Many managers have tried to push through radical change efforts in their organizations. Many have failed. By his own count John Kotter of Harvard Business School has studied over 100 organizational change efforts, both as an academic researcher and as a consultant who participated in the change effort. According to Kotter, there are eight errors that leaders often make when implementing a change effort.
First, Kotter estimates that over 50 percent of companies that fail to implement change do so because from the outset, they do not establish a great enough sense of urgency. In other words, they do not create a sense of crisis that startles employees out of their comfort zone.
Second, Kotter says many leaders do not create a powerful enough guiding coalition to push through the change. They do not understand the importance of power and the fact that many incumbent managers can be a source of inertia. As we saw, Anne Mulcahy at Xerox dealt with this problem by handpicking her own top management team, and Jack Welch fired 12 of his 14 top managers, replacing them with managers who shared his values and sense of urgency.
Third, many change efforts fail because the leader lacks a compelling vision that tells employees what the organization is trying to achieve by its change effort. Fourth, and related to this, the leader may have a vision, but the vision may be poorly communicated. According to Kotter, many managers do not understand the need to communicate the vision consistently, often over a period of years, and to make sure it is heard by employees at all levels in the organization.
Fifth, Kotter comments that many change efforts fail because leaders fail to remove obstacles to the change effort. The obstacles may include managers who are unable or unwilling to buy into the new culture or an organization architecture that continues to foster old habits.
Change efforts that fail to remove obstacles are cosmetic because the leaders have failed to change either the balance of power within the organization (shifting it away from managers who have a vested interest in maintaining the status quo) or an organization structure that reinforces the status quo.
Sixth, transformation efforts can fail due to a loss of momentum. Kotter sees the biggest error here as not planning for and creating short-term wins. People need to see evidence that the change effort is working—or they will fail to believe that change is possible and revert to the old ways of doing things. They need feedback to convince them that the change effort is making progress.
Seventh, Kotter believes that a big mistake is declaring victory too soon. As we have already stated, successful change efforts can take years, and persistence is required. If leaders declare victory too soon, the pressure for improved performance is released, and employees might slide back to the old way of doing things.
Finally, Kotter notes that change fails when it is not anchored in the organization’s culture. Without cultural change (change in the values that guide behavior in the organization) managers and employees revert to the old culture, and the change effort will not take.
Although not in Kotter’s list, there is another important reason for failed change efforts: failure to empower employees and lower-level managers to implement the change. As we have seen, a critical element of driving change efforts is to give employees a sense of ownership—to give them the power to push through changes. Often employees far down in the organization can be the greatest allies of senior managers.
This was what Jack Welch understood when he created the workout process at General Electric. Change is not something you drive just from the top. It can also be driven from the bottom.
So what is required to make a change effort work? In summary, change demands leaders who are committed to the change effort, who can create a sense of urgency, who can form a powerful guiding coalition to push through the change, who can craft a compelling vision for the organization to strive toward, and who can successfully and persistently communicate that vision to all within the organization.
Also required are quick and decisive changes in management and organization architecture to remove obstacles to change (to neutralize inertia forces). Managers should also arrange short-term wins to keep the momentum going. They should develop and implement processes that empower employees, enlisting them in the change effort as Jack Welch did at GE with the workout process.
Finally, they must not only push the culture of the organization in a new direction but also institutionalize that culture by creating supporting reward and incentive systems, hiring the right people, and socializing employees into the culture through training and development programs. Moreover, they must do this consistently and persistently for years to stabilize the change.
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