Wednesday, January 21, 2009

Why is the important word

When you embark on a change programme you set out with the intention to succeed, don't you? As a leader you have thought the change through and know what you are going to do (change the structure, implement a new system or process etc.) and you've had to build a business case to justify the spend against the return and benefits for the company. You get the green light to go ahead and start to implement your plan and make the change happen. Then you find, as the new structure is in place or the system starts to run, that the benefits are not coming or months later you are asked to review the change against your forecasted benefits and you can see it's not happening. People aren't really doing their new role in the structure or using the system the way it was designed. They are doing something else. Have you been here before or seen this happen? You should have, as it happens in 90% of change programmes.

In troubleshooting such programmes I come across frustration and confusion in the minds of so many managers. Some just want to get rid of the people who aren't doing the job and others up the stakes and make non appliance of the new system a dismissible offence. Others start to tinker with the structure or the system to apply band-aids as it obviously cant be working. Leaders point to nicely drawn business structures and organisational charts and ask "Why isn't it working?".

The key is in that word "why".

Often when leaders go out with their change they explain "what" is going to happen and sometimes "when" it will happen. Many forget to fully explain "why".

A study of students in the USA found that some tended to favour "what" questions, others "how" questions and another group favoured "why" questions. In my experience of change, everyone is a "why" person. Without a clear understanding of "why" the change is happening people don't really buy it. Even if they appear to have no choice (you take the computer off their desk and give them a new one with the systems fully loaded) the project doesn't deliver to its full potential. If they don't fully acknowledge the "why" they will never fully engage in the "what". This is why I.T people often find that users have their own favourite pieces of software loaded up and use that rather then the expensive system the company implemented. This is why people continue to do the old job even though the structure clearly shows that the job is now different.

Change challenges our certainty. We go in to work every day certain that we know what will be there and what we are there to do. We get used to it and in many cases it becomes part of us and who we are. When someone comes along and challenges that certainty, many people will hold on to what they know until they are sure that they understand "why" they need to change. If you don't provide any "why" or a robust "why" some will not let go of their current certainty at all, willing your change to fail so that they can get back to what they know is right or at worst actively working to subvert your change to prove you wrong.

Those that do come along because you have their trust, may not grasp the change with both hands and embrace it and engage in it. They may not even realise this themselves.

It's as if the word "why" is a filter to their beliefs. If the "why" is fully understood then the "what" will be too and the "how" will follow as they engage in your project. The less clear the "why", the more cluttered their filter and the less likely that the what and the how will have a smooth path to delivery of your objectives.

If your organisation is on the path of change, walk round a random sample of people and ask them "why were we doing this?". Any organisation that is set to successfully achieve the change will have consistency of reply and will find people happy to explain it and their part in it. The greater the variety of the answers, the more faces expressing confusion and the lack of certainty or willingness to discuss the change the less likely it is that the change will deliver.

And if your first 5 people say "what change?" you have real problems!

Change in a difficult climate

In difficult economic times most organisations face some form of change. It is predictable that with potentially lower profits most companies will look to fixed cost reductions and that normally means staff cuts.

Staff cuts are often seen as the easiest change to make and for many managers staff cuts are the automatic reaction to any tightening in any market. These are threatening economic times and the move to staff cuts in more obvious, however in good times it is often baffling that value and growth creating opportunities are forsaken because of the pursuit of fixed cost reductions. Those of us that survived the slash and burn approach to change in the 1980's know that many CEO's made their name on short term margin improvements that had long term lasting damage to the company's ability to grow; key knowledge was lost through early retirement policies, retention of "cheaper" staff also meant lower performance and the cutting of development of good leadership skills.

In bad times this short term versus long term argument is harder for most companies, particularly if survival is at stake. However it is easy to get sucked into panic measures and make the wrong moves for the right reasons. Not everyone is going to the wall, but most will be looking at job cuts to maintain margins in the coming months.

If you've lived through economic cycles before, you have that experience to draw on and you will have seen the right and the wrong way of making those decisions to cut numbers. If you were in junior positions then and now you are in a role that is responsible for delivery, it's a good time to remember all the decisions that you saw which had devastating effect (the ones where you said "when I am a manager I wont do that"). Its very different when you are under pressure from your board or from the shareholders to make the right decisions for the longer term when perhaps their perspective is short term position or shareholder value.

