Strategic Leadership and Decision Making
VISION AND THE MANAGEMENT OF CHANGE
There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things.
Vision can provide both a corporate sense of being and a sense of enduring purpose. While incorporating a measure of today's success, vision transcends day-to-day issues. And, by providing meaning in both the present and the future, vision can empower and encourage leaders and followers to implement change (Sullivan & Harper 1996).
In this chapter, we will examine how to implement and manage change, and learn how to integrate the notions of the strategic environment, the estimate of the situation, strategic vision, and the management of change. We will also discuss why change is necessary, the nature of change, the effects of change on people in the organization, leadership implications of change, and why efforts to change an organization often come up short of the intended target.
Change is pervasive in our society and a fact of life in organizations (Goodfellow 1985). Where does the impetus for change come from? The simple answer is that the impetus to change comes from the environment. Effective strategic leaders understand that change in the strategic environment is a continuous process.
By environment, we can mean the internal organizational environment, but more often, we are talking about the external environment. Organizations are awash in the external environment, and a sea change in the environment (e.g., the rifled musket, steam-driven warships, the jet engine, the Age of Information) can cause an unresponsive organization to founder. A part of strategic leadership is understanding when environmental change implies a need for organizational change and when it does not. Making internal changes to accommodate external change is reactive, and strategic leadership should be proactive. This is where a well-crafted, wel- managed strategic vision can help balance reactive and proactive changes.
Change is about survival. Change is especially necessary in organizations that wish to prosper in a volatile, uncertain, complex, and ambiguous environment. If changes rocking the external environment were temporary, the slow and uncertain pace at which organizations change would matter less. But, the reverse is true. Powerful forces in the environment are pressuring public and private organizations to alter permanently existing structures, policies, and practices (Bolman & Deal, 1991).
Globalization is one example of pressure to change. With globalization comes greater competition, especially for workforce quality. Wider differences in the skills, attitudes, and needs of the workforce are coupled to increases in communications problems. Geographic dispersion creates conflict between regional offices (e.g., unified commands) and the central headquarters as well as conflict among regional offices. Globalization creates the challenge of building cohesion and common purpose in the face of cultural and organizational differences. All of this is complex because many of the variables in the equation are not under the control of the leaders who are creating the vision for change.
Peace is another example of pressure to change. Peace necessitates, at least in the minds of some people, the need for reduction in the size of military forces. With smaller military forces comes the need for increased capabilities because the number and diversity of missions has increased. Also, reduced budgets create friction among the CINCs and among the services.
Another example of environmental pressure for change is information technology. Information technology facilitates structural decentralization and downsizing. People must develop new skills. Power often shifts from centralized functions to operating units.
Demographic changes in the population are creating enormous pressure for change in organization. Structural responses to demographic diversity include policies and programs like equal opportunity and affirmative action. The changing workforce has varied needs (e.g., religious and language) and often creates new training requirements. Friction and conflict develops between demographic groups.
In the private sector, deregulation has created major structural changes in some industries (e.g., the break-up of Ma Bell, the proliferation of airline companies, and the merging of major defense contractors). People in the workforce can sense that they can be cut loose without warning. Deregulation can bring major shifts in power (e.g., from the government to the consumer). And, deregulation results in the need for the redefinition of organizational mission and culture.
Change is absolutely necessary for the survival of individuals and organizations. The question isn't whether or not to implement change. Over the long run, you have no choice unless you are willing to become irrelevant. The strategic environment, over which you have little or no control, is in a state of constant change and it's your job to sense when changes in the organization are going to be necessary.
Therefore, the first real question is what role are you going to assume? Domain defender? Reluctant reactor? Anxious analyzer? Or, enthusiastic prospector? If you choose to play only one role and that in a fixed manner over time, then you and your organization will survive for as long as the environment tolerates that role. A successful strategic leader knows which role to play at what time, and he/she knows when to change roles. Once the role is sorted out, you can ask the other really important questions: What changes are necessary and desirable? How do you go about managing change?
STRATEGIC LEADER ROLES IN RESPONSE TO THE ENVIRONMENT*
- MAKE MINOR ADJUSTMENTS IN ORGANIZATIONAL STRUCTURE AND PROCESSES.
