Success today requires organisations to be strategically-flexible and effective at change. Successful change often requires re-organisation, sometimes major transformation, and always sensitive management of people. On these issues, three recent publications in the leadership field caught my eye.
The first is a recently published book: ‘Stragility: Excelling at Strategic Changes’ by academics/consultants Professor Ellen Auster and Lisa Hillenbrand. Although it lacks a full or original model on the subject, the book has attracted attention – not least, I suspect, because of its clever, one-word title – and it does contain some wise nuggets. Its central argument is that too many leaders: fail to update their strategies regularly enough in response to external change; they don’t manage strategy and change in an integrated way; they don’t manage change enough as a people-centred process; and they tend to see change as top-management pushing action ‘down’ the organisation.
The authors urge leaders to develop four “critical” skills. Firstly, rather than see business strategy as fixed and set for years at a time, leaders should instead follow a continual ‘sense and shift’ approach that focuses on closely monitoring what’s happening in the external world and then update/refine their organisation’s strategy in response. Not exactly a novel view on strategy, but a welcome reminder.
Secondly, leaders should face up to, rather than ignore, the politics that inevitably exist in any change programme by building support proactively across stakeholder groups. The authors suggest a five step process: i) map the ‘political’ landscape; ii) identify the key ‘influencers’ within each stakeholder group; iii) assess influencers’ receptiveness to the planned change; iv) mobilise influential ‘sponsors’ and ‘promoters’; and v) engage influential ‘positive’ and ‘negative’ sceptics. This is the best and most original part of the book (but a better explanation of these ideas was given in a previous article by Auster a few years ago – see my blog post of August 2013 here on Stratminder reviewing that article).
The third skill that leaders should develop is ‘inspire and engage’ rather than the more usual ‘tell and sell’ approach to change. This means taking time at the start of a change project to communicate with people who are going to be affected by the change and, in particular, explaining ‘why‘ the change is needed and exciting people about a future vision based on appealing to their emotions, not just presenting facts. It also means leaders helping people to understand, asking for their ideas and input (to develop a feeling of ownership of the change) and working through their concerns. Where change requires a move from a current state which is settled but not stable or viable long-term, leaders need to persuade people by presenting fresh facts about the current state to show how continuing with the status quo is not acceptable/desirable.
The final skill is creating ‘change fitness’ – helping people to cope with the almost continual level of change seen in organisations nowadays by using efficient project management practices. Tactics the authors prescribe include: reduce the total number of change projects happening at any one time by bundling related projects together; prioritising projects well; and using limited-life task-forces rather than open-ended projects. Other tactics suggested include: make extensive use of pilots and prototypes before rolling out initiatives; ensure projects have contingency back-up plans; ensure project plans have some early quick-wins and have frequent milestones; and take time to look back at completed projects and learn what went well or not so well. All good stuff, even if not new thinking.
The next, recent publication I liked on change dealt with the subject of re-organisations: it was entitled ‘Restructure or Reconfigure?’ by strategy professors Stephanie Girod and Samina Karim in the March/April issue of HBR. Based on research and experience looking at re-organisations over the last couple of decades, the authors propose some very useful and clear guidance on how to re-organise well.
Their starting point, though, is to distinguish between two different types of re-organisation (or ‘re-org’). A ‘re-structuring’ involves changing the core structure around which resources and activities are grouped and co-ordinated: companies commonly organise around function, product line, customer segment, technology platform, distribution channel, geography or perhaps a matrix combination of these. In contrast, a ‘re-configuration’ involves adding, splitting, transferring, combining or dissolving organisational or business units without modifying an organisation’s core structure.
The goals for both types of re-org are often basically the same: to improve operating performance, customer satisfaction or innovation. Furthermore, the authors urge that companies need to use both types, rather than choose one or the other. But the key is to use each at the right time, depending on the specific circumstances facing the company.
More specifically, if a company is operating in a fast-moving, quite open or turbulent marketplace, it’s best to go for regular re-configurations – involving reasonably quick, easy-to-implement, small-scale changes which can put the organisation in a better position to seize ad-hoc opportunities: a re-structuring in this situation would be too slow and cumbersome.
