Managing turnaround and transformations

Have you ever noticed a butterfly? Have you ever pondered whether it was beautiful since birth or it turned beautiful over a period of time. Well, all butterflies go through a phase of metamorphosis (change of form) - caterpillar to butterfly. The phase when this metamorphosis happens - they go blind, legs fall off and slowly a beautiful butterfly takes form. ( Managing Radical Change Ch. 3, Sumantra Ghoshal ) Organizations are no different from them. They also go through similar phases. Corporate transformation involves fear and intense pain. The ones which have a good vision, plan for the transformation process, strategy to implement the plan, control measures to ensure that major deviations do not take place, good communication and training between the change agents and recipients have the maximum chance of survival and growth through the change initiatives. There are rapid economic, technological and competitive changes in the business environment . Managers and Leaders have to manage emotional and intellectual aspects. Transformation is much more then simple change - it involves complete change of culture. There are 3 alternatives: 1. deny need for transformation and continue till death, 2. gather courage and initiate transformation (may not survive), 3. move aside and allow someone else (leader) to do it and survive.

Transformation is defined as the marked change in the nature or function of organizational systems creating discontinuous, step-function improvement in sought-after result areas. ( Transformational Leadership - Creating Organizations of Meaning - Stephen Hacker and Tammy Roberts - ASQ Quality Press - 2003 )

Any process improvement initiative needs a solid foundation to stand on. The foundation consists of corporate culture, organizational structure and leadership behavior. Process improvement is accomplished through change, and without the proper motivation change will not happen. With fear governing many organizations, change will not take place simply because of the associated risk of failure. Change therefore needs to be rewarded. Initially, strong leadership can paint burning platform scenarios thus motivating the organization.

Jack Welch of GE has been known to take a similar stance in situations that require rapid change. While this approach may be used to generate motion, long term, a culture change must replace the top driven pressure and self-motivation must be generated. Only self-motivation will make improvement sustainable. There are only two motivators for change and improvement, aspiration or desperation - and businesses will default to one or the other. Unfortunately, most businesses have to reach the stage of desperation prior to focusing on process improvement with the intensity required. Once the organization goes through some improvement and is operating profitably again, complacency moves in and the cycle starts again several years down the road. Organizational design and corporate culture are the foundation that leadership must address prior to the deployment of process improvement initiatives.

As a first step, leadership has to clearly understand and communicate the motivation for change. Whether or not the organization is ready for the disruption and uncertainty it is about to face is a question that has to be answered. A detailed assessment of the organizational structure and corporate culture is required.

Most companies go through an evolutionary process that resulted in their current organizational structure. At some point, the structure was designed and implemented, possibly during the latest re-engineering event. Over time, business needs arise and small changes are made. Additional functions and responsibilities are added to the existing organizational chart. Soon so much has been added outside of the original design that the organization is not capable of supporting the business. The organizational structure has evolved to the point of constant gridlock. Conflicting goals, metrics, and reward structures prevent the organization from fixing the overall process. We need to ask if the current structure still serves its purpose. The purpose, however, should not just be the production of products and services that are sold today. Fundamentally, the structure must allow for continuous change to take place and improvements to be made. If organizational structure is not considered, current measurements and reward structures in functional areas hinder improvements that should take place. Future improvements will continue to produce lackluster results.

Today, most organizations are aligned by function: Marketing, sales, design engineering, customer support, manufacturing, distribution, etc. The prevailing logic in this setup is based on economies of scale and intra-function learning based on specialization. The result is slow change and lack of rapid process improvement.

Once the structure - and therefore the team - is in place, the organization needs to be aimed. How about teams in business? The team now contains thousands of associates. The stakes of the game are weekly paychecks with the well being of families and communities at risk. Is the team clear on the goals, the rules, and the scorekeeping? If not, how much effort is a spent on non-critical issue? Running a business is very much like team sports. Visions and goals need to be clearly communicated and understood by everyone in the organization. Technique needs to be taught and discipline needs to be instilled. Sounds simple, but it is not. Not convinced? At your next staff meeting pose two simple questions: "What are we in business to do? How do we get it done?" The answers should be clear, consistent, and concise.   Some of the above-mentioned issues are about providing leadership in conjunction with providing tools. Tools - no matter how powerful - are no substitute for good leadership. Good leadership provides the appropriate structure, vision, goals, and tools to win the game.

