Last month, in Part I of this column, I highlighted one of the CEO's biggest challenges: the inevitability of change. This challenge has many layers and levels, and since it involves many individuals and teams, it's much more complex than it appears.
The Complexity of Change
Change is pervasive in our society and a fact of life in organizations. In fact, change is absolutely necessary for the survival of individuals and organizations. The question isn't whether or not to implement change. Over the long run, you have no choice – if you want your company to stay competitive, grow, and succeed.
Types of Organizational Change
There are two types of change you can choose to introduce in your organization: tactical and strategic.
Tactical change occurs in the short-term and, more often than not, is very short-lived. Unfortunately, many business leaders operate with the concept of “Management by best-seller”. It is not to say that there are not good business books to gain ideas and processes. It is more a situation in which the leader reaches out and grasps the book’s concept or the "fad du jour" (e.g., one-minute manager, management by objectives, TQM, etc.) Then the next day, they grasp at the next new idea and whip-saw the organization with inconsistent messages and inconsequential behavior. This attempt to manage change will not result in the outcome the leader desires.
Strategic change is about understanding and communicating the CEO’s vision to drive fundamental aspects of the organization, including the organization's direction, its culture and its ability to execute on the strategy. Strategic change is long-term, and is much harder to implement. As a result, it also has the most significant enduring impact on an organization’s future.
Steps To Introduce Change In Your Organization
How does a major change take hold and become infused throughout the organization?
CREATE THE VISION. Successful change is hinged on a picture of a desirable future. Without a clear vision, change efforts can dissolve into a list of confusing projects that take the organization in the wrong direction. It’s important that the vision be clear and easy to communicate.
CREATE A SENSE OF URGENCY. If people think that the organization is doing fine, there will be little motivation for change. Successful change starts when everyone takes a hard look at the organization's competitive situation, market position, technological advances, and performance, and realizes that “if nothing changes, nothing changes.”
COMMUNICATE THE VISION. Getting the word out is key. Change is not possible unless people are willing to help. Speeches, posters newsletters help communicate the vision, but the most powerful medium is the behavior of the leaders in the organization. Very visible executive-level leaders must behave in ways that are consistent with the vision.
MANAGE THE PLANNING AND EXECUTION PROCESSES. The key to turning a strategic vision into reality comes from linking the strategy to the daily activities of every team member, assigning accountability, creating timelines to the vision for change, and then working the plan. Changes and revisions to the strategic plan will be necessary, but if the strategic leader doesn't insure that the vision for change evolves into a plan for specific action, the vision will just sit in a 3-ring binder on a dusty shelf.
PLAN TO OVERCOME RESISTANCE. Anyone who has ever been in an organization knows that even small amounts of expected change lead to decreased organizational effectiveness. Change suggests letting go of old habits, roles, processes, procedures, and structure. There is uncertainty about new requirements and excessive concern about the future. All of this results in anxiety, stress, conflict, and resistance. Failure by the strategic leader to understand the causes for and results of resistance can lead to the outright failure in adopting the change.
Overall, change sticks when it becomes part of the organization’s culture - it becomes part of "the way we do things around here." There are four techniques for institutionalizing change. Show people how the change has helped improve performance and competitive advantage. Communicate to the people the connections between individual efforts and the resulting improvements. Allow the people to participate in the process. And most importantly, you must walk the talk!!
As the old saying goes: “If nothing changes, nothing changes.”
Last week I was visiting with the CEO of a landmark Toledo company. The CEO was lamenting the challenges of moving away from the “status quo.” He said, “I know we need to change, but I’m scared to death that if I make changes, I’ll screw up the business I have today.” Then, in the next breath he said: “But if I don’t make changes now, what will I have in 5-years? Things are pretty good today, but if I don’t look to where I want to take this organization, we may never again enjoy the same growth, revenue, profit, or lifestyle we have today.”
An interesting dilemma, indeed! This CEO’s biggest fear was that the changes he was considering might actually be upsetting to his leadership team. This might, in turn, cause them to retire early, resign – or worse – stay on and become naysayers, dragging the company down with them. In some cases, however, their departure may actual benefit the organization. Strong leaders make tough choices; that’s why they’re called strong leaders.
