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Leading Organizational Change, Part 1
How to Keep Pace with the Unprecedented Changes in Your Business

Change is the one constant in today’s tumultuous business environment. A company’s ability to adapt quickly to the shifting sands of the marketplace is critical to lasting success. While change is unavoidable in the marketplace, several forces are at work to avoid it in the workplace. People generally resist change, even when they understand it is needed. They may agree to change initiatives in principle, but find it difficult to put change into practice. Old habits are hard to break.

That’s why leading change is one of the most important and challenging aspects of being a corporate manager. Chances are your firm doesn’t lack for good ideas, sound strategies, and market insight. The greatest factor in your firm’s continued success will not strategy or smarts, but being able make the needed changes to respond to an ever-changing world.

The Rate of Change

Not only is change a fact of life in corporate America , but the rate of change has reached unprecedented levels. Previous generations all witnessed cultural and technological change, but it progressed in a slower, basically linear fashion. If one were to chart change that has occurred in our generation in any number of areas, the slope would indicate an exponential increase (as shown in the adjoining figure).

What this means is that leaders must not only facilitate substantial changes in their companies, but must do so rapidly. The business landscape is constantly evolving. If it takes you years to reach your target, the target will inevitably have moved by the time you get there.

Why People Resist Change

Companies cannot change until the people in it change. Our aversion to change is a powerful force that must be overcome to accomplish meaningful performance improvement or strategic repositioning. A good place to start is to understand some of the primary reasons why people are generally resistant to change:

u Force of habit. Habits are extremely valuable because they enable us to perform many functions unconsciously, preserving brain power for other tasks. But they are also very difficult to break, and thus to change.

u Low expectations. Because change is difficult, it’s often hard to convince people it’s possible. They may lack confidence in management, their coworkers, or the proposed change.

u Past experiences (good or bad). Past success lulls people into thinking change isn’t needed. Past failures may lead people to be skeptical that it will work this time (leading to low expectations).

u Inadequate perceived personal benefit. Most people view corporate changes through the lens of what it means for them. If they don’t see personal benefit, they aren’t inclined to support change, even if it looks good for the company.

u Fear of diminished competency. Change often forces us to acquire new skills and knowledge, pushing us out of our comfort zone or eroding the strength of our expertise.

u No sense of urgency. Unless leaders communicate a sense of urgency, people may agree with the change but put it off. There must be motivation to act now.

u Not enough time or resources. Because we’re busy and have other priorities, we may find it impractical to implement change, even though we may be convinced it’s important.

Two Dimensions of Change

The responsibility of leading change is not simply making organizational, structural, or situational changes. It involves helping people adapt and respond positively to external change. William Bridges describes two dimensions: (1) change—that which occurs externally and (2) transition—that which occurs internally. He observes that managers often make changes (which are relatively easy), but fail to lead people through the transition in response to the change, which must produce sustained behavioral change (which can be very difficult). This article focuses on the latter.

Stages of Organizational Change

Organizational change initiatives usually follow a somewhat predictable pattern. Understanding the three primary stages of organizational change will better enable you to achieve substantial, enduring change—such as moving towards a value-driven culture. These stages are depicted in the figure below:

Stage 1: Edict

For your change initiative to succeed, your staff must perceive a compelling reason for it. Most people inherently resist change. It pushes them out of their comfort zone. It forces them to break entrenched habits. There is pain involved in changing. And when the pain of change is greater than the pain of staying the same, meaningful, lasting change is unlikely to occur.

So people need an Edict, a compelling reason for submitting to the pain of change. This may come in the form of a management mandate. Better still is a client mandate (another good reason for soliciting regular feedback from your clients). It may be some other circumstance, such as a change in the marketplace, that compels people to change lest they face something worse. The change must be viewed as required; the result you want initially is compliance by your staff.

Stage 2: Ethic

Having first recognized the necessity of change, people typically come to the point where they embrace the value of change. The focus shifts from why to how. A plan is developed, tasks are assigned, new procedures are established, and systems are put into place to support the effort. The Ethic stage is evidenced by a surge of activity. The motivation now comes from the fact that change is seen as strategic; the desired result is collaboration among coworkers.

And this is usually where the change initiative stalls. Just as you are beginning to see change, the force of the Edict weakens. As you make progress, the sense of urgency begins to fade. Without the compelling reason, the initiative starts to lose the momentum it had at the start. Keep in mind that the Ethic stage is hard work. In most organizations, the strategic value of change alone is not enough to sustain the effort over the long term. People must remain convinced that the change is not only strategic but needed.

Stage 3: Ethos

In order to complete the change process, you need to reach this next stage. Now the change shifts from being externally motivated to being internally motivated. It becomes characteristic— “the way we do things around here.” It’s moved from the head to the heart. It’s no longer just what you do; it’s who you are. It’s still hard work, but you wouldn’t dare accept the alternative. The change is now embedded in the company culture.

Impacting Corporate Culture

The most difficult—and often the most needed—changes are those that run somewhat counter to your current corporate culture. A firm’s culture can present a substantial obstacle to making needed changes. But the culture itself can be changed over time with effective leadership. In fact, the most effective organizational changes are those that are embedded in the firm’s culture. So important changes in corporate behavior typically must be made in concert with cultural changes.

Corporate culture can be defined as the sum total of formal and informal systems that influence how things get done. Every firm has a culture. Some result from deliberate effort. Others evolve without much thought being given to it. Generally, the most successful firms are those that work hard to create a specific corporate culture that reflects their values, vision, and mission.

The adjoining figure depicts the core elements of corporate culture. A deliberate culture begins with an overall mission that defines the firm’s central focus and a vision of what the company wants to become. This leads to the development of formal (“process”) and informal (“values”) systems needed to accomplish the mission and vision.

u Process includes systems, policies, procedures, and standards that seek to direct how work is done—doing things right.

u Values represent the informal network of principles, priorities, and social norms that largely guide how employees interact with each other and outside parties such as clients—doing the right things.

Culture is shaped not only by the specific elements described above, but by the relative emphasis given to each. Some companies stress process, an often heavy-handed approach intent on getting employees to comply. Other firms lean more toward values. They expect self-initiative and principled conduct to yield the desired results. Still other companies are so driven by results that all other elements of culture are subjugated to it—the ends justify whatever means are necessary. Healthy corporate cultures are those that find a balance among these elements.

In Part 2 of this article, we will explore the steps that will help move your firm or department through the difficult process of change, ultimately fixing the change in your culture.

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