Summary: Many organizations fail miserably when making change. Managing change is difficult and takes wisdom, experience and thoughtful analysis. More often than not, leaders charge into change without taking time to reflect, analyze and plan each step toward their goals. Renova Corp. offers three unique principles that impact the way you manage change and dramatically increase the probability for your success.
Many organizations fail and fail miserably when it comes to making change.
In a recent study by the Cutter Consortium, nearly half (44 percent) of all organizations admitted they had abandoned one or more change projects over the last three years.
Despite this high failure rate, the best performing companies not only understand how to implement change, but also stay ahead of the curve by initiating change. That is, they implement change before they absolutely must — to stay ahead of the competition — and they do this in a coordinated and balanced way.
What follows are three principles, developed from our study of companies that consistently outperform their competition when it comes to instituting change. For any organization, these principles are worth the time it takes to read and understand them.
Principle #1: Slower is Faster.
Most business leaders view the best rate of change as fast, faster, fastest. However, the optimal rate of change is far less than the fastest possible.
This principle is exquisitely demonstrated in Aesop’s Fable, “The Tortoise and the Hare.” While the tortoise may be slower, he keeps plodding along and eventually wins the race.
Business Case: Wal-Mart Trips as It Tries to Change Too Fast
Wal-Mart has had has little choice but to change. The company’s formula since 1962 — pile cheap merchandise high and watch it fly — is no longer enough. Competitors like Target and Best Buy have stolen shoppers with smarter fashions and sleeker electronics.
Last year, Wal-Mart introduced a dizzying number of new strategies: it started a line of urban fashion, began renovating 1,800 stores, overhauled its advertising to focus less on price and more on style, rolled out $4 generic drugs, ended its layaway program, imposed wage caps on its workers and mounted a relentless strategy of opening about 300 new stores a year…to name just a few.
Wal-Mart has, however, felt the impact of trying to change too fast. Its growth strategy was poorly planned and new stores siphoned away sales from existing ones. This mega-retailer also alienated shoppers with designer-inspired clothing that did not fit the profile of existing shoppers. In addition, many of the new strategies worked at cross purposes. For example, store renovations were taking place when new electronics were being introduced, making it difficult to find all that enticing new merchandise.
Collectively, Wal-Mart’s new strategies created confusion in the stores, temporarily disorienting consumers and employees. Consequently, sales fell and other financial performance measures have been lackluster.
Recommendation: Just as you would never drive your car at the fastest speed possible (at least for any length of time!), every organization has its individual and optimal rate of change.
When there is strong sense of urgency to change rapidly, many organizations execute too many strategies simultaneously, trying to get everything done at once. Corners are cut, ignoring important background research and planning. Strategies may be poorly integrated and may actually be at cross-purposes, creating confusion. Slow down, plan, integrate and execute.
Principle #2: Think smarter, don’t work harder.
We’ve all heard this phrase dozens of times. Rarely, however, do we take time to step back and think about how we might apply it to our own organization. We also seem to continually forget that the harder you push, the harder the system pushes back.
Business Case: As a manufacturing company’s core product began to lose market share, management pushed for more aggressive marketing. That’s what always works, right?
More money was spent on advertising, prices were dropped and the sales staff was incented to push business.
These strategies, which required many of the company’s important resources, brought customers back, but only temporarily. Why? Because the real issues of product quality and value were not addressed. As management continued to push harder, quality continued to deteriorate, service became shoddy and fundamental product and market issues were continually ignored.
In the long run, the more the company marketed, the more customers it lost!
Recommendation. Pushing harder is exhausting. When initial efforts fail to produce lasting improvements, step back, identify and examine the causal factors of the problem. Rather than pushing harder, take time to reflect, think and analyze before making your next move.
Principle #3: Remove the Barriers
Leverage comes from identifying and removing barriers which slow down, halt or limit change. Barriers are those organization issues and obstacles that cut companies off from their goals. If they are not addressed, moving forward feels like pushing a wheel barrel through the mud. You are trying to make progress but it becomes harder and slower.
Business Case: An insurance firm was having great success. Products grew, revenues grew and its information services grew in size and complexity to support the organization.
Eventually, the company’s rate of growth outpaced its technical staff’s ability to keep up. Soon, the explosive growth cycle diverted the most experienced IT people from IT development to management, resulting in extended product development time.
The company continued to grow without addressing IT issues. As a result, customer service began to sag, market expectations went unrealized and the company’s stock price plummeted.
Recommendation. Focus on the barriers which limit organizational performance. These constraints can be broadly classified as either an internal constraint (people, systems, structure, technology) or a market constraint. Focusing on factors limiting change will, in time, actually accelerate it.
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The Bottom Line: Managing change is hard. It takes wisdom, experience and thoughtful analysis. More often than not, leaders charge into change without taking time for careful reflection, analysis and planning each step toward your goal. Remember, organizations are complex systems of coordinated and interacting parts. They must be considered as a whole rather than focusing on one component to the detriment of others.
Each of the above change principles is really about balancing a group of interacting and interdependent elements to accelerate change.
As Walt Kelly wrote in his now famous line from the cartoon strip, “Pogo”: “We have met the enemy and he is us.”
Consider the following:
- Take time to look at what’s really going on around you.
- Recognize that faster is actually slower…and slower is usually smarter.
- Don’t push. Think smart, instead.
- Reduce the barriers to change and plan your strategy.
- Now, you’re ready move forward toward change — slowly, thoughtfully and one step at a time — to successfully achieve your goal.