People and organizations have only two alternatives: get better (improve) or get worse (decay). And it’s a constant battle. Our only choice is to manage this ongoing process and improve the things that can be improved, or ignore the process and decay. This principle is just as important in life-long learning as it is in organizational change.
The challenge for us as individuals and organizations is how to keep on the “upward vector” of growth, innovation, improvement and continual learning. It can be done, but it takes positive, continuous energy and communication.
But first, we need to understand the dynamics of change.
Which Comes First: Process or Behavior?
Many leaders address the change challenge in a very clinical fashion. They begin by attacking the process, the policy or the procedure, instead of addressing the tougher challenge: people’s behaviors.
Effective execution of strategy ultimately requires change in the behaviors and attitudes of leadership and of all employees first -- before processes can be effectively changed.
A common failure of most business improvement approaches is the tendency to develop new or ideal processes on paper, without addressing elements of human behavior and human nature.
Perhaps it’s an over-reliance on highly data-driven methodologies like Six Sigma or lean. In these scenarios the expectation is if we can use quantifiable data to demonstrate that a process change will result in an improvement, then people will automatically change their behaviors.
On the contrary, our experience and research tells us that behavior change requires time, effort, measurement – and most importantly – discipline.
For any enduring change to take place, behaviors (habits and attitudes) need to change before processes can successfully be changed. Sounds simple, but the complexity of managing change grows exponentially as the organization’s size increases.
The often-used blanket comment; “I don’t like change” is untrue. We generally like changes that affect us positively, but tend to resist changes that affect us in a negative way.
For example, initially it will take an employee more time to complete an old task in a new way. While they were once the expert, they’re now required to learn a new process – slowing them down in the short run – but increasing their productivity in the long run. These new changes require acclamation or acceptance time. In other words, “We don’t resist change, we resist being changed.” That said, what people want and need is a new perspective on change, and how it will benefit them.
In Part I of this column, I’ve highlighted one of the CEO’s biggest challenges – the inevitability of change. This challenge has many layers and levels, and since it involves many individuals and teams, it’s much more complex than it appears. Fortunately, there are proven best practices to address the challenge of organizational change. In Part II, I’ll address both the additional complexity – and how to deal with it.
Eric Kurjan is the President of Six Disciplines Northwest Ohio. Six Disciplines brings “big company” process improvement to organization looking to break beyond the status quo. For more information visit www.SixDisciplines.com/Toledo, or call 419-581-2823.
As businesses are coming out of the economic downturn they are starting to recognize that they need to do something different. However, that is a highly complex statement. What can you possibly do differently? Well, in most cases the list is enormous. There are plenty of things to work on. If you followed my advice in my October article, then you are headed down the right path. There is a long way to go to get to the final destination but if you have defined that destination at least you know where you want to go. Now how to do I get there? The first step is to communicate that information to the rest of the team. Where are we going, what will we do to get there, how will we do it and who is responsible for the various steps and actions? Those four basic tenets are the key drivers of strategy formation and more importantly the execution. But there is something more.
For some reason, asking CEOs/Presidents/Owners to share this type of information with their teams seems to be a very foreign concept. There is the unreasonable expectation that the team members/employees somehow already know where they are going and how to get there. Most folks are not great mind readers and then they end up doing whatever they think is best because as leaders we have not communicated what we need or want. As someone wise once said, “The biggest problem with communication is the illusion that it has taken place."
In fact, the larger the organization is, the greater this illusion becomes. As organizations grow, communication challenges grow as well. These challenges will grow dramatically faster than the organization headcount. To illustrate:
• In an organization with 3 people, there are only 3 possible different interactions.
