by Mike Norman, Phil Drouillard, and Marnie Smith who can be contacted at

www.imakenews.com 

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The information explosion and the rapid expansion of global markets that occurred during the 1990s led to a new and different competitive reality. To remain viable in this new environment, American companies needed to be fast, nimble and adaptive. The mantra for success became "be ready for change, or be left behind."

Today, even though Corporate America faces a different set of economic conditions, many CEOs believe the same attributes are still absolutely essential. Corporate leaders struggling to navigate through an ever-changing business landscape continue to place a premium on change management capability.

However, traditional change management methodologies are failing miserably. Windows of opportunity open and shut before organizations can respond appropriately. Without new ways of quickly engaging the workforce and building broad-based commitment to change efforts, today's companies are playing a perpetual game of catch-up. The result is unfulfilled performance expectations, shareholder disappointment and chronic change fatigue syndrome.

Although it is a critical variable, speed has proved to be a double-edge sword. Innumerable articles and books have been written extolling the virtue of accelerating organization change efforts while at the same time advocating standardized, often bureaucratic project management processes. However, Corporate America has learned the hard way that espousing speed while clinging to cookie-cutter approaches does not work.

Research shows that 75 percent of all attempted change initiatives fail within the first three years.1 Other studies have found high failure rates in specific types of large-scale change efforts, including efforts to integrate new technologies (more than 60 percent fail because of poor planning and implementation2) and acquisitions (61 percent of acquisition programs fail3). Further research shows that, of the 65 percent of Fortune 500 companies that have undertaken major change efforts since 1995, only a meager 30 percent believed that their investments actually produced the results anticipated.4 It is interesting to note that nearly 60 percent of respondents felt that their organizations had both a satisfactory business case and a sense of urgency, but that these proved insufficient to accomplish meaningful change. Political infighting, lack of explicit agreements across major functions, limited buy-in and unclear people engagement strategies often derailed their efforts.

These findings indicate that standard change management practices coupled with speed have fallen short. New approaches are sorely needed. New methodologies must focus on attaining tangible business results that can be quantified, tested and verified over time.

Speed is a positive by-product of a carefully crafted change strategy, but sustainable impact is the real desired outcome. Experience has shown that a keen concentration on business impact greatly accelerates the overall change process because it creates and/or revitalizes mutual stakeholder synergies that are often lost in day-to-day work activities. Sustainable impact is achieved through the introduction and implementation of three specific change management variables - business focus, leadership alignment and employee momentum. Each of these elements is necessary and are together sufficient to raise probability of creating sustainable impact through the change process. If any element is missing, the likelihood of success is improbable.

# Business focus refers to the clarity and continuity of messages that leaders communicate to all stakeholders - customers, shareholders, employees, etc - in terms of value proposition. This variable provides the required credibility for the change effort to take hold. During times of tumultuous change, those affected will invariably question and compare new priorities to previous company initiatives and cultural norms to determine if the change will be worth the reward, and if leaders will stay the course.

# Leadership alignment is the degree to which organization decision-makers and key influencers consistently articulate, model and reinforce the desired change. Alignment at the top of an organization is critical for sustainable impact, particularly when it comes to allocating resources and rewards.

# Employee momentum is the result attained by building a critical mass of people who become fully knowledgeable and/or directly engaged in the change process itself. This variable is key for sustainable impact because employees' willingness to relinquish existing comfort zones and commit themselves to the new and unfamiliar is one of the first steps in breaking through normal patterns of resistance.

# Time is the number of months required to define, design, implement and measure the change. In general, the longer the time required, the less the sustainable impact, because focus becomes diluted, leadership alignment becomes difficult to maintain, and employee momentum slows down. Thus, speed is actually vital to sustainable impact because moving slowly dilutes the key forces that create impact.

The combination of focus, alignment and momentum provide the power for organization change initiatives to break through cultural inertia. When these variables operate in concert, a new organization gestalt is created - a different mindset enabling greater levels of performance. We call the successful combination of these variables the change management sweet spot.

"Speed is a positive by-product of a carefully crafted change strategy,

but sustainable impact is the real desired outcome."

