10 Principles of Change Management and Innovation for Dummies

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Way back when (pick your date), senior executives in large companies had a simple goal for themselves and their organizations: stability. Shareholders wanted little more than predictable earnings growth. Because so many markets were either closed or undeveloped, leaders could deliver on those expectations through annual exercises that offered only modest modifications to the strategic plan. Prices stayed in check; people stayed in their jobs; life was good.

Market transparency, labor mobility, global capital flows, and instantaneous communications have blown that comfortable scenario to smithereens. In most industries — and in almost all companies, from giants on down — heightened global competition has concentrated management’s collective mind on something that, in the past, it happily avoided: change. Successful companies, as Harvard Business School professor Rosabeth Moss Kanter told s+b in 1999, develop “a culture that just keeps moving all the time.”

This presents most senior executives with an unfamiliar challenge. In major transformations of large enterprises, they and their advisors conventionally focus their attention on devising the best strategic and tactical plans. But to succeed, they also must have an intimate understanding of the human side of change management — the alignment of the company’s culture, values, people, and behaviors — to encourage the desired results. Plans themselves do not capture value; value is realized only through the sustained, collective actions of the thousands — perhaps the tens of thousands — of employees who are responsible for designing, executing, and living with the changed environment.

Long-term structural transformation has four characteristics: scale (the change affects all or most of the organization), magnitude (it involves significant alterations of the status quo), duration (it lasts for months, if not years), and strategic importance. Yet companies will reap the rewards only when change occurs at the level of the individual employee.

Many senior executives know this and worry about it. When asked what keeps them up at night, CEOs involved in transformation often say they are concerned about how the work force will react, how they can get their team to work together, and how they will be able to lead their people. They also worry about retaining their company’s unique values and sense of identity and about creating a culture of commitment and performance. Leadership teams that fail to plan for the human side of change often find themselves wondering why their best-laid plans have gone awry.

No single methodology fits every company, but there is a set of practices, tools, and techniques that can be adapted to a variety of situations. What follows is a “Top 10” list of guiding principles for change management. Using these as a systematic, comprehensive framework, executives can understand what to expect, how to manage their own personal change, and how to engage the entire organization in the process.

1. Address the “human side” systematically. Any significant transformation creates “people issues.” New leaders will be asked to step up, jobs will be changed, new skills and capabilities must be developed, and employees will be uncertain and resistant. Dealing with these issues on a reactive, case-by-case basis puts speed, morale, and results at risk. 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. This demands as much data collection and analysis, planning, and implementation discipline as does a redesign of strategy, systems, or processes. 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.

2. Start at the top. 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. They must speak with one voice and model the desired behaviors. The executive team also needs to understand that, although its public face may be one of unity, it, too, is composed of individuals who are going through stressful times and need to be supported.

Executive teams that work well together are best positioned for success. They are aligned and committed to the direction of change, understand the culture and behaviors the changes intend to introduce, and can model those changes themselves. At one large transportation company, the senior team rolled out an initiative to improve the efficiency and performance of its corporate and field staff before addressing change issues at the officer level. The initiative realized initial cost savings but stalled as employees began to question the leadership team’s vision and commitment. Only after the leadership team went through the process of aligning and committing to the change initiative was the work force able to deliver downstream results.

3. Involve every layer. 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.

A major multiline insurer with consistently flat earnings decided to change performance and behavior in preparation for going public. The company followed this “cascading leadership” methodology, training and supporting teams at each stage. First, 10 officers set the strategy, vision, and targets. Next, more than 60 senior executives and managers designed the core of the change initiative. Then 500 leaders from the field drove implementation. The structure remained in place throughout the change program, which doubled the company’s earnings far ahead of schedule. This approach is also a superb way for a company to identify its next generation of leadership.

4. Make the formal case. 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. The articulation of a formal case for change and the creation of a written vision statement are invaluable opportunities to create or compel leadership-team alignment.

