Leading Your Organization
Through Change

By Doug Wesley

Three Types of Organizational Change

Twelve Elements of a Successful Transformation

A Grave Challenge to Today's Leaders

In this age of worldwide transformation many companies are learning that to remain viable they must exchange large parts of their secure traditions for untried paths into the future. This type of frame-breaking change makes unique demands on corporate leaders. Many seasoned executives -- though effective and experienced at managing success -- have never learned the techniques required to lead a company through such a structural change. They believe their trusty scientific management methods will solve the problems they face. Any combination of six common, yet potentially fatal, leadership errors can cause the failure of a major change. And, if that change was necessary for survival, these errors could cause the death of the enterprise as well. Twelve elements of a successful structural change are summarized in this article.

Organizations Experience Three Types Of Enduring Change

Developmental Change: Natural Growth

Like people, business organizations change through a predictable growth process. Developmental growth for a corporation is as natural -- and dramatic -- as the growth of a child to adulthood. Healthy, fit companies grow from total dependency on their founders in the first years to become greater than the founders: organizations with their own unique character.

. . . as natural and dramatic as the growth of a child to adulthood.

This Developmental Change makes few demands on leaders beyond assuring that the business remains healthy and fit to survive in the world. It's possible that, during these early stages, leaders can do as much harm as good. Some leaders -- usually founding owners behaving like over-bearing parents -- stunt the growth of their companies and prevent them from reaching maturity. Others, eager to see what this fledgling will become, build a solid foundation of discipline and give their organizations lots of room to grow. Managing Developmental Change is a whole lot like raising children.

Transitional Change: Moving to a Known State

Companies that have achieved stable success sometimes find themselves unfit to compete and thrive. A significant external factor like a change in technology, evolution of customer demands, or new types of competitors can force an organization to change just to maintain its position and viability.

Transitional Change is reactive and defensive in nature. From a position of success, a company carefully adopts proven formulas and technologies to stay competitive. Great emphasis is put on protecting traditional strengths and on maintaining roots. The idea is to change just as much as is necessary to meet the challenges it faces (not much more).

Defensive change implemented carefully to protect the nature and the character of the enterprise

Leaders of Transitional Changes must maintain a fragile balance between opening the organization to new ways of doing business and maintaining the controls necessary for continued efficiency. This is frequently accomplished by isolating the change within a single departmental or divisional unit. With what have been known until recently as "modern" or "scientific" management skills and systems, changes can be implemented in one department after another without ever putting the character or the effectiveness of the company at risk.

Transformational Change: Moving into the Unknown

Today, many companies are finding their entire industries shaken and redefined by a confluence of factors in the outside environment. Some enterprises are facing significant shifts not just in one, but in all of these key variables.

Increasing cultural diversity of customers and of employees
Shifting balances in the national and world economy
Radically new technologies
Evolving social values
Changing demands and skills of employees
Unexpected competition from unfamiliar angles
Failure of traditional lines of supply
Fragmentation of traditional markets
Collapse of key revenue sources
Aggressive pressure from government or special interest groups

When faced with four or five of these challenges at the same time, most corporate leaders realize that a controlled series of Transitional Changes just won't move their organizations fast enough. They see that the solution to the problems their companies face will not be found in improving the components of the system they manage, but in transforming the system, itself. Rather than methodically implementing proven innovations, some executives have chosen to lead their companies into unknown territory, inventing the future for themselves.

The success of these leaders depends more on vision than on analysis, more on learning than on knowing.

Leaders committed to Transformational Change purposefully alter the very relationships that define their enterprises: relationships with customers, with suppliers, with employees, with competitors, and the internal relationships between working units. Unlike the managers of Transitional Change, the success of these leaders depends more on personal trust and faith than on managerial control, more on vision than on analysis, more on learning than on knowing, more on invention than on tradition. Where managers have customarily demanded "No Surprises" from their employees, leaders of Transformational Change are more likely to embrace surprises with interest and curiosity.

