4 Tips for Managing Organizational Change

Transformations that do succeed have one thing in common: Change is driven through empowerment, not mandated from the top.

By Greg Satell
February 28, 2020

Launching a major transformation effort is a common way for business leaders to get ahead of the competition. But too many of these efforts fail; many people tend to resist and may even seek to undermine them. Transformations that do succeed have one thing in common: Change is driven through empowerment, not mandated from the top.

My research shows that successful efforts not only identify potential sources of resistance from the start but also make plans to overcome any that may arise. And this is not done through bribery, coercion or cajoling, but by enabling people to drive organizational change themselves. Here’s how to do that.

START WITH A SMALL GROUP: Typically, leaders launch transformative efforts with a large kickoff to build momentum and communicate objectives clearly. This can be effective if a consensus already exists around the initiative. Still, inertia may prove to be a powerful force. A large campaign essentially presents an initiative as inevitable, which can harden the opposition.

Most successful transformations begin instead with small groups that are loosely connected by a shared purpose. They’re comprised of people who are already enthusiastic about the initiative but are willing to test assumptions and convince their peers of the change. This has to be done on the ground without the involvement of leaders so that people feel ownership over the effort. For example, when Wyeth Pharmaceuticals set out to adopt lean manufacturing practices, it began with just a few groups at a few factories. The effort soon spread to thousands of employees across more than a dozen sites and cut costs by 25 percent.

IDENTIFY A KEYSTONE CHANGE: Every change effort begins with some kind of grievance. For example, leaders may have costs that need to be cut or disengaged employees to address. Wise managers will use a grievance to create a vision that moves the organization forward and creates a better future. This vision, however, is rarely achievable all at once. Most significant problems have interconnected root causes, so trying to solve them all in a single and ambitious vision is more likely to devolve into a five-year march to failure. That’s why it’s crucial to start with a “keystone change,” which represents a clear and tangible goal, involves multiple stakeholders and paves the way for bigger changes down the road.

That gap between aspiration and practical reality was the challenge that Barry Libenson encountered when he arrived at Experian as chief information officer in 2015. In his conversations with customers, it became clear that what they most wanted from his company was access to real-time data. Yet to deliver that, he would have to move the technology from traditional infrastructure to the cloud, an initiative that raised serious concerns about security and reliability. He began by developing methods for accessing real-time data for internal use rather than developing customer-facing features first.

“Once we developed some internal APIs, people could see that there was vast potential and we gained some momentum,” Libenson told me. By starting with a keystone change, Experian was able to successfully move to the cloud.

NETWORK THE MOVEMENT: All too often, we associate any large-scale change with a single charismatic leader. For instance, the American civil rights movement is commonly associated with Martin Luther King Jr. In much the same way, turnarounds at major companies like IBM and Alcoa are credited to their CEOs, Lou Gerstner and Paul O’Neill.

The truth is more complex. Martin Luther King Jr., for example, was just one of the “big six” civil rights leaders. Gerstner gained allies by refocusing the company around customers. O’Neill won over labor unions by making a serious commitment to workplace safety. That’s why in his book “Leaders: Myth and Reality,” Gen. Stanley McChrystal defines effective leadership as “a complex system of relationships between leaders and followers, in a particular context, that provides meaning to its members.”

Every large-scale change requires leadership at the top as well as the widening and deepening of connections through wooing an ecosystem of stakeholders.

Consider the case of Talia Milgrom-Elcott and 100Kin10. When she set out to start a movement to recruit and retain 100,000 STEM teachers in 10 years, she knew that there was no shortage of capable groups working to improve education. In fact, she had worked with many people building myriad approaches to this same issue. But they had never met one another. And so instead she created a platform that brings together nearly 300 partner organizations to work together through conferences and networking.

SURVIVING VICTORY: Often the most crucial part of any transformation effort is when the initial goals have been met. That’s why successful transformation leaders focus also on the process of change itself. If Wyeth had stopped at a 25% cost reduction it would have soon found itself facing the same problems again. However, because its employees embraced the lean manufacturing methods it introduced, the company was able to keep moving forward.

In some cases, the benefits of a successful transformation can last for decades. Remembering Gerstner’s turnaround of IBM in the ‘90s, one of his top lieutenants, Irving Wladawsky-Berger, told me, “Because the transformation was about values first and technology second, we were able to continue to embrace those values as the technology and marketplace continued to evolve.” After nearly going under, the company remains profitable today.

Copyright 2019 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

Topics: Leadership Management

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