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 ACHIEVING QUANTUM CHANGE: INCREMENTALLY!!
THE ART OF HIGH LEVERAGE CHANGE1

by
Gareth Morgan and Asaf Zohar
York University, Schulich School of Business Research Program

ABSTRACT:
Many organizations are looking for ways of restructuring and reshaping their activities to
deliver quantum change in a quantum way. The reality, however is that most quantum
change occurs incrementally - as a result of "high leverage" decisions and actions that can
push an enterprise in a new direction and reverberate and cumulate in their effects. To aid
the process, managers must master the art of high leverage change: by learning how to be
driven by a quantum sense of vision while finding "doable," high impact initiatives that
challenge and transform the status quo; by learning how to allow one change to build on
another and achieve a compounding effect; and by building on opportunities created by
random changes that can create unanticipated breakthroughs.

Morgan and Zohar demonstrate the power of this approach to change by examining the
pattern of successful reengineering projects in companies such as Ford, Taco Bell, IBM
Credit, Hallmark and Bell Atlantic, and in the successful corporate transformation steered
by Ricardo Semler in the Brazilian company, Semco. They show that despite the widely
different philosophies and approaches underlying these projects, the principles of success
are exactly the same. Large scale change is not the product of large scale change
programs, or pat formulas. It unfolds as the result of crucial small scale initiatives that
succeed in creating novel contexts that break the status quo and allow new streams of
innovation to occur.

The authors demonstrate how managers can find these critical initiatives by targeting
doable, high leverage actions within their "15% sphere of influence" and create quantum
change incrementally, even in situations where people have extremely limited power.
Their approach uses the implications of modern theories of chaos and self-organization to
recognize that while the days in which leaders can mandate, control and direct change are
long gone, there are alternative leadership and management strategies that can cope with
the flux that's drowning so many organizations. This new perspective on change brings a
message of hope, optimism and practical good sense that places the possibility of creating
substantial change within everyone's grasp - from the CEO's office to the shop floor.

ACHIEVING QUANTUM CHANGE INCREMENTALLY

There's a fundamental misconception in management about the relationship between
quantum and incremental change. Given the enormous challenges facing our

1
Source: G. Morgan and A. Zohar (1998), "The 15% approach: quantum change
incrementally!" Holland Management Review, 53, pp. 14-25
organizations most managers are now searching for major breakthroughs. They are
looking for ways of restructuring and reshaping their activities to deliver quantum results
in a quantum way. That's why the reengineering and reinvention movements have
become so popular, and why so many corporations have been looking for that magic
program or change initiative that will catapult them into a new situation.

The reality, however, is that putting aside the extreme cases where organizations in
desperate circumstances are forced to downsize and restructure almost overnight, just like
a medical surgeon may have to engage in a major amputation to save a person's life, most
quantum change occurs incrementally - as a result of "high leverage" decisions and
actions that push the organization in new directions and reverberate and cumulate in their
effects.

Consider the following example.

A manufacturing company in the consumer goods business is facing major problems.

Profitability and performance are at an all time low. New competitors are eroding the
business. Costs of production in remaining niches are high and margins poor. Customers,
shareholders and employees are all unhappy.

Clearly, major new initiatives are necessary. Under the fresh leadership of the new CEO,
a decision is made to steer itself out of trouble by achieving world class manufacturing
standards. Since the employees are the ones that have to make this happen, a decision is
made to get them behind the new initiative by listening and responding to their needs. An
employee survey is conducted to identify key concerns and to provide a basis for
dialogue between management and staff on key problems in the workplace and the
challenges facing the company.

In this new context, the first steps in restructuring are then taken. A cross-functional team
of change leaders is established to plan and launch the new initiative. As they begin their
work, important decisions arise. Where should the team start? Which processes should be
reengineered first? What sites should be used for pilot projects? Who should be involved
in detailed decision making and design?

As the team wrestles with these concerns, new "people issues" begin to surface.
Employees become more fearful of the implications of the changes underway. How will
they be affected? Will their jobs disappear? Is all the change really necessary? Should
they continue to support the change or dig in their heels? As the rumor mill works
overtime and political tensions begin to rise, the CEO decides to step in and "break the
grapevine": any questions that staff want to ask can be submitted anonymously through
staff representatives. Honest, prompt answers are guaranteed. The intervention is crucial
in reestablishing a more open climate, and a culture that supports the redesign begins to
emerge.

