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"The Eight Steps to Transformation"
on October 22, 2000
"Over the past decade," John P. Kotter writes, "I have watched more than a hundred companies try to remake themselves into significantly better competitors. They have included large organizations (Ford) and small ones (Landmark Communications), companies based in United States (General Motors) and elsewhere (British Airways), corporations that were on their knees (Eastern Airlines), and companies that were earning good money (Bristol-Myers Squibb). Their efforts have gone under many banners: total quality management, reengineering, right-sizing, restructuring, cultural change, and turnaround. But in almost every case the basic goal has been the same: to make fundamental changes in how business is conducted in order to help cope with a new, more challenging market environment. A few of these corporate change efforts have been very successful. A few have been utter failures. Most fall somewhere in between, with a distinct tilt toward the lower end of the scale. The lessons that can be drawn are interesting and will probably be relevant to even more organizations in the increasingly competitive business environment of the coming decade."
In this context, John P. Kotter lists the most general lessons to be learned from both (I) the more successful cases and (II) the critical mistakes as follows:
I. Lessons from the more successful cases:
1. Establishing a sense of urgency
* Examining market and competitive realities
* Identifying and discursing crises, potential crises, or major opportunities
2. Forming a powerful guiding coalition
* Assembling a group with enough power to lead the change effort
* Encouraging the group to work together as a team
3. Creating a vision
* Creating a vision to help direct the change effort
* Developing strategies for achieving that vision
4. Communicating vision
* Using every vehicle possible to communicate the new vision and strategies
* Teaching new behaviors by the example of the guiding coalition
5. Empowering others to act on the vision
* Getting rid of obstancles to change
* Changing systems or structures that seriously undermine the vision
* Encouraging risk taking and nontraditional ideas, activities, and actions
6. Planning for and creating short-term wins
* Planning for visible performance improvements
* Creating those improvements
* Recognizing and rewarding employees involved in the improvements
7. Consolidating improvements and producing still more change
* Using increased credibility to change systems, structures, and policies that don't fit the vision
* Hiring, promoting, and developing employees who can implement the vision
* Reinvigorating the process with new projects, themes, and change agents
8.Institutionalizing new approaches
* Articulating the connections between the new behaviors and corporate success
* Developing the means to ensure leadership development and succession
II. Lessons from the critical mistakes:
1. Not establishing enough sense of urgency - A transformation program requires the aggressive cooperation of many individuals. Without motivation, people won't help and the effort goes nowhere.
2. Not creating a powerful guiding coalition - Companies that fail in this phase usually underestimate the difficulties of producing change and thus the importance of a powerful quiding coalition.
3. Lacking a vision - Without a sensible vision, a transformation effort can easily dissolve into a list of confusing and incompatible projects that can take the organization in the wrong direction or nowhere at all.
4. Undercommunicating the vision - Transformation is impossible unless hundreds or thousands of people are willing to help, often to the point of making short-term sacrifices.
5. Not removing obstacles to the new vision - Sometimes the obstacle is the organizational structure: narrow job categories can seriously undermine efforts to increase productivity or make it very difficult even to think about customers. Sometimes compensation or performance-appraisal systems make people choose between the new vision and their own self-interest. Perhaps worst of all are bosses who refuse to change and who make demands that are inconsistent with the overall effort.
6. Not systematically planning and creating short-term wins - Creating short-term wins is different from hoping for short-term wins. The latter is passive, the former active. In a successful transformation, managers actively look for ways to obtain clear performance improvements, establish goals in the yearly planning system, achieve the objectives, and reward the people involved with recognition, promotions, and even money.
7. Declaring victory too soon - Instead of declaring victory, leaders of successful efforts use the credibility afforded by short-term wins to tackle even bigger problems.
8. Not anchoring changes in the corporation's culture - Change sticks when it becomes "the way we do things around here," when it seeps into the bloodstream of the corporate body. Until new behaviors are rooted in social norms and shared values, they are subject to degradation as soon as the pressure for change is removed.
Finally, John P. Kotter writes, "There are still more mistakes that people make, but these eight are the big ones. In reality, even successful change efforts are messy and full of surprises. But just as a relatively simple vision is needed to guide people through a major change, so a vision of the change process can reduce the error rate. And fewer errors can spell the difference between success and failure."