• In an organization with 25 people (8 times as many people), there are 300 possible different interactions = 100 times increase in the complexity of communications
• In an organization with 100 people (33 times as many people), there are 4,950 possible different interactions = 1,650 times increase in the complexity of communications
Growing organizations respond to increased complexity by creating layers (business units, divisions, departments, teams, groups, etc.). Add to this challenge -- 55% of communication really takes place through non-verbal body language (not phone, not email, not IMs, not video conferencing.)
So, we have some pretty big issues to overcome to get people on the path we want. Unfortunately, we have leaders who don’t share the company message, direction or expectations with their employees, and then couple that with the complexity of a growing organization. In the absence of leadership, employees decide their own direction. Often times the intentions are good; however, they do not always align with what management sees as important.
Gary Harpst, the founder of Six Disciplines, tells a very poignant story of “Susan”. “Susan” works for a very good commercial HVAC (heating, ventilation, air conditioning) contractor in the Midwest. She has been an excellent, loyal, hard working inside sales employee for the past seven years. This morning she has a conversation with her leader, the manager of inside sales. He tells Susan that the numbers on the commercial business are off for the month. Their normal commercial clients are not upgrading and new construction is terrible. He tells her that she needs to get more deals in the door, somehow. Seems pretty straightforward and probably a conversation repeated in organizations all across America. Being a creative and hard working person, Susan is looking for any new business she can find. In good times, the pipeline has been plentiful with commercial deals and anytime a residential sales/service call came in she turned them away. However, now based on the conversation she had with her manager this morning, she “decides” to take on a residential opportunity. She completes the paperwork, sends a service crew to the residence and thinks she has uncovered a new opportunity. However, she has created a nightmare. The work crew is not trained to work on residential HVAC systems, they do not carry the parts, the business model and cost structure are not compatible, and on and on. Susan’s decision is full of good intentions but her self-directed approach is fraught with issues. And it all started with a lack of clear direction and communication.
This type of disconnect is very common and it is all about the lack of communication.
Communication also ties to overall employee performance. Yes it is true, not only do you need to tell your employees what they need to do and what you expect of them but you also need to share with them how well they are doing their jobs.
SuccessFactors surveyed 3,600+ workers at 291 companies and found, among other things,
• 51% of employees don’t know whether their performance is where it should be
• 66% say they have too little interaction with their boss
• 55% don’t get enough timely constructive criticism
It all comes down to communication. You should try it. Set the direction, define the actions and measure the results. The investment is small but the rewards are huge.
Eric Kurjan is the President of Six Disciplines Ohio/Indiana. Six Disciplines brings “big company” process improvement to organizations looking to break from the status quo. For more information visit www.SixDisciplines.com, email email@example.com or call 419-348-1897
In an article earlier this year, I wrote about the fact that setting strategy is a year-round opportunity. The message being, don’t wait to take action. For those of you who waited it is definitely time to get moving. The end of the calendar and perhaps fiscal year is rapidly approaching and planning for next year needs to begin.
So what does an effective strategic planning process look like?
Strategic planning is actually the easy part of the two-part process for business success – strategy and execution. Let’s discuss a couple of key thoughts about strategic planning starting with; it needs to be a repeatable process. This process should be one that can be used continually, without changing major elements based on management whims or MBS (Management by Best Seller).
Here are the key steps in Strategic Planning:
1) Step Back – Take a look around. We need to look at where we have been before we can decide where we want to go. Companies rarely track performance against long-term plans: less than 15% of companies make it a regular practice to go back and compare the business’s results with the performance forecast for each unit in its prior years’ strategic plans according to the Harvard Business Review. So the Step Back process should include a consistent method for reviewing external factors (i.e., economic influences, competitive trends, governmental requirements…etc.) as well as internal factors (i.e., achievement of current year goals, key performance measures, stakeholder satisfaction surveys, completion of a SWOT analysis) plus a process to prioritize a long list of actions into a reasonable, achievable list. I recommend using what we call the 100-Point Exercise to boil down the list to the top items. The 100-Point Exercise allows each participant in the planning meeting to apply up to 100-points (I like increments of 20 points) to the items on the SWOT or brainstorming list they see as having the most impact on the business or organization in the coming year. Then you add up the scores for each item across all participants and the highest scoring items are the winners. It makes a big list manageable and something you can actually work on and complete versus trying to work on a list of 10 or 15 items which is virtually impossible to complete.
