LEADING ORGANIZATIONS: Change Management
A key skill of any modern leader is the ability to continuously calibrate the operating model within which he and his organization operate and ensure alignment with the corporate and business strategies of their company. In essence, the key is to ensure that operational excellence levers driving his operating model, i.e. competencies/capabilities, structures, systems, and processes, are perfectly tuned and continuously in sync with his company’s market context, strategies and culture. As a leader, emphasis is placed on his ability to integrate, build and reconfigure his organization’s: a) competencies/capabilities, b) structures, c) systems and d) processes to ensure a strong and market-sensitive execution. We term this ability: Dynamic Competencies.
What are dynamic competencies?
Dynamic competencies can be divided into three interconnected areas of competencies essentially encompassing the ability to:
1. sense and shape opportunities and threats;
2. seize opportunities and meet threats;
3. reconfigure the business’ intangible and tangible resources, including the ability to adapt the operational excellence levers (see below model): a) capabilities/ competencies; b) systems; c) processes; d) structures.
Leaders working in companies that find themselves in rapidly evolving environments, open to international commerce and competition, need to acknowledge that long-term success depends on the ability to continuously discover and develop opportunities (i.e. the sensing and seizing capabilities), and on effective reconfiguring its resources – in effect, adjusting its operational excellence levers to match those opportunities or threats. For companies to survive in the long run, growth must be at the top of the agenda. However, the entire foundation of a growth platform rests on the dynamic competencies of its leaders, including their ability to:
Develop a deep understanding of the markets and identify unmet customer needs (i.e. sensing the market) (Teece, 2007). Your customers’ needs change and new products and distribution methods emerge as threats to your existing business model. If you do not sense these things before they happen, you can easily become misaligned.
Finding – or seizing – opportunities at the intersection of market needs and current/future resources of the company, and clustering these around a strategic platform.
Reconfiguring existing operational excellence levers in order to execute efficiently on the seized opportunity.
Leaders with dynamic competencies embrace change as a constant and part of the ongoing process of synchronizing the operational excellence levers to new market dynamics.
Driving change management processes
Change management is the process, tools, and techniques to manage the people side of change to achieve a required business outcome. Change management incorporates the organizational tools that can be utilized to help individuals make successful personal transitions resulting in the adoption and realization of change.
In 1996 John Kotter wrote the book Leading Change, which looked at what people did to transform their organizations. In the book, Kotter introduced an 8-step change model for helping managers deal with transformational change. This is summarized in Kotter’s 8-step change model as illustrated below:
John Kotter’s 8-step change model comprises eight overlapping steps. The first three are all about creating a climate for change. The next on engaging and enabling the organization. And the last, implementing and sustaining change – see below:
Step 1: Create a sense of urgency
Help others see the need for change through a bold, aspirational opportunity statement that communicates the importance of acting immediately.
Step 2: Build a guiding coalition
A volunteer army needs a coalition of effective people – born of its own ranks – to guide it, coordinate it, and communicate its activities.
Step 3: Form a strategic vision and initiatives
Clarify how the future will be different from the past and how you can make that future a reality through initiatives linked directly to the vision.
Step 4: Enlist a volunteer army
Large-scale change can only occur when massive numbers of people rally around a common opportunity. They must be bought-in and urgent to drive change – moving in the same direction.
Step 5: Enable action by removing barriers
Removing barriers such as inefficient processes and hierarchies provides the freedom necessary to work across silos and generate real impact.
Step 6: Generate short term wins
Wins are the molecules of results. They must be recognized, collected and communicated – early and often – to track progress and energize volunteers to persist.
Step 7: Sustain acceleration
Push harder after the first successes.
Step 8: Institute change
Articulate the connections between the new behaviors and organizational success, making sure they continue until they become strong enough to replace old habits.
Successful leaders find a problem or a solution to a problem and then show people by using engaging and compelling situations to change behavior. They recommend a people-driven approach that helps people to see the reason for change. They argue that people change when they are shown the truth because this influences their feelings.
When a change initiative requires some level of organizational re-structuring
Adjusting (e.g. your organization’s capabilities/competencies) to match the future challenges of the company involves putting people in the right roles. The performance of organizational restructuring processes can be a powerful change agent because personnel moves spark emotions, fears and, egos, and when people are promoted, terminated or moved, those who have been resisting change often develop a whole new perspective.
