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Published: November 30, 2004

 
 

Best Business Books 2004: Change Management

The Three Elements of Transformation

In recent years, both the breadth of change and the pace of change in business have accelerated to such an extent that change presents personal and professional challenges to people at all levels of responsibility in organizations. In our own work as consultants in change management, we always start at the top of an organization and talk about how the leadership team needs to "model the change." But the act of modeling change can be superficial -- and thus ineffective -- in achieving transformational change if leaders don't recognize that they are asking for deep changes in attitudes and behaviors not only from their employees, but also from themselves.

This year, three very different books expand our understanding of change management techniques, especially those appropriate to large companies. They also explain why some change management initiatives succeed while so many others do not. Collectively, these books address three conditions that must exist for successful change to occur:

  • Leaders must change themselves before they can be effective at leading change by example.
  • For change to cascade down through the organization, groups and individuals within the organization whose behaviors already embody the desired state must be engaged in the change process.
  • People at the top of the organization need to tell a story that resonates throughout the organization and explains why change is necessary and what the role of every employee will be.

Only when these three elements fall into place can middle managers and frontline employees begin to adopt the desired behaviors and bring the change to life.

States of Leadership
In Building the Bridge as You Walk on It: A Guide for Leading Change (Jossey-Bass, 2004), Robert E. Quinn expands on the argument made in his previous book, Deep Change: Discovering the Leader Within (Jossey-Bass, 1996), that significant organizational change doesn't happen unless the leader genuinely lives the changes he or she is advocating.

Quinn, a professor at the University of Michigan Business School, describes two "states of leadership" that illuminate why so many leaders struggle with change. In what he calls the "normal state of leadership" -- a state in which most people operate most of the time -- it is very difficult to achieve change because the leader is too self-focused and comfort-centered. Individuals in this state mostly consider what is right for them personally, and they have difficulty seeing the larger picture of what is right for the organization. The preferred state for leading change is what Quinn calls "the fundamental state of leadership." In this state, individuals are internally directed by a strong sense of right and wrong, and are also externally aware of the larger issues faced by the organization.

In Building the Bridge as You Walk on It, Quinn identifies eight practices for achieving the personal transformation that takes an individual from a "normal" to a "fundamental" state of leadership. These are: reflective action, authentic engagement, appreciative inquiry, grounded vision, adaptive confidence, detached interdependence, responsible freedom, and tough love.

The eight practices examined in Building the Bridge as You Walk on It are, on one level, exercises to help leaders maintain their integrity under situations of great duress. On another level, they're avenues to help leaders engage individuals in reflecting on their own experiences with change and in adopting new behaviors.

Each practice is explained at length, and with personal stories. "Authentic engagement," for example, is the ability to align intentions and motives with actions. If leaders advocate change for the broader good of the company but are not fully committed to seeing it through, the contradiction will be apparent to others. Quinn believes that authentic engagement requires leaders to make a fundamental choice to live by principle, even when faced with pain and sacrifice.

He tells the story of an executive famous within his organization for turning around failing business units. The executive was temporarily placed in a dying unit with the promise of inheriting the top job at the company's largest business, regardless of his performance in the interim position. For the first time, this executive found he was ineffective at fixing a broken situation. Quinn recounts asking the executive what he would do if the job in the other business unit were not there waiting for him. In response, the executive began to run through the changes he would make. As a result of the conversation with Quinn, he decided to excuse himself from taking the other leadership position, and instead rededicated himself to turning around the failing business unit. The workers in the unit immediately saw the change in his engagement and began to change their own behaviors as well.

"Tough love" describes the leader's ability to encourage people in the organization to reach for a higher standard while also holding them accountable for meeting those standards. The prime example Quinn gives is GE's Jack Welch, an executive renowned for pushing his team to reach for the highest standards of performance, but having limited tolerance for those who fell short. Testimonies from managers who reported directly to Welch demonstrate that the first time someone missed the bar, Welch provided considerable support to help him or her shore up his or her skills and prevent the person from repeating the mistake. Only if the individual missed again -- after receiving support -- were the consequences serious. Jack Welch left no doubt that he believed in his subordinates' abilities and backed them. But at the same time, these executives knew that if they could not live up to his expectations, they would be let go. Quinn argues that supporting individuals as well as holding them accountable for adopting new behaviors is essential to motivating those individuals to challenge themselves and improve their performance.