Transformational Change means risking certainty to invest in possibility. Leaders who choose this path must still continue to fulfill their stewardship responsibilities to their principals as well as to the customers, employees, suppliers, and communities that depend on their companies. The equilibrium of these varying interests is frequently upset. Active, skillful relationship management is critical.

Six Fatal Errors
Of Change Leadership

You're Blinded By Your Vision

You Don't Know When To Start

You Don't Know Your Place

You're Playing By Old Rules

You're Never Satisfied

You Don't Know When To Quit

As the complexities of a major corporate change increase so do the risks of failure. And failure is inherent in innovation.Each one of these errors, alone, has proved fatal to a change in one company or another. When the leader of an organizational transformation allows two or more of these breakdowns to continue, the change -- if not the company, itself -- can be imperiled.

1. You're Blinded by Your Vision

You are so sure that your vision for the future is the right one that you fail to take into account critical external or internal factors. Some leaders become so deeply committed to advancing their values and ideals that they lose their peripheral vision of today's realities. The greater the personal power of the visionary and the more s/he is inclined to independent action, the greater the hazard of this inherent blindness.

In 1990, we saw the Chief of Staff of the Air Force -- a general who firmly believed in openness and candor with the public -- lose his job because of frank statements he made to the press. The policies and programs he introduced to support openness were immediately dismantled.

Make a practice of looking at yourself in a "different mirror." -- Robert Waterman, The Renewal Factor

American companies are learning to open their visions to all players, allowing managers and productive employees throughout the organization to contribute a strand of personal vision to a more general framework established by those in customary leadership roles. The result is a corporate vision far more powerful and more broad-reaching than any single great thinker could create. Another practice used by companies forging new paths is opening their strategic thinking to active participation by outsiders: not just to consultants, but to customers and vendors and community leaders. In his book, the Renewal Factor, Robert Waterman calls this "a different mirror."

Sometimes the visionary leader has an effective handle on the external variables, but discounts the power of the organization, itself, to resist the change.

Corporate culture serves to stabilize an organization. If a company has been stable and successful for a long time, its work practices, systems, organizational roles, and politics become so tightly integrated that they can overcome enormous pressure to change. It's possible for change advocates to run out of time, resources, and power before they are able to unfreeze the culture. When leaders honor and protect specific old values even as they articulate new directions for the future, people who need stability are left with the familiar foundations they depend on; resistance is empowered.

In the change process, first you unfreeze the culture, then you change it, then you refreeze it.

Some less stable and less successful companies have experienced a succession of change initiatives that have failed because of incomplete or misdirected vision. Such organizations may inadvertently create and sustain employee beliefs that "nothing around here works" or "changes come and go, but everything remains the same." When the commitment of leaders is suspect and people have learned to distrust new directions, an organization may not be healthy enough to survive a change, even though it may not survive without one. A change leader must have earned the necessary trust -- before the change is implemented -- through a track record of goodwill, integrity, persistence, and success. People must put themselves at risk to make a change happen. And smart people don't follow dabblers who regularly lead them nowhere.

An organization may not be healthy enough to survive a transformation, even though it may not survive without one.

In stable companies, leaders may have to clearly put their own jobs on the line with their plans, just to get the attention of those who must change. In less stable companies, leaders may have to invest months to broaden their base of support and to build their credibility before they can be taken seriously enough to mount a major change.

2. You Don't Know When to Start

Long before the world presents a company with the mandate to change or die, there are subtle signs of the shift to come. Some intuitive and insightful leaders are not only able to read these signs, they are anxious to jump in as pioneers. The "right time" to move a company in a new direction is more a range of months than a particular point; those who go first will inevitably suffer development costs that benefit their competitors. In the 1970's, hundreds of entrepreneurs lost millions of dollars gearing up to provide solar power and wind power devices as alternatives to fossil fuels. Right idea, wrong time. Many business pioneers junked several generations of computer systems before their competitors bought their first one. While these innovators pave the way for conservative companies, more than a few have gone broke in the process. Their bones are found on the side of the road by the time the rest of the world sees the rightness of their direction.

The bones of pioneers who started too early often pave the road for others who started at the right time.

