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The Truth About Leading Organizational Change

By Lisa Woods (1140 words)
Posted in Leadership & Teambuilding on July 24, 2017

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Organizational strategists help business leaders realize their strategy by framing the organization necessary to achieve it. They look at what the organization is today vs. the business leader’s vision for the future, and then develop the changes necessary to achieve the desired results.

 

Here's the problem...it's still up to the leader to implement that change and most leaders fail at doing so.

 

Why is that? The answer is not so obvious. In fact, the reason is often blamed on the leader's inability to drive change, low employee engagement or a multitude of other excuses.

 

But the real reason organizational change fails is very different. The real reason organizational change fails is that most leaders and managers don't really understand their business as it actually functions. Their understanding is flawed, and therefore, the information used as the basis of change is flawed too.

 

Let’s put this into perspective. I was asked to help a company that was struggling to make a strategic project successful. Their strategic vision was to lead in a market that they were currently a small player in. They originally invested $10 Million into making that a reality. They designed new technology, expanded their facility, invested in new software, engaged & retrained their workforce, and launched an extensive sales & marketing campaign. Each of these organizational change initiatives was well organized and focused on steering the business to achieve success. The results however, were slower than expected…so they spent more, pushed more…and asked for help.

 

Keep in mind that this company participated in other markets, with other products, but leadership saw a large growth opportunity and wanted to implement the changes necessary in order to capture it. The leadership team believed that they could turn their investment into $20 Million of new annual revenue at high profit margins within five years. They were willing to change the organization and invest whatever was necessary in order to achieve success. By the time they called me, the organization was stressed and running three years behind schedule. Leaving us with three lessons every Leader & Manager can learn from.

 

3 Lessons Every Leader & Manager Can Learn From

 

1) You can’t lead organizational change with a carrot.

 

2) Resistance to change isn’t always bad; sometimes it’s a positive indicator that the change is unnatural or flawed.

 

3) Organizational change initiatives can cost the business much more than the investment they put into them.

 

Keeping these three important lessons in mind, let’s dive into the example I listed above.

 

There were a few carrots used to lead this organizational change. At the top was the prospect of leading a market that had huge growth opportunity and a substantial long-term residual return on investment. At the management & project team levels was a significant bonus to implement the change on time and on budget. At the employee level was the potential to develop new skills and secure the benefits of the company’s profit increases in their year-end bonus. That’s a lot of incentive. But none of it meant anything, three years in.

 

Resistance came from several areas. From the market not adapting to the new technology, from key employees in other parts of the organization choosing to leave and pursue their careers (and ideas) elsewhere, from change initiative team members getting burnt out and disgruntled.

 

The cost of this organizational change initiative skyrocketed. What started as a well planned $10 million initiative, crept into an additional $750k in software reconfiguration to adapt existing systems that were not originally considered, $1.5M in packaging changes, $100k in onboarding replacement employees, $3M in lost customers from other parts of the business and an uncalculated opportunity cost from market and organizational opportunities that did not materialize outside of this project’s tunnel vision.

 

Now, we can look at this example from a couple of angles, first being that the project was poorly planned & executed. Second being that the project was a poor business decision from the start. Those may be true to some extent, but how did they get to this point in the first place?

 

Remember, most leaders and managers don't really understand their business as it actually functions. Their understanding is flawed, and therefore, the information used as the basis of change is flawed too.

 

Whether organizational change is targeted across all levels of the business, within a specific department, or on a project level that impacts certain job functions - the risk of failure remains the same.

 

The Truth About Leading Organizational Change:


- The Organization Must Be Ready

 

When leaders and managers understand this truth, they are able to avoid chasing carrots, engage the organization, and invest in strategic initiatives while minimizing costs. They follow these steps to ready the organization, their department or their team:

 

3 Steps to Ready Your Organization for Change

 

1)   Start by dissecting and understanding the organization today: people, processes, systems, objectives and obstacles. Develop a company wide (or departmental) understanding of what works, what doesn't work and why. Define these things and understand your business.

 

2)   Make what you have work better. Don't invest in who you want to be. Instead remove roadblocks, inefficiencies and duplication. Streamline processes and improve communication.

 

3)   Raise the bar for the way managers manage, and the way leaders lead. Creating a structure with a level of uniformity and accountability at the management level.

 

 

When you make these changes first, your real strategy will evolve. A strategy you can implement successfully because it is natural and can be understood. Your organization will be ready, not only to implement strategic change coming from leadership, but also to propose organizational change where opportunity exists.

 

 

That's the way we should change, step by step. Radical changes don't work.

 

By the way, that company we talked about…they backed away from their investment, sold off production assets, got to know their business better, met their revenue growth goal and improved profits without spending any new money.

 

Good Luck!

 

 

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Written by Lisa WoodsPresident ManagingAmericans.com   

Lisa, a thought leader in Business Management and Leadership, founded ManagingAmericans.com in 2011 after 20+ years successfully leading and driving growth in the corporate world. Her objective is to help mentor and develop professionals to be better leaders, managers, team players and individual contributors in a “do-it-yourself” learning environment using unique & practical tools to support the process. Lisa’s career spans from Global Sales & Marketing to General Management of Multinational Conglomerates. Today she continues to consult small business owners through her private practice. Lisa's publications include: • 4 Essential Skills for Leaders, Managers & High Potentials © 2013 • The Cross Functional Business: Beyond Teams © 2015 • Action Item List: Drive Your Team With One Simple Tool © 2016 • Small Business Planning Made Simple: What To Consider Before You Invest © 2017

 

 

 

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