When change is on the agenda:
Select your destination (vision, mission, and goals) and set the course (strategy).
Assess the supporting structure, systems, processes and competencies/capabilities (operating levers) currently in place.
Define the new operating levers needed to execute the strategy.
Introduce the new strategy while employing Kotter’s 8-step change model.
When it comes to the part of executing a organizational restructuring as part of your change process, your organizational restructuring plan should include:
Assessment – identify business critical positions and employees and assess for competency gaps. By performing a future skills management analysis, your focus is on assessing your organization’s capabilities by seeking to identify critical gaps between needed and existing skills and knowledge. Closing gaps can potentially produce significant gains in performance and productivity. The gap analysis must reflect the organizational skills and resources needed to successfully executive the new strategy
Acquisition – define roles, match the roles to a workforce plan defined to deliver on the new strategy, and acquire/recruit the needed talent (internally/externally)
Selection - assign each employee to one of the following categories:
a. assign less responsibility/complexity
b. keep in current position or move to similar position
c. move to a position with more responsibility/complexity
d. move from a non-managerial to a managerial position
e. observe for a while
f. exit or develop
If you need to exit people, treat them respectfully because your actions in this team-restructuring process will impact the company’s employer brand
Onboard – ensure that appropriate internal onboarding processes are in place – particularly when it comes to leaders and business critical employees
Direct – provide clear direction, objectives and goals
Monitor – monitor people’s performance
Migrate – migrate people into relevant roles
Develop – create an overview of skills and knowledge and develop an organizational development plan that is aligned with the strategic plan. Track performance and make talent reviews and career-development plans
Succession management – prepare a succession management platform. Succession management assists the organization in evaluating its supply of talent against the demand for talent. Succession planning concerns the top talent pool only, delivering multiple reserves to a given position, as opposed to replacement planning that delivers only one reserve. Succession management concerns all talent pools located in the pipeline and focuses on developing and managing these talent pools (i.e. building skills and competencies)
When a change initiative requires some level of cultural adjustment
Culture is often strongly rooted in a company and consists of habits and norms that operate at full speed to reinforce the status quo. As a leader, you must work continuously to diagnose potential challenges with the existing culture and its readiness for change, while trying to figure out how you may address these challenges. It is essential that you allocate sufficient time to uncover organizational dynamics with the objective of disclosing invisible cultural barriers. Seeking to identify typical working styles, forms of communication and collaboration, structures (e.g. top-down or consensus building), and feedback from employee surveys on cultural aspects, is always a good idea.
Assessing the organization’s cultural readiness and ability to adapt to change, combined with an evaluation of the need for cultural change, is key. Be aware that the more influence an employee exerts in his/her current role in the organization, the less prone this employee will be to support an agenda for change as this may imply a loss of power and prestige. As leader, you are continuously required to drive through some level of change in the organization and will invariably face a culture more or less ready/willing to change. In your due diligence, you will most probably come up with four possible scenarios for cultural change as depicted in the culture model below (Inspired by Bradt et al. in their book: “The New Leaders 100-Day Action Plan”):
The culture model explained:
Your change initiative does not entail an urgent need for cultural change. Yet, the governing culture in the organization is ready to change. Here, your focus should be to congregate (i.e. to assemble your team and key stakeholders around minor changes that need to take place over time) while continuously nurturing their willingness to undertake larger changes with time.
Your change initiative does not entail an urgent need for cultural change and the governing culture in the organization is similarly not ready to change. Here, your focus should be to slowly develop and mature the idea of cultural change within your team with the objective being to make the team and stakeholders ready for change when it is needed.
Your change initiative entails an urgent need for cultural change and the governing culture in the organization is ready to change. Here, your focus should be to move forward fast. The organization is ready to embrace change and, in light of your diagnosis. you should make use of this opportunity.
Your change initiative entails an urgent requirement for cultural change, but the governing culture in the organization is not ready to change. Here, your focus must be to instigate multiple initiatives that will shock the organization – initiatives that will essentially build awareness around urgency for change.