Communication Levers
When a top executive team has decided on a change initiative, the new approach must be communicated effectively before it can change the way people behave. Changing Minds: The Art and Science of Changing Our Own and Other People's Minds, by Howard Gardner (Harvard Business School Press, 2004), shows how leaders can develop different strategies to communicate change to different stakeholders and audiences, helping these groups to internalize the change more effectively.

Gardner, a psychologist and professor at Harvard, was one of the first to propose the theory of multiple intelligences (such as logical, spatial, interpersonal, and intrapersonal) in his earlier books, Frames of Mind: The Theory of Multiple Intelligences (Basic Books, 1983) and Multiple Intelligences: The Theory in Practice (Basic Books, 1993). Changing Minds applies his theory to the business community. Because people with different types of intelligence respond to different stimuli, the process Gardner proposes for changing minds appears to be an almost artistic endeavor, in which messages are crafted to speak to the hearts and minds of specific audiences, and are enhanced by the natural talents and sympathies of the person leading the change.

At the core of Gardner's approach are six levers for changing minds. Four of them are obvious: reason, research, rewards, and real-world events. Two others are less obvious. "Resonance" is the language in which an argument is couched. The choice of language can either make an argument seem trivial to the listener, effecting no change, or make it "feel right," causing the argument to move the listener toward a new frame of mind. "Representational redescription," he explains, is a way to present an argument in different modes -- through mathematics, graphics, or language. This is necessary because people respond differently to these modes of expression. He also describes what he calls "resistances," which are the specific hurdles that must be overcome using the other six levers for changing minds; these are the assumptions and ways of thinking a person develops beginning in childhood.

Changing Minds comes alive when Gardner uses narrative examples to show how these levers work in different contexts, ranging from changing the minds of a nation to changing minds within a business unit to changing one's own mind. A comparison of Margaret Thatcher and Bill Clinton illustrates the mastery of all six levers required to change the minds of a large and diverse population. Here these leaders use logical, simple stories based on facts, couched in rhetoric that speaks to people's hearts, backed up by multiple visual images, directly addressing sources of resistance. Both politicians used their rise from middle-class backgrounds to relate to a broad spectrum of people; both were able to judge which arguments or stories would be most persuasive to a given audience. In contrast to Margaret Thatcher, however, Bill Clinton was unable to achieve transformative goals, in part, Gardner argues, because his behavior undermined his skills as a communicator: "Clinton seemed unable to 'go to the mat' for issues in which he apparently believed."

A more practical example for business leaders is the story told in the book of Lord John Browne's transformation of British Petroleum in the early 1990s. Gardner describes how Lord Browne applied the concept of redescriptive representation to engage his work force in a change from a hierarchical company with low accountability and initiative to a flatter organization that valued experimentation and the sharing of best practices. Gardner shows how Lord Browne, having developed his new strategy, organization design, and implementation plan for BP, convinced a team of managers to adopt the new way of thinking to overcome their resistance, to help the entire organization embrace the new model, and to make a public commitment to achieving results.

Creative Recombination
In Change Without Pain: How Managers Can Overcome Initiative Overload, Organizational Chaos, and Employee Burnout (Harvard Business School Press, 2004), Columbia Business School professor Eric Abrahamson criticizes business process reengineering, and its rallying cry of "don't automate, obliterate," as a painful, risky, and disruptive practice that destabilizes firms.

Abrahamson's central thesis is that most change programs are incorrectly centered on the concept of creative destruction, that a company going through a major transformation must break down its current structure, process, or culture in order to create something new and better. This destruction, he believes, is what causes pain, anxiety, and resistance among employees, and ultimately leads to failed transformation programs.