Three steps should be followed in developing the case: First, confront reality and articulate a convincing need for change. Second, demonstrate faith that the company has a viable future and the leadership to get there. Finally, provide a road map to guide behavior and decision making. Leaders must then customize this message for various internal audiences, describing the pending change in terms that matter to the individuals.

A consumer packaged-goods company experiencing years of steadily declining earnings determined that it needed to significantly restructure its operations — instituting, among other things, a 30 percent work force reduction — to remain competitive. In a series of offsite meetings, the executive team built a brutally honest business case that downsizing was the only way to keep the business viable, and drew on the company’s proud heritage to craft a compelling vision to lead the company forward. By confronting reality and helping employees understand the necessity for change, leaders were able to motivate the organization to follow the new direction in the midst of the largest downsizing in the company’s history. Instead of being shell-shocked and demoralized, those who stayed felt a renewed resolve to help the enterprise advance.

5. Create ownership. Leaders of large change programs must overperform during the transformation and be the zealots who create a critical mass among the work force in favor of change. This requires more than mere buy-in or passive agreement that the direction of change is acceptable. It demands ownership by leaders willing to accept responsibility for making change happen in all of the areas they influence or control. Ownership is often best created by involving people in identifying problems and crafting solutions. It is reinforced by incentives and rewards. These can be tangible (for example, financial compensation) or psychological (for example, camaraderie and a sense of shared destiny).

At a large health-care organization that was moving to a shared-services model for administrative support, the first department to create detailed designs for the new organization was human resources. Its personnel worked with advisors in cross-functional teams for more than six months. But as the designs were being finalized, top departmental executives began to resist the move to implementation. While agreeing that the work was top-notch, the executives realized they hadn’t invested enough individual time in the design process to feel the ownership required to begin implementation. On the basis of their feedback, the process was modified to include a “deep dive.” The departmental executives worked with the design teams to learn more, and get further exposure to changes that would occur. This was the turning point; the transition then happened quickly. It also created a forum for top executives to work as a team, creating a sense of alignment and unity that the group hadn’t felt before.

6. Communicate the message. Too often, change leaders make the mistake of believing that others understand the issues, feel the need to change, and see the new direction as clearly as they do. The best change programs reinforce core messages through regular, timely advice that is both inspirational and practicable. 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. Often this will require overcommunication through multiple, redundant channels.

In the late 1990s, the commissioner of the Internal Revenue Service, Charles O. Rossotti, had a vision: The IRS could treat taxpayers as customers and turn a feared bureaucracy into a world-class service organization. Getting more than 100,000 employees to think and act differently required more than just systems redesign and process change. IRS leadership designed and executed an ambitious communications program including daily voice mails from the commissioner and his top staff, training sessions, videotapes, newsletters, and town hall meetings that continued through the transformation. Timely, constant, practical communication was at the heart of the program, which brought the IRS’s customer ratings from the lowest in various surveys to its current ranking above the likes of McDonald’s and most airlines.

7. Assess the cultural landscape. 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. These diagnostics identify the core values, beliefs, behaviors, and perceptions that must be taken into account for successful change to occur. They serve as the common baseline for designing essential change elements, such as the new corporate vision, and building the infrastructure and programs needed to drive change.

8. Address culture explicitly. Once the culture is understood, it should be addressed as thoroughly as any other area in a change program. Leaders should be explicit about the culture and underlying behaviors that will best support the new way of doing business, and find opportunities to model and reward those behaviors. This requires developing a baseline, defining an explicit end-state or desired culture, and devising detailed plans to make the transition.

Company culture is an amalgam of shared history, explicit values and beliefs, and common attitudes and behaviors. Change programs can involve creating a culture (in new companies or those built through multiple acquisitions), combining cultures (in mergers or acquisitions of large companies), or reinforcing cultures (in, say, long-established consumer goods or manufacturing companies). Understanding that all companies have a cultural center — the locus of thought, activity, influence, or personal identification — is often an effective way to jump-start culture change.