- LIKELY CANDIDATE FOR DERAILMENT AND EXTINCTION.
- NOT LIKELY TO MAKE SUBSTANTIAL ADJUSTMENTS UNTIL FORCED TO DO SO.
- MAY SURVIVE, BUT AT THE MARGINS.
- WAIT UNTIL COMPETITORS DEVELOP A RESPONSE AND THEN ADOPT IT.
- LIKELY TO SURVIVE, IF NOT FIRST OVERRUN.
- PERCEIVE CONTINUALLY CHANGE AND LOTS OF UNCERTAINTY.
- REGULARLY EXPERIMENTS WITH POTENTIAL RESPONSES TO TRENDS.
- SURVIVES AND PROSPERS OVER THE LONG RUN.
* Adapted from Goffee and Jones, 1996.
WHAT IS CHANGE?
Organizational change is about making alterations to the organization's purpose, culture, structure, and processes in response to seen or anticipated changes in the environment. Strategic management of change is all about identifying and embedding in the organization those changes that will ensure the long-term survival of the organization. How do we think about change?
CONDITION AND PROCESS. Change can be thought of as a condition and a process. Change as a condition describes what is happening in the environment; it is part of the reality we must accept. Change as a condition may profoundly influence our organization, but it takes place externally and we have little control over it.
Change as a process is what we foster internally in response to changes in the environment. It is the leadership and management actions we take to change the organization. Therefore, unlike changes in the environment, change as a process is ours to influence (Sullivan & Harper, 1996).
PLANNED OR UNPLANNED? Change can be planned or unplanned. Both can be good, both can be bad. Unplanned change just happens in reaction to unseen or unanticipated influences. Often, it is difficult to tell where the change came from and how it was initiated. Paradoxically, planned change is all about maintaining the organization's relevancy in the face of environmental pressures.
TACTICAL OR STRATEGIC? Tactical change occurs in the short-term and, more often than not, is short-lived. "Fad-surfing" is a sure symptom of tactical change. In the face of changes in the environment, many leaders often reach out and grasp the "fad du jour" [e.g., one-minute manager, management by objective (MBO), TQM, TQL]. Then the next day, they grasp at the next "fad du jour," whip-sawing the organization with inconsistent messages and inconsequential behavior. This attempt to manage change is a sure sign that the leaders do not understand the environment, the organization, or both.
Strategic change is about leveraging vision to get at fundamental aspects of the organization, including the organization's direction and its culture. Strategic change is about forging organizational robustness in the face of environmental pressures. Hence, an accurate and insightful view of the current reality is as important as a clear vision (Senge 1990). Robustness is the timely capacity to anticipate and adapt to environmental change in order to maintain competitive advantage. Improving and maintaining robustness takes three interdependent forms. First, it is a function of comprehensive environmental scanning, accurate articulation of values, beliefs, and assumptions, the freedom to question values, beliefs and assumptions, creativity to formulate new options, and tolerance of risk in the pursuit of a new course. Second, robustness is about resource self-sufficiency. Often, the capital investment/reinvestment required to implement change is huge. Third, robustness is about maintaining contact and managing credibility with strategic constituencies.
EVOLUTIONARY OR REVOLUTIONARY? Change can be evolutionary or revolutionary. It can take place gradually within an existing paradigm, or it can be a dramatic shift to an entirely new paradigm. In addition to being gradual, evolutionary change usually is linear, and sequential. The downside of evolutionary change is that it is predictable. Competitors can figure out what your organization is doing and where it is going.
Revolutionary change is about transforming the organization. The revolution can be small or it can be sweeping. The path of transformational change, while not linear and sequential, can be made predictable to people inside the organization through proper planning and communication.
Both evolutionary and revolutionary change can be legitimate strategic choices under the right environmental conditions. Environmental conditions can be defined by velocity, mass, and complexity. The velocity of change is the rate change takes place. The mass of the change is how widespread it is. And, the complexity of change means that change never occurs in isolation. Each change affects other changes in often unseen, unanticipated, or misunderstood ways that lead to unintended second- and third-order effects (Sullivan & Harper 1996).
GENERALIZED EFFECTS OF CHANGE
Can we anticipate the generalized effects of change on people? Within the domain of human behavior, the answer is yes. Four main effects are salient: self-confidence, confusion, loss, and conflict.
