The world we live in keeps on changing at an intense rate. This rate of change challenges our individual ability to keep up with it. Organizations are forced to change faster and more radically than ever. The organizations we work in are changing dramatically, in terms of their strategies, their structures, their systems, their boundaries as well as their expectations of their staff and their managers. The quantum of change in organizations has been on a steady rise over the past two to three decades, and this rate of change is set to accelerate at dizzying pace. To see that the pace of change does not outpace our capacity to deal with it, leading change becomes a paramount concern for entrepreneurial individuals and the top management of an organization.
In 1996, John P. Kotter’s Leading Change became a best seller; it advocates an eight-step program for organizational change that was embraced by executives around the world. In this book, the author also outlines his vision for the twenty-first century organization. The major premise of the author is that the magnitude of change in today’s business world is increasing so rapidly that it cannot be dealt with by management, what is required is strong and decisive leadership.
Kotter investigated the efforts of more than 100 companies to remake themselves into companies that are better able to deal with competition, turbulence and change. He identifies the most common mistakes leaders and managers make in attempting to create change and has evolved a clearly outlined paradigm to overcome the obstacles and carry out the firm’s agenda. Kotter’s paradigm has eight distinct steps: 1)establishing a greater sense of urgency, 2) creating the guiding coalition, 3) developing a vision and strategy, 4) communicating the change of vision, 5) empowering others to act, 6) creating short-term wins, 7) consolidating gains and producing even more change, 8) and institutionalizing new approaches in the future.
Kotter emphasizes that the single most important factor distinguishing successful corporate change efforts from those that fail is effective and competent leadership. Without clear, focused leadership that sets an example of personal commitment, most change efforts will fall short of expectations. When change efforts fail, it could be because of many reasons, but it could also be because leadership “undercommunicates” their vision for the future, something which is eminently avoidable.
Therefore, if the change effort is to be successful, leadership must be totally visible and totally involved. John Kotter asserts that communicating the desired future is vital to creating the necessary behavior change. But such communication naturally follows and is based on a good, inspiring, and realistic vision first:
In the change process, a good vision serves three important purposes. First, by clarifying the general direction for change… it simplifies hundreds of thousands of more detailed decisions. Second, it motivates people to take action in the right direction, even if the initial steps are personally painful. Third, it helps coordinate the actions of different people, even thousands and thousands of individuals, in a remarkably fast and efficient way. (p.68)
Kotter observes that most organizations today lack the leadership they need and that this leadership dearth is significant. Although his book is a decade old, the problems continue to be the same, since the pace of change is only accelerating. However, this lack of leadership is not attributable to a shortage of talent, effort, innate capacity in general. The problem is rather that relatively few individuals are focusing on actively developing their leadership skills. And as the environment becomes tougher, more competitive and demanding, leadership is becoming even more critical.
Effective leadership can impact on factors both inside and outside the organization. With inadequate leadership, firms fail or underperform. Leaders must bring about change. Leaders must function in a complex array of relationships. Leaders must anticipate and respond to changes in the contexts in which they work that are being driven by technology, the globalization of competition and markets, and changing workforce characteristics. These changes result in greater speed and less stability that demands more from managers, particularly in bringing about change (reengineering, restructuring, restrategizing, quality management, culture change, mergers and acquisitions). However, leading is different from managing. Leading is “the development of vision and strategies, the alignment of relevant people behind these strategies, and the empowerment of individuals to make the vision happen, despite obstacles” (p.10). Leading and managing serve different purposes in organizations. Leading produces change: managing keeps the current systems operating. Management is about coping with complexity; leadership is about coping with change. Organizations need both.
Managers must combine leading and managing, maintenance and change, and the use of hierarchy as well as personal networks. According to Kotter, most organizations are overmanaged and underled. It must be always borne in mind that true transformation cannot be created by managerial pressure or injunctions:
Someone puts together a plan, hands it to people, and then tries to hold them accountable. Or someone makes a decision and demands that others accept it. The problem with this approach is that it is enormously difficult to enact by sheer force the big changes often needed today to make organizations perform better. Transformation requires sacrifice, dedication, and creativity, none of which usually comes with coercion. (p.29).
Management may be able deal with change, and certainly a competent management is required to keep change efforts running smoothly. However, for many organizations, there exists a bigger challenge of leading change. Dynamic leadership is required to galvanize a corporation and keep it moving proactively, and not just in response to the environment. “Only leadership can blast through the many sources of corporate inertia. (p.30)” Furthermore, in any large-scale change process, there arises the need for changing the behavior and attitudes of the employees, and an effective leadership is needed to motivate such transformation at personal level. Then there is the need to preserve the positive changes effectuated by integrating them into the very culture of the organization, which again is something that can be brought about only by means of sufficiently strong leadership.
