Tuesday, May 29, 2012

Making the Compelling Case for Change

When the pain of change exceeds the pain of staying the same, change is unlikely. That quote from sales trainer Bill Scheessele has proven true over my 20-plus years as a change initiative leader. Given people's natural resistance to change, it's hard to move them far from the status quo without a compelling reason to do so.

Research by the Harvard Business School found that the number one reason corporate change initiatives fall short is the failure to establish a sense of urgency. Some call this the "burning platform," a crisis or challenging situation that compels change. So your first step as a change leader is to convince people that staying the course will be more uncomfortable than making the change.

In my last post, I outlined six steps to effective corporate change. This post explores the first step--creating a sense of urgency--in more depth. A few pointers to keep in mind: 

Let circumstances drive change, not just internal directives. I've never seen a corporate change initiative succeed that was propelled entirely by management prerogative. The fact that "the boss wants it done this way" is not an effective driver of change in most organizations. A better approach is to leverage an external threat or change that provides a "situational mandate" for change in your firm.

The presence of an external change driver lends greater weight, then, to corresponding management directives. Perhaps the most successful change initiative that I've been part of was launched by a threat from our largest client to cut us off if we didn't improve our safety performance. That got everyone's attention! Then our president drove the point home a few weeks later when he fired two field managers for not adequately supporting our evolving safety process. 

Build a strong consensus within your leadership team. The Harvard research directed by John Kotter found that the second most common reason for unsuccessful change efforts was the failure to create an effective "guiding coalition" among company leaders. This process must start in agreeing on the need for inclusive change.

A common scenario I've seen is this: Company managers agree in concept on the need for change, but some don't see the need for them to change. By their example, they send the message that the expressed reasons for the corporate change are not so compelling after all. There's no quicker way to undermine your change initiative (as I've experienced many times!).

Consensus doesn't mean unanimity. But you must secure what I call a "functional consensus," meaning that the leaders who are most important in guiding change in your firm (your major influencers) are agreed and committed. Likewise, you may need to take steps to neutralize the influence of other leaders who are not fully on board (e.g., reassigning them). 

Personalize the pain of staying the course. It's usually not enough to focus only on how change impacts or benefits the company. Most employees will be more concerned with how it affects them personally. Therefore, you need to make the compelling case at the personal level, as well as at the corporate level.

A good place to start is to probe employee perceptions of the situation. What are they seeing? What are they feeling? Are they making the connection (with reasonable accuracy) between how the company is affected and what it means for them? Understanding what your employees are thinking helps you better communicate the personal risks and benefits associated with the change.

Be sure to translate the company impacts down to the individual level. In the aforementioned example, it was easy to see that losing 40% of our revenue (which is what our top client represented) would exact personal costs through job losses, relocations, reassignments, etc. But often the connection isn't so obvious. How does continued quality problems impact the individual employee? You need to make that clear and compelling. 

Show the evidence. Given our professional affinity for data and facts, I'm sometimes surprised how major corporate decisions are made in A/E firms based more on opinions or preferences than evidence. The problem is--besides the fact that you're more likely to be wrong--that it doesn't sell across the organization.

If you have evidence that forms a compelling reason for change, share it with your employees. If you don't, go find it. While your employees may generally trust your business instincts, when it comes to asking them to buy into a significant change, objective facts are better. Of course, the data don't always add up to a consistent story--especially after they've been twisted to fit different people's narratives. But with some effort, you should be able to find information that supports what your leadership team is seeing--"we'd better make this change, or else."

Thursday, May 17, 2012

Six Steps to Effective Change

Change is the one constant in today's tumultuous business environment. A company's ability to adapt quickly to the shifting sands of the marketplace is critical to lasting success. Fail to keep pace with this change and you'll find your firm losing ground to your more adept competitors.

While change is unavoidable in the marketplace, several forces are at work to avoid it in the workplace. People generally resist significant change, even when they understand it is necessary. They may agree to change initiatives in principle, but find it difficult to put change into practice. Old habits are hard to break. 

That's why leading change is one of the most important and challenging aspects of being a company leader. Chances are that your firm doesn't lack for good ideas, sound strategies, and market insight. The most crucial factor in your firm's continued success will not be strategy or smarts, but being able to make the needed changes to respond to an ever-changing world.

Thankfully the path to successful change has been well traveled--and researched. From my own experiences as a change initiative leader and research by John Kotter of the Harvard Business School, I offer the following six steps to effective corporate change:

1. Create a sense of urgency. According to Kotter's research, the number one cause of unsuccessful corporate change efforts is the failure to establish an adequate sense of urgency. People are both (1) uncomfortable with most company changes that directly affect them and (2) prone to be complacent about the need for change. Successful change initiatives usually must start with establishing the compelling case for change.

It is said that when the pain of change is greater than the pain of staying the same, change is highly unlikely. So the change leader needs to convince employees that the discomfort of change is a better alternative than maintaining the status quo. This is what I call "the Edict," a compelling reason to change lest you suffer more unwanted consequences. 

