Paradoxical Issues the Most Profitable Companies Manage Well

Toyota is the number one car manufacturer in the world. It also sells more cars in the United States than either General Motors or Ford. The year prior to the global recession, Toyota reported a profit of $13.7 billion, where as General Motors and Ford reported losses of $1.97 billion and $12.61 billion, respectively. (1) According to an interview with Katsuaki Watanabe, Toyota’s 65-year-old president, Toyota's future will depend on its ability to strike the right balance between these paradoxical issues:

• Short-term and long-term
• Being a Japanese company and being a global company
• The manufacturing culture of Toyota city and the design culture of Los Angeles
• Cautious Toyota veterans and confident youngsters
• Incremental improvements and radical reform

These are not empty words from Toyota's president. Professor Takeuchi and his colleagues studied Toyota for six years, interviewing hundreds of Toyota employees at all levels, in 11 countries. (2) They concluded that...
"The company succeeds because it creates contradictions and paradoxes in many aspects of organizational life... Toyota's culture of contradictions plays as important a role in its success as the Toyota production system does."
The researchers further point out that Toyota deliberately fosters contradictory viewpoints because they understand that “when people grabble with opposing insights, they understand the different aspects of an issue and come up with effective solutions." Do you understand this?

But let us not mistake anecdotes for evidence.

Researchers Dodd and Favaro studied the 20-year performance of 1,000 companies and found that the most profitable companies managed what the authors called “the three tensions” the best. (3) These three tensions were:

1. Profitability and growth;

2. Short-term and long-term;

3. Whole and parts.

The authors calculated each company’s “batting average,” defined as "how often a company is able to succeed at managing two competing objectives at the same time in any given year." They found that although most executives said they tried to manage both issues of the paradox simultaneously, the data showed that they failed well over half the time. Thus, the batting average for profitability and growth was only 38%; meaning only 38% of the companies were able to achieve both positive profitability and real revenue growth in the same year. For short-term and long-term, only 44% of the companies grew earnings over the previous year while also staying on their path toward long-term profitable growth. Finally, only 45% of the company’s divisions (i.e., business units) were able to add value to the whole while improving their stand-alone performance at the same time.

The authors found that a mere 10% increase in the batting average (i.e., hitting both objectives one additional year every 10 years) equaled a two-percentage point increase in annual total shareholder return. The authors point out that although this may seem like a small number, consider that an investment of $1,000 made in 1983 in the average S&P 500 company would be worth $5,620 twenty years later; with a return of two percentage points higher each year, that investment would have been worth more than $8,000.

Performing well on both of the competing issues in a paradox at the same time is important because it, not only expands your thinking, it shows your ability to meet the conflicting interests of different stakeholders.

What is good for organizations applies to individuals. When Professor Beech studied 400 middle managers, he discovered that simply raising awareness of the types of tension that frequently occur at work enhanced a manager’s ability to handle them. Many of the managers he studied commented that just understanding that there are no easy answers was empowering. (4)

This is why the web-based eXpansive Leadership Method (XLM) Assessment measures paradox in the “Agility Score.” Within minutes of completing your assessment (which takes less than 20 minutes to fill out), you can download your highly personalized Profile - a comprehensive, 21 + page report and customized action plan in PDF format. Click http://xlmassessment.com/ to take the assessment or see below for more info*.

Which paradoxes do you see at work? How are they managed?

Keep eXpanding,
Dave
http://www.DaveJensenOnLeadership.com

*Your Personal Profile provides the insights required to leverage your strengths and minimize your weaknesses in the four, paradoxical leadership styles. By concentrating your energy on a few actions, you’ll develop the leadership flexibility you need to navigate today’s whitewater environment and tomorrow’s foggy future. Click http://xlmassessment.com/ to take the assessment.