And so the project continues, moving from problem to problem and success to success
until a genuine turnaround is achieved. Within a period of fifteen months major
production processes are completely redesigned and bureaucratic structures transformed.
The company has a new corporate culture fuelled and supported by major increases in job
satisfaction, productivity, profitability and customer evaluations. The company succeeds
in transforming itself from a struggling enterprise into a profitable and effective niche
player.

The question posed by our example: Is this a case of quantum or incremental change?

In our view it is spectacularly quantum in terms of the results achieved: an exemplar of

what major transformation is all about. But it's also spectacularly incremental in terms of
the process through which the results were gained. Our research shows that this is the
pattern in most successful change initiatives and that when we lever this insight the way
opens to a completely new perspective on the management of change with dramatic
consequences for management practice. In our view management writers offering "total
solutions" to management problems through, for example, the reengineering or
reinvention movement, have got the relationship between quantum and incremental
change completely wrong. They are correct in saying that many of our organizations need
to achieve breakthroughs that will deliver quantum improvements in performance, and
that 5%, 10%, 15% or even 20% incremental improvements in end results are not
enough. But they are wrong in projecting this desire for major breakthroughs into a
search for large-scale quantum solutions, particularly of a programmatic kind. They
understand the objectives or desired results of the required change, but not the process
through which it can be achieved.

THE MYTH OF TOTAL SOLUTIONS

The evidence is overwhelming. Large-scale change programs designed to produce
quantum changes in a quantum way have a very poor success rate. For example, recent
surveys on the success of Total Quality Management programs show that over 70% have
failed or delivered disappointing results. Data on reengineering initiatives is pointing to a
similar conclusion. Fads and fashions come and go and company-wide transformation
projects, with minor exceptions, attract consistent criticism. Michael Beer and his
colleagues captured the problem in the title of their 1989 HBR article on "Why Change
Programs Don't Produce Change," and the same theme is echoed yet again in John
Kotter's 1995 article on "Why Transformation Efforts Fail." [1]

Yet the reason for these problems is obvious when you look at the evidence on the
structure of influence and control. Research suggests that any person in any
organizational role typically has very limited influence over the process, perhaps no more
than 15%. The other 85% rests in the broader context and is beyond direct influence. The
implication: effective change occurs when people, individually and collectively, target
and lever their "15%"; attempts to change situations in an unfocused "100% way" are
doomed to fail.

WIDESPREAD SUPPORT FOR THE 15% PRINCIPLE

Our interventions and research suggest that successful leaders and managers understand
and practice this principle. But formal theories of leadership and management tend to
push them in the opposite direction by emphasizing the importance of programmatic
change. Indeed, these theories and programs actually prevent effective change from
occurring because they diffuse energy and attention into the program itself rather than
towards the high leverage initiatives that are needed to make it a success.

To test this idea for yourself look at the way your organization is approaching the
challenge of managing change:

 Are you being swamped by programs and processes that generate enormous amounts
of activity with little bite?

 Is the planning process focussing on the production of documents and "PLANS"

rather than generating and discovering key initiatives that will make a real difference?

 Is your corporate vision alive or dead? Dead ones look great on paper but are bogged
down by "100% aspirations" rather than serving as action-generating frames that can
unleash significant change.

 Are your reengineering projects being stalemated by consultations, meetings,

programs and plans that merely end up giving shape to the latent resistance within the
organization - the "global 85%" that doesn't want to move? Or are they evolving in a
more open-ended way by targeting the breakthrough initiatives that can seed genuine
change?

Successful corporate transformation requires the mastery of what we call the art of "high
leverage 15% change" and avoid the stalemating, diffusion of energy and "make work"
that accompanies so many contemporary change efforts. This is the message of our
opening case study. Though conducted under the guise of a broad restructuring initiative,
it was successful because the people involved used the right levers at the right time to
create new contexts in which successful initiatives could evolve.

The art of using highly levered "15% initiatives" to create contexts that facilitate and
encourage change is a fundamental competence for management in turbulent times. The
15% principle has revolutionary significance, because it forces leaders and managers to
completely rethink their role and influence. As one executive put it, "It puts the
management of change in completely new perspective. Instead of trying to create 100%
change in a 100% way, it shows that we should be creating 100% change in a 15% way."