The key thing to remember is that a cycle is exactly that. There is an end to it. Smart companies are using the current climate to take a look at where they may have got a bit fat in the past few years and where they are performing or not performing. Really smart companies are looking at the opportunities that the cycle brings them. Often those that make the smartest moves during the downturn come out of the cycle in the best position to take the larger market share from those that made short sighted decisions. For example, those companies who take a "we can fire them when we dont need them and hire them when we do" find that it takes longer to recover because they don't have talent in place when the market begins to open up again. Being in the best position to take opportunities as they open up is vital to coming out of the cycle in a healthy position.

Often a downturn will provide opportunities to increase market share unexpectedly. That market share might not bring in the revenue that it did a few years ago but it will do on the upturn of the cycle. If a competitor fails in the downturn, are you in a position to take up their share and service their customers in a way that you hold them on the upturn? You wont be if you've cut your key staff to the absolute minimum. Yes of course you can pick up the failed competitors staff if needs be (and I have heard this argument on many occasions). But is this the time to set about converting a large group of people from the culture they knew to your "way of doing things" and do you really want to service a new customer with exactly the same people who looked after them but failed? Having key performers able to absorb new business effectively into your systems & processes is the only way to really take the market share and hold it.

The failure or possible weakening of a competitor is often an opportunity in itself, but be careful. There are many examples of take-overs whose intention was to grow the company out of problems. Some of these were vanity take-overs boosting the ego of the CEO or the board but some of these were just poorly informed decisions. A take over is a massive programme of change. To integrate the new business with yours is a massive challenge to your culture, your systems and your leadership. It takes considerable effort and resource (and dare I say specialist help) to achieve. Acquisition is a skilled path and needs to be entered in to strategically with your own house in order. If your stock system is inefficient and wasteful then the addition of a vast array of new stock is not really going to help, and who knows it may even destroy the profitability of the business that you bought.

These are good times to get your house in order but the key is to make the best moves to maintain the opportunities of tomorrow and being ready for change should the cycle throw a growth opportunity your way:

• Trim your excess fat well. Look at your business performance with a cynical eye and see who has performed well and who let the market perform for them.
• Don't mandate percentage cuts across the whole business. It may seem easier to ask for a 15% staff cut from every manager but not everyone had 15% fat. This is a good time to really review your business.
• Look hard at your pet projects. Every business has something that the board or the CEO just liked the idea of. If they are not performing or not for this market at this time, shelve them or drop them.
• Get clear on your strategy and the KPIs for the downturn. Make sure your people understand them and know that they are for the short term. Clarity is sound leadership at the best of times but in hard times it is vital that everyone is rowing the ship in the same direction.
• Raise your leadership game. Now is not the time to resort to command and control management style (or even worse, management by fear). Motivated people will find solutions to the problems you face if you ask them.
• Keep your dialogue up, maximise your communication and draw on the talents you have with an inclusive approach. The more people understand the better they can do.
• If you do have to cut numbers, do it well. A downturn is no excuse to text people to tell them they have lost their job! Remember that those who stay will judge your leadership by how you treat those that go. Manage redundancy badly and you will notch down the commitment of those that stay behind.
• Educate your managers in leadership of change and an understanding of what people go though during change (ask us about our programme on Leading though transitions) and educate your people in dealing with the impact of change. After all, change is likely to be an important part of their lives in the coming years.
• Be aware that people will always try to look busy. If someone has less to do because your market has shrunk its not necessarily their fault. Work with them on focusing their time well.
• Work hard on morale. You cant afford big bonuses or celebratory parties today so get creative on what you can do. It's a good time to write personal notes to people to recognise their efforts and walk around a little more and show some presence. A hands on touch can lift morale (as long as you dont spread doom & gloom)
• Use enforced changes to your advantage by also improving the culture of the organisation in the process. Any well managed restructuring programme will have a solid communication approach, so use this to get across more than just the minimum of consultation
• Don't forget your values. Now is not the time to ignore what the company stands for . If you drop them now and operate in a completely different way don't expect people to believe them tomorrow when things are good again. Values are there to guide your leaders in how they should behave in bad times as well as good.

Change in difficult times needn't always be bad. In fact good leaders take the adversity of the situation and use it to their advantage to improve morale, embed their culture, improve leadership skills and raise the games of people with potential. Go in to your change with an opportunistic and positive mind-set and you you may find that you achieve exceptional results.