Abrahamson takes the position that "creative recombination" is a better way to reinvent a company. Most companies, he claims, have capabilities that can be reassembled to create a winning new direction more easily and effectively than one could be created by destroying the old. His idea is to redeploy people rather than to fire or replace them; to salvage and refine processes rather than to reengineer them completely; to recombine organization structures around their key components rather than to reorganize them radically; to revive old cultural values rather than to redefine them; and to preserve and leverage social networks rather than to eliminate them through too much automation.

Change Without Pain is filled with case studies and stories that describe how managers successfully identified and reassembled their companies' components to create capabilities that excelled in the marketplace.

Early in the book, Abrahamson uses the example of GKN PLC, the U.K.-based automotive and aerospace parts supplier and one of the oldest companies listed on the U.K. stock exchange, to illustrate his notion of creative recombination and how it differs from creative destruction. For example, in the 1980s a high level of contract cancellations was a chronic problem for GKN. Each time the company landed a new contract, it would quickly assign engineers to the project. The trouble was that when a customer canceled or postponed a contract with GKN, many of its engineers were left idle. Instead of laying them off, several of GKN's business units decided to "rent out" their engineers to other companies for short-term assignments. This created a fluid pool of engineers who could easily be reassigned if a contract was canceled, or be pulled back into GKN if it needed them. Initially, individual business units adopted the practice, but it was so successful in increasing revenue and profits and improving staff skills that GKN eventually made it a formal part of its business model. Abrahamson writes: "GKN recombined its reputation for attracting top flight engineering talent as well as its talent for developing engineering skills, and its extensive network of contracts, to start what was, for all intents and purposes, a highly sophisticated employment agency."

Abrahamson spends considerable time fleshing out how to implement creative recombination through three distinct "action techniques" he calls "cloning, customizing, and translating." Each action requires looking internally to see what components of the organization are working in the desired way, and adapting them to create a new model. Action techniques can be applied in many different contexts to change social networks, organizational structure, culture, and business processes.

Cloning Capabilities
Successful "cloning," Abrahamson explains, involves taking a fundamental capability from one division and replicating it in another -- or across the entire firm. Cloning can be done by moving people around, through process transference, or by requiring the entire organization to adopt a standard way of doing business. For example, when GKN's Meineke automotive franchise developed a Web-based training course for some franchises, it discovered it could roll out the course, unmodified, to all its new and existing franchises.

"Customizing" refers to refitting and reusing parts of the organization. It is more difficult than cloning because executives must consider how a particular process should be modified to meet new market demands. Abrahamson notes this was a lesson the Walt Disney Company learned well when it tried and failed to clone its Disney theme park formula in a location outside Paris. He argues Disney would have done better had it used a customization approach to understand why and how Disney theme parks worked so well in the U.S. and Japan, and what aspects would not work in a European context.

"Translating" is the most complex of the recombination techniques. It forces executives to interpret and redefine their approach in order to meet different needs in the marketplace. An example: a multinational that must translate its corporate values so that they are expressed in words and in processes that are appropriate to and understood in each country where the company operates.

Too many executives, Abrahamson argues, use a clean-sheet approach and a totally new model when taking on a new assignment, rather than looking within at what is already working. The result is often initiative overload, change-related chaos, repetitive changes, and employee cynicism. We agree with Abrahamson's view here, and believe this book provides the most practical and useful counsel on the subject of change management of the three books we reviewed. The concept of creative recombination forces executives to think through exactly what the company's assets are, how they are deployed, why they are valuable, and who is capable of driving the change. This is a pragmatic approach to change: Build on what you have rather than start from scratch.

Change is hard; transformation is harder still, whether it involves an individual or an entire organization. Together, these books show why those at the top of an organization need to undergo deep personal change in order to alter the behavior of their organization.

Author Profiles:


John Jones (jones_john@bah.com) is a vice president with Booz Allen Hamilton in New York. Mr. Jones is a specialist in organization design, process reengineering, and change management.

Elizabeth Powers (powers_elizabeth@bah.com), a senior associate in Booz Allen Hamilton's New York office, specializes in change management for companies that are designing and implementing new operating models.

 
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