Leadership involves a set of competencies that creates organizations in the first place, and then constantly adapts them to rapidly changing circumstances. Leadership determines what the future could and should look like within the scope of natural limitation faced by an organization, and then goes about to align people with that vision, inspiring them to make it happen despite countless obstacles and forces offering resistance.
However, by strong leadership is not necessarily meant the leadership by a Moses-like a figure who can lead thousands of his followers across the desert of tough times and into a promised land of plenty. It is wrong to associate leadership with giants and larger-than-life characters. Leadership must evolve from grassroots at many points and at many levels within each particular sphere of activity inside an organization. Individuals manifesting able leadership at many crucial junctures within today’s large and complex organization become pillars of support for the overall leadership agenda of an organization. “Many people need to help with the leadership task, not be attempting to imitate the likes of Winston Churchill or Martin Luther King, Jr., but modestly assisting with the leadership agenda in their spheres of activity” (p.30). However, there is still some emphasis on one visionary or charismatic individual: “Typically the change begins with a single powerful person, spreads from him or her to a few other through example, produces some group benefit, and then spreads still more widely” (p.163).
John Kotter’s book Leading Change is divided into three sections. In the first section, entitled “The Change Problem and its Solution,” Kotter explores the why the task of successfully implementing organization in order to adapt to the changes in the market environment is usually such an almost extremely difficult task. Kotter says that upon a close survey and scrutiny of scores of large and small organizations, companies located in the U.S. as well as abroad, and companies making good profits as well those that are running flat, he drew several lessons as to why the change efforts, in the name of TQM, restructuring, reengineering and such, often fall far short of the mark. These lessons, Kotter sums up under eight headings, which are of course the negative images of the steps of the eight-stage process he delineates in the next section. These are:
1. Allowing too much complacency
2. Failing to create a sufficiently powerful guiding coalition
3. Underestimating the power of vision
4. Undercommunicating the vision
5. Permitting obstacles to block the vision
6. Failing to create short term wins
7. Declaring victory too soon
8. Neglecting to anchor changes firmly in the corporate culture.
These errors tend to be further amplified in the rapidly changing environment of a competitive world. However, much of the damage that can occur through committing of these errors can be mitigated through adopting a more informed approach to leadership. With sufficient expertise it is possible to eliminate these errors altogether. The way to steer clear of error that can be detrimental the long-run prospects of success for a company lies in understanding why organizations resist needed change and following a systematic process to achieve it.
Changes in the market and the environment create both more hazards and opportunities for organizations. To make optimal use of opportunities and to effectively thwart the hazards, to leverage change to the best possible effect, the leadership of the company should take up the responsibility not only to shake off the inertia naturally inherent in a smoothly-running large-scale organization, but to get rid of all complacency by establishing a sense of emergency. That is the first step, which is followed by seven more steps which should result in embedding the necessary pattern of thinking and behavior among the individuals that constitute an organization into the very culture of the organization.
Kotter’s model for leading change is a result of many years of experience in consulting with numerous and diverse organizations. After having observed and analyzed the many difficulties associated with change efforts, he distilled the common themes, which are the errors enumerated above, and turned them around to comprise a prescriptive framework to lead change. Addressing the steps of this framework in a sequence (which is a point that needs to be stressed, although one operates in multiple phases at once) can afford the best chance of making change efforts sustainable, and the best chance of their resulting in a new paradigm or way of doing business. While he acknowledges the scale of the challenge that is usually involved in successfully tackling change, Kotter lays particular emphasis on the need to get the fundamental groundwork done first.
Kotter breaks down the process of creating and leading change within an organization into the following eight-stage process:
1. Establish a Sense of Urgency
Examining market and competitive realities, the supply/demand realities and operating environment.
Identifying and discussing threats and opportunities; discussing crises, potential crises.
Programming the process – identifying priorities and key stakeholder interests.
In order to get people motivated, they must be shown a reason, and a really convincing one, for doing things differently. To this end, leaders ought to examine market or competitive realities and identify an urgent need in terms of a crisis, potential crisis which could at the same time be a great opportunity.
