vision and is essential to large scale change. Internal communication needs to be blunt and realistic about the market imperative driving transformation. It’s most important audience is the survivors of the change. Any email messages must be written carefully, as they can always be forwarded. External communication with analysts and governing structures can help get investors to support the change in strategic operations.

10.    Making sure the change is permanent and the results sustained. If leaders wait too long to explain the change, it creates uncertainty that lets rumours to develop, which leaders then have to respond to. Once the change occurs, and financial targets are met, vigilance must be maintained to ensure people don’t slip back into old habits, which is all too common. Leaders must ensure the new capabilities developed do not require the constant addition of new resources. The most common mistake is for leaders to declare victory too early and then fail to follow through with continued scrutiny.

Exercising Common Sense
Gary Neilson and Jack McGrath
Strategy + business, Issue 48, Aautumn 2007

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