It's a paradox, but "100% change" is far more likely to result from a series of highly
leveraged 15% initiatives than a large-scale program or "big play." To illustrate the
power of this principle in action, the next section revisits our opening case study and
some highly publicized success stories of organizations that have achieved quantum
change. In all of them, the 15% principle is a major driving force.
ORGANIZATIONAL SUCCESS STORIES ARE STORIES OF 15% CHANGE!
Our opening case study provides a perfect example of how successful quantum change
unfolds through a series of highly leveraged "15% initiatives" that create new contexts in
which radically new things can happen:

The new CEO recognizes that she's inherited an organization in desperate shape and does
something nobody has done before: she survey's staff opinions on the situation. This
would have been a disastrous step if they'd already been surveyed to death. But in a
context where employees had all but been ignored, it was exactly the right thing to do.
The survey was a high leverage 15% action, and so were the other key decisions and
actions that launched the change on its uncertain way:

• The decision to establish a cross functional team broke familiar boundaries;

• The status of the people selected to the team communicated that the project was
serious and not to be ignored;
• The projects selected to pilot manufacturing redesign were crucial in
demonstrating that meaningful results could be achieved;
• The decision to confront the rumour "grapevine" was crucial in tackling forces
that threatened to undermine the whole change effort.

At each stage of the change process the CEO and her change team were confronted with a
fork in the road. One branch led to a new future: the other back to the past. They used
their 15% to launch simple well-targeted initiatives that could keep the project on the
right road. The quantum change eventually achieved was the result of this unfolding
process.

We see the same process in the major reengineering and other success stories that are
celebrated in the management literature. To illustrate, let's take the cases of IBM Credit,
Ford, Taco Bell, Capital Holding, Bell Atlantic, and Hallmark Cards, which were the
major cases featured by Michael Hammer and James Champy to establish the success of
Reengineering as an approach to change, and the major transformation of the Brazilian
company Semco, led by Ricardo Semler. Semler's approach with its emphasis on highly
individualistic leadership is usually seen as being at the opposite extreme of the
programmatic approach to change represented by reengineering, and the differences
confound many people. But, as we will show, there are amazing commonalities when you
tap the underlying principles on which their success is based. [6]

CASE STUDIES: QUANTUM CHANGE IN ACTION

IBM CREDIT
At IBM Credit the highly bureaucratized process for approving financing requests was so
slow that it took five separate departments an average of six days to close a deal.
Salespeople were incredibly frustrated because in the interim, many customers took their
business elsewhere. Attempts to streamline the process all failed until one day two senior
managers decided to walk a typical claim through the entire process for themselves. The
experience was crucial since it revealed that the whole process took just ninety minutes to
complete, and pointed to a simple solution. Instead of trying to streamline and reorganize
relations between the five departments, it was decided to take the whole process of credit
approval out of the hands of the specialists and make one generalist responsible for
completing the task. Average completion time was reduced to four hours, and the
productivity of the system as a whole was eventually increased one hundredfold through
the introduction of new technology, using a small group of skilled specialists as a back up
resource to support the generalist's work.

As Hammer and Champy have shown, this case provides a wonderful illustration of the
breakthroughs to be achieved by rethinking and reshaping complete business processes
with the customer in mind. But look at how the change happened. It wasn't the result of a
formal program so much as of a 15% action on the part of two managers. By walking a
typical claim through the whole process they found a way of breaking the bureaucratic
stalemate, opening the way to a series of key improvements. Reengineering , like other
programmatic approaches to change, is most successful when it's implemented through
high leverage actions that create a new context for those involved in tackling key
problems. The pattern is also evident in the following examples. Without this kind of
leverage change initiatives are as likely to become empty, expensive rituals, as means of
creating significant breakthroughs.

FORD MOTOR COMPANY

The dramatic breakthrough at Ford Motor Company's North American Accounts Payable
Department came when a group of Ford managers visited Mazda in Japan and found that
the work being performed by five hundred people at Ford was being done at Mazda by
five. The executives realized that instead of just trying to improve the accounts payable
system they should focus on rethinking the whole process of procurement, encompassing
purchasing, receiving and accounts payable. This new focus reframed the whole business
problem, allowing them to find a solution whereby the receiver, supported by an
appropriate information system, could authorize payment for goods received when
backed by relevant purchase orders. At a stroke the accounts receivable function was
eliminated, reducing staff to 5% of the original number in the form a small team of
people handling exceptional circumstances.

Here again we see the effects of high leverage actions creating a new context where new
things can happen. The visit to Mazda transformed executive assumptions about what
was possible. The focus on the importance of the receiver as the crucial point in the
procurement process allowed them to lever a complete transformation with dramatic
results.