Xerox invented and marketed the personal computer long before IBM introduced its PC. Before the mid-1980's Xerox was out of the business. It's possible for a company to be so deeply involved with the technicalities of an innovation that it lacks the longer view of the marketing realities.

It's useless to expect a leader with a pioneering spirit to wait for others to break the path. Some companies stay on the cutting edge of developments in their industries by allowing experimental (but peripheral) operations within the organization to play with new ideas and develop new technologies without disrupting the day-to-day conduct of the enterprise. For decades, the St. Petersburg Times, a newspaper proud of its innovations, maintains a subsidiary, the Semit Corporation (Times spelled backwards), for just this purpose. Sometimes the small enterprise actively pursued a new venture and at other times it lay dormant.

The responsibility of stewardship for the corporation -- maintaining its value -- keeps most top executives from jumping too soon.

Experienced managers know how to maximize investments. Technologies become efficient and profitable when they are fully mature. Many managers find themselves overwhelmingly tempted to ride the high profits of their proven systems while competitors are spending lots of money on experiments. They are sure they will be able to get on board later -- if change proves necessary -- when the pioneers have worked out the bugs.

An organization can wait so long to accept an inevitable change that it may be impossible to catch up with those who invested earlier in the new skills and systems. When a company is behind the curve like this, it finds itself losing contests to recruit talented people; it may also become a burial ground for other companies' employees who were unable, or unwilling, to accept the change.

You may wait so long to begin an inevitable transformation that it's impossible to catch up.

The conservative leader can use a strategy of continually implementing small transitions, department by department, following the pioneers who stabilize new technologies. By making these incremental moves into systems proven by others, a conservative company can continue to profit from the efficiencies of old systems and avoid wild leaps into the unknown.

3. You Don't Know Your Place

In the tradition of the Master's shop, many managers take pride in their abilities to do the jobs of their subordinates. When a senior leader refuses to delegate and detach from the task of implementing change, a vital "big-picture" perspective is lost. A strategic leader who becomes captivated by the details of implementation abandons the point of view necessary to make objective judgments about the continued viability of the change plan. S/he can lose the perspective needed to effectively assess the progress of those responsible for implementing the change. S/he will likely stick with ineffective implementers too long, trying to teach and coach them into success.

Successful organizational transformation requires both Sponsors and Agents.

Major organizational transformations require two separate leadership roles: one that sponsors and champions the change and another that plans and implements the process. Each role must act with some degree of autonomy and each makes a vital contribution. Some executives feel lazy if they are not in the midst of the action; they don't see that sponsorship is honest work that requires skill, discipline, diligence, and powerfully good judgment. Executives who desert this duty to get their hands dirty typically fail to understand the importance of their own tasks and responsibilities. If the change fails due to their meddling, their hands are, indeed, dirty. Before putting their companies at risk with their everyday skills, managers should go through a basic training in change technology .

Many organizational transformations are initiated by capable, aggressive managers who fail to get necessary permission, support, or sponsorship for their plans. When managers encroach on their boss's authority -- and responsibility -- to maintain and protect the company, they endanger more than just the change. They often find themselves out of work: replaced by someone instructed to dismantle their change and return the operation to its old ways. One boss of such an enterprising leader described his experience this way: "It was like leaving your child at summer camp and learning, a month later, the counselors had performed plastic surgery on her."

Top leaders who need to keep their hands in the work may, indeed, end up with dirty hands.

Successful organizational change is a collaborative effort. Those who would implement significant transformations in the enterprise must also take responsibility for managing their relationships with the people who have the authority to determine the nature and shape of the company. The role of the implementer is called Change Agent because that person acts on behalf of principals. Change Agents without sponsorship are rightfully labeled "loose cannons."

4. You're Playing by Old Rules in a New Game

Managing a stable, successful organization is a defensive, conservative activity. Primary emphasis is placed on protecting corporate systems and dampening the forces that would disrupt productivity. The models, measures, and methods used to manage success function to keep bad things from happening and to prevent surprises.

