Reviewed Jan 07 M Rhodes. Leading Change. Harvard business School Press ISBN Author: John P Kotter

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1 Reviewed Jan 07 M Rhodes Leading Change Harvard business School Press ISBN Author: John P Kotter In many ways this is the seminal work on change in the corporate environment. Now used as the primary change model on several MBA courses, Kotter s insights and understanding of the change process, the problems that arise has much to offer the modern manager and leader. I consider it essential reading for anyone in the management arena. Chapter 1 Why Firms Fail There are several drivers of change that force a competent managers to implement change in their organisation. These drivers of change include Drivers of change: Technology Internationalisation of economy Maturation of markets in developed countries Fall of communism Globalisation Increased competition and speed of competition Increasing market size Fewer market entry barriers Large scale change in organisations o Reengineering o Restructuring o Quality programmes o Mergers and Acquisitions o Strategic change o Cultural change In implementing change Kotter suggests that there are 8 factors that lead a firm to failure: Why Firms Fall: Too much complacency Failing to create a sufficiently powerful guiding coalition Underestimating the power of vision Not communicating the vision Permitting obstacles to block the vision Failing to create short term wins Declaring victory too soon Neglecting to anchor the changes into the corporate culture These failings lead to: New strategies not being implemented well

2 Acquisitions not achieving expected synergies Reengineering that takes too long and costs too much Downsizing that does get costs under control Quality programmes that don t deliver hoped for results Chapter 2 Successful change and the force that drives it To competently and robustly drive a change process, Kotter suggests the following 8 stage process: 8 Stage process of creating Major Change Establish a sense of urgency To break the team out of their complacency Create a guiding coalition As a focus of the change process and a driver to achieve results Develop a vision and strategy Know where you want to be and how to get there Communicate the change Spread the message by every means possible Empowering Broad Based action Encourage the team to try plus remove obstacles Generate Short term wins Achieve something early to gain confidence and commitment Consolidate gains and produce more change Use the confidence to increase change Anchor the new approaches into the culture Management Versus Leadership Management Planning and budgeting Organising and Staffing Controlling and problem solving Leads to Predicatbility, order and consistency in output Leadership Establishing direction Aligning attitudes and emotions Motivating and inspiring Leads to Change, growth, commitment to the vision Chapter 3 A Sense of urgency Complacency can come from: Too much happy talk from senior management The absence of a major and visible crisis Too many visible resources Low overall performance standards Organisational structures that focus employees on narrow functional goals Internal measurement systems that focus on the wrong performance indices A lack of sufficient feedback from external sources A kill the messenger, low candour, low confrontational culture Human natures capacity for denial when busy or stressed Ways to increase the Urgency level: Disclose or create a crisis such as financial loss, competitor performance Eliminate obvious examples of excess Set revenue, income, productivity, customer satisfaction and cycle time targets that cannot be reached by usual business practises Stop measuring narrow functional performance goals. Make people accountable for broader business performance

3 Give the work force more information on financial and customer performance Insist people talk to unsatisfied customers, suppliers and shareholders Use consultants and other means to force more relevant data into discussion Expose the firms problems to the workforce Expose people to the potential opportunities and the rewards that achieving such opportunities brings Chapter 4 Creating a guiding coalition The first step in building such a coalition is to fill the 4 essential characteristics: Position Power Ensure that there is sufficient leadership from the top to communicate the degree of commitment behind the change Expertise The team needs the expertise to make the informed and germane decisions Credibility Is the group large enough and have the correct reputation Leadership Does the team have the proven leadership to drive the change process Chapter 5 Developing Vision and Strategy Vision has a way of breaking through emotional and cultural barriers and has characteristics of: Imaginable Conveying an image of what the future will be Desirable Appealing to the interests of all stakeholders Feasible Has realistic attainable goals Focused Is clear enough to provide guidance to decision makers Flexible Is general enough to encourage individual initiative Communicable Needs to be explainable in under 5 minutes Such visions should also include the input of several stakeholder groups, including the employees. Chapter 6 Communicating the vision Kotter suggests that all of the above will be in vain unless the information is given to the team. His key elements for effective communication of vision are: Simplicity No jargon or technobabble Metaphor, analogy and example rich a verbal picture that is easily understood Multiple forums Big meetings, small briefings, memos, internal comms. Repetition Hammer the message home Leadership by example Behaviour from senior management that is consistent with the message Explanation of seeming inconsistencies Inconsistencies undermine credibility Give and take listen as well as broadcast Chapter 7 Empowering Employees for Broad Based Action There are some common barriers to empowerment: Formal structures and bureaucracy impeding action A lack needed skills undermines action Personnel and IT systems make it difficult Bosses discourage actions aimed at implementing new vision Therefore the ways to empower people to effect change are: Communicate a sensible vision