A consumer goods company with a suite of premium brands determined that business realities demanded a greater focus on profitability and bottom-line accountability. In addition to redesigning metrics and incentives, it developed a plan to systematically change the company’s culture, beginning with marketing, the company’s historical center. It brought the marketing staff into the process early to create enthusiasts for the new philosophy who adapted marketing campaigns, spending plans, and incentive programs to be more accountable. Seeing these culture leaders grab onto the new program, the rest of the company quickly fell in line.

9. Prepare for the unexpected. No change program goes 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. Fed by real data from the field and supported by information and solid decision-making processes, change leaders can then make the adjustments necessary to maintain momentum and drive results.

A leading U.S. health-care company was facing competitive and financial pressures from its inability to react to changes in the marketplace. A diagnosis revealed shortcomings in its organizational structure and governance, and the company decided to implement a new operating model. In the midst of detailed design, a new CEO and leadership team took over. The new team was initially skeptical, but was ultimately convinced that a solid case for change, grounded in facts and supported by the organization at large, existed. Some adjustments were made to the speed and sequence of implementation, but the fundamentals of the new operating model remained unchanged.

10. Speak to the individual. Change is both an institutional journey and a very personal one. People spend many hours each week at work; many think of their colleagues as a second family. Individuals (or teams of 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. Team leaders should be as honest and explicit as possible. People will react to what they see and hear around them, and need to be involved in the change process. Highly visible rewards, such as promotion, recognition, and bonuses, should be provided as dramatic reinforcement for embracing change. Sanction or removal of people standing in the way of change will reinforce the institution’s commitment.

Most leaders contemplating change know that people matter. It is all too tempting, however, to dwell on the plans and processes, which don’t talk back and don’t respond emotionally, rather than face up to the more difficult and more critical human issues. But mastering the “soft” side of change management needn’t be a mystery. via strategy-business.com

 

HIRE JIM WOODS TO CONSULT OR SPEAK WITH YOUR ORAGANIZATION.  

Jim Woods is principal and founder of InnoThink Group. Jim is a business turnaround expert and personal coach. His story is riveting. He has worked with government, U.S. Army, MITRE Corporation, Pitney Bowes, Whirlpool, and 3M. Jim W experiences, extensive research on competitive strategy and innovation have given him a fresh perspective on improving individual and organizational performance. Jim is a prolific speaker on strategic innovation, creative leadership, uncertainty and competitive strategy. Speak with us for consulting or speaking engagements call 719-266-6703 or click here for more information. Follow Jim on Twitter. Follow Jim on Facebook.  

 

Gallup: The Value of Personal Branding - Achieving Success In Any Economy

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In the first article in this series, "It's Time to Brand Yourself," Blaise James explained his theory of self-branding. Your personal brand isn't a couple of adjectives, and it shouldn't be a résumé either. It should demonstrate your authentic talents and strengths. Your self-brand is integral to your career and your life -- and it influences your long-term career strategy and development.

Your self-brand is integral to your career and your life -- and it influences your long-term career strategy and development.

According to James, Gallup global brand strategist and former strategic planning director at Ogilvy & Mather Worldwide, your personal brand helps you map out the best of who you are and apply it to the best of what your company is. To do that, James recommends writing a statement of purpose, determining your point of view, and ascertaining your principles -- not only because they act as guides to conduct your strategies, but also because they're hard for anyone else to replicate. Your self-brand can help you become invaluable to your company or to a hiring manager.

In this interview, the second of a two-part series, James describes how people can reconcile their brands with that of their companies. He talks about how to define a differentiated brand and how to present it. He explains the difference between tactics and strategies in branding -- and why hiring managers are bored by most résumés. And in the end, he shows why self-branded people are so valuable to companies. Read on to learn why constructing your personal brand may be the best thing you can do for your workplace and for yourself.

GMJ: You said that the first step in the process of building your personal brand is thinking of yourself as an embedded entrepreneur. The second step is ascertaining your talents and those of your boss. What is step three?