Implementing organizational change is an offensive activity designed to create a new -- and desired -- reality. Transformational change disrupts familiar patterns. When the leaders of a company set a new direction, it is evident that people who produce, sell, and deliver products or services must change the ways they work. It is not always so evident that the managers who are responsible for organizational efficiency must make changes as well.

Leaders who fail to change significantly often end up victims of their own transformation projects.

Management controls and procedures that tighten down the operation to make it predictable and consistent must be loosened until the new course is set. Productivity typically declines for a while as people learn new skills and give up old practices; these shifts take hours out of each work day. If, during the period of change, leaders continue to play their parts and measure their success by old rules and standards, they will (at best) send mixed messages to the people in jobs that must change. At worst, effective managers react to what appears to be chaos by turning up the power on the old systems until they kill the change.

In the 1980's, when American industry began transforming itself to remain competitive, tens of thousands of management jobs were "collapsed." Managers who had served effectively for years were called "dead wood" and removed to give aggressive, visionary leaders more direct access to the company's people. After new, more appropriate, organizational forms are implemented, a defensive management function will, once again, be needed to stabilize and protect these systems. Laying off managers during the period of change merely disguises and prolongs the cost of change. If managers learn the skills and orientations needed to function as Change Agents, their experience can be preserved and their continuing value to the organization enhanced.

Leading a major transformation is offense. Managing success is defense.

5. You're Never Satisfied

Most people responsible for managing stable, successful companies have seen the danger of complacency. One of the greatest challenges to leaders of mature organizations is to keep their companies fresh. Some use techniques like management by objectives to constantly raise the level of expectations. Others regularly reorganize or transfer people to new assignments in unfamiliar departments. Managers with a pattern of using these productive tactics may be blind to the hidden organizational costs extracted by major change.

The findings of Hans Selye, a respected researcher in the field of human stress and adaptation, can be applied to corporate organizations, as well as to people. Selye found that when an individual is faced with any sort of pressure to adapt, the body responds with one pattern: first, Alarm, marked by a loss of efficiency and diminished resistance to threats; second, the Resistance Stage in which the individual works to make a permanent adaptation to live with the pressure; finally, if pressures to change continue unanswered for a long period, the Stage of Exhaustion. People, in this third stage, lose their resistance to even small hazards and diseases; their lives are at stake. Selye believed that we have a sort of limited "capital account" from which we make withdrawals for major adaptations; when the account is empty, we die.

A company that is pushed through change after change after change can lose its resiliency, its ability to adapt. Without sufficient time to recuperate and stabilize before engaging the next transformation, the foundations of the last change may fall apart. Both changes may fail.

Change leaders must exhibit patience and care for the health of the organization, not just vision and drive.

Leaders who love the thrill of change may fall into the pattern of the addict. At first, you feel a little uncomfortable with it, but you develop a taste for it. As you get more experience, it makes you feel good. You look forward to your next crack at it to feel the high again. After a while, you need it just to feel normal; you begin building your life around it. In the deepest stages, you have to have it to keep from feeling bad and you can't get enough of it. Addiction is chronic, progressive, and fatal.

Patience, and care for the health of the organization, are virtues as important to the change leader as drive and vision for the future. A company can lose its character and its fundamental strengths, its distinctive capabilities and its competitive edge, when forced to change too much or too often.

6. You Don't Know When to Quit

Healthy change in an organization is driven by -- and responsive to -- external realities. Some changes are begun in anticipation of shifts in the marketplace or technologies. Other changes react to shifts that have already begun. No matter how well-planned a major change, the external realities and internal pressures continue to shift. Sometimes, abandonment or radical redirection of this particular change is the most appropriate decision. Sometimes abandonment leads to disaster for the organization. In the early 1950's, Xerox persisted through huge losses with it's Model A Copier to become the first American corporation to reach a billion dollars annual sales in a decade with a new technology. In the early eighties, Xerox, having invented the personal computer, abandoned the technology because "the public wasn't ready."

Pragmatic managers may decide to quit too soon, folding a hand that could win if given more time and money. This is most likely to happen if the change was begun in anticipation of shifts in external variables that are coming slower than expected. Change is expensive and disruptive. If the world outside fails to respond positively to the investments and if the chaos of the process begins to eat into corporate profits and stability, the practical leader may choose to return to the methods that historically paid off.