XLM

By the way, many research-based, 360 leadership assessments cost between $49.00 and $107.00. HOWEVER, because my publisher demands that I create and analyze a large database of anonymous leadership profiles for my forthcoming book, we are offering the XLM Assessment at the discounted, introductory price of ONLY $29.95!

Oh yes, I almost forgot… The XLM Assessment also allows, but does NOT require, you to invite others (direct reports, peers, boss…) to assess your leadership styles. So, you can gain a true 360 perspective… at the same, low price of $29.95!

So, click http://xlmassessment.com/ . Within minutes of downloading your Profile, you’ll be applying the most advanced, research-based leadership tools, tips, and techniques to conquer your challenges and catapult your career.

1. Thomas A. Stewart and Anand P. Raman, Lessons from Toyota's Long Drive, Harvard Business Review, July -- August 2007, 74 -- 83.

2. Hirotaka Takeuchi, Emi Osono, and Norihiko Shimizu; The Contradictions That Drive Toyota's Success, Harvard Business Review, June 2008, 96 -- 104.

3. Dodd, Dominic and Favaro, Ken, Managing the Right Tension, Harvard Business Review, December 2006, 62-74.

4. Beech, Nic; Contrary prescriptions: Recognizing Good Practice Tensions In Management, Organization Studies, January 2003, 1 -- 28.

How Leaders Mismanage Paradox

Not long ago, a bank manager in our leadership class lamented that the senior executives from her corporate office had implemented a new system to automate the bank’s credit scoring. The manager applauded their efforts to improve efficiency, but complained that the IT system was not flexible enough to adapt to her local needs.

"Why can't the IT folks get it right?" She moaned.

I replied, "Because they tried to solve an unsolvable problem. They standardized the process instead of designing a loan processing system that manages the tension between clarity (follow these standards) and flexibility (meet your unique needs). It's one of the many paradoxical issues that organizations mismanage that costs them millions of dollars."

How much time and money do you and your organization waste trying to solve problems that are in fact, “paradoxical issues?” You can answer that question by considering if you’ve ever seen:

1. Uniform/standard procedures too rigid to meet customized/individual needs.

2. Deep expense cuts that hurt productivity.

3. Mandates from the central office that fail to address local concerns.

4. Long-term goals sacrificed at the altar of short-term objectives.

5. Employees resist changes because they cling to the stability of the ‘good old days.’

6. Customer satisfaction slip because of an overemphasis on increasing sales.

7. Employee motivation drop due to a push to increase accountability.

8. Creative innovation hindered by creeping incrementalism.

9. Individual initiative get lost in a fog of teams or working groups.

10. Excessive work demands causing problems at home.

Do any of these sound familiar? Of course they do. Leaders struggle with paradoxical issues like these all the time. So the real question is not whether you deal with them, it’s how well do you manage them? Researchers tell us… not very well.

In a survey of 504 senior business and technology executives worldwide, David Shpilerg and his colleagues at Bain & Company found that only 7% believed that their IT organizations were both highly effective in delivering what was asked and tightly aligned with business strategy. (1) These top 7% recorded a compound annual growth rate over three years that was 35% higher than the survey average. Even more startling was the fact that IT spending in these companies was 6% less than the average. How could these companies perform better and spend less?

It turns out that most IT organizations attempt to help their business units align with corporate strategy by developing customized, best practice solutions. The problem is that the IT organizations create so many individualized software solutions that they generate enormous complexity within the overall IT infrastructure. This snowballs into higher support and programming costs, project delays, and legacy issues. Instead of over-focusing on meeting the individualized needs of each business unit, successful IT organizations (e.g., FedEx, Wal-Mart, Dell...) manage the tension between customized solutions and standardize offerings. (The opening story about the unhappy bank manager was concerned with the flip side of this paradox – too much standardization at the expense of customization.) It pays to manage these issues as a paradox.

