Discuss the office manager's role as a leader in the change process.

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describe the major factors that lead to the necessity for change and the impact change has on individuals. Consider the following for your assignment: 


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www.hbrreprints.org B E S T O F H BR Leaders who successfully transform businesses do eight things right (and they do them in the right order). Leading Change Why Transformation Efforts Fail by John P. Kotter • Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 Leading Change: Why Transformation Efforts Fail 10 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications Reprint R0701J This document is authorized for use only in Contemporary Leadership Challenges by Rasmussen College from October 2011 to April 2027. BEST OF HBR Leading Change Why Transformation Efforts Fail The Idea in Brief The Idea in Practice Most major change initiatives—whether intended to boost quality, improve culture, or reverse a corporate death spiral—generate only lukewarm results. Many fail miserably. To give your transformation effort the best chance of succeeding, take the right actions at each stage—and avoid common pitfalls. Why? Kotter maintains that too many managers don’t realize transformation is a process, not an event. It advances through stages that build on each other. And it takes years. Pressured to accelerate the process, managers skip stages. But shortcuts never work. Equally troubling, even highly capable managers make critical mistakes—such as declaring victory too soon. Result? Loss of momentum, reversal of hard-won gains, and devastation of the entire transformation effort. COPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. By understanding the stages of change— and the pitfalls unique to each stage—you boost your chances of a successful transformation. The payoff? Your organization flexes with tectonic shifts in competitors, markets, and technologies—leaving rivals far behind. Stage Actions Needed Pitfalls Establish a sense of urgency • Examine market and competitive realities for potential crises and untapped opportunities. • Convince at least 75% of your managers that the status quo is more dangerous than the unknown. • Underestimating the difficulty of driving people from their comfort zones • Becoming paralyzed by risks Form a powerful guiding coalition • Assemble a group with shared commit- • No prior experience in teamwork at the top ment and enough power to lead the change effort. • Relegating team leadership to an HR, quality, or strategic-planning executive • Encourage them to work as a team rather than a senior line manager outside the normal hierarchy. Create a vision • Create a vision to direct the change effort. • Presenting a vision that’s too complicat• Develop strategies for realizing that vision. ed or vague to be communicated in five minutes Communicate • Use every vehicle possible to commu- • Undercommunicating the vision the vision nicate the new vision and strategies for • Behaving in ways antithetical to the achieving it. vision • Teach new behaviors by the example of the guiding coalition. Empower others to act on the vision • Failing to remove powerful individuals • Remove or alter systems or structures who resist the change effort undermining the vision. • Encourage risk taking and nontraditional ideas, activities, and actions. Plan for and create shortterm wins • Define and engineer visible performance improvements. • Recognize and reward employees contributing to those improvements. Consolidate improvements and produce more change • Declaring victory too soon—with the • Use increased credibility from early wins to change systems, structures, and first performance improvement policies undermining the vision. • Allowing resistors to convince “troops” that the war has been won • Hire, promote, and develop employees who can implement the vision. • Reinvigorate the change process with new projects and change agents. Institutionalize • Articulate connections between new new behaviors and corporate success. approaches • Create leadership development and succession plans consistent with the new approach. • Leaving short-term successes up to chance • Failing to score successes early enough (12-24 months into the change effort) • Not creating new social norms and shared values consistent with changes • Promoting people into leadership positions who don’t personify the new approach page 1 This document is authorized for use only in Contemporary Leadership Challenges by Rasmussen College from October 2011 to April 2027. Leaders who successfully transform businesses do eight things right (and they do them in the right order). BEST OF HBR Leading Change Why Transformation Efforts Fail COPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. by John P. Kotter Editor’s Note: Guiding change may be the ultimate test of a leader—no business survives over the long term if it can’t reinvent itself. But, human nature being what it is, fundamental change is often resisted mightily by the people it most affects: those in the trenches of the business. Thus, leading change is both absolutely essential and incredibly difficult. Perhaps nobody understands the anatomy of organizational change better than retired Harvard Business School professor John P. Kotter. This article, originally published in the spring of 1995, previewed Kotter’s 1996 book Leading Change . It outlines eight critical success factors—from establishing a sense of extraordinary urgency, to creating short-term wins, to changing the culture (“the way we do things around here”). It will feel familiar when you read it, in part because Kotter’s vocabulary has entered the lexicon and in part because it contains the kind of home truths that we recognize, immediately, as if we’d always known them. A decade later, his work on leading change remains definitive. Over the past decade, I have watched more than 100 companies try to remake themselves into significantly better competitors. They have included large organizations (Ford) and small ones (Landmark Communications), companies based in the United States (General Motors) and elsewhere (British Airways), corporations that were on their knees (Eastern Airlines), and companies that were earning good money (Bristol-Myers Squibb). These efforts have gone under many banners: total quality management, reengineering, rightsizing, restructuring, cultural change, and turnaround. But, in almost every case, the basic goal has been the