Best practice: When making the compelling case, don't just focus on why change is needed for the company. Personalize it to the extent practical. Describe how employees will be negatively impacted should the firm not make the change. Better yet, link the need for change to their current concerns and frustrations. People are much better able to make the transition when they see both personal impacts to be avoided and personal benefits to be gained.  

Common mistake: A management mandate is rarely as effective in establishing the Edict as an unpleasant or threatening situation. Use outside factors--the economy, market changes, client dissatisfaction, etc.--to motivate changes. You can also leverage your employees' unhappiness to propel change. Avoid the "do-this-because-I'm-the-boss" option as much as possible. 

2. Communicate a unifying vision. If the Edict is the stick, vision is the carrot in gaining buy-in for change. Kotter describes vision as a "sensible and appealing picture of the future." It combines two elements: (1) a core ideology, linking to your values and convictions, and (2) a favorable envisioned future state or accomplishment.

The strength of your vision depends in large part on both how well it connects to employee aspirations and how well you communicate it. That means that your communication needs to be two-way. Learn what your staff wants and find ways to connect this to your vision. 

Best practice: Before rolling out your vision to the whole group, test it with a sample of your employees. Ask for their feedback on how clear it is, how well it resonates with them, how it might be best to disseminate and reinforce it across the organization. You don't want to find your vision misses the mark after you've rolled it out. 

Common mistake: Message discipline and message diligence are common shortcomings. The first relates to a lack of consistency in how the vision is communicated firm wide. The second problem is a failure to communicate it often and broadly enough. If it's important, it should at least reach the frequency of other important messages (e.g., meeting utilization goals) in the organization. Take steps to promote conversation about the vision at all levels affected. 

3. Get employees engaged. There's only so far a leader can drive change from the top. For it to be successful, it must be embraced and acted on by the people who must actually make the change happen. Leaders set the vision, but followers must implement it. Many a change initiative is derailed by the failure of company executives to understand the need to engage staff--rather than simply tell them what they must do--to accomplish the change. 

Best practice: Establish a representative implementation team to guide the work of change. Invite all employees to provide feedback and ideas to this team, so that all feel like they have a voice. This doesn't imply a democracy where majority rules, but empowering a group of people who are more familiar than company management with the work activities that need to be modified. 

Common mistake: When management dictates the specifics of how work must be done differently (e.g., a new QA/QC process), it's a recipe for failure. Management should determine what needs to achieved, but it's best to leave the details of how that will be accomplished to those who actually do the work. 

4. Reinforce new behaviors. I suppose you could combine this step with the previous one, but it's crucial enough to warrant separate mention. As noted above, habits are hard to change. So you need to determine how you're going to promote the development of new habits and ways of doing things. Few company managers actually consider the psychology of behavior change, which is undoubtedly a key reason why most change efforts fall short.

You can tell employees what to do differently and you might get good results initially. But to sustain those new behaviors over the long haul, you need to understand the role of consequences. When people, of their own volition, do something repeatedly, it's because that action produces a fairly consistent favorable result. It's self-rewarding. That consequence may be subtle, subjective, or even imaginary, but it motivates the continuation of the behavior.

So if you're seeking to replace old behaviors with new ones that last, you'll need to effectively employ consequences that reinforce the change. The best approach is the use of positive reinforcement, something I've written about extensively in this space. You've no doubt heard the old adage, "what gets rewarded gets done." Unfortunately, most managers fail to understand what's really rewarding. 

Best practice: Be sure your efforts to use positive reinforcement to establish new behaviors meet the following criteria: (1) the reward is valued by the employee, (2) it is contingent on meeting specific objectives, (3) it is provided regularly, and (4) it immediately follows the desired behavior. You will notice that most of our attempts to incentivize behavior fail to meet all these criteria. 

Common mistake: Managers more commonly rely on negative reinforcement to influence behavior change. Negative reinforcement can be used to increase certain behavior, but there is a substantial qualitative difference. It produces compliant effort--doing the minimum--versus discretionary effort that goes beyond requirements. Positive reinforcement promotes discretionary effort, which is particularly important when implementing substantial change. 

5. Anchor change in the corporate culture. The most pervasive influence on how things get done in a firm is culture. It has it's own inherent reinforcers, rewarding certain behaviors and discouraging others. Some aspects of corporate culture are formal and intentional, others have evolved without much conscious design. Culture defines the rules of conduct, which may or may not mirror what company leadership wants it to be.

Any successful change initiative must be rooted in the culture for longevity. If the specific change is a bad fit for the culture, then the culture must be conformed to accommodate it. That's why trying to impose new rigor on work processes (e.g., how you manage projects) predictably comes up short in a loose, laissez-faire culture--a common occurrence in our industry. 

