Leading Change

by John Kotter

John Kotter is a Professor at the Harvard Business School, specializing in management and leadership. He
has a long string of books to his credit, including the phenomenally successful The New Rules: How to
Succeed in Today's Post-Corporate World (1995). In Leading Change, he presents a tried-and-true approach
that organizations can follow to induce positive change within their ranks.

Before presenting his recipe for inducing proactive and positive change within an organization, Kotter
analyses how and why major change efforts often fail. He identifies eight common errors:

1. allowing too much complacency

2. failing to create a sufficiently powerful guiding coalition of senior people
3. underestimating the power of vision
4. under-communicating the vision (by a factor of 10, or 100, or 1000)
5. permitting obstacles to block the new vision
6. failing to create short-term wins
7. declaring victory too soon
8. neglecting to anchor changes firmly in the corporate culture

As a result of these common errors:

 new strategies aren't implemented well

 acquisitions don't achieve expected synergies
 reengineering takes too long and costs too much
 downsizing doesn't get costs under control
 quality programs don't deliver promised results

Accordingly, Kotter has articulated an eight-stage process for creating major positive change within an
organization. (Note that each of the eight steps addresses one of the 'eight common errors' referred to
above.) The eight steps are:

 Establishing a sense of urgency

 Creating the guiding coalition
 Developing a vision and strategy
 Communicating the change vision
 Empowering broad-based action
 Generating short-term wins
 Consolidating wins and producing more change
 Anchoring new approaches in the culture

The major considerations to be borne in mind at each step are as follows.

1. Establishing a sense of urgency. Kotter outlines several sources of complacency that might exist
within an organization that works against the creation of a sense of urgency regarding the need for change.
These include:

 the absence of a major and visible crisis

  too many visible resources (e.g. ornate boardrooms, plush offices)
 low overall performance standards
 organizational structures that focus employees on narrow functional goals, rather
than the overall situation of the organization
 internal measurement systems that focus on the wrong performance indicators
 a lack of sufficient and effective feedback from external sources
 a low-confrontation, or kill-the-messenger, environment
 human nature (preferring to deny a crisis rather than embrace one)
 too much ‘happy talk’ from senior management

He discussed various ways of raising the perception of urgency, to prepare a more receptive environment
for the change effort. Such methods include the following:

 allow a financial loss and thus expose managers to major weaknesses

 visible and public removal of the signs of excess
 set targets so high that they can’t be reached by simply conducting business as usual
 adopt a broader-based management and accountability system
 circulate more data about customer feedback and performance appraisal
 insist that employees and managers talk more frequently to dissatisfied customers,
unhappy suppliers, and grumbling shareholders
 use consultants to force more open discussion within an atmosphere of objectivity
and honesty
 stop senior management ‘happy talk’
 bombard people with information on future opportunities

2. Creating the guiding coalition. This second step is also key and involves the establishment of a team
of senior individuals to lead the transformation within the organization. Kotter differentiates between
leadership (i.e. the vision to see where the company should be going, and the charisma to inspire others to
follow him or her) and management (i.e. skills in the administrative procedures to make positive change
happen), and points out that the team guiding the change effort needs to have skills in both areas in place.

Other important considerations in establishing a guiding coalition are:

 ensure that enough key players are on board so that those left out cannot easily
block progress
 ensure that the range of expertise that is required to make informed decisions is
represented in the group
 credibility ensure that the guiding group has the credibility and respect of others in
the firm

3. Developing a vision and strategy. "Vision refers to a picture of the future with some implicit or
explicit commentary on why people should strive to change that future. In a change process, a good vision
serves three important purposes. First, by clarifying the general direction for change, by saying the
corporate equivalent of "we need to be south of here in a few years instead of where we are today", it
simplifies hundreds or 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."