# Business Focus

An old advertisement for IBM said, "We sell our customers a good night's sleep." At Ford Motors, the message was "Quality is Job #1." Each phrase was powerful in its own right because it created clarity of focus. Many vision statements miss this fundamental principle and resort to "fluffy" language describing ethereal management aspiration. Linkage to business strategy often gets lost. A good litmus test for clarity of focus is whether leadership messages can answer three important questions: 1) How will the new direction strengthen our position with our markets and customers? 2) How will the new direction improve our shareholder value? 3) How will the new direction pass the stakeholder WIIFM (what's in it for me) test? The answers to these questions determine whether the messages will be perceived as clear and compelling.

The following anecdote can serve as an example.

A major manufacturer and retailer of consumer electronics changed leadership at one of its major operating divisions. Faced with flat sales, a declining customer base and poor product distribution, the new leadership team didn't know where to begin.

The first challenge was to create an organization-wide rallying cry. It was believed that an externally based business focus would help unify the division, thus setting the stage for across-the-board change. (Historically, division management tended to default to an internal perspective - what they already knew.) Asking customers to help define what "great performance" actually looked like, and what types of issues got in the way of delivering it created this new focus. During a series of Leadership Summit meetings, this new perspective was communicated to all levels of management. The purpose of these working sessions was to communicate the reality behind the customer data, ensure understanding of its importance and determine what could be done - quickly and profitably. The need was urgent. Unless the company stemmed customer losses and quickly executed a turnaround in sales, the survival of the division was in doubt.

Several key outcomes emerged from the Leadership Summit meetings, including:

1. Satisfying customers' needs and wants is everyone's job. Performance incentive plans were quickly modified to drive and support the new focus.

2. Customers want to deal with providers who are "market leaders." The existing product introduction timeline was streamlined and product availability was guaranteed by means of an innovative replacement program.

3. Marketing and Sales material should be in the language of the customer. Sales material was reconfigured to demonstrate product "application" value versus standard features and functions.

4. Relish being number 1 - next year nobody will remember who ran second or third. Specific criteria outlining goals for attaining market leadership were defined and built into performance standards and performance expectations.

The division president commented, "In retrospect, the Leadership Summits were a critical turning point for our business turnaround. We were able to capture everyone's attention with the customer and 'market leadership' data. However, it wasn't until we translated the data into meaningful performance standards that we got the necessary business focus across the ranks. That clarity of focus provided the horsepower for fundamental change to begin. As a result we were able to stem the tide of lost customers and resulting revenue loss within 90 days."

There is inherent wisdom in the saying, "Leadership sets direction." However, direction without clarity of focus is analogous to using a pickaxe to carve a turkey. It is only when leadership can articulate direction in a clear and compelling way that critical resources rise to the challenge of implementing change. Experience shows that although focus is a key ingredient, additional variables also must come into play.

# Leadership Alignment

Another example involves a multi-national restaurateur that was experiencing a prolonged trend in declining revenue and operating profit. After two and half decades of unprecedented success, its market concept had become outdated and once-loyal customers were selecting other dining options. Corporate leaders knew not only that the company's brand needed to be re-vitalized, but that the entire operation needed to be re-invented as well. Time was of the essence, as market share was eroding each quarter.

The first challenge was to build a strategic change plan that would be owned and driven by all levels of management. This was going to be difficult because, given the geographical dispersion of the individual restaurant stores, the company's operating culture had historically reinforced independent leadership styles. The COO felt strongly that alignment at the top-of-the-house would be key, and that success would depend on fundamental shifts in senior leadership behavior. This new behavior would provide the necessary credibility to revitalize the business model.

Company executives began reflecting on their own collective and individual leadership styles. To set things in motion, they crafted a new vision, and tested the degree to which they agreed about key principles and behaviors for driving its execution. These discussions brought to the surface some fundamental differences in perspective. The senior leadership team realized that these differences, unless resolved, would slow progress and create confusion across the organization. Aligning strategy and style at all levels of management became the focus of the change planning process. In the end, executives concluded that this variable was critical for the change initiative to yield results quickly.

The executives knew where the company needed to go, but basic questions surfaced regarding how to proceed effectively. The team designed a methodology that would help accelerate alignment throughout the management ranks. They then realized the approach could not be training-oriented or programmatic. It had to be designed in such a way that the content could be "internalized," then easily transferred to the organization by all levels of management. A set of strategic topic areas and support tools emerged that enabled managers to conduct focused conversations about the business case for change and achieving the vision. By facilitating these conversations, managers were able to break through normal "operating patterns" and gain additional insight about their own people and the challenges everyone was facing. In addition, new facilitation skills emerged that encouraged open and honest communication both horizontally and vertically - something the company had struggled with for years. During these sessions, business expectations were defined, challenges and opportunities identified, and resistance addressed. This was a new way for managers to lead.