Hammer and Champy and other proponents of reengineering do an excellent job in

promoting the power of reengineering as a concept. But they tend to underplay the
significance of finding the high leverage initiatives that spell the difference between
failure and success. Too much emphasis is placed on selling reengineering as a solution,
and too little on the strategies and tactics needed to make it work. Yet the lessons are
there in their case studies. Take for example the major strategic transformations achieved
at Taco Bell, Capital Holding, Bell Atlantic, and Hallmark Cards. They all lend support
for the emergent "15% nature" of successful change.

TACO BELL
Under the leadership of John E. Martin Taco Bell has been transformed from a small
regional $500 million company in the quick service restaurant business into a $3 billion
company with its sights set on $20 billion in sales by the year 2000. Martin attributes this
breakthrough to the insight that the only way that Taco could become a giant player was
to focus on the value given to the customer in terms of the value of the actual food and
paper in the customer's hand.

This led to a search for ways of reducing all costs except those of goods sold, and ended
up transforming the whole business. As Martin puts it, "With that decision we were
creating a true paradigm shift that launched our entire reengineering program... By
thinking entirely out of the box... we unleashed a power within our company that has
produced enormous success and ...has enabled us to think realistically about becoming
the dominant force in the convenient food industry within the next ten years."

The focus on creating a better deal for the customer led to an attack on all overhead and
marketing costs, a flattening of the hierarchy and redefinition of jobs to make the
restaurant manager's role more important, new yardsticks and controls for measuring
performance in terms of sales, profitability and customer satisfaction, and many
innovations in relation to the use of new technology. One thing led to another as the
changes rippled through the organization. For example, a decision to increase the focus
on the customer by reducing the kitchen area of outlets from 70% to 30% , led to search
for innovations that would allow more preparation of food outside the restaurant. This, in
turn, led to the idea of "kitchenless restaurants" and the idea that the company should be
taking the food to where people congregated rather than expecting the people to come to
them, This in turn is leading to a reinvention of the basic business that is taking the
company out of the traditional fast food restaurant niche into becoming a value leader for
foods for all meal occasions.

The changes at Taco Bell have been driven by a quantum sense of vision linked to a
highly leveraged set of insights and actions that have resulted in a fundamental
reengineering of the company. The question we ask is whether the success has been
driven by a reengineering program, so much as by a series of 15% initiatives that have
produced a set of reengineered outcomes?

It may seem paradoxical to describe this change as being driven by the 15% principle.
But that's exactly what happens. Thousands of companies are driven by a vision of
making customer needs the central point of reference. Few succeed in the manner of John
Martin and Taco Bell. The key, as Martin says, is to find ways of making the vision
realistic and actionable. In his case the decision to drive change around cost reductions
outside the direct costs of good sold, created a sense of purpose and direction that
allowed all the detailed initiatives to unfold. They were not planned or programmed in
advance. They emerged as resonant 15% opportunities along the way.
BELL ATLANTIC
At Bell Atlantic, a $12 billion communications company facing the challenge of moving
from a monopoly position to one of open competition while meeting new technological
challenges, reengineering was seen as a means of creating dramatic improvements in cost
and service. Under the leadership of Regis Filtz, head of Carrier Access Service, first
steps were taken. Filtz decided to meet first-hand with the three largest long distance
carriers to understand what they wanted long and short term. He sees these meetings as
crucial in getting to the heart of the situation, in a way that was impossible through more
formal market surveys. From there the project moved to an analysis of current problems,
revealing a slow, expensive delivery process involving 13 different organizational units
and 27 different information systems.

To address the problems two cross-functional reengineering teams were established with
a view to slashing costs and service time. One of these teams, known as the "core team,"
was given the seemingly impossible goal of achieving a new work design that could
provide cost effective service with a zero cycle time. The other team was charged with
testing and implementing the ideas with no holds barred. They were empowered to make
any changes in procedures and work processes. As Filtz reports, the leadership and
membership of these teams was crucial, and much care was taken to ensure that they had
the character and skills to make them effective.

Using close communication between the two teams a rapid cycle of improvements were
soon created. Within a month the core team had developed the prototype of a new system
that was then piloted and improved in practice. From there it was spread into other
operating subsidiaries.

The process delivery changes were then used to drive further changes in management
systems and management practices based on cross functional modes of operation. In this
way the pilot projects prototyped the new style organization, their obvious success - with
service cycle time being reduced close to zero in many cases, and costs being reduced
from $88 million to $6 million - sending a strong message about the need for change to
the culture at large. The improvement process continued as the core team engaged in
further experiments designed to create further changes in modes of operation by using
multi-skilled individuals supported by new technology in place of the cross functional
teams.

