A Four-Step Strategy for Change Management
Lisa Thompson, LPC, PCC – Managing Director, Professional Services
It’s not easy for a successful organization to change direction, but it’s sometimes necessary. The senior leadership team may see a serious challenge on the horizon or a new opportunity for growth. A new technology or innovative business model could upend the current market dynamics, or there might be a need to update internal policies, practices or cultural values to attract and maintain top talent.
Being able to get in front of these types of issues—rather than simply react to a problem—is crucial for an organization to survive and thrive over the long term. The senior leadership team needs to keep looking into the distance, trying to spot dangerous hazards and identify promising growth opportunities in time to change direction.
Our leadership expert, Lisa Thompson, suggests four steps that will help prepare for and manage change.
Forecast the Future
To get a better understanding of current market conditions and the near-term outlook, companies often undertake an annual SWOT (strengths, weaknesses, opportunities, and threats) analysis or apply a similar process. This can be done as part of a strategic retreat or woven into the financial and operational planning process. A good SWOT analysis can provide a relatively accurate picture of the company’s current position. However, it does have limitations when forecasting the future, as discussed in Step 2.
In addition to looking at the market climate, organizations also need to examine their internal situation. Among the good questions to ask are the following: Is there a need to invest in new technology? Update current business practices? Accelerate the supply chain? Bring in fresh talent? Restructure the departments or business units?
Surveys, focus groups and turnover levels can provide insight into the engagement and productivity of the workforce. Looking at industry benchmarks, such as revenue per employee, can help organizations see where they stand in comparison to their peers.
Many organizations bring in a strategic consultant to provide a fresh perspective on the company’s current operations and future prospects. A good consultant can provide a road map toward sales growth, increased profitability or market leadership.
These approaches can be combined in different ways to provide a multi-dimensional forecast of the future. Then, it’s up to the CEO and senior leadership team to determine what changes need to be made internally or externally to achieve the desired outcome.
Challenge Your Assumptions
In conducting an annual SWOT analysis or similar process to understand the current situation, it’s not enough to simply dust off last year’s analysis and “round up the usual suspects” of solutions. You have to dig more deeply into the issues and challenge your assumptions, or else your analysis is likely to miss something important.
Assumptions are the ideas and concepts buried in the brain that shape our subconscious responses to personal and professional situations. On an organizational level, they create blind spots. It’s like gazing through binoculars with a cap on one of the lenses.
For example, you might assume that “bigger is always better,” especially if you’re a leader in a Fortune 500 company. But perhaps size and scale can be a hindrance, and the organization (and its shareholders) might be better off spinning off certain business units and focusing on core business.
On the other hand, you might assume that “staying small” is a good competitive strategy for a small to midsize enterprise because it lets your organization move more quickly than bigger companies. However, it may be possible to grow and still retain your current agility. Or it could also be the case that your company is not as nimble as you think, and the corporate culture needs to be revamped.
It’s also a good idea to challenge your assumptions about the organization’s workforce. Do you need more or fewer people to achieve your goals? Are employees satisfied and engaged with their work? Does your workforce reflect the diversity of the U.S. and global workforce?
Making decisions based on unconscious assumptions can be very dangerous to the sustainability of any organization. That’s why so many oil and gas exploration companies found themselves in trouble when the price per barrel plummeted. It’s also why leaders in the Democratic and Republican parties were surprised by the strength of “outsider” candidates Bernie Sanders and Donald Trump, who criticized the political system.
Bringing your assumptions into the light allows you to examine them carefully, discuss their significance and widen your SWOT analysis. It’s a crucial step toward making a well-reasoned decision to change your organization’s strategy, structure or culture.
Overcome the Inertia
Like a car on the highway or ship in the ocean, an organization has a natural tendency to stay on course. Inertia can lead to positive financial results when the road is clear and the seas are calm. But it can create disaster if there’s an unexpected obstacle dead ahead.