The danger is that trends may be read incorrectly. Many social and economic changes start slowly and take a long time to begin rapid acceleration. Declines and reverses may even precede the take-off. Awareness of environmental hazards and moves toward greater diversity in the work force began in the 1960's and they have yet to become critical issues for many businesses. Some organizations that made large investments in these areas have reordered their priorities and turned their attention to more pressing issues. They may have cut their losses too soon.

At one point, there may be no decision more important than to change the change. Persistence can be fatal.

On the other hand, tenacious visionaries, having set a course for the future, may stubbornly drive on even though the course of events in the world has turned away from their visions. Dedicated, idealistic Communists in eastern Europe experienced just such a turn.

Changes in the marketplace, lagging technology, and critical downturns in the economy are good reasons to review the vision to make sure it is still the right move at this time.

In 1990, the Chicago Tribune closed the fax version of its newspaper. Thirty years earlier, The New York Times -- a major early force the technology sold its fax patents for $1,250,000. Did they abandon too soon?

"Cutting your losses too soon on a new venture is like cutting your own throat." This quote is from Al Neuharth, founder of USA TODAY, an enterprise that achieved one million in circulation in less than a year, yet failed to make a profit in its first ten years.

Twelve Elements
Of a Successful Organizational Change

A Shared Vision

The values, work styles, and behavior patterns that distinguish a corporate culture are invisible to the people of that culture. They are seen as merely normal and rarely discussed. When an organization makes a major change, its new beliefs and capabilities must be articulated, discussed, and consciously modeled by leaders. One powerful way to begin implementing a change is to invite the people of the company to flesh out the vision of senior leaders by adding their own ideas and ideals for the future. By weaving together the vision of many people, scores of perspectives, sensitivities, and insights are integrated. A broad base of support is created for the change.

Sponsors and Agents

People who bear the ultimate responsibility and authority to assure the life and health of a company, must explicitly and publicly endorse major changes; this is sponsorship. Change Sponsors should be as interested in keeping the transformation within the bounds they have set as they are in the efficient execution of the change. Sponsors must employ, authorize, and manage Change Agents to lead the people of the organization through the change process. Change Agents define the skills, tasks, and jobs that are to be added -- and eliminated -- to make the vision a reality. Change Agents use a broad range of leadership techniques to address and resolve natural resistance, to train people to work in new ways, and to perform this operation on a living patient (the organization) that continues to produce throughout the process. The skills and orientations required of Change Sponsors and Change Agents are vastly different.

Time and Money

Some estimates indicate that a major organizational change temporarily adds a hidden 20% to the labor costs in the positions that must change. This cost in reorienting, retraining, and redirecting people is just one facet, though. There are also the direct costs of new technology and the costs of implementing the change with outside stakeholders like vendors and customers.

Companies hardened by a history of success and proud traditions may require years of unfreezing before a major transformation can begin to move. Younger, more fluid companies may get started with a structural change quicker, but take many months -- if not years -- for the new foundations to solidify.

Most organizations that have succeeded with a transformational change find that the costs in time and money were far greater than all reasonable estimates predicted.

People as Solutions, Not as Problems

People normally resist change. Each of us resists some part of a major change in our work. But, far more powerfully than people, systems and organizations resist change. If anything, it is human nature to adapt to change. Exhorting people to change without seriously (and effectively) changing their tools, their skills, and the work processes they use to succeed is futile.

People represent the primary units of organizational change. They are solutions, rather than problems, in the process. Skilled Change Agents embrace the people of the organization -- and their resistance -- to bring about planned change.

The Loyal Opposition

Some resistance to change is psychologically rooted in fear or in pride. The most steadfast opponents fight on behalf of their principles and their values: they firmly believe that a traditional way is right and that a new direction is wrong. The only way to defeat these Loyal Opponents is to persuade them to abandon their beliefs. Such an attempt is typically seen as an attack on their integrity.