At Bell Atlantic we see the same process of quantum change as in the other case studies.
It's driven by carefully targeted initiatives and experiments capable of prototyping new
styles of organization in practice. Success breeds success as the organization uses
carefully chosen initiatives to lever large effects. There's no attempt to change everything
at once even though the aim is quantum gain. With hindsight there is a very clear course
to the change. It's a reengineering project that's worked! But the precise path emerged as
the project went along!
HALLMARK CARDS INC.
The transformation at Hallmark was another top-down initiative designed to create a new
competitive edge in the face of fragmenting markets, expanding channels of retail
distribution, and smaller average print runs, all leading to fundamental changes in the
economics of Hallmark's business. The project was driven by a "quantum vision" of
achieving radical transformation in the way the company did business, but again,
unfolded in a step-like way.

The first step was to get the company's 40 senior executives "on board" through an off
site meeting. From there the company proceeded to create a broader context for change
by getting the chairman, Donald Hall, to articulate the company's "beliefs and guiding
values" for communication to employees generally. A clear set of business priorities was
also set, emphasizing the importance of getting new products to market in less than a
year; producing products and promotional programs that consistently won over both
buyers and retailers; and reducing costs with continued improvements in quality. As
Robert Stark, President of the core business unit puts it, "It all boiled down to
dramatically improving performance at the retail level" through Hallmark's specialty
stores and other distribution outlets.

Against this background the company embarked on what Stark calls "The Journey." They
sought , in his words, "to demonstrate the viability of some of (the) concepts and come
out with significant wins. That required picking our pilot projects carefully. They had to
be believable and reproducible in another area of the organization. The improvement had
to be order-of-magnitude - something you couldn't get from continuous improvement, for
example."

As in the other cases the whole change was driven by pilots and prototypes that brought
the challenges down to a manageable size. For example, they grouped one hundred
people into nine teams to address what Stark calls a series of "leverage points" - the
critical parts of the business that needed to change. From over a hundred
recommendations for design improvements, a dozen were selected for validation in a
series of pilot projects. As a result of the experience critical improvements were made,
for example, around the use of new technology. Specific understandings of how new
technology could improve the business came through the experiments. As Stark reports,
there was a faith in the idea that new technology could improve the business, but the
details had to emerge and be refined through practice.

For example, an initiative designed to create instantaneous market information led to a

number of stores being outfitted with computerized point-of-sale information systems.
Decision support systems were then produced, allowing fine-grained real-time analysis of
what was selling and what wasn't, using experiments with in-store layout, promotion and
advertising to determine effectiveness on the basis of immediate feedback.

In another situation, pilot experiments in relation to the product-development cycle for a

new line of cards allowed the time to market to be reduced from an average of two to
three years to less than a year. Over half the line hit the stores within eight months. The
breakthrough was achieved by prototyping a system whereby the development process
broke the boundaries between traditional departments and functions by using integrated
teams that could communicate and act creatively in a more direct way.

Hallmark provides an exemplar of the reengineering process and of how it is possible to

achieve quantum change. But the change is not achieved at a stroke. It unfolds in what we
are calling a 15% way, taking a course that could never have been clearly anticipated at
the start.

RICARDO SEMLER'S TRANSFORMATION AT SEMCO

Ricardo Semler's best selling book Maverick, together with his two Harvard Business
Review articles, chronicles the development of what's described as "The world's most
unusual workplace": a Brazilian company that "has no receptionists, secretaries, standard
hierarchies, dress codes, or executive perks...a company that lets you set your work hours
and even your salary...where the standard policy is no policy." [7] Semler is the
flamboyant and inspirational CEO in his mid thirties who, in just ten years, transformed
the company into what is now being touted as "a model for the 90s and beyond." Semler's
work is much admired. He is celebrated as a role model of a CEO who bucks all the rules
and succeeds, but one who's behaviour and success seems to defy explanation.

In our opinion, he is a master of highly leveraged "15% change."

A lot of Semler's early changes were classic "catch up" measures. Quantum change was
achieved in a quantum way as he wielded the corporate axe to cut a failing organization
into shape, and through acquisitions that created a diversified company driven by tight
discipline and control. The stress of these changes was enormous, generating hosts of
personnel problems and discontent. Semler himself was being physically destroyed by his
workaholic life-style, creating a context in which something had to give. And it did!
Semler's sickness forced a dramatic reappraisal of his work patterns, and a complete
reformulation of his approach to managing the company. His state of personal crisis
catalyzed a series of changes that set the organization in a completely new direction.