Another example: Have you ever felt pressure to meet short-term needs (e.g., performance targets) at the expense of long-term success? In a study of 2,859 companies over five years, professors Mizak and Jacobsen discovered that 40% of the firms made short-term expense adjustments (they decreased spending in activities such as marketing and R&D) in order to inflate earnings at the time the firm offered additional stock (i.e., seasoned equity offerings or SEO). (2) Interestingly, this cost-cutting "myopic" group actually out-performed the “non-myopic” group (i.e., the 60% that did not cut expenses) by realizing an average positive stock return of 15.7% the year after the SEO was issued. A great short-term result, right? Yes, but a terrible long-term strategy; evidenced by an average return of -22.3% after four years compared to the non-myopic group firms returns of a +10.47%. Mismanagement of the short-term and long-term paradox is very costly.

This is why Geoffrey A. Moore admonishes us to "succeed in the long term by focusing on the middle term." (3) He points out that many former technology giants, such as Digital Equipment Corporation, Silicon Graphics, and Wang, lost their way by failing to develop effective strategies between today's budgets and tomorrow's long-term plan. In my view, his research is another expensive example of the failure to manage paradox.

Which paradoxes do you see at work? How are they mismanaged? At what cost?

I’ll discuss how to manage them well in future blogs.
Keep eXpanding,
Dave
http://www.DaveJensenOnLeadership.com

"The issue all companies face is that
the corporate center wants every business unit to be the same,
but every business unit wants to be different."

Textron CEO, Lewis Campbell (4)

1. David Shpilerg, Steve Berez, Rudy Puryear, and Sachin Shah; Avoiding the Alignment Trap in Information Technology, MIT Sloan Management Review, Fall 2007, 51 -- 58.

2. Natalie Mizak and Robert Jacobsen; The Cost of Myopic Management, Harvard Business Review, July -- August 2007, 22 -- 24.

3. Geoffrey A. Moore; To Succeed in the Long Term, Focus on the Middle Term, Harvard Business Review, July -- August 2007, 84 -- 90.

4. Dodd, Dominic and Favaro, Ken, Managing the Right Tension, Harvard Business Review, December 2006, 62-74

Are Generation X’ers Built to Lead?

Members of Generation X are suited for leadership according to researcher/writer Tamara J. Erickson. She states that those who came of age in the 70s and 80s responded to their parents' idealism with practicality and self-reliance. These workers value innovation, diverse viewpoints, and hard work... all keys to leadership success according to Erickson (HarvardBusiness.org/Across the Ages blog .

My research found that today's challenging workplace requires leaders juggle four fundamental leadership styles regardless of their generation:

RATIONAL - Focus on the Facts
The rational leadership style is the left-brain, logical thinking side of leadership. Leaders who are highly skilled in this style clearly define their and their team members' roles. They excel at setting short-term objectives and generating detailed plans with milestones. Performance expectations are plainly spelled out. Because they actively seek feedback, effective rational leaders understand their strengths and weaknesses, as well as the strengths and weaknesses of those around them. They stay in touch with their team members, peers, their boss and their customers.

VISIONARY - Imagine the Future
The visionary leadership style is the creative, dreamer aspect of leadership. Those highly skilled in this style create flexible approaches to solve problems, make decisions and achieve strategic goals. They bring new products, services or processes to fruition. They are effective in launching cross-functional experiments. Visionary leaders also inspire others to question the status quo by embracing change, creativity, and open-mindedness. They enjoy reflecting on global issues, thinking about long-term consequences and pondering future possibilities.

EMPOWERING - Take Care
The empowering leadership style is the servant side of leadership. Those highly skilled in this style enable others to do their best every day by delegating well, as well as coaching and involving team members in decisions. They are masters at orchestrating diverse individuals into high-performing, energized teams that work well across the enterprise. Empowering leaders build trust and empathy by patiently listening to other perspectives and beliefs without prejudgment. They also demonstrate fairness, honesty, integrity, and humility in their interactions.