Change can cause people to feel incompetent, needy, and powerless, in short, to lose self-confidence. It is essential for the people in the organization to be involved in planning and executing change, to have opportunities to develop new skills required by the change, and to depend on psychological support mechanisms put in place before, during, and after the change is implemented.
Change can create confusion throughout the organization. Change alters the clarity and stability of roles and relationships, often creating chaos. This requires realigning and renegotiating formal patterns of relationships and policies.
By definition, change creates loss and therefore generates interpersonal conflict. Change can create loss of meaning and purpose. People form attachments to symbols and in symbolic activity. When the attachments are severed, people experience difficulty in letting go of old attachments. Avoiding or smoothing over these issues drives conflict underground, where it can fester and boil over. The psychological wounds that come with change require the creation of arenas where issues can be dealt with that may require symbolic healing (Bolman & Deal 1991).
How does a major change take hold and become infused throughout the organization? The answer comes from being broad-minded rather than narrowly focused. A strategic leader must develop sensing networks, expand the target audience, gather and broaden the power base, alert the organization that change is coming, actively manage the planning and execution processes by linking every day-to-day action to the vision for change, continually communicate the vision for change to key internal and external constituencies, know about and plan for overcoming resistance, and be prepared for unexpected but necessary mid-course corrections (Goodfellow 1985).
A KEY INDICATOR OF A SUCCESSFUL CHANGE AGENT IS THE NUMBER OF INTERNAL AND EXTERNAL SENSING NETWORKS HE/SHE DEVELOPS, MAINTAINS, AND USES.
DEVELOP SENSING NETWORKS. Most strategic leaders consciously develop and maintain a variety of information and power networks. These networks may be the sources of information that change is necessary. In addition to serving as sources of information, these networks also serve as sounding boards for new ideas. The people in these networks must be trusted by the leader, and familiar with the leader's thought processes.
SELECT THE TYPE OF CHANGE. What type of change is needed? The answer depends on the nature of changes in the environment, how well strategic leaders have scanned the environment and anticipated the need for change, and the nature of the organization itself. Two forms of interest here are revolutionary change and evolutionary change.
Research shows that organizations can get so immersed in inertia that they require revolutionary changes to adapt successfully to the changing environment. In other words, some organizations may not be able to change in spite of warnings from the environment. General Motors and IBM are two examples of organizations that almost became irrelevant because they persisted with their unimaginative products despite the risks imposed by Japanese car manufacturers and the rise of the personal computer. They could not visualize another way of doing things. Can you think of examples within the defense establishment where change mistakenly was avoided, or the wrong kind of change was selected?
In "stuck" organizations, quantum changes seem to occur only after a significant decline in organizational performance; often a leader is recruited from outside the organization. This is because leaders from outside the organization bring a new way of seeing the world; they are not trapped by the cultural norms and conventions that created the inertia. Revolutionary change is the way to save an organization that has lost its competitive advantage and slipped perilously close to the abyss of irrelevancy. The downside to revolutionary change is that it tends to accentuate the negative generalized effects discussed earlier.
The alternative approach argues that successful change does not come from tumultuous and radical change, but from gradual and incremental change. Gradual and incremental change is easier to plan for, easier to implement than revolutionary change, and tends to be less bloody. Arguably, gradual change is the preferred method; however, the choice between evolutionary change and revolutionary change will be driven by the pace of change in the environment and how well strategic leaders have kept up with those environmental changes.
SELECT THE RIGHT METAPHOR. The underlying issue with selecting a metaphor is the connections or mutual influences among words, mind-sets, and behaviors. There are five
LANGUAGE IS THE VEHICLE FOR THE EXPRESSION OF MIND-SETS.
things that strategic leaders should consider when selecting the metaphor for change:
CREATE THE VISION. Successful change is hinged on a picture of a desirable future. Vision can provide both a corporate sense of being and a sense of enduring purpose. Without a sensible vision, change efforts can dissolve into a list of confusing projects that take the organization in the wrong direction. It is important that the vision be easy to communicate (Kotter 1995).
VISION IS ABOUT ACTION. VISION CAN EMPOWER BOTH LEADERS AND FOLLOWERS TO IMPLEMENT CHANGE.