However, there is no need for it to be a naïve doomsday scare tactic. It should reflect the market environment in a realistic sense. This is a very necessary step to convince people that maintaining status quo is more dangerous than taking a relatively risky leap into the unknown. This is a critical first step. “In the world of the twenty-first century, we will all need to learn and grow throughout our careers” (p. 48).
In Kotter’s experience, 50 percent of change efforts failed right here. His studies further suggest that about 75 percent of the work force must accept the urgency of the overall situation if the change effort is to succeed.
2. Form a Powerful Guiding Coalition
Putting together a group of key individuals with enough power and commitment to lead the changes
Encouraging the group to work as a team
Change cannot be directed through the prevalent hierarchical structures. To nurture and support the requisite levels of change, the prerequisite is a dedicated and growing group of able leaders throughout the length and breadth of a large organization. It is probable that this group spearheading the change process to not to include some of the higher echelons of corporate leadership because the top management may often show reluctance to buy new and radical ideas for change. However, this group must show enough entrepreneurial spirit and be influential enough to act as a powerful avant-garde. Because without sufficient influence and power, the group may lead to changes, which can nonetheless be snuffed out over time.
3. Develop the Vision and Strategy
Creating a vision to help direct the change effort
Developing policies, strategies and systems for achieving that vision
Once the employees understand and accept the urgency of the situation, it is imperative that they have some idea as to where they are going. They would like to have a clear direction to a better future. Without a compelling vision, the change effort can dissolve into incoherency.
Kotter observes that failed change efforts often comprise plenty of plans and directives, but there would be no unifying vision. Further, the vision clear and concise a vision be, the better. Kotter suggests that leaders should be in position to communicate the vision in five minutes if need be and also elicit understanding and interest from the audience. If this is not the case, there is a need to rework the vision.
There are many characteristics of a good vision. But above all, it should appeal to people and connect with them.
A good vision acknowledges that sacrifices will be necessary but makes clear that these sacrifices will yield particular benefits and personal satisfaction that are far superior to those available today – or tomorrow – without attempting to change. (p.70)
4. Communicate the Vision of Change
Using every means possible to communicate the new vision and strategy constantly to all stakeholders
Having leaders and senior managers role model the behavior expected of managers and employees
Making the future possible is a team effort. The cause of change should draw to itself as many people, adherents and proponents within the organization, as possible. Therefore, there is a need for the vision of change to be disseminated widely and effectively. Communication is not about just informing people, as by a group email or a notice posted on the bulletin board. The best form of communication is when leaders are able to communicate the vision through their actions.
All the usual communication media should be used. But leaders must endeavor to find opportunities to communicate the vision in day-to-day activities. Because it is not just enough if the employees understand the vision, they should imbibe it. Every opportunity should be used to present the case for change, and instill in the employees the need for it. The vision should keep popping up in even in minor talks and discussions or technical seminars. Talk and discussion about the broad vision can pave way for more clarity in the minds of customers as regards the objectives the must be reached. And then,
With clarity of vision, managers and employees can figure out for themselves what to do without constantly checking with a boss or their peers. (p.70)
Beyond mere talk, however, the day-to-day actions of leaders must reflect the vision, wherever applicable. It is common knowledge that nothing will kill a change effort quicker than leaders saying one thing and doing another.
Nothing undermines change more than behavior by important individuals that is inconsistent with the verbal communication. And yet this happens all the time, even in some well-regarded companies. (p.10)
Kotter offers warning that a result-oriented leaders may be sometimes tempted to skip one or more of these first four steps in order to get right in to the heat of the action. However, doing so can seriously imperil and hamper the change effort. Without the existence of a solid and broad foundation to support it in the first place, any change action is unlikely to gain strength and survive for the long term.
5. Empower Broad-based Action
Getting rid of obstacles to change
Changing systems or structures that seriously undermine the vision
Encouraging risk taking and nontraditional ideas, activities, and actions
The guiding coalition must strive to remove obstacles that may be entrenched in organization processes, especially if it is a typical hierarchy-based, change-resistant organization. “Unaligned structures block needed action” (p.115). Even the imaginary obstacles that exist only in the minds of the employees have to be dealt with. Kotter observes that the worst case scenario is one where the bosses themselves are reluctant to change and who make demands contrary to the vision, though unfortunately this frequently enough seems to be the case in the real world. People standing at loggerheads with change should be encouraged to get on board and embrace the vision. It is definitely a challenge, but one that must be met in order to secure a more solid footing for the sought after changes. It is the responsibility of the leaders to clear the way for the majority of the employees to develop new ideas and approaches without being impeded by the old and outdated modes of thinking and perception.