Ultimately the challenge of change in difficult times is a test of good leadership. Making good decisions for the short-term while maintaining the long term for the business is vital to your legacy for the business and to the reputation that you and the company carry forward.

If you are planning change, make sure you are well supported and if nothing else remember the words of Anton Chekhov.."If you cry 'forward' you must make clear the direction in which you want to go"

Who needs to change?

At a client meeting the other day I heard words that I think I’ve heard a thousand times over the last decade. “They need to change” said the GM, who then went on to dissect the performance of his workforce who were “stuck in the past”, “resistant to new ideas”, and “unwilling to go that extra mile”. He then outlined for me the change programme that had been put in place over the last year, which was inevitably failing due their “intransigence”.

Very few changes start at the bottom of the tree. The Russian revolution aside, history shows that changes are made by people in a position to make them. The top of the tree. The ideas for change come from the top and so they should. That’s what the organisation’s leadership is for; to provide direction and business clarity, to analyse the trends and meet them with innovation.

So it is only natural to look down from the top of the organisation and conceive of the new ideas that those at the bottom should be implementing. By and large leadership is what workforces expect of leaders, and while many people are initially resistant of the idea of change, most workforces I have met understand that the company has to make changes to keep ahead of, or in touch with, the competition.

The trouble with looking down from the top to the bottom is the bottom is looking up at you. “We need to change” is your rallying cry. But the “we” often falls short when it comes to “I” And the bottom notices this and knows you don’t mean “we” at all.

With this thought in mind I asked the GM what the change programme had incorporated for the leadership of the organisation. Aside from a few shuffles of position under the banner of restructuring, the same leaders were in the top positions doing roughly the same things. Yet the workforce had to change its behaviours and its attitudes and align to a new set of values.

It brought to mind a quote that we use on our business cards. Mahatma Gandhi said, “You must be the change you want to see in the world”, which I think is great guidance for CEO’s and GM’s leading change in their organisation. “What am I doing now that is not in support of the changes I need? “What behaviour do we need to adopt at the top to engender the change throughout the organisation?” and “What demands am I making that are counter-cultural or change destructive”

Change starts at the top, not just with an idea but with demonstration.

Many years ago I worked in a business that was implementing a spending freeze in line with its bottom line focus. To make a major statement it was announced that all business travel was to be stopped completely. The immediate impact was great. Throughout the organisation people got the message, and started to consider little ways that they could tighten the belts in their area.
A week later a small announcement followed to say that the travel ban had been modified and that people of a certain grade and above would be continuing to travel first class.

The message was immediately lost. The belief in the business took a step back. People gave lip service to the profit drive. Why? Everyone knew that a total travel ban would not work. Some people had to travel as part of their job. Destination dependent would have been acceptable. Role dependent and business class for long distant would have made sense. But grade dependent? And still first class?

The message was “the change is not about us, it’s about you”. That one message destroyed all the good intent of the profit drive and impacted on change programmes for years to come, as it installed suspicion and cynicism of the leadership group.

Many years ago I read a book by Chris Argyris, called “Overcoming organisational defences”. It was in my early years as a change agent and trouble-shooter of change failures. It made me really aware of the unwritten rules that propagate the business and run counter to the change you are trying to make. A favourite of mine, came when I was working with a business that was streamlining its management information systems and as a result reducing the number of people in its accounts department. The initiative was founded on good I.T and should have worked but it didn’t.

I follow my nose in these things and asked the people on the ground what they were doing and where their time was going. In the course of one discussion I noticed some piles of papers on one employee’s desk. They didn’t look like the standardised, cost effective reports I had been shown by the head of IT. I asked about them. “Oh, they are for the CEO and the Chairman”, I was told. These “special” reports were being hand created to mach a report that he CEO had used in the past. It turned out that a number of senior people also had their own “special reports”

The change was not about these senior people, in their minds so in a few simple requests they were wasting the vast spend of the I.T project and ensured that the head of accounts could not cut to the numbers that had been part of the project justification.

And of course the workforce saw and the workforce lost belief.

My advice? Remember Ghandi, and before you say that your workforce is resistant to change, ask yourself “What do I need to do differently? “What behaviour do I need to have” and “What counter-cultural demands do I make?” and be the “change you want to see in your world”