EXPAND THE TARGET AUDIENCE. As the need for change begins to crystallize, the strategic leader can begin to expand discussions to a broader cross-section of organizational members, paying careful attention to their reactions, suggestions, and alternatives. This actually is a search for allies within the organization and with strategic constituencies outside the organization.
STRATEGIC CHANGE IS BROAD-BASED, NOT NARROW. INCLUSION IS BETTER THAN EXCLUSION.
Expanding the discussion is a way to gain greater clarity around the issues, to get key people to begin to talk about the issues, and to build support. Gradually, people in the organization will become aware that change is imminent. Their expectations will begin to build that problems are going to be solved, things are going to get better, and procedures are going to change. But, at this point, there will be few if any specifics to complete the picture (Goodfellow 1985).
GATHER AND BROADEN THE POWER BASE. As the strategic leader develops greater clarity around the need for change, he/she will begin to pay attention to power figures in the organization, and may commission studies of alternatives. Study groups, part of participatory decision making, require personnel involvement and build pockets of support in the organization. By setting the agenda of study groups, timing the sequence of studies, and selecting the leaders and members of each study group, the strategic leader maintains influence over the process.
IT IS IMPORTANT TO AVOID SENDING THE MESSAGE THAT THE OLD WAY IS WRONG. A BETTER TACT IS TO HELP PEOPLE REALIZE THAT TIMES HAVE CHANGED AND THE ORGANIZATION MUST CHANGE.
Study groups can serve the purpose of educating, generating cohesion and support, coopting power figures, and building momentum for change. (Yes, giving the issue of change to a study group also can be a way to impede or retard change.) Individual and collective discussions surrounding the recommendations of various study groups generate give-and-take exchanges regarding specific proposals until a broad consensus is reached about the need for and direction of change.
If study groups come up with recommendations opposed by the strategic leader, the leader usually can establish hurdles and blocks to such ideas without openly opposing them. Additionally, the strategic leader can use information networks to disseminate throughout the organization those ideas which he/she supports (Goodfellow, 1985).
ALERT THE ORGANIZATION. As consensus within the organization is reached, the strategic leader begins to describe an emerging vision, often in very specific terms, for the organization as a whole. For the first time, the leader may affix a stamp of approval to new thrusts or new initiatives (Goodfellow, 1985).
At some point, after studying the issues and building support for change both inside and outside the organization, the strategic leader will make a formal announcement of the change. Announcing change should be carefully planned and well-timed for maximum effect. The announcement can, and should, take many forms, from speeches to the board of directors, to distributing pamphlets, to dinner or lunch presentations, and to informal discussions.
UNDERSTAND THAT, ULTIMATELY, YOU CANNOT KEEP CHANGE A SECRET. DON'T EVEN THINK ABOUT IT.
COMMUNICATE THE VISION. Getting the word out is key. Change is not possible unless people are willing to help. Speeches and newsletters help communicate the vision, but the most powerful medium is the behavior of the strategic leaders in the organization. Very visible executive-level leaders must behave in ways that are consistent with the vision. Strategic leaders, those who communicate the vision well, must incorporate messages about the vision into their hour-to-hour activities and use every communication channel to get the word out (Kotter, 1995).
A CLASSIC ERROR IN CHANGE MANAGEMENT IS TO UNDER COMMUNICATE THE VISION BY A FACTOR OF TEN.
CREATE A SENSE OF URGENCY. If people think that the organization is doing fine, there will be little motivation for change. Successful change starts when the people in the organization take a hard look at the organization's competitive situation, market position, technological advances, and performance. A frank and open discussion of the potentially unpleasant facts about new competition, shrinking budgets, flat performance, lack of growth, and other
DO NOT FALL INTO THE TRAP OF BECOMING PARALYZED BY THE DOWNSIDE POSSIBILITIES OF CHANGE.
indices of declining competitive position can create in the minds of people the need for change. A strategic leader can create that sense of urgency by painting the facts and by presenting the undesirable outcomes that may result from maintaining the status quo.
MANAGE THE PLANNING AND EXECUTION PROCESSES. The strategic leader's public announcement of a vision for change usually includes the unveiling of an accompanying plan (or the need to develop such a plan) and the appointment of a key member of the organization charged with turning the vision into a reality.
