I am sure that many of you have been involved in at least one major corporate transformation programme.If it was like other similar programmes it will have been launched as a major event, with speeches from the top brass, opportunities for questions, videos of the organisation’s future and visible intranet sites, wallcharts and programme updates across the workplace.
But how many of these programmes succeed? Does the high-publicity approach to change actually work? My own experience tells me it doesn’t and reading others’ experiences reinforces this view. In fact John Kotter, in his book Leading Change argues that the very nature of this approach hinders successful change:
- The high-publicity launch sets high expectations of change;
- This creates excessive excitement in some but high levels of resistance to change in others;
- If results are not visible quickly, questions are asked, the enthusiasts disappointed and the cynics vindicated;
- The lack of momentum leads to the death of the transformation;
- Subsequent change programmes are received with less enthusiasm and greater cynicism.
For example, in the late 1990’s, the new CEO of Procter & Gamble, Durk Jager, created a radical global transformation of the business which he linked to aggressive financial performance targets. Despite progress on several fronts, performance did not match aspiration. Consequently the company issued three profit warnings in four months, and the share price fell by 30% in a single day! Unsurprisingly Jager left the business and was replaced by P&G “insider” AG Lafley.
So how do you create the conditions for successful change? The answer is fundamentally simple – deliver results. Results rooted in the new business strategy not only help organisational performance, they also give people reason to believe. Only once people believe can they truly engage with the wider programme of change. There are four success factors critical to this approach
Act, don’t exhort
In his book, Good to Great, Jim Collins identifies the factors that separate the great companies from the also-rans. One of these factors is what Collins calls “the flywheel”. Pushing a flywheel through its early rotations requires great effort and it is only after several turns that the wheel’s energy allows the wheel to use its own momentum. But which turn is most important, the first or the last? The answer is, of course, that all the turns are equally important.
Collins details how Kroger, the US grocer chain, was able to transform itself from a traditional supermarket into a superstore retailer. CEO Jim Herring explained the approach as follows “We presented what were doing in such a way that people saw our accomplishments. We tried to bring our plans to successful conclusion step-by-step, so that people would gain confidence from the successes, not just the words.”
Develop clarity of purpose
Of course, being able to focus on doing the right thing requires a clear understanding of the key objectives and goals of the business. Without this clarity there is limited ability to track whether activity is helping or hindering. This does not necessarily mean creating a bold new vision.
Since AG Lafley has been CEO of P&G there has been no radical vision, but there has still been clarity on the goals, even where this disappoints external stakeholders. Lafley told the McKinsey Quarterly how the P&G share price reduced still further as he took his new role “because the first thing I did was to set lower, more realistic goals.” However, in his first four years as CEO company profits grew by 70%.
Deliver and celebrate early wins
The need to focus on the “flywheel” suggests that there may be no big magic solutions in successful change strategies. Delivering and celebrating early wins is therefore essential. In fact, major change is often an accumulation of early wins that, over time, become embedded in the business.
For example, US company Abbott Laboratories transformed itself from a pharmaceutical business into the number one in diagnostics and healthcare nutrtionals. Yet an Executive involved in this transformation told Jim Collins, “Our change was a major change, and yet in many respects simply a series of incremental changes – this is what made the change successful.”
Balance short and long term objectives
The danger of celebrating early wins is that ultimate victory can be called too early across the organisation. This allows the cynics to continue to stall and even the enthusiasts to believe that the job is done and the bigger change to elude the business. Further change is required to consolidate improvements and Kotter argues that “three years of work can come undone with remarkable speed.”
A critical factor is to balance short term, operational improvements and longer term growth.Focusing solely on near term performance can harm the long-term effort. John Varley, CEO of Barclays told the McKinsey Quarterly, “The focus on initiatives to improve financial performance crowded out attention on underlying health, leaving us with a set of issues in some businesses.”/em>
Both Stuart Rose at M&S and Justin King at Sainsbury have wisely avoided the trap of calling victory too early in their turnaround strategies at two of the UK’s biggest retailers. Although they have both been keen to emphasise and celebrate the progress made to date, they are equally clear that there is still “much to do”.
Of course, there is no one best way to deliver successful change. However these four factors – acting, not exhorting; developing clarity of purpose; delivering and celebrating early wins; and balancing short and long term goals – enable teams to create the mindset and focus to deliver successful change. Breaking away from the idea of big, brash programmes of change to an approach rooted in “delivery first, publicity later” requires leadership and discipline. It is based on the premise that people will “get it” and become involved as they see success being achieved and appropriate effort being rewarded.
What is the approach of your company’s major change programmes? Is the focus on “stretch goals” and promises of what’s going to happen or is it on the quiet, determined delivery of results against specific objectives, and the unstoppable momentum of ongoing success?
To find out more contact Stuart by clicking here or call +44-(0)1636-526111.