COMMANDING - Take Charge
The commanding leadership style is the strong, forceful side of leadership. Those skilled in this style work extremely hard to fulfill commitments. They push to accomplish tasks, projects and goals on time. They are not afraid to solicit opposing views when making important decisions. They are also comfortable with ambiguity; they don't need all the data in order to move forward. Commanding leaders control their emotions and moods under pressure. In addition, they refuse to allow themselves or their team to play the victim during adversity. They take personal responsibility for their choices and consequences.

What do you think? Does Generation X have what it takes?

Keep eXpanding,
Dave

http://www.DaveJensenOnLeadership.com

How Employees Judge Your Change Process

Research tells us that if employees don’t buy into the process of change they won’t buy into the desired outcome of the change. (1) Is it any surprise therefore, that a survey of 5,100 global business leaders by the American Management Association found that most change initiatives fail because the leaders fail to gain buy-in to the process of change? (2)

Previous blogs have focused on rectifying this failure. These blogs recommended monitoring your team closely, teaching them how to embrace the paradox of change, engaging them in the process, and inspiring them during the early stages of the change in order to gain buy-in.

But how do you know if your attempts to gain buy-in are working? How do you know if your team is committed or merely complying to the change? Invite them to take (anonymously) the “Change Process Survey” below:

The Change Process Survey

Regarding the recent change initiative, I believe…

Strongly Disagree = 1; Neither Agree or disagree = 3; Strongly Agree = 5

1. The process of change is transparent.

2. Decisions are being made fairly.

3. Employees are being treated fairly.

4. I think the change will be good for our unit.

5. Employees are kept informed.

6. Employee views are considered.

7. Explanations are honest.

8. The organization is concerned about employee well-being.

9. Objective information is used to make decisions.

10. Employee rights are being respected.

11. My needs are being considered.

12. The organization is trying to do what is best for me.

13. Employees are being treated with dignity.

14. Our unit will be well positioned for the future.

15. In general, the salary and benefits changes are fair.

The scoring is as follows: High = 60-75; Medium = 45-59; Low 30-44. I adapted this survey so that it also serves as a summary of many techniques that increase initial buy-in to any change. So, if the team scores (you) low in any area, ask them how to improve.

Let me know how it works for you. Also, I’d love to hear how you gain buy-in to your change initiatives.

AND remember, a change well begun is half done!

Keep eXpanding,
Dave

http://www.DaveJensenOnLeadership.com

1. Geert Devos, Marc Buelens, and Dave Bouckenooghe; Contribution of Content, Context, and Process to Understanding Openness to Organizational Change: Two Experimental Simulation Studies, The Journal of Social Psychology, December 1, 2007.

2. Dan Cohen, Building Strategic Agility, American Management Association - MWORLD, 2006, page 12 – 15.

Inspire Any Change by Changing Your Focus

Don't think of a red apple. Don't think of a red apple. What just popped into mind? You probably thought of a red apple, right? Why? Because the brain cannot work on the reverse of an idea. Neuroscientists tell us that we move in the direction of the dominant images that we place (or let others place) in our minds. Therefore, it is important when communicating with your team about change that you focus on what you want more than what you don't want. This does not mean you totally ignore problems, obstacles, or mistakes. According to a 127 women bowlers in Wisconsin, it does mean that you should emphasize the desired behaviors, skills and outcomes that support the change you want...

Professor Kirschenbaum and his colleagues at the University of Wisconsin assessed the impact of positive versus negative self-monitoring in 127 female bowlers. (1)

These women were instructed on the seven key components of effective bowling (called “Brain Power Bowling” in this study). They were then divided into two groups for the next five weeks, given rating sheets and the following instructions:

Group 1- Positive Self-Monitoring. After bowling each frame, review the seven components of Brain Power Bowling. For those components that you did well, put a number from 1 to 3 in the box corresponding to that component. 1 = good; 2 = very good; 3 = excellent. If you did not do a good job on a particular component, leave the box blank. Before making your approach, it is very important to remind yourself of the correct way to complete the final 3 components...

