Harvard Business Review and others have cited about 70% of all change efforts fail. Many include reorganizations. Studies such as Bain & Company’s show only a third add any meaningful value. In spite of this, close to half of all CEOs do a reorg in their first two years. Lehr explains the money pit and how to avoid it.
Greg: Mike, companies cannot avoid change. When one does the research though, change seems highly risky and costly. It seems a company can expect to face this risky, costly task again and again. Where is the biggest waste in these efforts?
Mike: The biggest waste is that leaders do not apply the same business sense to change that they do to their businesses. They think they do but they do not.
For example, a company test markets ten products. Two do well, three okay and five are duds. Where does it invest more? The two best sellers of course, it sends the others back for more testing and study.
When it comes to change though, that same company will spend the same money, time and effort on everyone. The cost is in the form of training, education and communication. The company is now a farmer who plants seeds no matter how bad the soil is. That is a big money pit.
The truth is that some personalities thrive on change better than others do. People also differ in where they are with their careers and family. Some are more motivated to seize change than others are.
Greg: I see that. How does that work though when you need everyone moving in the same direction?
Mike: Greg, five to six thousand naval personnel work on an aircraft carrier. Yet, you only need a handful to steer it in a different direction. The rest go along.
Studies show that a minority as small as five percent can influence a group. That minority needs to be passionate, organized and purposeful. A majority did not win the American Revolution. A minority did. A large majority opposed it or were apathetic towards it. In the end though, that majority went along.
As with any movement, we find and organize our best supporters. It is not about changing some people and not others. It is about changing people at different times that suit their personalities and circumstances.
When we start a snowball, we collect a handful of snow and compact it. Once we start rolling it though, we do not have to do any compacting. The weight of the snowball does that. We just keep it moving. More snow just sticks and comes along.
The snow in a snowball does not come together all at once. That would be way too much work. Yet, that is how we tend to promote change. We try to get everyone to stick to our snowball at once.
Greg: How do we put this concept into an action plan?
Mike: First, we assess personalities. Second, we organize them. Third, we support them exceptionally well.
Again, some personalities are very accepting of change. I call them Initiators. There are others who just want to change the status quo because it does not serve them. They might be looking for new opportunities or ways to show better their talents. Personality assessment tools can help here. Once you learn what to look for it becomes easier though.
The tough part is organizing them. People need to be from all parts of the firm and all levels of its hierarchy. There are two basic ways. One is to organize them as a separate unit specializing in that new product, service or process. The other is to link them as a formal, internal network aimed at helping each other.
Once done, we devote exceptional money, time and attention to them. This keeps our snowball moving. The idea is to get everyone else wanting to be them. Some will do so because they see the change working, others because they see it is “the thing to do.” Others will not.
How this all plays out depends on the change the company is making as well as its culture, internal politics and traditions. Individual personalities and relationships make a difference too. Having leadership that actively and very overtly supports Initiators is the force that keeps the ball rolling.
To learn more about leading through change, visit Mike’s website at http://omegazadvisors.com/benefits/