However, if your market is facing a big disruption and a big shift in strategy is called for, piecemeal re-configurations are not sufficient and re-structuring should be used. If your industry is generally quite stable and predictable, re-structuring is also more appropriate. But don’t use restructurings too often, though, as they can cause a lot of turmoil and tension and – importantly – they usually need at least three to four years to bear fruit. The general, overall rule should be: re-structure sparingly but be ready to re-configure more often in between restructurings (but not so often that chaos or change fatigue set in).
Both restructurings and reconfigurations work best when they are explicitly designed to build on an organisation’s competitive strengths or increase differentiation against competitors. It’s also important to remember, of course, that with either type of re-org, when activities are re-organised, the resources needed to support them must follow. But with a restructuring, additionally, many other aspects of the overall organisation should be changed too – and quickly – to avoid dysfunction: these include management processes, IT systems, culture, leadership styles and people incentives/rewards.
The final, recent publication that caught my eye was an article in the HBR May 2017 issue entitled ‘What the Best Transformational Leaders Do’, written by two strategy writers/consultants S. Anthony and E. Schwartz. They did a study of S & P and Global 500 companies and found that the leaders who achieved the most successful transformations – those involving creating new product/service offerings and business models to push into new growth markets – shared some revealing, common characteristics and a similar approach in how they led their transformation.
Such studies, of course, always need to be taken with a good pinch of salt because they involve wide, qualitative judgements, but I noted in this case the assessment was done by a combination of desk analysis of companies’ performance and then using a panel of ‘expert’ judges including luminaries like former CEO of Procter & Gamble, A.G. Lafley. Their ‘top 10’ transforming companies included a cross-sector mix, ranging from stars like Amazon, Netflix and Microsoft to less obvious names like Danone and ThyssenKrupp.
But more interesting than such details are the general, five recommended principles and practices that the authors propose arising from the study:
The first principle is that the most successful transformational leaders tend to be individuals who are what the authors term “insider-outsiders” – that is leaders who have both some relevant, transferable experience from another sector or field as well as some knowledge/experience in their current organisation or its sector. Furthermore, these leaders maintain an outsider/external perspective throughout the transformation journey they manage. That perspective helps them see and explore paths to growth or improved success without being constrained by yesterday’s success formula.
The second principle is that successful transformation requires a “dual process” of two separate but simultaneous journeys: one is developing and repositioning an organisation’s existing, core business, whilst the second involves actively investing in and nurturing the new growth business. The classic exemplar here is Apple: all those years ago Steve Jobbs launched a radically new type of consumer product cum content eco-system involving iPod and iTunes, but at the same time, whilst he nurtured that new growth engine, he reinvigorated the core Mackintosh business by injecting a new sense of thinking and design for what computers could be used for in the age of the internet.
The next principle is that successful transformational leaders actively use culture and values to help drive engagement amongst employees and create the best, supportive environment to favour the desired change. For example, at Microsoft, in the first four years with Satya Nadella in charge as CEO, he converted a traditionally cautious, insular culture that involved large teams working for years on a major new version of a program into a new culture where dozens of new features and improvements were introduced every month (and no one would fully know ahead of time what they were).
Another principle is that leaders should develop and communicate a powerful story / narrative about the future. The leader needs to present a stark but realistic assessment of why the status quo cannot continue and then build a picture of a fresh, exciting new vision of a better future and explain the path of how to get there. Leaders should tell the story repeatedly, consistently, and persistently, telling different aspects of the same story to suit the different groups of people affected by the change.
The fifth and final principle recommended by Anthony and Schwartz is that transformational leaders should note that transformations typically need several years before their full aims are realized, so leaders should develop a long-term road-map for handling the journey and get started as soon as possible on the journey. In this way, when likely difficulties or disruption do occur down the line, leaders will be more prepared and in a stronger position because they will have pushed forward more of the planned changes by that time and their planning well-ahead will help them deal with and move on from the disruption when they see it.
Altogether, I think the book and the two articles outlined here present a practical and valuable pot of good ideas and recommended practices to help with the leadership of strategic change. They don’t give an exhaustive list of good practices, but they do show, in particular, that change is a complex, multi-faceted challenge that demands proactive and thoughtful management of both ‘hard ‘ aspects of change (e.g. structure) and ‘soft’ aspects e.g. people and communication.
As always, if I can be of assistance with change in your organisation, do get in touch.
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