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 / Autumn 2007 / Issue 48(originally published by Booz & Company)


Exercising Common Sense

Creating the right kind of balance in this maneuver will call on all the judgment and skill that leaders have. They must be careful not to implement changes too early, and to balance the multiple needs of a company in flux. If the organization is initially forced to operate without key resources, it will compound stress and confusion. Premature personnel departures can also stir a sense of anger throughout the organization and deprive employees of the chance to see firsthand how these departures actually serve to augment capabilities and ensure strategic change.

Another mistake we see in this domain occurs when leaders focus too much and too early on the future organizational structure, filling in boxes and fiddling with the organization chart well before it’s necessary. New leaders are then apt to begin operating in their new roles and lose their focus on the details necessary to execute the transformation. In addition, poor timing creates needless chaos and undermines people’s commitment to even the most powerfully articulated vision of the future.

9. Communication is proactive and ongoing. Skillful internal and external communication linked to a strategic vision is essential to large-scale change. Internal communications should be blunt and realistic about the market imperative driving transformation. They should be consistent throughout the enterprise, but should also be flexible enough to address the concerns of specific businesses and functions.

Such communications, too, must reflect the leadership’s understanding that the most important internal audience for its message will be the survivors. And in a networked environment in which e-mail communication is common and forwarding messages is easy, communications must be written with the awareness that any of them could instantly be leaked to analysts, reporters, or the blogosphere.

External communications to Wall Street analysts, governing structures, and the board must not only be consistent with the transformation’s goals, they must be pro­active and aimed at aligning these key constituents with the goals of the transformation. Sometimes, approaching analysts early with a strong market-based rationale is extremely effective in getting in­vestors to support changes in stra­tegic operations. Communications to the board must frame every objective within the larger strategic vision and new operating model. As noted by one CEO who skillfully built support for radical transfor­mation, “If you want to motivate people to do something big, you must use clear language. People deal with reality better than with ambiguity.”

Making Change Permanent
The most common mistake we see here occurs when leaders wait too long before communicating the logic behind the transformation strategy. This usually happens because leaders fear not having all the answers or because they believe they need to create a detailed plan in advance of announcing their intentions. But waiting too long dilutes urgency, and undermines the tie to the market-based case for change. Waiting too long also creates a chance for rumors to grow rampant, putting senior managers in the position of responding to their environment rather than leading it. 

10. The results of change are sustained. Transformation is as much a way to change behaviors and practices as to reconfigure costs and strategy. New capabilities for achieving accountability, distributing benefits, allocating incentives, and tracking results must therefore remain in place even after financial targets are met.

But vigilance is required to keep people from slipping back into old habits, as anyone who has successfully lost weight can attest. So leaders must continue to make sure that new capabilities don’t require continual resource additions after the transformation or undermine the results that have been achieved. The program office for transformation should not be dismantled too soon, and the ongoing organizational structures, budgets, and incentives should reflect the new imperatives.

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