He began by attacking what he calls "corporate oppression." Time clocks, dress codes,
security procedures, privileged office styles and perks, along with other manifestations of
the driving culture came under attack. His reduction in hours of work and the desire to
make himself dispensable encouraged greater delegation and a drive towards
arrangements where factories and offices became more self managing.

As Semler acknowledges, one thing led to another. The attempt to increase worker
involvement in decision making through "factory committees" got off to a stumbling
start. Many people didn't want to be involved, and those that did focussed on minor
issues. People were scared about being on the committees and losing their jobs,
particularly if they were outspoken, so Semler guaranteed that they could not be fired
while serving on the committees and for at least a year thereafter. His initiative created
room for real initiative to develop.
From there the power of locally based management really began to grow, and the
committees began to wield a major influence on the business. They began to assume
responsibility for their activities, and to push their boundaries into other areas. The drive
to increase profitability under new profit-sharing schemes encouraged them to look for
savings and efficiencies wherever they could be found. This led them to question the role
and utility of various levels of management and to eliminate redundant managers and
procedures that didn't add value. The drive towards a flatter organization began to come
from below! The revolution in Semco had now really begun, and Semler became more
and more committed to this emerging style of organization, even though he didn't know
where it would take him.

Semler presents himself as "the questioner," the challenger" and "the catalyst": as the
person who asked basic questions and encouraged people to bring things down to the
simplest level in making key decisions shaping their work performance. By challenging
the status quo at every turn and allowing people to come up with appropriate solutions,
the attack on bureaucracy and conventional styles of management became more and more
dramatic, leading to many novel innovations such as: the "spinning off" of factories and
other business units into separate self regulating units; widespread profit-sharing; the
hiring and firing of managers by their employees; and the idea that to keep employed
you've got to find a way of adding visible value so that your team will continue to want to
include you as part of their six month budget. As a result of these innovations on the part
of his employees Semler prides himself on the fact that he is now completely dispensable
and spends less and less time working for the company.

Semler has helped to create a quantum change at Semco. But it's patently clear that he has
done so incrementally. Although Semco is now touted and celebrated as a model of a new
kind of industrial democracy, its distinctive style has not been created by design. It's not a
model that any other organization can copy or one that will guarantee success either now
or in the future. Semco is an organization that has evolved through a series of 15%
initiatives. As in all the other case studies featured in this article, we see in its history a
series of high leverage changes that are as likely to be born out of desperation as from
high principle or design. The style of industrial democracy we see today began to emerge
when Semler collapsed from exhaustion and had no other option than to relinquish
control. His particular skill and genius has been to recognize the self-organizing
potentials that were unleashed and how he could build a new organization around them,
meeting forks in the road as they arose and nudging the organization along an appropriate
path. For example, the decision to guarantee that factory committee members couldn't be
fired during or immediately after their time in office was absolutely crucial in nurturing
the new approach to a critical level where workers could realize that they were truly in
control.

KEY PRINCIPLES FOR MANAGING CHANGE

All these case studies, and the dozens of change interventions with which we have been
involved, point to a number of principles that provide a powerful yet practical theory
through which we can guide successful change. The key to it all rests in understanding
that the preeminent task of leadership and management is to create contexts in which
meaningful change can occur. The days in which leaders can mandate, control and direct
change are in most circumstances gone. The challenge in turbulent times is to recognize
that controlled, planned change though maybe an ideal, is an illusion, and that the longer
we try to hang onto this idea, the more trouble we are likely to create. Leaders must focus
on "context making" in a way that embraces the traditional functions of setting a direction
for the future, while creating a sense of space and possibility within which meaningful
innovation can occur, and which at times, will challenge the direction being taken. Our
key insight around this process is to recognize that this is best achieved through what
we'll call a "high leverage incrementalism" that confronts the dilemma that while leaders
and managers are charged with leading and managing their organizations, they usually
can only do so in a constrained way.

The reality is one of mastering and generating the art of "15% change" throughout an
organization. In turbulent times managers need to find ways of creating contexts that
evolve: by using their limited but always significant spheres of influence to nurture the
creative possibilities that always arise in systems that bring people together. The detailed
principles discussed below capture the essence of the approach:

1. Find ways of creating quantum leaps through well-chosen 15% initiatives.

2. Recognize the connection between the "15% principle" and the art of high
leverage.
3. Mobilize the effects of "critical mass."
4. Be open to spontaneous and random changes that can produce unanticipated
breakthroughs.
5. Recognize how spheres of influence interact.