same: to make fundamental changes in how business is conducted in order to help cope with a new, more challenging market environment. A few of these corporate change efforts have been very successful. A few have been utter failures. Most fall somewhere in between, with a distinct tilt toward the lower end of the scale. The lessons that can be drawn are interesting and will probably be relevant to even more or- harvard business review • january 2007 This document is authorized for use only in Contemporary Leadership Challenges by Rasmussen College from October 2011 to April 2027. page 2 Leading Change •• •B EST OF HBR ganizations in the increasingly competitive business environment of the coming decade. The most general lesson to be learned from the more successful cases is that the change process goes through a series of phases that, in total, usually require a considerable length of time. Skipping steps creates only the illusion of speed and never produces a satisfying result. A second very general lesson is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating hard-won gains. Perhaps because we have relatively little experience in renewing organizations, even very capable people often make at least one big error. Error 1: Not Establishing a Great Enough Sense of Urgency Now retired, John P. Kotter was the Konosuke Matsushita Professor of Leadership at Harvard Business School in Boston. Most successful change efforts begin when some individuals or some groups start to look hard at a company’s competitive situation, market position, technological trends, and financial performance. They focus on the potential revenue drop when an important patent expires, the five-year trend in declining margins in a core business, or an emerging market that everyone seems to be ignoring. They then find ways to communicate this information broadly and dramatically, especially with respect to crises, potential crises, or great opportunities that are very timely. This first step is essential because just getting a transformation program started requires the aggressive cooperation of many individuals. Without motivation, people won’t help, and the effort goes nowhere. Compared with other steps in the change process, phase one can sound easy. It is not. Well over 50% of the companies I have watched fail in this first phase. What are the reasons for that failure? Sometimes executives underestimate how hard it can be to drive people out of their comfort zones. Sometimes they grossly overestimate how successful they have already been in increasing urgency. Sometimes they lack patience: “Enough with the preliminaries; let’s get on with it.” In many cases, executives become paralyzed by the downside possibilities. They worry that employees with seniority will become defensive, that morale will drop, that events will spin out of control, that short-term business results will be jeopardized, that the stock will sink, and that they will be blamed for creating a crisis. A paralyzed senior management often comes from having too many managers and not enough leaders. Management’s mandate is to minimize risk and to keep the current system operating. Change, by definition, requires creating a new system, which in turn always demands leadership. Phase one in a renewal process typically goes nowhere until enough real leaders are promoted or hired into seniorlevel jobs. Transformations often begin, and begin well, when an organization has a new head who is a good leader and who sees the need for a major change. If the renewal target is the entire company, the CEO is key. If change is needed in a division, the division general manager is key. When these individuals are not new leaders, great leaders, or change champions, phase one can be a huge challenge. Bad business results are both a blessing and a curse in the first phase. On the positive side, losing money does catch people’s attention. But it also gives less maneuvering room. With good business results, the opposite is true: Convincing people of the need for change is much harder, but you have more resources to help make changes. But whether the starting point is good performance or bad, in the more successful cases I have witnessed, an individual or a group always facilitates a frank discussion of potentially unpleasant facts about new competition, shrinking margins, decreasing market share, flat earnings, a lack of revenue growth, or other relevant indices of a declining competitive position. Because there seems to be an almost universal human tendency to shoot the bearer of bad news, especially if the head of the organization is not a change champion, executives in these companies often rely on outsiders to bring unwanted information. Wall Street analysts, customers, and consultants can all be helpful in this regard. The purpose of all this activity, in the words of one former CEO of a large European company, is “to make the status quo seem more dangerous than launching into the unknown.” In a few of the most successful cases, a group has manufactured a crisis. One CEO deliberately engineered the largest accounting loss in the company’s history, creating huge pressures from Wall Street in the process. One division president commissioned first-ever customer satisfaction surveys, knowing full well that the harvard business review • january 2007 This document is authorized for use only in Contemporary Leadership Challenges by Rasmussen College from October 2011 to April 2027. page 3 Leading Change •• •B EST OF HBR results would be terrible. He then made these findings public. On the surface, such moves can look unduly risky. But there is also risk in playing it too safe: When the urgency rate is not pumped up enough, the transformation process cannot succeed, and the long-term future of the organization is put in jeopardy. When is the urgency rate high enough? From what I have seen, the answer is when about 75% of a company’s management is honestly convinced that business as usual is totally unacceptable. Anything less can produce very serious problems later on in the process. Error 2: Not Creating a Powerful Enough Guiding Coalition Major renewal programs often start with just one or two people. In cases of successful trans- formation efforts, the leadership coalition grows and grows over time. But whenever some minimum mass is not achieved early in the effort, nothing much worthwhile happens. It is often said that major change is impossible unless the head of the organization is an active supporter. What I am talking about goes far beyond that. In