Group 2 - Negative Self-Monitoring. After bowling each frame, review the possible errors you could have made by not following the seven component principles of Brain Power Bowling. If you made any of these possible errors, put a number from 1 to 3 in the box corresponding to that error, denoting how poorly you did. 1 = terrible; 2 = very poor; 3 = poor. If you did not make an error on a particular component, leave the box blank. Before making your approach, it is very important to remind yourself of the errors you could possibly make on the final 3 components...

Thus, group 1 (positive self-monitors) focused on effective execution, and group 2 (negative self-monitors) focused on avoiding errors. Five weeks later, group 1 improved their scores 100% (an average of 11 pins) more than group 2.

How much would you and your team improve if you focused on the positive (i.e., desired outcomes) more often?

Keep eXpanding,

Dave

http://www.DaveJensenOnLeadership.com

1. Daniel Kirschenbaum, Arnold Ordman, Andrew J. Tomarken, and Robert Holtzbauer; Effects of Differential Self-Monitoring and Level of Mastery on Sports Performance: Brain Power Bowling, Cognitive Therapy and Research, Vol. 6, No. 3, 1982, pp. 335-342.

Eight Tools Leaders Use to Inspire Change

There are many changes affecting employees these days. Your job as a leader is to help your team commit to the changes needed to make it through these tough times. An important step to gaining buy-in to change is to inspire your team members. Here are eight tactics you can take that increase the chances that your inspiration has the intended effect:

1. Communicate a sense of urgency… emotionally. Good leaders show employees the data that proves the need for change. Expansive leaders also inspire them emotionally. You need an ocean of emotion to generate the motion. For example, Dan Cohen tells the story of the procurement manager whose project team discovered that the company purchased 424 different types of gloves when only three types were actually needed. To communicate rationally and emotionally, the manager collected all 424 gloves, put a price on each, and stacked them in the boardroom so that senior leadership could see and feel the cost of this inefficiency. (1) People will feel a sense of urgency when you communicate data emotionally.
2. Experiment with small change before rolling out major initiatives. One of the decision-making traps leaders fall into when implementing a change is assuming that the change needs to be rolled out as a major change initiative. Yet, nature and science teach us that experimentation is king of this classroom called life. So, whenever possible conduct your own small experiments before rolling out any initiative. Experimentation provides the opportunity to learn from each successive iteration. As each experiment gets you closer to the desired outcome, your team members will feel more inspired to adapt their behaviors to support the change.
3. Celebrate team members who remove obstacles to change. That which gets rewarded gets repeated. As employees try new approaches, develop new ideas, and take small steps implementing the change, reinforce these actions. The most powerful communication is rewarding action. The more employees see the new behaviors consistent with the change being rewarded the more they will be inspired to the change. Employees will also feel inspired when they see evidence that small progress is being made and rewarded. Celebrating small wins inspires team members because it also sends the signal that management is paying attention. Place your attention on your intention by rewarding those who embrace change.
4. Be the change you wish to see. This quotation from Gandhi reminds us that employees need to see words in action. They comply with what they hear, but they are inspired by what they see.
5. Set realistic objectives and milestones. When I was at UCLA, I was a member of the Dean's “goals committee.” The Dean wanted us to set forth the strategies and tactics necessary to accomplish his vision -- for the UCLA School of Medicine to become the preeminent medical school in the world by the end of the decade. At the time, UCLA was ranked number eight or nine depending upon which survey you reviewed. The Dean's goal was so lofty that most of the committee members did not believe it was achievable. They therefore did not put forth a serious effort. They went through the motions by giving the Dean’s initiative lip service and very little hip (i.e., action) service.
6. Estimate resources accurately. Employees have a specific capacity to handle change. Too much change overwhelms them. Yet, under stress, many organizations push one change after another without assessing the ability of the people to digest the change. One high-tech firm that I worked with had three major change initiatives affecting most of its employees at one time. The resources required to implement these changes were severely underestimated, while the capacity for people to absorb them were overestimated. I never could get senior management to understand this fact.
7. Maintain motivation. Too many change initiatives begin with a grand kickoff meeting and fade because of decreasing communication and leadership visibility. If you want people to stay committed to change, keep communicating and making small victories visible.
8. Be a meaning-making machine. The number one predictor of commitment is value. People only commit to that which they highly value. And what people value most are their values. Therefore, if you want to inspire people to buy into change, connect what they value to the change.