Any significant transformation creates human-related issues. A formal approach for managing change - beginning with the leadership team and then engaging key stakeholders and leaders - should be developed early, and adapted often as change moves through the organization. The change-management approach should be fully integrated into program design and decision-making, both informing and enabling strategic direction. It should be based on a realistic assessment of the organization's history, readiness, and capacity to change. Because change is inherently unsettling for people at all levels of an organization, when it is on the horizon, all eyes will turn to the CEO and the leadership team for strength, support, and direction. The leaders themselves must embrace the new approaches first, both to challenge and to motivate the rest of the institution. As transformation programs progress from defining strategy and setting targets to design and implementation, they affect different levels of the organization. Change efforts must include plans for identifying leaders throughout the company and pushing responsibility for design and implementation down, so that change "cascades" through the organization. At each layer of the organization, the leaders who are identified and trained must be aligned to the company's vision, equipped to execute their specific mission, and motivated to make change happen. Individuals are inherently rational and will question to what extent change is needed, whether the company is headed in the right direction, and whether they want to commit personally to making change happen. They will look to the leadership for answers. Leaders of large change programs must over perform during the transformation. It demands ownership by leaders willing to accept responsibility for making change happen in all of the areas they influence or control. Change leaders make the mistake of believing that others understand the issues, feels the need to change, and see the new direction as clearly as they do. Communications flow in from the bottom and out from the top, and are targeted to provide employees the right information at the right time and to solicit their input and feedback. Successful change programs pick up speed and intensity as they cascade down, making it critically important that leaders understand and account for culture and behaviors at each level of the organization. Companies often make the mistake of assessing culture either too late or not at all. Thorough cultural diagnostics can assess organizational readiness to change, bring major problems to the surface, identify conflicts, and define factors that can recognize and influence sources of leadership and resistance. Once the culture is understood, it should be addressed as thoroughly as any other area in a change program. Change programs do not go completely according to plan. People react in unexpected ways; areas of anticipated resistance fall away; and the external environment shifts. Effectively managing change requires continual reassessment of its impact and the organization's willingness and ability to adopt the next wave of transformation. Change is both an organizational journey and a very personal one. Individuals need to know how their work will change, what is expected of them during and after the change program, how they will be measured, and what success or failure will mean for them and those around them.

'Transformation' has become a buzzword in the organizational behavior industry. In theory and on paper, transformation is an appealing concept with its restructured flow charts, diversity programs, and team-building exercises. In reality, organizations are filled with old cultural norms that are as tough as rubber, which make new and innovative ideas difficult to embrace. Transformation, like oil on water, can live comfortably on the surface of an organization resistant to penetrating the fiber and makeup of the culture. Transformation is a major undertaking that comes at a high price. But when it is implemented, the rewards surpass the painstaking effort. Prior to transforming a culture, it is important to understand what 'culture' and 'organization' is. The culture of the organization speaks of the values, beliefs and behaviors that are shared by the members of the organization (Kennedy). E. H. Schein, a leading theorist on organizational culture, defines 'organizational culture' as a pattern of shared basic assumptions that a group learns as it solves its problems. These solutions are successful enough to be considered valid and, therefore, should be taught to new members of the organization as the correct way to perceive, think, and feel in relation to those problems. Combining these definitions it is clear that the organizational culture provides the interpretation of core beliefs and serves as the basis by which decisions are made, acceptance is granted, rejection occurs, and truth determined. Each organization has a culture that is unique. The culture of any organization is formulated and impacted by several variables. The most obvious variable is the 'leader' of the organization, whether that leader is a parent or CEO. All things flow from the head. The values of the leader of any organization are reflected in the culture of the organization. The second variable is the influence of the team-members of the organization-those joined to serve its mission. Members have an important impact on the organization's culture. According to Kaufman, "An organization is only as good as its people". These first two variables influence from "within" and thus are referred to as internal cultural variables (Schein 1992). There are external variables. The culture of an organization can be influenced by cultures from "without". This influence comes from the environment. For instance, industry, government regulations, technological systems can impact an organization's internal culture. An organization's culture can endure while change is going on all through the organization. "Leaders die, products become obsolete, markets change, new technologies emerge, management fads come and go but core ideology in a great company endures as a source of guidance and inspiration" ( Collins and Porras 1998 ). Managers often force, rather than lead, change. However, organizational transformation imposed on followers first is resisted and resented by the followers. Successful leaders first impose change on themselves and then cultivate it in others.

The Center for Organized Change in San Diego identifies several pitfalls when implementing organizational change:  1) Managers lack integrity. Their words and actions are inconsistent. 2) Unrealistic expectations are set with no system to measure success or failure.  3) Systems remain unchanged. 4) Managers are impatient with the process. Most managers want results immediately and are not committed to investing years to see results. 5) Management often tries to force the issue through buzzwords and force. 6) Leaders resort to training as the main tool of transformation.

Legitimate transformation is organic. It must be cultivated and nourished. The leader sets the example in the transformation process. Anything short of this simply creates a culture of compliance rather than commitment.

Peter Senge greatly impacted the way we view organizations when he introduced the paradigm-creating organizations that are built around learning. In an interview he said, "Perhaps treating companies like machines keeps them from changing, or makes changing them much more difficult. We keep bringing mechanics when what we need are gardeners. We keep trying to drive change-when what is needed is to cultivate change."

Senge's approach brings the leader to a place of self-analysis, re-educating the way the leader thinks regarding organizational culture. The leader is called to distinguish him or herself as the trendsetter within the organization. Senge says, "Leaders must approach change as if they were growing something rather than changing something".

True transformation begins within the leader. Senge admits, "Most people in the organization other than the leader can't make deep changes; they act out of compliance rather than commitment." Organizations rely on the transformation of its leaders rather than the transformation of subordinates or systems.

The process that actually implements change often moves from the leader to small groups and then to the rest of the organization.

No one can expect the task of changing an organization to be a quick, simple or easy process. However, no one should imagine that this is an impossible task - it just takes patience, persistence and a sound game plan.  If you have committed yourself to acting as an agent for change, you can expect more than your share of risks, challenges and surprises. But if you know what you are doing, you can also expect some successes that you can be proud of, and some intensely rewarding experiences along the way. Organizational change is inevitable. Although it does take continuos time and effort, we have seen the step-by-step models which can help you down the path.   The only question is whether your business is going to keep up with the ever-so-rapidly changing industries.  It seems the longer your company waits to catch up, the farther you will have fallen behind.

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. Niccolo Machiavelli, 1369-1427, Florentine statesman and philosopher, Discourses