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Leading Change

John P Kotter

 

Significant change has grown tremendously in organizations during the past two decades due to powerful macroeconomic forces.  Whenever human communities are forced to adjust to shifting conditions, pain is ever present.  Some of the most common errors when transforming an organization are: (1) Allowing too much complacency, (2) Failing to create a sufficiently powerful guiding coalition, (3) Underestimating the power of vision, (4) Under communicating the vision by a factor of 10x-100x, (5) Permitting obstacles to block the new vision, (6) Failing to create short-term wins, (7) Declaring victory too soon, (8) Neglecting to anchor changes firmly in the corporate culture.  These errors amplify in a rapid moving competitive world.  These errors can be mitigated and possibly avoided.  The key lies in understanding why organizations resist needed change and the multi-step process to achieve it, and how leadership is critical to drive the process in a socially healthy way.

            There are many factors necessitating organizational change including technological, international economic and opening market forces.  They create both more hazards and opportunities for organizations.  Useful change tends to be associated with a multi-step process that creates power and motivation significant to overwhelm all the sources of inertia and is driven by high quality leadership, not just excellent management.  The eight stage process follows from the errors in leading change: (1) Establishing a sense of Urgency, (2) Creating a guiding coalition, (3) Developing a vision and strategy, (4) Communicating the changed vision, (5) Empowering broad-base action, (6) Generating short-term wins, (7) Consolidating gains and producing more change, (8) Anchoring new approaches in culture.  It is important to go through all eight stages in sequence; however, normally one operates in multiple phases at once.  A purely linear, analytical plan is likely to fail.  There are many forces at work creating a dynamic, complex and messy environment.  This is why leadership is so critical, not just management.  Management is a set of processes that can keep a complicated system of people and technology running smoothly.  Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances.  Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles.

Kotter breaks down the process of creating and leading change within an organization into an Eight-Stage process of leading change.  In chapter 3 he explicates on the first stage: Establishing a Sense of Urgency.   Completing this stage requires a great deal of cooperation, initiative, and a willingness to make sacrifices from many people. 

A high level of complacency and a low sense of urgency, Kotter asserts, constitute the two most significant impediments to change.  In addressing complacency, he presents nine reasons organizations experience complacency.  Before this, however, he explains that most companies face complacency despite the fact that they have highly intelligent and well-intentioned individuals. 

First, companies often lack a visible crisis, and so employees fail to feel compelled to address problems within the company, though they do in fact exist.  Second, companies tend to lull themselves into a false sense of security with the mere affluence of the corporate headquarters.  This environment serves to instill a sense of success within employees.  Third, managers will measure themselves and the performance of others against low and easily attainable standards.  Furthermore, these standards actually deceive employees as to the success of their results by failing to compare their results with those of their competitors.  Fourth, organization structure may cause employees to focus on narrow functional goals of the department they are involved in, rather than establishing a sense of contribution to the overall performance of the business.  So, an employee may feel successful with their personal work and fail to realize that the performance of the company is declining.  Sixth, internal performance feedback composes almost 100% of the feedback employees receive during their tenure.  Without crucial external feedback from outside stakeholders, they will never realize the reality of their performance.  Seventh, those employees who do seek feedback from outside stakeholders and initiate honest discussions regarding company performance are admonished for inappropriate behavior.  Eighth, the human tendency to deny what we don’t want leads to suppression of problems and avoidance of the work necessary to address them.  Ninth, senior managers often cultivate a lethal sense of complacency within a company’s employees through “happy talk”.  This serves to downplay problems and embellish success, ultimately fostering a false sense of security.

Kotter provides nine ways to overcome complacency, and he also asserts that a strong leader is required to facilitate these methods.   A leader must establish a crisis to cause employees to realize internal problems; he must eliminate false signs of security; set standards of achievement high enough that “business as usual” will not suffice; broaden functional goals and their measurement to encompass company goals; explicate the reality of performance through the use candor and external feedback; increase employee interaction with the customer; use external consultants for honest feedback; facilitate and encourage honest discussions and eliminate “happy talk”; and emphasize future opportunities and the incredible possibility of success in capitalizing on those opportunities.

Chapter four deals with the second stage: Creating the Guiding Coalition.  In order to actuate change within an organization a strong guiding coalition is needed.  The right composition of individuals, level of trust, and shared vision is critical to the success of this team.  Furthermore, one strong leader cannot make change happen, and therefore, it is his responsibility to build such a strong composition of people that can lead the change as a team. 