For example, when I was working in a Connecticut factory during my college days, my uncle Burt, who was the shop foreman, asked me to join him on the loading dock. As we marched past the lunchroom, I grabbed my long army coat knowing how cold it was going to be on the loading dock. As we stared at the big bins that lined the walls of the loading dock uncle Burt explained, "Dave, we have a delivery of new Kirsch rods arriving tomorrow. Tony will be installing them in the new school being built down the street. So, I need you to make room for the new rods by moving all of these old blinds from the front bins to the back.”

Do you see what uncle Burt did here? By telling me why I needed to change from working in a warm factory to the cold loading dock, my commitment level (at least subconsciously) went up. I wasn't just moving old blinds around; I was building a school! (Okay, maybe I'm getting a bit carried away here. But you get the idea.) This is why John Hammergren, CEO of McKesson (a US-based healthcare company), pointed out during their change initiative that every employee was, or would someday be, a patient in the healthcare system. This larger purpose made a big difference. When you connect values to the direction, you create power behind the purpose.

These are eight ways to inspire your team to change. Let me know which ones work for you.

Keep eXpanding,
Dave
http://www.DaveJensenOnLeadership.com

1. Dan Cohen, Building Strategic Agility, American Management Association - MWORLD, 2006, page 13.

Leading Change By Managing Stability

My wife and I recently took Lincoln, our new puppy (a rescued German shepherd), for his first walk. As we strolled down our quiet street, a car drove by. Lincoln jumped away from the street and stared at me trembling. His frightened eyes seemed to be crying, "Woe, Dad that's way too new for me!"

How do your team members respond when they are hit by change?

People react to change in many ways. They may feel apprehensive about the new, fear losing the old, or some combination of both. Your job as a leader is getting your team to see the need for change so that they can begin learning the new behaviors needed to support the change. One of the best ways to gain buy-in to change is to explain “the paradox of change.” (1) Here’s how:

A. Draw a sigmoid curve

On a flipchart or whiteboard, draw a sigmoid (i.e., “S”) curve as seen in below.

The Sigmoid Curve

B. Label the curves and explain the curve

1. Germination. This is where new ideas are born and innovation is encouraged. Research and development (R & D) occurs here, although it's usually more research than development. Much time, money, and effort is expended with little return during this phase. Explain to your team that this is the work you do in the garden in order to get the plants to grow. Tilling the soil, planting the seeds, fertilizing, and watering are all necessary in order to move into the next stage.

2. Growth. Growth occurs when the product takes off. The market wants it and sales are great. If sales really take off, it is often hard to meet demand because the process, policies, and people are not in place yet. Production is often strained at this time because operations and plans are not fully implemented. Toward the end of the growth phase, you harvest the crop.

3. Maturity. This is that time in the product's life when demand starts leveling off. Usually the competition has joined the field and affected your market share. The crop is harvested and people wonder how they'll make it through the winter.

C. Ask your team several questions.

Ask your team what options they have when their product reaches maturity. Of course, they'll tell you that you need to start a new curve. Ask them where you should start this new curve. They'll probably tell you it needs to be done during the growth phase of curve number one, as illustrated in below. Next, ask your team a series of questions, such as:

1. How well accepted is this new, second curve?

2. Is there any tension between the first and the second curve? When they answer yes, draw a line between the curves as seen in figure 3. Label that line “bifurcation,” and define it as "the place of maximum tension between the old and the new curve."