The Loyal Opposition can be honored and employed keeping the old systems running (and profitable) as new methods are tried and proven. In the process, many will find ways to join the new direction without compromising their principles. Those who remain true to the traditions may find niches in the organization where they can survive. Some may choose to leave the company with their honor. In the end, the best resolution for the Loyal Opponents is the one they devise for themselves, but you must take care to employ them, not to attempt to crush them.

Competent Training

Almost every organizational transformation introduces new skills and capabilities into the company. Change Agents must have a thorough understanding of training methods. One of the by-products created by the rapid changes in technology over the past few decades is a new training technology vastly different from the old "school" model. Using up-to-date training techniques, people can develop basic competence in hours instead of days and weeks.

Powerful Coaching

Coaching is the name given to a broad-ranging set of leadership and support activities designed to develop the potential of capable, productive people. A coaching relationship is a voluntary alliance in which the "player" accepts intensifying challenges to test and strengthen specific capabilities. Coaches manipulate time and resources to make the effort a game, exploring the limits of possibility. Coaching unlocks enormous potential in the human asset of an organization; this hidden capability can even offset the costs of change.

More Time and More Money

Lasting organizational change costs a fortune and takes forever.

The Critical Mass

A Change Agent's goal is to develop so much support and advocacy for the new direction that the change continues to grow with its own momentum. This is Critical Mass. The people of the organization create Critical Mass through their actions and their commitments. You know you have reached Critical Mass when all management efforts to drive or support the change are withdrawn and the process continues in motion on its own.

Renovation of "Hard Systems"

Organizational systems -- hardware (like computers and production equipment) and socio-economic systems (like hierarchies and compensation plans) -- sustain, reinforce, and limit behavior at work. Transformation of a successful company depends on continued production and reasonable efficiency throughout the change process. Old systems are typically left to run in parallel with new ones until the change proves itself.

Systems lock people's behaviors into a pattern. Since major changes evolve during the process and rarely end up exactly as they were envisioned in the beginning, hard systems should not be firmly set before Critical Mass is achieved. Establishing new systems puts the brakes on the change process and locks in the new direction.

Timely Turnover and Withdrawal

The end of a change is marked by diminishing power in the roles of Sponsor and Agent. Responsibility for continued operations is passed to those who work within the system. While Sponsors and Agents may remain in their jobs after Critical Mass is achieved, the balance of their energies shifts from the offense (making good new things happen) to the defense (keeping bad new things from happening).

Conservation of Change Skills

The greatest barrier to change in most companies is their own stable history of success. Success without failure breeds arrogance. And arrogance breeds rigidity: an unwillingness to learn from those outside the boundaries of this excellent institution. Perhaps the greatest such story of our times is the continuing saga of IBM.

We live in an age of change. To prepare for -- and diminish the magnitude of -- the next transformation the organization will face, the change skills used to lead people through this process can be retained to implement smaller, incremental transitions that anticipate shifting demands that lie over the horizon. With effective timing and accurate vision, the company may arrive at the next crisis already prepared for the future.

To remain viable in the information age, businesses must value learning as highly as they value doing.

Paradox in the Change Process

People are truly too busy to change. Often seen as an excuse to cover personal resistance, this common cry of distress may be an honest reflection. If an organization has put off major change until long after its work processes are outmoded, increasing portions of each person's day must be spent correcting errors, solving problems, and walking important papers through the system. Unfortunately, not to change in this case means that there's less and less time for productive work. Things get worse before they get better.

Mixed messages from management are a good sign. Because, in a going concern, old systems cannot be retired before new ones prove themselves and because people -- even leaders -- take time to change, a high ratio of mixed messages in an organization may be a good sign that the change is alive and well. Consistency is a sign of stability.

The old systems perform better than ever! Improvements in sailing technology never came faster than after the steamship was introduced. In an effort to prove radical change is unnecessary, people squeeze every ounce of productivity out of themselves, their tools and their familiar systems. But if a real transformation is overdue, incremental improvements can't go the distance. A withdrawal of efforts to change is often accompanied by a decrease in these improvements. John Henry performed well against the steam hammer, but totally exhausted himself in the process.