1. FIND WAYS OF CREATING QUANTUM LEAPS THROUGH WELL-CHOSEN 15% INITIATIVES.

It's a paradox, but as we have shown, it's possible to create quantum change
incrementally. The trick is to be driven by a quantum sense of vision that seeks major
transformation, but to find ways of achieving the vision through manageable "doable"
initiatives that fall within the 15% sphere of influence. This is a characteristic of all the
examples discussed above.

The trouble with a lot of visioning is that it's either so open that it can mean anything, or
so precise that it creates a myopic focus. The former dissipates energy. The latter has a
tendency to create groupthink and to lock the organization into too narrow a frame of
reference. All the case studies discussed above show that change evolves. Its precise
pattern and course can never be predicted in advance. The trick is to use the visioning
process to create a shared frame of reference that will motivate and allow people to find
the 15% initiatives that can lead to major breakthroughs. As we have suggested, everyone
in an organization has access to their 15%. When this is mobilized in the context of a
shared vision powerful forces for change are unleashed. This idea of unlocking 15%
innovation within the context of a shared vision needs to be a guiding principle of all
change initiatives since its impossible for change in any complex situation to be an
individual affair. [8]
2. RECOGNIZE THE CONNECTION BETWEEN THE "15% PRINCIPLE" AND THE ART OF HIGH
LEVERAGE.
To illustrate this point examine the above picture. Our question, what is this scene? Most
people will see a preacher addressing an open air congregation. Now, turn the page, and
examine the picture presented there. We've made a "15% change" and placed a flowerpot
on the preacher's head. In the process we've created a completely different scene
depicting a street entertainer. If this is the picture that you'd seen first, there would be no
preacher.

This is what we mean by creating a high leverage 15% change. It's something that is
often very simple yet so powerful that it creates a completely new context. In our
experience, successful change agents are masters at the art of "finding the flowerpots"
that will make an enormous difference to how change unfolds. Revisit our case studies.
All of them illustrate this process. The decision to walk a credit application through the
approval process at IBM Credit created a completely new context for understanding the
basic business problem. The visit of Ford executives to Mazda transformed their view of
the accounts payable function. Taco Bell's decision to focus on reducing the cost of
everything except the cost of goods. Their 70-30 rule for viewing restaurants. The
membership of reengineering teams at Capital Holding and Bell Atlantic. The projects
selected as pilots and prototypes at Hallmark. The decision to survey employees for the
first time and "break the grapevine" in our opening case. Semler's guarantee that factory
committee members could not be fired for making an unpopular decision. All these are
examples of "15% flowerpots" that had a dramatic influence in creating a new context in
which new initiatives could unfold.

The art of context-making is crucial for successful leadership and management. When
this is linked to the "15% principle" and the realization that small changes can lead to
large effects, 15% influence doesn't look so small anymore. Properly leveraged 15%
initiatives can have a dramatic impact on how change unfolds.

3. MOBILIZE THE EFFECTS OF "CRITICAL MASS."

One "15% initiative" can lead to another.....and another and another. Change unfolds. The
decision at Taco Bell to focus on increasing value to the customer by reducing the cost of
everything but the costs of goods sold brought focus to an abstract vision. This in turn led
to numerous ideas and initiatives on how the costs could be reduced, setting in motion
further changes resulting in the restructuring and redefinition of jobs, the relationship
between kitchen and eating areas, the idea of the kitchenless restaurant, and so on.
Semler's revolution was the result of a whole chain of changes that built upon each other
and developed momentum along the way. This is the process of developing critical mass
whereby a series of changes, large and small, accumulate to create truly transforming
results.

One person can never make a revolution. He or she may set it on its way. But it takes the
energies, actions and commitments of many others to make it a living reality. When you
get enough people using high leverage 15% initiatives within the context of a shared
vision, the critical mass effect allows you to reshape the collective 85%. Successful
change, often driven through small wins, generates a momentum for further change, as
others get on board.

4. BE OPEN TO SPONTANEOUS AND RANDOM CHANGES THAT CAN PRODUCE UNANTICIPATED

BREAKTHROUGHS.
Who'd have thought Semler's revolution at Semco could be attributed to his physical
collapse and exhaustion? It's a little bit of an exaggeration to present the issue this way,
but this event marks the precise moment at which the company began to embark on the
journey that eventually led to the democratization and decentralization of the
Corporation. Who'd have thought that the reluctance of factory committees to exercise
real power could lead to their true empowerment?