6. Generate Quick Wins
Planning for visible measurable performance improvements
Creating those improvements (not just hoping they will happen).
Recognizing and finding ways to reward employees who make them possible.
It is in human nature to tend to favor short term benefits over long term ones. It would be very difficult for people to stick to vision seemingly forever, in the absence of palpable benefits coming their way. The vision may be grand, but the employees must start seeing results as soon as possible or at least within 12 to 24 months or they could be instinctively compelled to lose grip on the vision or perhaps even join the naysayers, in pure frustration or disillusionment. Short-term wins validate the effort and maintain the level of urgency. Also, rewarding people responsible for the improvements taking place is essential.
7. Consolidate Gains and Encourage Further Change
Using increased credibility to change systems, structures, and policies that do not fit the vision or fit together
Hiring, promote, and develop employees who can make it happen
Reinvigorating the process with new projects, themes, and change agents
Short-term wins can be alluring. It can be easy to settle for them, but doing so can be deleterious. Premature victory celebrations can quash momentum and allow complacency to take hold. It should always clear to each and everyone involved that short-term wins are nothing but stepping-stones to greater opportunities. Ambition must be constantly fostered, keeping in with the overall vision.
8. Institutionalize New Approaches
Performance improvement through benchmarked ‘productivity’ and customer-focused behavior
Articulating the connections between the new behaviors and success
Developing the means to ensure leadership development and succession
Even changes that are materialized with great effort over an extended time can wither unless they are consciously reinforced in one way or other. Having achieved a degree of change, leaders must now seek make it more deep-rooted. Old habits die hard. People, by their innate human nature, are prone to relapse to old ways. Leaders must connect new behavior with corporate success, and thus by associating actions with rewards, reinforce the new behavior in the classic Pavlovian way. The message must be driven home that the new ways are here to stay.
It must be noted, however, that even though Kotter’s model may seem more relevant for large-scale organizations, it in fact works for leading change in any organization at any level. It can be a powerful tool for project managers who must lead their organizations into a better future, motivating them to be more than managers and be visionary leaders.
In the third and final section of the book, Kotter draws attention to changes in organizational structures, systems and cultures. Kotter’s observations about the differences between the 20th century and 21st century organizations can be summarized under the following heads:
20th century organizations
Structure: bureaucratic, multileveled, organized with the expectation that senior management will manage, characterized by policies and procedures that create many complicated internal interdependencies
Systems: depend on fewer performance information systems. distribute performance information to executives only, offer management training and support systems to senior people only.
Culture: inwardly focused, centralized, relatively slow to make decisions, political, risk averse
Leadership of change: directive, participative at top levels only
21st century organizations
Structure: nonbureaucratic, with fewer rules and employees, limited to fewer levels of hierarchy, organized with the expectation that management will lead, lower-level employees will manage, characterized by policies and procedures that produce the minimal internal interdependence needed to serve customers
Systems: depend on many performance information systems, distribute performance information widely, offer management training and support systems to many people
Culture: externally oriented, empowering, quick to make decisions, open and candid, more risk tolerant
Leadership of change: encouraging participation and connectedness, giving meaning and purpose to the whole group
Kotter affirms that future organizations must possess certain fundamental traits if they intend to survive in the 21st century. One such trait is a distinct organization-wide sense of urgency; these organizations cannot afford to be burdened with any sense of complacency as did many twentieth century organizations. In the years to come, organizations will be forced to make changes often, and a sense of urgency is the best tool to root out complacency, allowing employees to better cope with frequent change. Kotter goes on to explain the meaning and significance of what he calls “broad-based empowerment” and “delegated management.” A broad leadership base coupled with effective delegation will make communication and decision-making much faster and more efficient processes. Kotter maintains the necessity of future organizations to possess limited levels of interdependence, as individual interdependence only slows things down within an organization. Finally, Kotter asserts the overwhelming importance of corporate adaptability. A need for change is not always predictable, and in the modern fast-paced world, it will be necessary for organizations to remain flexible and always on high alert to readily implement change. Kotter regrets that “For a lot of reasons, many people are still embracing the twentieth-century career and growth model” (p.185), but hopefully the situation should have changed significantly in the last decade or so since this modern classic on leadership was written.
A strategy of embracing the past will probably become increasingly ineffective over the next few decades. Better for most of us to start learning now how to cope with change… (p.185)
Kotter, J. P. 1996. Leading Change. Boston, MA: Harvard Business School Press