3. How have you experienced these growth curves at work and at home?

The Stability-Change Curves

D. Discuss key ideas

Help the team understand the following key ideas via your questioning strategy. Don't lecture. If you say it they doubt it, if they say it they’ll believe it.

1. Curve one is the stability curve, while curve number two is the change curve.

2. You need both curves to survive. For example, revenue from the stability curve finances the change curve.

3. There is often tension between the two curves.

4. Different groups in the organization value and defend different portions of the curve.

5. Different leadership styles need to be emphasized at different phases of the curve. While visionary and commanding skills (the preferred styles of adventurous pioneers) need to be emphasized during germination phase, more rational and empowering skills (the preferred styles of organized administrators) are needed during the growth and maturity phase. Of course, you need all four styles all the time. Yet, successful leaders accent specific styles to meet the unique demands at different phases.

6. In a rapidly changing environment, the length of the cycle is shortening (e.g., shorter product lifecycles). Therefore, more time is spent in bifurcation - managing the tension between the old (stability) and the new (change).

7. Life is a series of growth curves. Going off to college, getting married, having children, death of loved ones, children growing up... These life transitions are illustrations of growth curves. The essence of "The Hero's Journey," (and most heroic movies) popularized by Joseph Campbell, is really the story of growth curves.

8. Old (and young) dogs can learn new tricks (change) if you give him comfort (stability).

This exercise will help you explain the need for both change and stability. They are interdependent. All those consultants teaching change management and all those books pushing change as the answer are only half right. Your team will always seek stability when they are bobbing around in a sea of uncertainty. They're looking for something to hold onto. You are their mooring.

Professor Laurence and his colleagues from Canada summarized 15 years of change research by stating, "Initiating and maintaining continuous change in an organization requires a foundation of stability. Understanding that paradox is crucial" (3)

So, how do you build your platform of stability with your team?

Keep eXpanding,

Dave

http://www.DaveJensenOnLeadership.com

1. Charles Handy, The Age of Paradox, Harvard Business School Press, Boston 1994.

2. Harvey Robbins and Michael Finely in Why Change Doesn't Work, Texere Pub., 2001.

3. T. Lawrence, B. Dyck, S. Maitlis, and M. Mauws, The Underlying Structure of Continuous Change, MIT Sloan Management Review, Vol. 47, No. 4, pp. 59-66, 2006.

How to Gain Buy-in to ANY Change

Approximately 70% of all change efforts fail (1). The actual percentage will vary depending on the scope of the change and whether it is initiated in times of crisis (dramatic change) or develops in a more orderly fashion (systematic change). While the scope of your change initiatives may range from complex organizational change to simple implementation of new office policies, the fact remains that unless you follow the few fundamentals described here, your team will probably suffer the negative consequences of failed change seen below (2):

The Negative Consequences of Failed Change

Anger

Lower morale

Increased stress

Diminished risk-taking

Decreased trust in leaders

Less money for other priorities

Subtle sabotage of the change effort

Less commitment to future change initiatives

Do you detect any of these side effects of failed change in your environment? If your answer is yes, this blog is for you. Although entire books are dedicated to implementation of change (e.g., J.P. Kotter and D.S. Cohen, The Heart of Change: Real Life Stories of How People Change Their Organizations, Boston: Harvard Business School Press, 2002.), I focus on gaining buy to change thrust upon by senior management. This is the type of change most leaders experience. Even if you are a senior executive that initiates major change in your organization, gaining buy-in is the critical first step to an entire successful change effort.