The successful management of change requires that we be open to unexpected problems

and solutions because they contain the seeds of new development. As Pamela Godwin at
Capital Holding put it, problems lead to better solutions. When approached constructively
they can point toward developments that could have never been anticipated. All our case
studies share this characteristic in that their paths to success were never straight lines.
They were journeys shaped by all kinds of twists and turns that, in the end, led to
constructive lines of development.

5. Recognize how spheres of influence interact.

Interacting "15%'s" shape much of the total context - "the collective 85%"! To illustrate
consider the following diagram. A manager's 15% does much to shape the 85%s of those
with whom he or she works, and visa versa. Organizations are domains of interacting
spheres of 15% influence. When we recognize this, we translate what seems at first sight
to be a very limited individual sphere of influence into an extremely powerful ... Whether
we know it or not, our organizations are being shaped, for better or worse, by our
individual 15%'s. When we recognize this we open the way to the idea that collectively,
we have the means to make major contributions to the reshaping of each other's world!

All five of the above principles contribute to a view of change management that
recognizes and mobilizes the natural energies of a system so that change can "self
organize" in a way that will find an appropriate path. The leader's task is to help create a
context that will allow this self organizing activity to acquire a coherence that addresses
the significant challenges being faced. Turbulent times require that we approach change
in an opportunistic, open ended fashion. We believe that the high leverage yet
incremental change strategy that we have advocated here offers a powerful means of
dealing with the complexities and uncertainties of a world where successful change
cannot be created by design. Change unfolds. It can be nudged and shaped, but never
fully programmed and controlled.

By acting on the "15% principle" we can live through the dilemma of being powerful and
powerless at the same time. By working with and through others towards visions we
value and share, we can make transformations in the collective 85%. In doing so we
practice the art of creating quantum change, incrementally!
 ENDNOTES:

1. Michael Beer and his colleagues. "Why Change Programs Don't Produce Change,"
Harvard Business Review. (November-December 1990) pp. 158-66. Also John Kotter, J.
"Why Transformation Efforts Fail," Harvard Business Review. (March-April 1995) pp.
59-67.

2. For a more detailed account of Deming's ideas, see Deming, W.E. Out of the Crisis.
Cambridge, Mass.: MIT Press (1988).

3. Karl E. Weick (1984). Small Wins: redefining the scale of social problems." American
Psychologist, vol. 59, no. 1, January 1984. For an account of current research in this area
see Reger, R.A. Gustafsun, L.T., Demaire, S.M. and Mullane, J.V. (1994). "Reframing
the organization: Why implementing total quality is easier said than done." Academy of
Management Review, vol. 19, pp. 565-584.

4. See Mintzberg, H. (1994). The Rise and Fall of Strategic Planning, New York: The
Free Press; Quinn J.B. Strategies for Change: Logical Incrementalism. Homewood, Il.:
Irwin (1980); Lindnom, C.E. (1959). "The science of muddling through." Public
Administration Review, 19, pp. 79-88 and Linblom, C.E. (1979) "Still muddling, not yet
through." Public Administration Review, 39, pp. 517-526.

5. Alinsky, S. Rules for Radicals. New York: Vintage (1972).

6. The material presented in the IBM Credit, Ford, Taco Bell, Capital Holding Corp., Bell
Atlantic, and Hallmark Cards cases is taken from Michael Hammer and James Champy's
Reengineering the Corporation (1993), especially the original accounts of the change
process offered by the change champions involved.

7. The material on Semler's transformation of Semco is taken from his 1993

autobiography, Maverick, and his HBR articles "Managing without managers,"
(September-October 1989) pp.76-84; and "Why my former employees still work for me,"
(January-February 1994) pp. 64-74.

8. For further discussion of this idea see the chapter on "Strategic Termites" in Morgan,
G. Imaginization: The Art of Creative Management. Newbury Park: Sage Publications
(1993). Also, see the literature on the links between chaos theory and management in
turbulent times. For example, see Stacey, R.D. Managing the Unknowable. San
Francisco: Jossey-Bass Publishers (1992); Wheatley, M. Leadership and the New
Science: Learning About Organizations from an Orderly Universe. San Francisco: Berret-
Koehler (1992); and Goldstein, J. The Unshackled Organization. Portland, Ore.:
Productivity Press (1994).

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