In the strategy community, there has been a lot of discussion lately about the need for companies to continuously reinvent themselves in order to succeed in today’s complex, uncertain, and volatile business environment in the long-term. Not only products and services, but also the business model and the corporate culture need to evolve and change in increasingly short intervals. Strategic realignment and restructuring of a company is anything but an easy undertaking, though, and, in most cases, inevitably faced with resistance by the employees. Fear of change and anxiety of being unable to meet the challenges that lie ahead are widespread and all too human. To get all employees to move into the same direction, an effective change management is essential.
Change management is focused on the people. It aims to implement change in a comprehensive, smooth, and lasting way. But how can it be achieved in practice?
There are many different theories about how to transform an organization. Most of them are based on the work of leadership and change management guru John P. Kotter, a retired Harvard Business School professor. Kotter developed his 8-step change model in his seminal book Leading Change back in 1996. Since then he has steadily refined the model which is now used by many consulting firms around the world.
The 8-step model offers a holistic approach to implement far-reaching organizational change. Kotter points out that each of the eight steps needs to be fully completed before continuing with the next: “Skipping steps creates only the illusion of speed and never produces a satisfying result.“ The eight steps can be divided into three phases: creating a climate for change (steps 1 to 3), engaging and enabling the whole organization (steps 4 to 6), and implementing and sustaining change (steps 7 to 8).
Step 1: Establishing a Sense of Urgency
Major change projects can work out only if they find sufficient employee support. Therefore, the first step in any change management program should always be to convince the staff of the necessity and urgency of taking a new direction. “Help others feel a gut-level determination to move and win, now,” is Kotter’s advice. This is anything but an easy task, though. Complacency and a false sense of urgency driven by anxiety, frustration, or anger and expressed in frantic actions are some of the main stumbling blocks to change. To succeed, people need to constantly focus on what is important. “Urgency is not simply important as the ignition for a change. It must be the engine for change,” Kotter points out (2011).
To create a sense of urgency among the staff, he recommends, to map out to them the potential opportunities and risks arising from the business environment. Successful leaders do so by appealing both to the hearts and minds of the employees. "See-Feel-Change," that is Kotter's motto.
Step 2: Creating a Guiding Coalition
The next important step is to form a coalition of people to lead the change effort. Team members should have enough power, credibility, expertise, excellent leadership skills, and a shared objective. To function well as a team, it is also essential that team members build mutual trust. This may be achieved, for instance, through regular off-site activities.
Step 3: Developing a Change Vision
The job of the guiding coalition is now to develop a vision of the future. According to Kotter, a clear vision serves three important purposes:
- It serves as a basis for decision making,
- It motivates people to take action in the right direction even if the first steps are painful, and
- It helps to coordinate the actions of different people in a remarkably fast and efficient way.
A well-formulated vision provides meaning to the people. It is the glue that keeps everything together. Kotter identifies six key characteristics of effective visions:
- Imaginable: They convey a clear picture of what the future will look like.
- Desirable: They appeal to the long-term interest of those who have a stake in the enterprise.
- Feasible: They contain realistic and attainable goals.
- Focused: They are clear enough to provide guidance in decision making.
- Flexible: They allow individual initiative and alternative responses in light of changing conditions.
- Communicable: They are easy to communicate and can be explained quickly.
Step 4: Communicating the Vision for Buy-in
The next step is to spread the new vision throughout the organization in order to win buy-in from the employees. According to Kotter, undercommunication and inconsistency is extremely common. Successful change leaders, he says, use every communication channel possible to broadcast the new vision on a daily basis. They also experiment with new and different communication methods, such as storytelling, to make the vision more vivid and understandable to everyone. But words alone are not enough. Leaders need to “walk the talk” to inspire and motivate employees to do the same and overcome any mistrust within the organization.
Step 5: Empowering Borad-based Action
Once the employees accept the new vision, they need to be empowered to act upon it. It is the responsibility of the guiding coalition to remove any barriers and make sure people have the right skills, tools, and systems to bring about the change. In addition to human resource systems, information systems can have a big impact on the successful implementation of a change vision, Kotter points out. Access to current competitive and market information and a smooth exchange of information across departments are essential to ensure that the employees can do their jobs as efficiently as possible.
Step 6: Generating Short-term Wins
Major, long-term change efforts tend to lose momentum quite early on. To keep the motivation and the sense of urgency of everyone involved up, short-term wins are essential. Short-term wins may also take out the wind of the sails of cynics and resistors. Research shows that companies that experience significant short-term wins are much more likely to complete a transformation process successfully.
Step 7: Consolidating Gains and Producing More Change
While short-term wins are important, Kotter warns not to declare victory before the changes and business improvements have sunk deeply into a company's culture, as this may kill ongoing momentum allowing resistors to take over. Instead, leaders should seize the opportunity to use the increased credibility from early wins to produce even more change. At this point, new groups of people should be involved into the change process and promoted into key roles. In addition, the leadership coalition needs to make sure that the level of urgency and focus are kept up over time.
Step 8: Incorporating Changes Into the Culture
Finally, new approaches need to be anchored in the corporate culture in order to stick; otherwise, they may get lost as soon as the pressure for change subsides. To achieve sustained change, Kotter recommends to communicate frequently how the new approaches have improved performance and to create leadership development and succession plans consistent with the new norms and values.
Change processes put great demands on executives and managers and the organization as a whole. Kotter’s 8-step model provides a solid checklist for most things which need to be considered during such a process. Key prerequisites for each step are excellent leadership, a sense of urgency, open exchange of information, and continuous communication across all levels of the organization.
Kotter, J.P. (July 2011). Why do change efforts lose momentum? Forbes (online ed.). http://www.forbes.com/sites/johnkotter/2011/07/26/why-do-change-efforts-lose-momentum/
Kotter, J.P. (1996). Leading change. Boston: Harvard Business School Press.