For such a team to be successful in leading change, it is crucial that its members share a sense of problems, opportunities, and commitment to change.  Furthermore, these teams must possess significant credibility within the company in order to be effective. 

Kotter offers four steps necessary to put together a guiding coalition.  First, position power: does the team possess enough of the right individuals with the skills and influence to affect change?  Second, expertise: does the team have the necessary level and diversity of expertise to produce intelligent, informed decisions?  Third, credibility: does the group possess the credibility to influence the company and actualize change?  Fourth, leadership: does the group include enough legitimate and respected leaders to lead the change process? 

The two most critical characteristics of a successful team is the trust shared among its members and the sincerity of the commitment to a common goal.  Kotter further asserts that trust is fundamental to creating a shared objective.  Furthermore, the most typical goal used to bind a team together is a commitment to excellence, and a strong, genuine desire to maximize the performance of the organization.  Consequently, a strong leader is necessary for he possesses the ability to encourage people to transcend short-term parochial interests, and commit to furthering the excellence of the company.  In short, Kotter says to build a guiding coalition that you must find the right people, create trust, and develop a common goal.

            There are three methods of trying to coerce people into changing their behavior in order to create a transformation within the company.  Kotter calls these three methods authoritarian, micromanagement, and vision.  Vision is the explanation of why a change is needed.  Kotter claims that vision is a central component to all great leadership and that it is essential in breaking through the forces that support the status quo.  He continues to talk about what a viable vision consists of and how to implement it effectively.

            Kotter says that in order for change to take place there needs to be a shared sense of a desirable future.  Two of the pitfalls he describes are under communication of the vision and inconsistent messages.  He also talks about the magnitude of the task and some of the human resistance factors that play into possible failure.  One of the interesting factors that Kotter describes as “difficulties inherent to the process” is the internal struggle and doubt the guiding coalition has with change.  He says that there are many questions that the guiding coalition has to answer in their own minds before they can effectively implement the change within the company.  He continues to say that this takes a lot of time and communication.  In the remainder of the chapter Kotter outlines the seven key elements in the effective communication of vision:  simplicity, metaphor, multiple forums, repetition, and leadership by example, explanation of seeming inconsistencies and give-and-take.

Chapter eight delves into the concept of broad-based employee empowerment.  Although the term “empowerment” is used widely and maybe overused, the concept of empowerment cannot be overlooked when implementing change efforts.  Kotter speaks of removing barriers to action that will help the change effort.  This allows even the lowest level employees to participate in the change effort.  As a manager we remove barriers to change by ensuring that our current structure does not hamper vision and therefore prevent change.  By aligning our systems with our vision, the change process can be a more efficient and less timely process.  Kotter also speaks of the value of employee education with respect to empowerment.  Education allows for the actual empowering of your employees instead of just telling them they are “empowered”.  Obviously change efforts take “actual broad-based employee empowerment”.

            Kotter explains the value of “creating” short-term wins to the change effort in chapter nine.  Kotter states generating short-term wins allows a better chance of actually completing the change effort.  However, these short-term wins are only effective if they are visible to many, the terms are unambiguous, and the victory is closely related to the change effort.  A victory generated to meet these requirements creates excitement, certainty, momentum, and serves also to quiet critics.  So you ask, how do we do this?  Kotter states that PLANNING for results instead of praying for results is the key.  Kotter also talks about the difference between “gimmick wins” and actual short-term victories.  Kotter states that short-term gimmicks can be effective at least for awhile, but managers must not hurt the future of the company in order to provide short-term wins today.   

            In conducting long term changes in companies, one of the main problems companies run into is claiming victory too soon.  Company CEOs and high level executives can derail change initiatives by celebrating small victories too much.  While celebrating small victories is important in any change operation, too much emphasis on them will produce a false sense of security.  Kotter outlines five steps to succeeding in change programs at Stage 7.  The first step is to introduce even more and harder changes in the company.  Then bring in more help to ensure the programs success.  Third, senior level managers must continue to provide a strong focus on the purpose of the change initiatives.  Next, decentralization of projects is imperative.  This allows the leadership to focus on the specific projects and give them a better chance to succeed.  Finally, companies need to eliminate unnecessary interdependencies in their company.  Following these steps should allow companies to continue to progress with their change initiatives and to ensure their success.

