Change Management: When and How to Lead it

LS International

The pace of change in the world is undoubtedly accelerating, forcing leadership teams to devote more and more resources (people, money, management attention) to effectively managing change in their organizations. The current wave of change is being driven by external forces such as technology (e.g. AI), regulation (e.g. GDPR), emergence of new business models (e.g. online only retailers) or even geopolitical considerations (e.g. trade wars/embargos) as well as internal imperatives (e.g. a new purpose or vision).

Over the past three decades Change Management has been extensively studied and many different frameworks and best practices have been developed. These are intended to help organizations plan for change, implement it, communicate it, help people to adapt, and measure the impact. Most large-scale organizational changes impact processes and their technology underpinnings (the systems, their user interfaces, what data is fed in and when etc.). Of course, policies and procedures also often need to be amended. But the ultimate burden of “living the change” falls on those people who are tasked with driving and managing the change and those who are called upon to make small or large adjustments to their attitudes, habits, mindsets and managerial/leadership abilities.

As Mattia Aste, Global Manufacturing Excellence Lead at Monsanto says in a recent LS International Podcast, “… a transformation is a transformation… only if it’s really touching the full operating model, so you really take care of process, system and people at the same time”. So how can change in organizations be led more effectively, so that the goals are achieved with minimum “collateral damage” in the form of customer loss, employee attrition, non-compliance or other forms of resistance to change that might disrupt business?

Clearly, it’s best to start at the beginning, which is understanding why a certain change is needed and why now. All worthwhile organizational change must be around improving performance, an objective that can be achieved in many different ways. For instance, revenue from existing products could be grown faster by enhancing the efficacy of targeted marketing so that first-time purchases as also repeat purchases increases. A similar outcome is also possible through product innovation and compressing the time needed to launch them. Cost reductions could be achieved by using technology to raise productivity of employees or processes or changing mindsets so that “waste” such as excess inventory can be eliminated (the holy grail of Supply Chain transformation over the past two decades).

But not all change is about increased revenue and/or reduced costs in the short term. For instance, a merger could also be a trigger for massive enterprise-level change; in such a situation, while fresh revenue streams, synergies and cost-saving opportunities are important, perhaps even more important is the need to evolve a new culture that combines the best from the merging organizations. Such situations offer leaders an unprecedented opportunity to create something that is far better than either predecessor organization was. As a result of this headline intent, multiple functional transformation programs are identified and implemented. For example, a smarter, leaner supply chain or a more collaborative R&D network that is more tightly integrated with Marketing (to sense and respond to changes in customer preferences for instance).

As Mr. Aste points out, “A transformation is always designed around your customer”. It is important is for leaders to articulate a compelling vision of the change and why it is needed now. This needs to be communicated across the organization in ways that make sense to employees at every level. Often, large-scale change programs are encapsulated in slogans and posters. These are undoubtedly aides to spread the message, but what is also needed is a series of conversations between the leaders and those below. The first round of these conversations is too important to be delegated and must be led by the highest echelons of the organization. At one level, these conversations must be aimed at informing the middle levels and the rank and file of the proposed change and its contours, including the rollout plan. At another level, they must be forums for debating and discussing concerns and fears that, if unaddressed, could derail the program in the days ahead. This also serves to finesse the business case or plans by factoring in additional information from closer to the trenches. Additionally, such a step helps individuals to buy into the change program and take ownership. Personal commitment to change helps build accountability, which is critical to garner commitment and unleash the power of innovation.

Arguably, it is easier to drive change when the organization is doing well, as the pain associated with the change can be somewhat cushioned, but it may well be more important to drive the change when the organization is losing its competitive edge and ceding ground to competitors. Depending on the situation the organization finds itself in, leaders must convert the stark reality of under-performance (or the promise of a tremendous opportunity waiting to be tapped) into a powerful motivator for organizational change. They must infuse confidence across the organization by communicating and reinforcing important messages:

  • There is a clear set of reasons for the change and this is the best time to make traverse the leap across the chasm;
  • Necessary resources in the form of money, technology, people etc. will be made available;
  • The road ahead will not be easy and progress will depend on a unity of purpose, the “collective intelligence and will” of the organization;
  • Perseverance in the face of setbacks that may force course correction; and
  • Leaders are personally committed to the success of this change and will lead by example.