Driving the change harder and faster can sink it. Successful transformations are effected broadly throughout an organization through scores of small projects. The faster the change goes, the more resistance it creates. At some point the bow wave swamps the barge, resistance overcomes efforts to change. Encourage and sponsor lots of activity. Allow small projects to fail. Then, don't push the river; it flows by itself.

A Brief for New Change Sponsors:
Implementing Major Change Is Different From Managing Success

Operating a successful company requires four separate functions. Doers perform the actual work of the business. Supervisors select, train, organize, direct, and coach Doers to assure daily output of acceptable quality and quantity. Managers establish and monitor systems, procedures, and objectives to guarantee steady performance regardless of external variables. Executives set the course for the enterprise: assuring its existence, advancing its mission, and preserving its values. In a stable organization, these functions complement each other.

An organization differentiates itself from others with its corporate culture: the distinct values and capabilities that remain constant as employees and leaders come and go. While corporate culture is the stabilizer -- the shock absorber -- that keeps the enterprise from overreacting to change, it can also be a barrier to major changes that may be desired or necessary. Supervisors, managers, and executives serve as stewards of organizational values and capabilities, assuring the company's integrity and consistent performance.

All organizations must weather changes. Most changes represent a movement from the status quo to a known state. Cyclical changes in the environment require temporary adaptations in the way of doing business. Developmental changes are those associated with normal growth from founding to maturity. All organizations -- whether growing or not -- must implement Transitional changes to keep up with new technologies and evolving customer demands. Scientific management techniques (planning, organizing, controlling) were invented to manage these types of change.

Transformational change is a departure, a leap into the unknown. From time to time, permanent shifts in the environment necessitate major structural changes in a company's fundamental values and capabilities (the corporate culture). Since the failure rate is exceptionally high in Transformational change (historically 65% or greater), most companies avoid them. These structural changes become necessary when several key external factors begin shifting at the same time or when a company has failed to keep current with ordinary incremental transitions.

Success in Transformational change requires new types of leadership. In successful companies, supervisors stay busy applying their experience to assure acceptable daily results; managers work to stabilize the organization: to suppress and control change. Stable companies typically lack the specific capabilities and experience needed to effectively bring about internal structural changes.

Sponsoring change is an executive responsibility. Since Change Sponsors order structural alteration of the organization, they must possess broad authority -- beyond mere operations -- to change the nature of the enterprise. Still, authority and leadership are not enough to effect a structural change; complex technical and social modifications must be made throughout the operation. To implement a structural change, Sponsors appoint, authorize, and manage the work of Change Agents.

Change Agents effect corporate changes by operating on systems that perpetuate obsolete values and by replacing tasks within jobs (thus, requisite skills) that maintain the old ways. The work of Change Agents -- disrupting stable systems, disturbing continuity, challenging traditional beliefs -- seems, at first, to bring chaos and randomness to the structured and predictable organizations managers seek to maintain. Change Agents, for a time, impede the quantity and quality of daily output as people learn new skills and abandon old ones their supervisors so carefully cultivated. Managers and supervisors who are effective in a successful organization tend to see Change Agents as foreign and destructive.

Sponsors must maintain a measure of detachment from the change process to insure some objectivity in their view of the progress. During the change, people whose work and lives have been disrupted will make heartfelt pleas to the Sponsor to stop the pain and destruction in the company they love. Many will do their best to get Change Agents fired for real or exaggerated wrongs. Because pain and destruction necessarily accompany structural change, a Sponsor can make a valid judgment about excesses only by keeping some distance. The Sponsor's responsibility is further complicated by the fact that production must continue during the change operation and also by the fact that Sponsors must model the new ways even before others in the company are asked to change.

Professional Change Agents think differently. The goals and perspectives of career Change Agents are essentially different from those of corporate managers. The Change Agent optimistically believes that systems get better as a result of being broken; the manager's motto is "If it ain't broke, don't fix it." Though most managers now contribute by stabilizing and controlling their operations, over the next few years the ability to actively and effectively implement structural change may prove to be a survival skill for them.

