Basic goal: To make fundamental changes in how business is conducted in order to cope up with a new, more challenging market environment

Lessons from successful cases of change:

1)      Change process goes through a series of phases that require considerable amount of time

2)      Critical mistakes in any phase can have devastating impact

8-step framework:

1)      Establish a sense of urgency

Companies that successfully lead change identify important indicators and find ways to communicate the same broadly and dramatically. This is important as getting a transformation process started requires aggressive cooperation of many individuals. Major reasons for failure:

a.       Overestimate success of implementation

b.      Lack of patience

c.       Worry that senior employees will get defensive and there will be a morale loss

Leaders need to be change champions. Some leaders manufacture bad results to drive change as playing it safe is itself too risky. Acceptable rate is 75% of company’s management convinced about the need for change.

2)      Forming a powerful guiding coalition

Major successful changes are those where the leadership coalition grows over time and includes most of the top management. A successful guiding team may consist of only 3-5 people during the first year but for big companies, it can grow to 20-50 range before further progress can be achieved. The guiding coalition includes members not only from senior management, also key customers, board members and union members. This is outside the normal hierarchy. They need to first develop a minimum level of trust and commitment. Off-site retreats help. A change without a powerful coalition might end up in failure.

3)      Creating a vision

A vision helps clarify the direction in which an organization needs to move. It is a clear and compelling statement as to where all the change is leading to. It is drafted and fine-tuned over a span of several months by the coalition and is accompanied by a strategy for achieving that vision. If you can’t communicate the vision in 5 mins or less that is understandable, the vision isn’t clear.

4)      Communicating the vision

Without credible communication, the vision does not get ingrained into the employees. In successful transformations, executives use all communication channels to broadcast their vision. Communication comes in both words and deeds and the latter is the most powerful. Hence, leaders focus on “walking the talk” and attempt to become a living symbol of the new corporate culture.

5)      Empowering others to act on the vision

Apart from successful communication, removal of barriers is key. Obstacles can be:

·         Organization structure

o   Clash of vision with appraisal system

o   Bosses who refuse to change

§  Lower level managers concluded that senior management lied to them about their commitment

6)      Planning for and creating short term wins

In successful transformations, managers actively look for ways to obtain clear performance improvements, establish yearly goals, achieve the objectives and reward the people involved with recognition, promotions and even more money. When it becomes clear that major change will take a long time, urgency levels can drop and commitments to produce short term wins help keep the urgency levels intact.

7)      Consolidating improvements and producing still more change

First clear performance improvement cannot be treated as victory in change management. Better to quantify the amount of change that occurred each year.

8)      Institutionalizing new approaches

Change must be embodied into the culture of the organization. Until they are rooted, new behaviors are subject to degradation after the pressure for change is removed. Two factors are important for institutionalizing change:

·         Conscious effort to be made to show how change has improved performance

o   Helping people see the right connections

·         Taking sufficient time to make sure that next generation of top management personifies the new approach

o   Good succession decisions

o   Successor must be a change champion as well