The first key to turning a strategic vision into reality comes in linking actions, accountability, and time-lines to the vision for change, and then working the plan. Changes and revisions to the strategic plan will be necessary, but if the strategic leader doesn't insure that the vision for change evolves into a plan for specific action, the vision will devolve into feathers and smoke.
The second key in turning a strategic vision into reality is to designate a person charged with the everyday orchestration of the change. The strategic leader should avoid getting into the weeds of change management, and remain at the strategic level, scanning the environment, servicing strategic constituencies, and communicating the vision. The champion or change agent must be a credible member of the organization who has the trust and respect of key power figures and constituencies inside and outside the organization. This person must be committed to the change, must have the power and resources to make things happen, and must clearly support the change through everyday behaviors, communication, and execution management.
A STRATEGIC PLAN FOR CHANGE
EMPOWER OTHERS TO ACT ON THE VISION. Too often, people in the organization understand the vision and want to help transform the organization. But they can't. The strategic leader must remove blocks to change, call for new behaviors consistent with the vision, and, most importantly, visibly reward the new behaviors.
CHANGE REQUIRES THE REMOVAL OF OBSTACLES. THIS IS THE STRATEGIC LEADER'S JOB.
PLAN FOR AND CREATE SHORT-TERM WINS. Success breeds success. Most people won't go on a long journey unless they can see tangible short-term payoffs. Strategic leaders look for ways to obtain clear gains in performance, however small, and reward people who are involved through personal recognition, promotions, and bonuses. While short-term wins are important for building momentum, a wise strategic leader will not become focused on short-term performance. Nevertheless, commitments to short-term wins can help keep the urgency level up and force analytical thinking that can clarify and revise the vision, if necessary.
YOU CAN'T EAT AN ELEPHANT IN ONE BITE.
PLAN TO OVERCOME RESISTANCE. Anyone who has ever been in an organization (and that's just about everyone) knows that even small amounts of expected change lead to decreased organizational effectiveness, if just in the short-term. Change suggests letting go of old habits, roles, processes, procedures, and structure. There is uncertainty about new requirements and excessive concern about the future. All of this results in anxiety, stress, conflict, and resistance. Failure by the strategic leader to understand the causes for and results of resistance often leads to delays and even failure in implementation.
RESISTANCE TO CHANGE:
What is it that impedes or derails the implementation of change? The answer is complex. Part of the answer may lie in the style and behavior of the organization's leaders. The greater the size and complexity of the organizations, the less inclined senior executives are to sit down with their subordinates and participate in a formal, step-by-step process to develop long-term plans for the future.
Controlling the rumor mill is another way to decrease resistance to change. This is difficult in a large, complex organization because hierarchies tend to resist providing information downward until every detail of the plan is complete. This is a mistake. Smart leaders keep the organization informed about what needs to change and why, what isn't going to change, and how the actual change is going to be implemented. Periodic information briefings about the status of the change should figure prominently in the plan for change. This serves to slow down the grinding of the rumor mill.
One way to decrease resistance is to plan for and allow people to participate in decisions which affect them. Participation in decision making gives people a sense of involvement and increases the probability of commitment to change. Scheduling change is another way to overcome resistance. If people know when they are no longer required to do things one way and are expected to move to a new way of doing things, they tend to waste less effort, experience less frustration and stress, and tend to be less resistant. Another critical factor to overcoming resistance is support from the top. It is important that the strategic leaders in the organization demonstrate their commitment to change by being spokes-persons for the change, by providing incentives for change, and by embodying the change.
One way to guarantee resistance is to announce an immediate and unexpected change. This provides a shock wave in the thinking of people who are part of the organization. In the minds of those people, the shock wave often takes the form of "They're trying to keep something from us" or "They don't have a clue about what they're doing." This leads to embarrassment and loss of face on the part of the leader and the followers. This takes us beyond resistance to the question of why change often fails (Goodfellow 1985). This is discussed in detail alter in this chapter.
CONSOLIDATE IMPROVEMENTS. Occasionally, it will be time to pause and review what has gone on and what is going on. Perhaps the vision needs revision, perhaps not. Perhaps it is time to move from small wins to big wins. Past successes can
SHORT-TERM WINS ARE IMPORTANT, BUT DON'T DECLARE VICTORY TOO SOON.
become spring boards to even greater wins if the leader takes time to consolidate improvements by recognizing the people who made the improvements possible.