Blaise James: Step three is finding the positive aspects of the environment that you and your consumer share so you can make your brand undeniably appealing to your consumer. This is how some of the most powerful brands today achieved success.

For instance, Dove realized that its consumers lived in a world in which individual beauty should be celebrated over the unrealistic, manufactured beauty promoted by the beauty industry. Dove used its "Campaign for Real Beauty" to make this positive challenge. Kaplan University, a top brand in the explosive online education category, realized that its potential American consumer lives in a country in which 76 million Baby Boomers will retire over the next two decades and only 46 million American workers will be there to take their place. Kaplan saw this as a positive for their business: to lead the effort to train the nontraditional American student -- which traditional education has essentially failed -- to fill this 30-million-person gap. So they are leading the charge to "End Wasted Talent." This positive brand appeal connects the Kaplan brand name to a real mission in the consumer's world. In both cases, a larger environmental factor -- the way consumers define beauty or a large demographic trend -- added special positive significance to their brands.

Your brand needs to do the same. For your own brand, if your consumer is your boss, your environment could be a positive aspect of your company: for example, a can-do attitude, a unique expertise in your industry, or a relentless pursuit of creativity. If your consumer is the hiring managers within a particular industry, that environment might be what's happening in the industry or business world today.

Say that one of your talents is analytical ability. One key factor in your environment is that companies are trying to get smarter about how to be productive while saving money. So your analytical talents will definitely be a plus, and they should be a featured part of your brand. The point of this step is to think about the ways your talents intersect with the environment that you and your consumer share.

The Four Steps to Building Your Personal Brand Step 1: Think of yourself as an "embedded entrepreneur." Embedded entrepreneurs have a different mindset; they come up with new solutions to company problems and new ideas to fuel future growth. They understand what makes them unique and use that insight to navigate a profitable and fulfilling path within their company and over the course of their career. Step 2: Develop an understanding of your talents and strengths -- and those of your current or potential boss. Find what you're naturally good at so you can develop your strengths regardless of what field or position you're in. Then develop an understanding of your "consumer's" talents and strengths -- those of your current boss or the hiring managers within your industry, for example. Step 3: Determine the positive aspects of the environment you and your consumer share. For example, an organization's environment could be a can-do attitude, a specific expertise, or a relentless pursuit of creativity. Understanding your talents, your consumer's talents, and your shared environment is crucial to building your brand, because your talents must mesh with and make sense within your environment if you are to be effective. Step 4: Articulate your Purpose, Point of View, and Principles (the "Three Ps"). They are guides to how you will deliver your brand using the appropriate tactics.

GMJ: So part of your brand offering is your purpose?

James: When I create brand strategies, I go beyond purpose. You need to unpack purpose and help people understand how they carry out their purpose. First, you find the intersection point between you, your consumer, and the environment you share. I call this finding the "you, them, and us." Then you take that information and create statements of purpose, point of view, and principles.

The point of view tells us the why, the purpose tells us the what, and the principles are thehow. They're how you achieve your purpose.

Your statement of purpose comes first, and it will be a guide to how you'll conduct yourself and a filter for the decisions that you'll make as you deliver your brand. So, for example, the statement of purpose for an HR manager, Jane, might read "I'm in the business of providing senior managers with the human capital they need to feel confident in leading our company to growth." A CEO might say, "I'm in the business of inspiring global organizations with the leadership, management, and futurism they need to create value for the world's shareholders." And the statement for John, a marketing director for a nonprofit hospital, might read "I'm in the business of providing visionary executive directors with the strategic new audience development expertise they need to achieve their healthcare mission."

A statement of purpose is good, but it's possible someone could replicate it. Although purpose is important, it's only one step in creating differentiation. The second step is to determine your point of view -- your beliefs and unique take on the world. You do this by completing this sentence: "I believe the world would be a better place if . . ."

This exercise is valuable to establishing your personal brand because it's hard to replicate beliefs. They also give you a real motivation for doing what you do. Most people and companies never answer this question for themselves, let alone for their consumers.