The American Management Association surveyed 5,100 business leaders around the world and found that the reason most employees don’t buy-in to change is that the leaders focus too much on the change initiative itself and not enough on the process that will get employees to change their behavior. (3) Therefore, when major change is announced in your organization, your job as a leader is to gain commitment at the individual level (i.e., your direct reports). This buy-in is the precursor to the behaviors that support the change effort because the reality is… organizations don’t change, people do. If your people won’t change, your organization can’t change.

The eXpansive Leadership Method (XLM), seen below, can help frame the process you employ to gain commitment to the change effort. We’ll focus on the first step in this blog.

Figure 13.2

The Four-Step Process to Gaining Buy-In To Change

I. Monitor Closely.

Several years ago, legendary businessman Warren Buffett recommended that Xerox’s new CEO Anne Mulcahy spend the first three months of her tenure assessing the environment. He suggested that she meet with customers and front-line employees before deciding how to implement any changes. She followed his advice and has done an excellent job in turning that company around.

Contrast her approach with a high-tech organization going through a major change initiative. Employees were asked to submit questions prior to an all-hands-meeting conducted by the CEO a few weeks after a new change had been announced. The CEO began the meeting by showing one question that actually challenged the need for the new initiative. Instead of choosing responsibly (fourth competency of the commanding style in the XLM) and using the opportunity to restate his case for the change, the CEO went ballistic, admonishing the anonymous writer that his attitude that was not going to be tolerated. The collective wind went out of the sails of all the employees. The executive who relayed this story to me said that the initiative is barely limping along because of the resistance of the “silent majority.”

Pushback is merely feedback in need of information

Warren Buffett and Anne Mulcahy understood what the high-tech CEO did not -- that the first phase of a gaining buy-in to change is understanding what is happening in the environment. (4) The environment includes your competitive situation, market position, financial performance, and your employees’ state of mind. It’s easier to lead people to a destination if you have to know where they are coming from. A journey begins on common ground.

The best leaders stay in touch during times of change. Generals George Patton and George Washington were always on the front lines. Abraham Lincoln visited the troops on the battlefield frequently. Queen Elizabeth I met constantly with her council of advisors, individually and collectively. Leaders who access their rational thinking style, monitor the environment closely (the fourth competency of the rational style in the XLM). They find multiple ways to survey the landscape in which new initiatives are launched.

Here are several tips to help you monitor closely whenever a major change hits you and your team:

A. Listen to hallway, water cooler, and cafeteria conversations during the early stages of the change initiative. Sometimes “buy-in can be a simple matter of being heard.” (5)

B. Solicit e-mails from individuals on the front lines and in the sales organization.

C. Ask your front-line supervisors to survey their employees regarding the impact of the change on them.

D. Increase your management by walking around (i.e., MBWA).

E. Meet with your direct reports more frequently.

F. Conduct all-hands-meetings and small focus groups where all questions are perceived as opportunities to understand where people are coming from.

G. Survey customers and the competitive landscape regarding why change is needed.

H. Send team members to visit with customers who see the need for change.

Adapt these eight tips to monitor your environment closely when any change initiative is thrust upon you and your team members. They will help you gage the readiness of your team members to change the required behaviors, as well as provide you with the data needed to make a compelling case for change.

What are you doing to gain buy-in?

Keep eXpanding,

Dave

http://www.DaveJensenOnLeadership.com

1. Devos, G.; Buelens, M.; Bouckenooghe, D.; Contribution of Content, Context, and Process to Understanding Openness to Organizational Change: Two Experimental Simulation Studies. The Journal of Social Psychology 12/1/2007.

2. Harvey Robbins and Michael Finely in Why Change Doesn't Work (Texere Pub., 2001.

3. Dan Cohen, Building Strategic Agility, American Management Association - MWORLD, 2006, page 12 - 15.

4. John P. Kotter, Leading Change - Why Transformation Efforts Fail, Harvard Business Review, January 2007, 96 -- 117.

5. Jeffrey Ford and Laurie Ford, Decoding Resistance to Change, Harvard Business Review, April 2009, 99 – 103.