2) Decide What’s Important - The process must include a predictable, repeatable method for assessing your organization’s mission, shared values, vision, strategic position, and vital few objectives (a.k.a. goals). In this step we are setting or renewing the vision. Vision is the picture of “where” we want the organization to go in the next ten years. It is defining our destination. It is also the step that helps us determine “what” we need to do to get to that destination. These are referred to as our Vital Few Objectives (VFOs). It does not happen by accident, well it might, but then that would be an accident.
3) Set Goals that Lead - Also important is a process to determine and set goals that are measureable, allowing us a way to develop clear targets and deadlines. Nothing loosey-goosey here – hard numbers, revenue dollars, margin percentage, dates, units. Real goals have real outcomes by which we can measure our progress. Also, this is where we need to define the projects or initiatives that will help us get to our goals. If our Vision (where) is to have “regional geographic presence” and our VFO (what) is to “open five offices in the next five years” then our initiative/project is “how” to open the first “new office in 2010”. These initiatives are intended to change the trajectory of the business. We do many things to run the business but what do we need to do to change the business. These are the items that drive activities of “every person, every day.” Now that I know “Where”, “What” and “How” the next is “Who” will do the work.
4) Work the Plan – This is the execution phase of the strategic plan. And this is the biggest failure point for organizations. The execution phase is setting the stage for “who” will do the work. This is where we must assign the work that needs to be done to help the organization achieve the goals to arrive at the destination. Set real tasks with real deadlines and real outcomes.
To recap, strategic planning is not an annual event – it is an on-going process. While most organizations conduct strategic planning annually, that’s not enough. It needs to be revisited on a quarterly basis in order to measure progress, align resources and implement necessary adjustments. If you are not measuring, observing, and adjusting, the likelihood for success decreases rapidly. Just like driving a car on the highway, you need to pay attention to the key dashboard indicators and look out the windshield. You must continually adjust based on various internal and external inputs like the speedometer, the roadway, traffic, visibility, etc.
Let’s not forget, however, that strategic planning is only HALF of the equation. While the CEO and leadership team “own” the strategic plan and are accountable for it, they cannot be completely responsible for its proper execution. Even the most well-crafted strategy is subservient to superior execution. And, most successful business leaders agree, they’d rather have a “B” strategy and an “A” execution, than the other way around. In fact 90% of organizations fail to execute their strategies successfully according to a survey by the BSC Collaborative.
The tougher, more critical side of the strategy/execution equation is making it work - getting it done, measuring progress along the way, finding what doesn’t work early enough to make course corrections and aligning resources (people, technology, policies, processes, and measures) continually so that initiatives can support the vital few objectives (VFOs).
It’s the delicate balance of both strategic planning and execution that separates good organizations from great organizations.
In my next article, I’ll focus on this other half of the equation: Execution.
Eric Kurjan is the President of Six Disciplines Ohio/Indiana. Six Disciplines brings “big company” process improvement to organizations looking to break beyond the status quo. For more information visit www.SixDisciplines.com, or call 419-581-2823.
In my last article, "CEO Profiling - The Four Kinds of CEOs", I described the four different kinds of CEOs and their ability or inability to run, build or grow their business ventures.
In this article, the focus is on your own organization and your self-evaluation. The CEO Effectiveness Exam is simple and quick, yet illuminating. Although the tendency is to be lenient, I ask that you be honest with yourself and score each question with a truthful answer. Approach it from the perspective of what you are today, not what you want to be. The outcome of this self-evaluation will not do anything by itself. However, with an action plan it may change your perspective, habits, performance and ultimately your long-term results.
Let me recap the four CEO types from the previous article.
CEO #1 – The True Leader – they are solid leaders and run top notch organizations. They set clear goals, measure results, hold people accountable and communicate consistently to the organization. They will have the highest scores on CEO Effectiveness Exam.