INSTITUTIONALIZE CHANGE. In the final analysis, change sticks when it becomes part of the organizational culture-it becomes part of "the way we do things around here." There are two techniques for institutionalizing change. First, show people how the change has helped improve performance and competitive advantage. Helping people make the connections between their efforts and improvements requires communication. Second, the strategic leader makes sure that the next generation of top leaders personify the vision. If requirements for promotion and advancement do not change in a manner consistent with the vision, the change rarely lasts. Bad succession decisions can undermine years of hard work (Kotter 1995).
MAKE SURE YOU ANCHOR CHANGE IN THE ORGANIZATION'S CULTURE. THE KEY HERE IS SUCCESSION PLANNING.
A CHANGE IN STYLE
Unfortunately, change does not happen as easily as described above. Very few leaders can introduce major changes required to cope with environmental pressures. Due to their prior training and experience, they are simply unable to develop the vision needed to transform the organization. They are caught in a web of pre-existing structures, organizational politics, and comfortable traditions. This is the bureaucratic mentality (Conger 1989).
Because bureaucracies, especially large ones, consist of pools of specialized managers and leaders, people have precise roles where their duties and regulations are narrowly prescribed. In bureaucracies, a constricted understanding of one's role is emphasized. As a person moves up through the organizational hierarchy, he/she is rewarded for being effective within a narrow scope of responsibility. There often is no encouragement on the part of the bureaucracy to develop a wide perspective on the organization and its purpose.
As a result, leaders often arrive at the top of their organization with a myopic sense of the world and their organization's place in it. These rigid mind-sets often play themselves out as the leader tries to fit an inappropriate paradigm to a situation that either does not call for change or calls for more creative change. Yet, to be sensitive to the environment and strategic opportunities, a strategic leader needs an unfrozen mind-set, a broad perspective, and a vision (Conger 1989).
Too often, inexperienced or insensitive strategic leaders who have risen through the bureaucracy assume that when the they say "do it," everyone responds. We can see (since change efforts fail) that this simply isn't true. In large, complex organizations, the ability of one person, even the leader, to influence an entire organization through a "telling" style of leadership becomes increasingly remote (Goodfellow, 1985).
THE "TELLING" STYLE OF LEADERSHIP
WHY CHANGE FAILS
Change comes from a variety of directions-- technology, the law, education, etc. Whether change originates in the corporate planning room, or from a seedling planted in the head of the chief executive officer, or as a result of changes in the strategic environment, a number of predictable reactions occur within the organization that are directly related to organizational culture.
GREAT SOULS HAVE ALWAYS MET WITH VIOLENT OPPOSITION FROM MEDIOCRE MINDS.
Each one of these reactions is designed to stall or derail change. How can we avoid failure when trying to change an organization? The secret is to know, in advance, what and where the pitfalls are. Examples of these pitfalls, adapted from Leading Change (O'Toole 1995), include:
SUMMARY AND INTEGRATION
Change is much more than simply the "vision thing." Implementing change is inter-related to scanning the environment, making an estimate of the situation, determining what direction the organization needs to take, knowing what the culture of the organization is, how to leverage that culture to help with change, and deciding what actions need to be taken to make the change. Effectively implementing change also is directly related to the leadership style of the organization's top leaders. Also, as you move through the decision making process, trying to assess the need for change, make sure you ask the questions about opportunity costs. It is important to assess the costs of change as well as the cost of not changing.
Leaders are trained and educated to make things happen in organizations. However, leaders often fail to recognize the link between change and human behavior. It is this human element which helps or hinders successful implementation of change. For you to become an implementer of change, you must take stock of what the environment is like, who you are, what your organization is, and reconcile the differences. Chances are you will be more successful if you can fit your leadership style to one that closely approximates the leader performance demands at the strategic level.
DO WE NEED TO CHANGE? THE ACID TEST:
TODAY'S PROBLEMS COME FROM YESTERDAY'S SOLUTIONS, AND THE EASY
WAY OUT USUALLY LEADS BACK IN.
PETER SENGE, THE FIFTH DISCIPLINE
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