Best practice: Be sure to identify when your proposed change requires a corresponding change in the culture. Then include in your implementation plan steps to modify your culture as the change is being made. This may involve things like promoting new habits, eliminating old practices and systems, changing outward symbols such as terminology, logos, and rituals. Perhaps most importantly, actively promote conversation and stories that reinforce the key cultural attributes that you are seeking. 

Common mistake: I frequently encounter situations where strategy doesn't align with culture. One or the other simply has to give to make a successful change. It's easier to tailor your change initiative to your culture, but most often the change is in fact necessitated by cultural deficiencies. So cultural modification is usually a critical part of any corporate change effort. 

6. Lead by example. The strength of a leader is determined by his or her ability to influence others to follow. That depends on what is often called "personal power," the leader's character and skill that draws people to follow without having to regularly resort to positional authority. There is nothing more important in establishing personal power than integrity.

Integrity can be defined as demonstrating consistency between what you espouse and what you do. When a leader promotes a particular change effort and then acts in ways contrary to its objectives, integrity is compromised. To some degree, it is the leader's integrity that is brought into question. But assuming that individual is reasonably respected by his colleagues, it is likely that the integrity of the change vision that has been damaged more.

In the many change initiatives that I have been part of, there has been no greater cause of failure than firm leaders undermining the change by their example. Usually this is evidenced in having too little commitment to see the change through, or allowing other priorities to effectively usurp the change. The point is: Employees will look to their leaders to assess the real credibility of the purported change initiative. 

Best practice: Set the pace by your active involvement in the change effort. If you're not involved in the details of implementation, at least stay informed and visible. Remember, if it's not worth your time and attention, others are likely to make the same determination. 

Common mistake: Beware of allowing more urgent matters to distract you from leading the change effort you committed to. Change takes time, which makes it vulnerable to the constantly shifting priorities dictated, not by importance, but by urgency. This is where the dependable focus of an effective leader is needed for success.

Monday, May 7, 2012

Harnessing the Power of Change

If you plot the pace of societal and technological change over the course of human history, you see a generally linear pattern of growth over centuries until you reach the post-World War II era. Then suddenly the curve lurches upward, displaying an exponential rate of growth. And futurists project that the rate of change will only increase in the years to come.

In the business world, the rate of change accelerated substantially with the advent of the current recession. Many of the changes that the financial crisis wrought will likely be with us for a long time, if not permanently. This is what is popularly called the "new normal." It comes on the heals of what was the heyday of A/E industry, characterized by record growth in revenue, backlog, and profit.

Hard to believe it passed so quickly, isn't it? But we can no longer afford to reminisce. While most firms seem to be enjoying a modest rebound, don't expect a return to business as usual. If you agree, that begs the question: What is your firm doing differently now? Are you simply adapting to the marketplace changes, or harnessing their power to help you transform your business?

As I've written before, times like these present ripe conditions for corporate change. Firm executives face an unavoidable choice: Lead change or follow change. The vast majority of A/E firms have long followed others' innovations and adaptations. They could get away with it in the past because being slow to change didn't put their firm all that far behind the leaders.

That will no longer be the case. The financial crisis has weakened many firms, allowing the stronger ones to increase their advantage. With slow industry growth, those firms that can take market share will prevail over the majority that are merely eking out an incremental increase on pace with the marketplace. The best firms will leverage the crisis to remodel their business practices and reduce the inefficiencies that plague our industry.

Will your firm be among them? This post launches a series on leading change, a perennially important subject that has now become essential. Few firms are prepared for the changes that may be necessary even to just keep pace. Hopefully this series can help. 

Change vs. Transition 

Let me start by clarifying a vital distinction when it comes to this matter--the difference between change and transition. Companies make lots of seemingly wise changes that don't succeed because they fail to adequately manage the transition. 

For example, your firm may introduce a new business development process. The change is generally well received--in concept. But people find it more difficult in practice. They're uncomfortable and inconvenienced with doing things differently. They work at the new process for a while, but ultimately retreat to old habits. They can't make the transition to the change.

Changes are always easier to make than transitions. So when you hear the term "change management," what is really being referred to is management of the transition, the human dynamic of change. And to be precise, it's really not a matter of management, but of leadership.

Change is situational; transition is psychological. Change is external; transition is internal. Change is an event; transition is an experience. Change can happen quickly. Transitions almost always take time. Corporate changes rarely meet expectations without a successful transition. In fact, about 70% of corporate change efforts fall short. You can bet they fail in the transition phase. That's where leadership is needed.

Effective leaders guide people through the difficult process of transition. Indeed, successful transition is a byproduct of leadership, because leadership is about creating positive change. Is there a more important topic in our business these days? I think not. As evidence, consider that a post I wrote in 2009 on the four stages of organizational change continues to be my most popular post--almost each and every month!

So in the next few months, I'll be digging deeper into the topic, outlining several strategies for helping people transition through corporate changes. If you have particular issues related to this topic that you'd like for me to address, let me know.