Vision is just one element in a strategic plan. It is supported by strategies, plans, and budgets, which are all
interlinked. Kotter puts it all together in a remarkably useful diagram that links these elements, plus
suggests the appropriate roles for 'leadership' and 'management' in the process:
4. Communicating the change vision. The fourth step is to communicate the change vision throughout
the organization. Here, Kotter provides several guidelines:

 keep it simple, avoiding jargon and technobabble

 use metaphors and verbal analogies to convey ideas
 communicate using multiple forums (e.g. meetings, company newsletters, informal
interactions, etc.)
 repeat the vision many times
 lead by example, showing how the vision influences the behavior of senior people in
the company
 explain any seeming inconsistencies
 encourage two-way communication between management and staff

5. Empowering broad-based action. In most if not all cases, a vision will entail something to do with
enhanced or superior customer service. The ones who typically deliver this are the 'front-line troops': the
sales and service personnel who come into direct contact with the customer of the business. They must be
freed from any restrictions that would not allow them to respond to customer requirements. Accordingly,
once a vision and strategy are in place and have been communicated to employees, the next step is to
empower those employees to act in a way that will achieve these desired ends. Kotter identifies several
areas that need attention in this regard:

 ensure that a sensible vision is communicated to employees

 make the organizational structures of the firm compatible with the vision
 provide the training that employees need
 align information and personnel systems with the vision
 confront supervisors who undercut needed change

6. Generating short-term wins. Kotter next stresses the importance of having what he calls 'short-term
wins', that is, visible signs of success that occur within the first year of a change effort (at the latest). These
have several advantages: they provide solid evidence that any sacrifices are indeed worth it; they provide
an opportunity to publicly reward those behind the changes with a pat on the back; they help to build
momentum and convert skeptics into believers; they help to fine-tune the vision and strategies; and they
keep the bosses on board. A key strategic challenge, then, at this point in the implementation of the
change effort, is to identify and celebrate these early successes.

7. Consolidating wins and producing more change . At stage 7, the change effort has proven itself. A
new vision and strategies have been developed, some successes have been celebrated, and the corporate
culture is starting to change. Now is a critical time to ensure that the guiding coalition does not sit back and
rest on its laurels. It is critical at this stage to ensure that the momentum of positive change continues.

Kotter describes what Stage 7 looks like in really successful transformations:

 there is more change, nor less

 more help is available, as more people are brought in to help implement all the
changes
 there is more leadership from senior management, as the process is proven and true
 there is more leadership from below, as those lower in the hierarchy take on
individual projects that are consistent with the vision and strategies
 there is a reduction in unnecessary interdependencies

8. Anchoring new approaches in the culture. The final stage is reached when the changes get firmly
anchored into the overall culture of the organization. He makes the point that these types of
transformations occur only at the end rather than at the beginning of a change process. They are very
dependent upon proven results, which demonstrate tangibly and vividly that the 'changed culture' is better
than the 'old culture'. Often, there will be some staff turnover, as inevitably some people will not embrace
the changes.

Kotter ends the book by comparing the typical twentieth-century organization with the emerging twenty-
first-century type of organization. Because of major changes in customer expectations, technology,
supplier relationships, domestic and global competition, and a host of other factors, business organizations
will look very different in the next century than they did in the last one. The chart below outlines some of
the key dimensions that he foresees in this regard.

Twentieth Century Organization Twenty-First Century Organization

Structure  bureaucratic  non-bureaucratic, with fewer rules
 multileveled  fewer levels
 the expectation that senior  expectation that senior management will
management will manage lead; lower level employees will manage
 policies and procedures create many  minimal interdependencies needed to
interdependencies in serving customers serve customers

Systems  depends on a few performance  dependent upon many indicators,

indicators especially related to customers
 performance data distributed to  performance data distributed widely
executives only  training and support offered to many
 management training and support to people throughout the company
senior people only

Culture  inwardly focused  externally oriented

 centralized  empowering
 slow to make decisions (reactive)  quick to make decisions
 political  open and candid
 risk-averse  more risk tolerant

Leading Change is an excellent workbook for those who are managing a change or transformation in their
organizations. The eight-step program is intuitively sensible as well as proven, and the book articulates the
rationale and the process very well.