successful transformations, the chairman or president or division general manager, plus another five or 15 or 50 people, come together and develop a shared commitment to excellent performance through renewal. In my experience, this group never includes all of the company’s most senior executives because some people just won’t buy in, at least not at first. But in the most successful cases, the coalition is always pretty powerful—in terms of titles, EIGHT STEPS TO TRANSFORMING YOUR ORGANIZATION 1 2 3 4 5 6 7 8 Establishing a Sense of Urgency • Examining market and competitive realities • Identifying and discussing crises, potential crises, or major opportunities Forming a Powerful Guiding Coalition • Assembling a group with enough power to lead the change effort • Encouraging the group to work together as a team Creating a Vision • Creating a vision to help direct the change effort • Developing strategies for achieving that vision Communicating the Vision • Using every vehicle possible to communicate the new vision and strategies • Teaching new behaviors by the example of the guiding coalition Empowering Others to Act on the Vision • Getting rid of obstacles to change • Changing systems or structures that seriously undermine the vision • Encouraging risk taking and nontraditional ideas, activities, and actions Planning for and Creating Short-Term Wins • Planning for visible performance improvements • Creating those improvements • Recognizing and rewarding employees involved in the improvements Consolidating Improvements and Producing Still More Change • Using increased credibility to change systems, structures, and policies that don’t fit the vision • Hiring, promoting, and developing employees who can implement the vision • Reinvigorating the process with new projects, themes, and change agents Institutionalizing New Approaches • Articulating the connections between the new behaviors and corporate success • Developing the means to ensure leadership development and succession harvard business review • january 2007 This document is authorized for use only in Contemporary Leadership Challenges by Rasmussen College from October 2011 to April 2027. page 4 Leading Change •• •B EST OF HBR If you can’t communicate the vision to someone in five minutes or less and get a reaction that signifies both understanding and interest, you are not done. information and expertise, reputations, and relationships. In both small and large organizations, a successful guiding team may consist of only three to five people during the first year of a renewal effort. But in big companies, the coalition needs to grow to the 20 to 50 range before much progress can be made in phase three and beyond. Senior managers always form the core of the group. But sometimes you find board members, a representative from a key customer, or even a powerful union leader. Because the guiding coalition includes members who are not part of senior management, it tends to operate outside of the normal hierarchy by definition. This can be awkward, but it is clearly necessary. If the existing hierarchy were working well, there would be no need for a major transformation. But since the current system is not working, reform generally demands activity outside of formal boundaries, expectations, and protocol. A high sense of urgency within the managerial ranks helps enormously in putting a guiding coalition together. But more is usually required. Someone needs to get these people together, help them develop a shared assessment of their company’s problems and opportunities, and create a minimum level of trust and communication. Off-site retreats, for two or three days, are one popular vehicle for accomplishing this task. I have seen many groups of five to 35 executives attend a series of these retreats over a period of months. Companies that fail in phase two usually underestimate the difficulties of producing change and thus the importance of a powerful guiding coalition. Sometimes they have no history of teamwork at the top and therefore undervalue the importance of this type of coalition. Sometimes they expect the team to be led by a staff executive from human resources, quality, or strategic planning instead of a key line manager. No matter how capable or dedicated the staff head, groups without strong line leadership never achieve the power that is required. Efforts that don’t have a powerful enough guiding coalition can make apparent progress for a while. But, sooner or later, the opposition gathers itself together and stops the change. Error 3: Lacking a Vision In every successful transformation effort that I have seen, the guiding coalition develops a picture of the future that is relatively easy to communicate and appeals to customers, stockholders, and employees. A vision always goes beyond the numbers that are typically found in five-year plans. A vision says something that helps clarify the direction in which an organization needs to move. Sometimes the first draft comes mostly from a single individual. It is usually a bit blurry, at least initially. But after the coalition works at it for three or five or even 12 months, something much better emerges through their tough analytical thinking and a little dreaming. Eventually, a strategy for achieving that vision is also developed. In one midsize European company, the first pass at a vision contained two-thirds of the basic ideas that were in the final product. The concept of global reach was in the initial version from the beginning. So was the idea of becoming preeminent in certain businesses. But one central idea in the final version—getting out of low value-added activities—came only after a series of discussions over a period of several months. Without a sensible vision, a transformation effort can easily dissolve into a list of confusing and incompatible projects that can take the organization in the wrong direction or nowhere at all. Without a sound vision, the reengineering project in the accounting department, the new 360-degree performance appraisal from the human resources department, the plant’s quality program, the cultural change project in the sales force will not add up in a meaningful way. In failed transformations, you often find plenty of plans, directives, and programs but no vision. In one case, a company gave out four-inch-thick notebooks describing its change effort. In mind-numbing detail, the books spelled out procedures, goals, methods, and deadlines. But nowhere was there a clear an ...
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