CEO# 2 – The Know-it-All – they are too smart for their own good. They are the bully or they are the shrinking violet. They often misunderstand the key elements of leading an organization although the financial results can sometimes be surprisingly good but at a huge cost to the employees, clients and vendors. They will have the lowest scores on the CEO Effectiveness Exam.
CEO# 3- The Heart Attack – they are running scared. Something undesirable has happened to their business and now they are frantically trying to find a way to save the enterprise. A major client has left, product quality has slipped, or maybe sales fell well short of projections, or profits have melted away. Could those people have been right about having a plan and executing on that plan? They will have a low overall CEO Effectiveness Exam score but may be “good” in a few category areas.
CEO #4 – The Humble Leader – they are hard workers. They have built a very good organization and are not satisfied with the status quo. They want more for their organization and are doing something about it. They will score well above “good” in most every category.
Your CEO Effectiveness score is based on the six category areas: Leadership/Culture, Strategy, Customer Focus, Measurement, People and Process. Each one is of equal importance and contributes to the whole. The scores in each section will indicate strengths or shortcomings in an area; however each area must be developed, managed and fully implemented for a CEO to build a truly successful organization.
So now that you “know” what you are, what do you do about it? That is the biggest question you will need to answer. As Gary Harpst, founder of Six Disciplines, says: “the problem for most of us isn’t knowing what to do; it’s doing it”.
Unless you have earned the coveted “CEO#1” score, seek professional help, seriously. Whether it is from Six Disciplines or another qualified business advisor, look for professional assistance in developing a plan to raise your scores and produce better results.
In my line of work I see all kinds of CEO’s. Young and old, male and female, decision makers and decision avoiders, leaders and shrinking violets. The bottom line is that the personalities, skills, abilities and success factors vary by CEO just like they vary in their shapes and sizes.
My experience has shown me that you can group CEOs into four basic categories. Call it “profiling” if you like, but as I look at the businesses that are truly successful and those that need help (and more importantly, those who will accept it) the differences in CEOs becomes clear.
CEO #1 The True Leader – this CEO gets it. He or she has a clear vision for where they want the company to grow. They have communicated it effectively. They set the expectations, they measure the results, and they hold their people accountable. They demonstrate compassion for their people and have built a culture of earned trust. This CEO is open, honest and transparent. They know they will gain more by sharing information than by withholding it. Their employees, or in these cases, “Associates” or “Team Members”, work diligently toward the goals of the company. There is an uncompromising, mutual respect being exhibited. Their goals and plans are pursued with passion, and the results are strong and consistent. Unfortunately, this is a rare breed. I have only met a handful of these CEOs.
CEO#2 The Know-It-All – this CEO thinks he/she gets it. This group is too smart for its own good. These are the CEOs who pride themselves on having never asked anyone for help, guidance or assistance. They tend to be ego-driven, arrogant, controlling and intimidating. They “rule” with the iron fist and make “employees” or subordinates nervous. They may or may not be quick to solve problems with staff. Some will fire with the swiftness of a hit squad in the dark of night with or without justification, while others can’t confront issues and only demonstrate chest-beating and bluster, leaving the problem “employee” in place to continue to contaminate the work environment. There are some who really are more fear-driven and put on the “tough guy/gal” mask. They fear making a bad choice and in most cases are lacking the leadership skills needed to truly run or change the business. They surround themselves with weak, low-horsepower leadership teams in an effort to make themselves appear “smarter”. Unfortunately, this is a common breed. There are tons of these CEOs out there. Many actually run, reasonably successful (based on revenue and/or profit measures) organizations in spite of their behavior, style and methods. But think how successful they could really be with goals, a plan and a defined process for getting things done.