The Three Ps of Your Personal Brand Strategy When crafting your brand strategy, a statement of purpose is important. But it's also crucial to "unpack purpose" and help the consumers of your personal brand understand how you carry out your purpose. Statement of Purpose: This statement is your guide to how you conduct yourself, and your talents can provide key clues. To build your statement of purpose, complete this sentence: "I'm in the business of . . ." Point of View: This statement affirms your beliefs and your unique take on the world. State your point of view by completing this sentence: "I believe the world would be a better place if . . ." Principles: Principle statements articulate how you act on your purpose. Either you make good on them, or you compromise your purpose. These statements begin with phrases like: "I always . . . " or "I only . . ." or "I never . . ."

GMJ: What should your statement of beliefs include?

James: Your statement of beliefs should articulate what you will do that's positive in the world.

Let's go back to the example of our nonprofit marketing manager John and look at his point of view. John believes that even the best ideas need the genius of execution and follow through to make a difference in the world. Remember, his purpose statement is "I'm in the business of providing visionary executive directors with the strategic new audience development expertise they need to achieve their healthcare mission." So his point of view now answers why he's trying to achieve this purpose.

The answer why really helps us differentiate ourselves. For corporations, this whystatement can be incredibly motivating to employees who deliver the brand.

GMJ: What else can help you differentiate yourself when crafting your purpose statement?

This is another reason why knowing your talents is so important. Let's say that John has taken Gallup's Clifton StrengthsFinder assessment to help him identify his talents. John's top talent themes include Analytical and Activator, which in this context provide insights to how John thinks and how he influences others. John knows the type of executive director that he wants to attract: He wants to work with people who consistently look toward the future -- this is a talent often found in the StrengthsFinder Futuristic theme. Many people in nonprofit organizations embody the theme of Adaptability; they have to dance on a dime to accomplish their mission with limited budgets.

Now we've reached our brand intersection: where Analytical and Activator meet Futuristic and Adaptability. So John's brand focus is as a realizer of visions. He can help executive directors activate their ideas. And because this statement is genuine to John, it's valuable and hard to duplicate.

The point of view tells us the why, the purpose tells us the what, and the principles are thehow. They're how you achieve your purpose.

GMJ: Explain principles. Do you mean values or ethics?

James: Think of principles as either/or statements. Either you make good on them or you've compromised your purpose. Statements of principles begin with "always," "only," or "never," and they give a structure to and are a litmus test of your personal brand.

Let's use John as an example again. His statements of principle would be something like this: "I will only work for executive directors who have real vision." "I will never send a résumé to a nonprofit organization with a mission that I don't believe has lasting, significant relevance." And "I will always ensure that I have a yearly strategy in place to guide marketing initiatives." These principles will help him achieve his purpose. Just like any good brand strategy, they act like a filter that guides his decisions.

You can't stand for everything or you stand for nothing. You have to focus.

By the way, CEOs are often shocked when you tell them their corporate brand can't be everything to everyone. It's the same for your personal brand: You can't stand for everything or you stand for nothing. You have to focus.

GMJ: Of what value are social networking sites to self-branding?

James: Don't confuse strategy with tactics. This is just a word of warning: Many personal brand coaches lead with "Build your brand on Facebook" or "Do self-branding on Twitter."

If you hear that, proceed with caution. These folks are confusing strategy with tactics. Your résumé, your interview, your networking groups, your Facebook page, your tweets, your LinkedIn connections -- all that stuff is tactics. They're the ways in which you reveal your brand. Your purpose, your point of view, and the principles that guide you, those must come first.

GMJ: So how do you use these sites in a way that is consistent with your strategy, your brand?

James: When you have a solid personal brand strategy, who you're following on Twitter makes sense. The tweets you send have common themes because they come from your sense of purpose, your point of view, and your principles.