These strategic conversations resulted in alignment throughout the entire management population. "Having all leadership operating off the same song-sheet has greatly accelerated our change effort, and I never would have believed that we could get this far along by now," commented the COO in a recent interview. "It feels good to have our corporate and senior operations leaders pulling the rope in the same direction. Now we have to keep driving this alignment concept throughout the rest of the organization".

"Having all leadership operating off the same song-sheet has greatly accelerated our change effort, and I never would have believed that we could get this far along by now." -COO, Hospitality Industry

Although both are necessary, business focus and leadership alignment are insufficient by themselves to create sustainable impact. A broad base of employee awareness and understanding about the whys of change is also required.

# Employee Momentum

Our final example involves a medium-sized consumer goods company. An undeniable record of success and a highly talented management team helped make it the target of friendly acquisition. Once acquired, the focus became delivering higher productivity and financial performance during the integration process. Senior management had promised continued autonomy as a condition of the sale, to help mitigate potential employee turnover resulting from the buy-out. Higher financial contribution would help preserve the acquired company's status as an autonomous business unit within the new company. With sweeping infrastructure changes distracting focus from daily operations, however, hitting the new performance targets was going to be a stretch. Company leaders knew the transition had to be completed quickly if performance was to remain on an upward track. They had to get the entire workforce on board and actively contributing to the change process, to ensure critical momentum would not be lost.

To help increase employee productivity, senior leadership designed a customized business literacy initiative. The intent was to help a broad population of core employees better understand the business and to engage them in actively striving to meet or exceed their new performance targets. The company could not afford to have a majority of the workforce waiting around for management to drive action. Yet, the leaders also acknowledged that if employees were to become directly involved, they had to be educated. Building business understanding throughout the organization became the strategic focus of the change plan.

Using large-scale meeting formats (100-200 people), division leaders engaged all of their employees in a series of strategic conversations about the business-competitive environment, financial challenges, operational goals, shareholder expectations, etc. The process also included open discussion forums where employees could express their hopes and concerns about the acquisition. Leadership appreciated that employees had to vent about these types of issues before committing to the new direction of the company.

These large-scale discussion forums were accomplished through a unique discovery learning methodology. The approach facilitated the delivery of critical messages and strategic information through visual aids, experiential learning techniques and highly interactive peer dialogue. Employees also received tools to help them continue business-based conversations with their peers back on the job.

By boosting business literacy throughout the workforce, company leaders were able to accelerate the post-acquisition integration efforts. Cultural integration can be messy and time-consuming, especially if difficult people issues are on the table. In this case, the integration took comparatively little time because leaders used innovative ways to introduce it. As a result, productivity remained at pre-acquisition levels. More importantly, leaders gained broad-based buy-in to the strategic direction of the newly formed enterprise.

These three client examples illustrate the real-world application of the critical variables-business focus, leadership alignment and employee momentum-required for change management to be successful in today's fast-paced environment. In each case, leaders realized that traditional change management efforts, which focus on process and dealing with resistance, could not mobilize employees to achieve sustainable impact. Instead, they chose an approach that deals with resistance as a natural part of the change management process, and emphasizes increased involvement, buy-in and commitment. Using innovative methodologies, including business focus, leadership alignment and employee momentum, significantly enhanced the sustainable impact of their change efforts. These companies were able to find their change management sweet spot.

Finding that sweet spot is not an easy undertaking, nor is it for the fainthearted. It takes hard, purposeful work to introduce and build the three critical variables into a meaningful change strategy. Whereas traditional, process-driven methodologies can alienate those ultimately affected, deploying strategies that take these variables into account will help engage people and build a broader base of commitment to the change effort. Establishing clarity of business focus, aligning key leaders and generating employee momentum through direct involvement are essential to help mitigate the natural resistance that comes with change. The speed of the implementation is typically faster but, more importantly, the chance of creating sustainable impact is greatly enhanced.

Are your change management initiatives hitting the sweet spot?

*Reprinted by permission of the Segal Company, Sibson Consulting