The Agent role -- so necessary for structural change -- is no longer essential when Critical Mass is attained. Professional Change Agents tend to become bored -- sometimes even destructive in their tinkering -- when the organization needs to rest or stabilize. After the change becomes a normal way of doing business, the company once again needs the work of managers and supervisors to stabilize operations for maximum efficiency and success.

New leaders or new leadership skills? By training and supporting current managers as Change Agents, corporations benefit now and later. They are not only able to meet current challenges, but they retain in their managers the skills to control and optimize their organizations when the structural change plateaus. The company also builds in a new capability for the future -- a renewal factor -- that will allow them to adapt themselves as often as necessary.

There's no room for villains in a healthy change process. Without a full understanding of organizational change processes, executives -- frustrated by sluggish response to their orders for structural changes -- may misjudge managers' preoccupation with maintaining consistency and supervisors' narrow focus on daily activity as incompetence or evidence of corporate dead wood. In their impatience, they may fuel resistance by getting rid of the "bad" old-timers and replace them with "good" new people they believe will introduce the needed change. Often, the newcomers end up short-timers, failing to adapt to the old or the new culture.

Change for change's sake? The world is changing. Just as the former Soviet Union is undergoing a period of Perestroika, or restructuring, to revitalize its society and economy, the American economic community is experiencing a fundamental environmental change. This change was predicted in Alvin Toffler's books, Future Shock (1970) and The Third Wave (1980). It was reported in Peters' and Waterman's In Search of Excellence (1982) and in Drucker's Innovation and Entrepreneurship (1985). It is explained in Martel's Mastering Change (1986), in Waterman's The Renewal Factor (1987), and in Gleick's Chaos (1989). The nature of the change is outlined in Senge's Fifth Discipline (1990), in Bardwick's Danger in the Comfort Zone (1991) and in Barker's Future Edge (1992). Every successful American corporation will have to adapt to these changes in the world by transforming at a significant level its values and its capabilities.

Stable success may be the greatest liability. The book, Corporate Culture and Performance (Kotter and Heskett, 1992) reports research that a strong culture in a successful company first prevents transitional adaptations to shifts in the external environment, then smothers efforts at major change to catch up with the times. Companies with a history of stable success build powerful structures to enforce conformity and limit risks, simultaneously protecting and endangering their franchise.

Companies that survive the transformations they must make today are well-advised to create a new culture that values constant, anticipatory change to stay ahead of ongoing external developments. The "continual process improvement" principles of W. Edwards Deming provide a clear road map to build such a culture.

Doug Wesley is a professional Change Agent and founder of The Hall Wesley Group -- and its ChangeCraft Team -- a firm that works with organizations during times of growth, transition, and transformation.

Since 1977, the firm has specialized in the challenges of managing change in the publishing, insurance, and technology industries throughout the United States and the Caribbean.

Consultants of The Hall Wesley Group research a company's systems and assess the organizational culture to determine needs, opportunities and barriers to change. They prepare executives to perform as Change Sponsors and work with them to define new directions for the enterprise. They train Change Agents and help build teams to implement change in the company. Once the process has begun, they coach the leaders -- and the targets -- of the change, continuing to learn about the patterns in this complex and paradoxical process. They always work themselves out of a job.

Some of the firm's clients are Motorola, USA TODAY, Allstate Insurance Company, The New York Times, South Carolina Electric and Gas, Omaha World-Herald, U.S. Government Printing Office, Dayton Daily News, and Congressional Quarterly.

Bibliography

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Corporate Culture and Performance by J.P. Kotter and J.L. Heskett, Free Press, 1992.
Corporate Cultures: The Rites and Rituals of Corporate Life by Terrence E. Deal and Allen A. Kennedy, Addison-Wesley, Reading, MA, 1982.
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The Renewal Factor: How the Best Get and Keep the Competitive Edge by Robert H. Waterman, Jr., Bantam Books, New York, 1987.
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The Third Wave by Alvin Toffler, William Morrow & Company, New York, 1980.

Last Updated: 7/6/96 00:40

Leading Your Organization Through Change

A Grave Challenge to Today's Leaders