Forget the old model, change is emotional

By ASHLEY CAMPBELL

Change: all businesses do it. They create new products, try new procedures, introduce new equipment and adapt to customers' new needs.

They buy and are bought, expand and consolidate, move into new markets and change their brand. Some do it more successfully than others.

Business Herald columnist Jenny Ruth has highlighted transport operator Owens Group as one company that hasn't done it well.

"One analyst describes Owens as a perpetual restructuring story.

"Four years ago, the company was talking about restructuring and reviewing its strategy and it's still at it."

Why is it that some businesses can't seem to change successfully?

The answer, says American change expert Professor John P. Kotter, is simple: Major change requires employees to modify what they do and how they do it.

But too often those leading the change rely on thought and analysis rather than emotional motivation.

"The business model people use too often is the wrong model.

"It's the one we've been teaching in business schools. It's the one that's been wrong about so much in the past 50 years," he says.

It's the model that tells leaders that if they present a rational and intelligent case for change, people will buy in and change will happen.

In The Heart of Change, co-authored with Deloitte Consulting principal Dan S. Cohen (Harvard Business School Press, distributed by McGraw-Hill in New Zealand, $49.95), Kotter says: "People change what they do less because they are given analysis that shifts their thinking than because they are shown a truth that influences their feelings."

It's not that thought, analysis and planning are unimportant, but without lighting fires - giving employees a strong feeling of why change must happen and a clear vision of where it is leading - and soothing fears, all the thought, analysis and planning in the world will be sabotaged by complacency or resistance.

Every potential stumbling block concerns emotions and behaviour.

The first two or three steps are where most efforts fail, says Kotter. People won't accept the need for change if there's no sense of urgency, they won't be led by people with no sense of urgency and even less authority, and if change leaders aren't clear about where they're heading, they'll stumble.

"Budgets play certain roles and are important," says Kotter. "The operational plan plays a certain role and is important. Strategy plays a certain role and is very important.

"Vision is another thing, and in a change effort you need all four. If you lack the vision, you have a car with three wheels."

One example in Kotter's book shows how these steps were bundled into one hard-hitting presentation.

The change leader believed purchasing costs could be cut by US$1 billion ($1.8 billion) over five years.

"A change this big meant a big shift in process. This would not be possible, however, unless many people, especially in top management, saw the opportunity, which for the most part they did not."

So he found out how many different gloves the company's factories used and how much they paid for them: 424 different gloves and prices.

He collected one of every glove, tagged it with its price and displayed them on the board table. The divisional presidents were called in.

"What they saw was a large, expensive table stacked high with gloves. Each of our executives stared at this display for a minute. Then each said something like, We don't buy all these different types of gloves?

"Well, as a matter of fact, yes, we do. They looked at two gloves that seemed exactly alike, yet one was marked $3.22 and the other $10.55. It's a rare event when these people don't have anything to say. That day they just stood with their mouths gaping."

The vision was clear: cut NZ$1.8 billion in spending over five years. The urgency was established and a suitably enthused and authoritative guiding coalition was created among the divisional presidents, who now felt differently.

"Inspiration is very important in life, period," says Kotter. "It certainly can be important in change efforts because you are, in a sense, creating a resource that didn't exist: the energy within [employees] that's been sitting there untapped."


Eight steps to change - and failure

Establish urgency.

Concentrate on the rational approach and ignore feelings; start on vision or strategy without a sense of urgency.

Create a guiding coalition.

Rely on weak groups, single individuals, complex governance structures or fragmented teams; ignore entrenched power structures that undermine strong teams; try to work around crucial, but hopeless, individuals.

Develop vision and strategy.

Assume analysis and budgets can change behaviour; rely on depressing visions of anxiety-provoking cost-cutting.

Communicate the change vision.

Undercommunicate; speak as if just trans-ferring information.

Empower broad-based action.

Ignore bosses who disempower subordinates; scare bosses by giving their power to subordinates; try to remove all barriers at once; surrender to pessimism and fear.

Create short-term wins.

Launch too many projects at once; provide the first win too slowly; exaggerate or make up wins that haven't occurred.

Consolidate gains and produce more change.

Make long-term plans; convince yourself it's over too soon; accept embedded bureaucratic and political behaviour; work yourself to exhaustion.

Anchor new approaches in the culture.

Rely on anything but culture to make the change stick; try to change the culture before the behaviour.

* John P. Kotter will present a seminar at the Bruce Mason Centre next Tuesday. Contact Forum Meeting Planners, ph (07) 838-1098.