Depending on what your principles are, you may decide never to shotgun a résumé to monster.com. You may not subject yourself to the decision process of TheLadders.com. Instead, you may send a creatively packaged snail-mail letter to the senior vice president of human resources, or you may join the arts committee that the CEO and her husband chair. Those are all tactics that send a message about your personal brand.

But are they the right tactics? You will only know after you've put your strategy in place. Once you've done that, your résumé stands out because you're focused like a laser beam on what you want and how you talk about it. Hiring managers get a real sense of your difference and are clear about why you want to work at their firm.

So much job advice these days is about just getting a job. Just get it -- and so what if you take a step down?

GMJ: But that's a reality for many people.

James: It absolutely is, and it's bad for companies. This is exactly the cross-purpose that hiring managers are facing. They don't want to spend the money to bring in workers who are just looking for any job. Instead, they're going out of their way, in my estimation, to sniff out people who are just trying to get a job for the sake of working.

GMJ: What gives people away when they're doing that?

James: Résumés, for one. There's a whole way of gaming résumés nowadays, and it's not at all strategic. If you're cramming your résumé with buzzwords that you think are right for the job but have nothing to do with who you are or what you've done, how have you differentiated yourself from everyone else applying for that position?

What pops out at HR VPs are interesting facts that authentically come from who you are and that tell them how you will realize the mission of the job and the purpose of the company. That makes them want to call you in, because you gave them a sense of your unique value.

Self-branded employees are self-directed and more innovative. They're problem solvers, and they're a lot more engaged.

This is key: Don't start on tactics until you have your brand strategy. Then, when you get into the tactics, don't just do what's hot. Bring a sense of who you are to how you present your skills and experience. Think about how to differentiate yourself and your brand over the long term.

Remember: You're now an embedded entrepreneur. I hope that opens up a different way of thinking for people. The way the world is going, markets are so cluttered and competition is so acute -- and companies can basically replicate a product or service overnight. Their brand is crucial to differentiating their company, product, or service from all the others. The same is true of people.

GMJ: How does thinking of yourself as an embedded entrepreneur change how you approach your work?

James: Having a personal brand also helps you realize that meeting your goals matters as much as meeting the company's. When you're pursuing your goals -- and they're aligned with your company's goals -- you're much more engaged to act on the company's and the customer's behalf.

It also gives workers a sense of control. Right now, 7.2 million people are unemployed, which is a daunting number. Most workers still have jobs, but many of them are feeling uncertain and fearful.

GMJ: How are embedded entrepreneurs valuable to companies?

James: Embedded entrepreneurs point their brand toward the problems of the business. If you don't know what your talents are and you don't know what your brand is, it will take you a lot longer to get up to speed, and you'll be less productive. Anything that helps people express their talents leads to increased engagement, which benefits the company. Ultimately, people feel more engaged in their jobs when they're coming up with ideas, thinking creatively, and pursuing an agenda -- being proactive rather than reactive.

Gallup knows that people who work from their talents are more likely to be engaged, engaged employees are more likely to engage customers, and engaged customers are much more profitable to your business. So if you're a CEO, you want your workers to know their talents and use them to construct their identities in the company. That takes some work, some really profound thought, but it's worth it -- self-branded employees are self-directed and more innovative. They're problem solvers, and they're a lot more engaged.

GMJ: What can managers do to help people build their self-brands?

James: Ultimately, people have to do this on their own. It's a personal process that factors in someone's whole life. It's not top-down -- it works from the bottom up. But managers can encourage employees to develop their brands, and they can focus on their own brands and chart their own way through their companies. Your personal brand is more than just words -- it's actions. Live out your principles. Don't pay them lip service. That's something managers can do: lead by example.

-- Interviewed by Jennifer Robison

via gmj.gallup.com

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Jim Woods is president and founder of InnoThink Group. A leading consulting firm specialized solely in enabling organizations of all sizes in all industries develop top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. For availability email or call us at 719-649-4118. Subscribe to our innovation and hypercompetition newsletter.   

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