            So a change has been made in the corporation or whatever group that required it.  Great!  Now, what’s there to keep it from going back to the old way of doing business?  If the new way is not anchored in the culture of the business, nothing at all, and time will show that.  Chapter 10 of Kotter’s book deals exclusively with the perils of not changing the culture as well as his recipe for how to get it done.

In any organization the common practices it clings too tend to become more like a living being than an ideology.  This has the effect of making them very hard to get rid of.  However, failing to do so, especially in the rapidly changing world of today, will almost always lead to absolute failure.  Just think if there were still major corporations out there that refused to use computers.  Where would they be? 

Even something not so significant can be a major impetus for total change.  After all, even if a change is accomplished, but several years later the changes revert back to the old way of doing things, the change really didn’t matter at all.  Often times this is what happens when the driving force for change, be it a CEO or manager, leaves the organization.  Without that individual’s spark, the fire goes out and things fall apart.  The real key to lasting change is not just in changing vision or mission statements or even training manuals, but in changing the corporate culture itself.

Kotter looks at corporate culture as being made up of both the Norms of Group Behavior and the Shared Values of a company.  All things under this list range from the hard to change to the very hard to change based primarily on their relative visibility.  That is to say that it is easier to change the way a company reacts to a customer request than it is to alter managements view of quality versus quantity.  Kotter goes on to give three reasons why culture is difficult to change (151):

1)      Because individuals are selected and indoctrinated so well.

2)      Because the culture exerts itself through the actions of hundreds or thousands of people.

3)      Because all of this happens without much conscious intent and thus is difficult to challenge or even discuss.

So how does a leader try to tackle these seemingly insurmountable odds?  Kotter recommends treating them like what they seem to be; living things, just living things that have to die. He even goes so far as to tell a story of a GM who gave a eulogy for their old business practices at a meeting.  Kotter believes that, like a dearly departed friend, old policies have to be given credit for what they did and how they were great, but then have to also show how the new is better than the old.

Kotter’s last point is that the cultural change, as difficult as it may be, must come last and not first.  To try and put the culture in limbo first and then change the system is to put the entire organization at great risk, too many negatives can creep in along with it.  Instead, he says, it is better to go in and articulate what must be changed, implement the changes, and then alter the culture around that. 

In summary Kotter offers these tips to remember when anchoring change in the culture (157):

1)      Culture change comes last not first

2)      It is dependent on results

3)      It will require a lot of talk

4)      May involve turnover

5)      Makes decisions on succession crucial

 

With the many changes occurring in the world today, Professor Kotter describes the difficulty of predicting where the businesses of the future are headed.  He, however, does affirm that future organizations must possess certain fundamental traits if they intend to survive in the 21st century.  One such trait is a distinct organization-wide sense of urgency.  Kotter describes, as he does frequently throughout this book, the necessity of future businesses to eliminate complacency.  Organizations will be forced to make changes often, and a sense of urgency is the best tool to counter this complacency, as it often allows employees to better cope with frequent change.  Another essential attribute is higher level cooperation or “teamwork at the top” as Kotter describes it.  It is no secret that when the essential members of an organization work together, it is easier to get that organization moving in the right direction and, therefore, successfully implement change.  These individuals must also be able to effectively build and communicate vision.  When “high-ranking” members of an organization are consistently working as a team as well as acting upon a well-developed and well-communicated vision, it is much more likely that those beneath them will follow their example.  Kotter goes on to outline the importance of what he calls “broad-based empowerment” and “delegated management.”  Time is a valuable commodity, and the likelihood that future corporations will have it in abundance is slim at best.  A broad leadership base coupled with effective delegation will make communication and decision-making much faster and more efficient processes.  To piggyback on this point, Kotter maintains the necessity of future organizations to possess limited levels of interdependence.  Such interdependence should be kept at a minimum, as unnecessary departmental, group, and individual interdependence only slows things down within an organization.  Finally, Kotter asserts the overwhelming importance of corporate adaptability.  A need for change is not always predictable, and in the modern fast-paced world, it will be necessary for organizations to remain flexible and ready to implement change.

The desire to further one’s education throughout the duration of life is a key ingredient to maximizing potential.  There are five key characteristics exhibited by life-long learners: the propensity to take risk, humble self-reflection, aggressive solicitation of opinions from others, careful listening and openness to new ideas.  Through the use of these techniques, life-long learners are able to fully exploit the benefits of compound learning and eventually become the transformational leaders that they sought to be.