4 Make structures compatible with that vision Provide the training employees need Align information and personnel systems to that vision Confront supervisors who undercut the needed change Chapter 8 Generating short term wins Good short term wins have 3 basic characteristics: They are visible and people can see that this is not just hype Unambiguous so there is little argument Clearly related to the larger scale change The role of short term wins: Provide evidence that the sacrifices are worth it Reward change agents with a pat on the back Help to fine tune the vision and strategy Undermines the cynics and self serving resistors Generates and maintains the support of major stakeholders Builds momentum behind the overall change process Chapter 9 Consolidating the gains and producing more change Kotter suggests that the key elements of a successful change effort include: More change not less occurs as credibility and confidence of the coalition grows More help is available as people become committed to the change and management increases the support Leadership from senior management increases generating more urgency Project management and leadership from below increase as benefit is identified Reduction of unnecessary interdependencies as they are wasteful and not required by the improving processes Chapter 10 Anchoring the new approaches in the culture Kotter suggests that anchoring change in a culture: Comes last, not first as shared norms and values need time to be assimilated Depends on results as new approaches only stay if they are superior to the old ways in effort, output or both. Requires a lot of talk as people are often reluctant to admit the value of the new approaches May involve turnover as sometimes the only way to change the culture is to change key people Makes decisions on succession crucial as promotion processes need to support the new approaches not return them to the old ways Chapter 10 The organisation of the future Kotter; s discussion of change has some clear guidance for organisations of the future: There needs to be: A persistent sense of urgency

5 Teamwork at the top People who can create and communicate vision Broad based empowerment Delegated management for excellent short term performance No unnecessary interdependence An adaptive corporate culture The route to the next stage in organisational structure and behaviour is not easy but Kotter offers some comparisons that help the decisions process. Twentieth Century Structure Bureaucratic Multi-levelled Organised with the expectation that senior management will manage Systems Depend on few performance information systems Distribute performance data only to executives Offer management training and support systems for senior people only Culture Inwardly focused Centralized Slow to make decisions Political Risk averse Twenty First Century Structure Non-bureaucratic with fewer rules and employees Limited in levels Organised with the expectation that management will lead and lower levels will manage Systems Depend on many performance systems providing data on customers especially Distribute performance data widely Offer management training and support systems to many people Culture Externally orientated Empowering Quick to make decisions Open and candid More risk tolerant Chapter 12 Leadership and Life Long Learning It is no surprise that, in the 21 st century, people need to be well informed. Kotter supports a variety of different learning processes such as the learning organisation. He therefore suggests that a 21 st century executive has: Personal History o Innate capabilities o Childhood experiences o Job and educational experiences Competitive Drive o Standards o Desire to do well o Self confidence in competitive situations Lifelong Learning o Willingness to seek new challenges o Willingness to reflect success and failure honestly Skills and Abilities

6 o Knowledge o Leadership skills o Other Skills Competitive capacity Lifelong learning requires the mental habits of: Risk Taking willingness to push yourself out of your comfort zone Humble self reflection Honest assessment of success and failure Solicitation of opinions aggressive collection of information and ideas from others Careful listening Propensity to listen to others Openness to new ideas willingness to view ideas with an open mind Rating: 4/5

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