That’s why the senior leadership team needs to keep looking into the distance, trying to spot those dangerous hazards or identify promising growth opportunities in time to change direction. Challenging assumptions will complement that strategy and provide a clearer picture of the near-term future.
Of course, inertia can also impact an organization’s business processes, values, culture and financial results. “But, we’ve always done it that way” is a common response to an internal change initiative, whether large or small.
So, how does the senior leadership team overcome that deep-rooted inertia in time to put the company on a better path? Back in the 1940s, social psychologist Kurt Lewin recognized that individuals tend to be “frozen in place” and resist change, even when the outcome is almost certain to be positive.
Drawing on Lewin’s findings, you should consider how to deliver a carefully crafted “shock to the system”—something that overcomes the “business-as-usual” mentality that permeates any successful organization. It’s a concept that’s easy to grasp, but often difficult to execute in the real world.
One approach is to sound an alarm that’s easily understood by the entire workforce. This might be a significant change in the marketplace, such as a change in consumer behavior, or the rise of a competitive threat. A significant drop in sales or earnings might also be used as a warning to prompt a change in direction.
Another strategy is to bring in a new executive, or launch a task force to create a new business unit whose mission is very different from the rest of the company. Back in the 1980s, IBM used this approach to enter the personal computer business at a time when its primary customers were major corporations with expensive mainframe computers.
A third way to administer a shock is to downsize, reducing the workforce, closing offices, or selling off business assets. While this is not the most popular approach, it can be effective in repositioning an organization in a changing marketplace. For instance, newspapers and publishing companies have shrunk their workforces and sold their printing presses, and retailers have shuttered brick-and-mortar stores, as consumers have shifted to digital sources of information and purchasing.
These are just a few of the ways that the CEO and senior leadership team can deliver a shock to the system in order to overcome inertia and implement a successful change initiative.
Keep Things Moving
Launching a change initiative requires a significant commitment of time and energy. It’s not enough to forecast the future, challenge assumptions and overcome inertia. You also need to focus on keeping the change process moving forward, identifying sources of resistance and monitoring the progress. It may also be necessary to shift direction, at least partially, once the initiative gets underway.
Ongoing communication—in both directions—is vital when managing organizational change. This begins with explaining the reasons for the initiative, the desired changes within the workforce, and the desired outcome. Transparency is essential, at every stage of the process, to gain buy-in from managers and other employees.
One effective communication strategy is to identify the informal leaders whose opinions influence their co-workers. Make these leaders aware of the situation early in the process, listen to their feedback and explain why this change is important to employees as well as the company. Employees will always want to know “what’s in it for me”—and that’s a point that should be emphasized throughout the communication process.
Another way to build momentum is to highlight the victories. Let others in the organization know about positive results—how someone handled a problem or opportunity more effectively as a result of the change process. In general, it’s better to communicate these successes frequently, often in anecdotal format, rather than wait for a major result. That’s because most employees can relate to the smaller-scale changes, particularly when they see co-workers adopting new behaviors.
Set a timeline for a change initiative with deadlines along the way. Since everyone in business is used to scheduling their time, it’s natural to set goals—with deadlines—for making changes.
Maintain accountability. Be sure that managers and workers understand the need for change, what’s expected and the timeline for results. Then, hold them accountable for their performance. Try to find out the reason why an individual, team or department is lagging behind the rest of the organization, and commit additional support resources if necessary.
Finally, solicit feedback from as many sources as possible. Encourage workers to provide comments via email, text, voice, or internal posts. There will always be a segment of employees who are not comfortable expressing their opinion through formal channels. So, it’s vital for members of the senior leadership team to step out of their offices and talk with individuals at all levels of the organization. See what seems to be working, and where things aren’t going as well. Don’t be afraid to modify the initiative based on that feedback.
Remember that change is a constant factor, both inside and outside your organization. Be ready to adapt to new circumstances and keep things moving, and you’ll create an agile organization that maintains control of change, rather than being controlled by it.