CEO#3 The Heart Attack – this CEO has had one. Hopefully just in the figurative sense. They have been running the business and they are seeing things get worse and worse. They don’t work to change the behaviors, actions or direction -- they just fret as the business begins to tailspin. Then, some sort of major catastrophe hits, loss of a major client or two, the bank calls in the note or the line of credit is gone and they determine the need to make a change. This is much like the individual who ignored all the warning signs of an impending heart attack: high blood pressure, overweight, high cholesterol. They’re sure the bathroom scale is wrong. The heart attack is a big “surprise” but now they are going to straighten out their lives. Under a doctor’s supervision they begin to manage their diet, start working out and change the behaviors that led to the heart attack. There are lots of lessons learned (by the CEO and the company) if they survive the heart attack. They realize that the ways they have “led” the business were ineffective and that they need to get help from the outside to get them back on course for survival and fitness. By the way, no surprise here: CEO#3 almost always started out as a CEO#2 Know-It-All.
CEO#4 The Humble Leader – another fairly rare breed. He or she is actually a good leader. They’ve built a successful business and possess many of the same traits and behaviors as the “true leader”. They have not honed their skills to the degree of CEO#1, but they aspire for more. They are not satisfied with the status quo and are looking for every advantage to build a better team, to grow their business, to deliver higher, bigger and better. They look to outside resources and advisors to aid them in their journey toward their vision. They work to develop better and more effective processes and better alignment across the company. They are looking for help to manage the challenges of growth and all the thrills and challenges that come with it. They are hungry and open to learning. They are on the journey to become a CEO#1 True Leader.
So, which CEO type are you? If you can’t see it yourself look for the CEO Effectiveness Exam in next month’s article. The numbers rarely lie.
Eric Kurjan is the President of Six Disciplines Northwest Ohio. Six Disciplines brings “big company” process improvement to organizations looking to break beyond the status quo. For more information visit www.SixDisciplines.com/Toledo, or call 419-348-1897
When CEOs Fail To Implement Change – and What To Do About It
“Well, Doc how bad is it?” asked Bob Bizibee, ABC Company’s CEO. “I’ve seen this before with other CEOs like you,” said Dr. Foster. “It starts out as a small rash, but before you know it, you’re not sleeping at night, you’re kicking the dog, and you’re yelling at your neighbors for looking at your grass.” “Hey I‘ve been busy, and the grass isn’t more than two feet tall,” screams Bob. “Bob,” said Dr. Foster, “I’m afraid you have NPNR - No Plan, No Results.” “Yep, Doc, that’s it – you nailed it,” said Bob.
Do you have NPNR? Do these symptoms fit you?”
If misery loves company, then you’re in “good” company. Many CEOs just like you are fatigued from the pressures of managing the business during these tough times.
How do you know you might be suffering from NPNR? Take the following quiz (4=strongly agree, 3=agree, 2=disagree, 1=strongly disagree)
If you scored over 25, stop what you’re doing and seek out professional business help.
Let’s face it – being the CEO (or president, or owner, or whatever title/role you have) – is a lonely job. And yes, the challenges of being the CEO are enormous – but, there’s good news: there IS a systematic approach to handle these ongoing pressures.
What if I were to suggest that there was a way for you and your organization to:
What does it take?
1. The ability to accept and embrace change. Face reality. If you’re willing to get out of your comfort zone, as the old saying goes: “If nothing changes, nothing changes.
2. The ability to delegate. A big part of being a leader is to learn to trust your team. Be clear about your vision, provide direction and support, measure their progress - and let them do their job.
3. The ability to spend time ON your business. Creating a culture of ownership and accountability within your business and making sure that systems and processes are in place so you can spend more time working “ON” the business – not just “IN” the business. Set a realistic plan in place and live up to the plan
BOTTOMLINE: Execution is a systematic process of rigorously discussing what, how, and why, questioning, tenaciously following through, and ensuring accountability. In its most fundamental sense, execution is a systematic way of exposing reality and acting on it. Most companies and their leaders don’t face reality very well. That is the basic reason they can't execute. However, set a plan, communicate the plan, follow the plan and the business improves. By the way, the rash will go away too.
Eric Kurjan is the President of Six Disciplines Northwest Ohio. Six Disciplines brings “big company” process improvement to organizations looking break beyond the status quo. For more information visit www.SixDisciplines.com/Toledo, or call 419-348-1897