Monday, April 20, 2009

The Four Stages of Organizational Change

Leading organizational change is not for the faint hearted. Nor is it something you can merely dabble in with your leftover time. It requires your very best leadership focus, perseverance, and resources. Most firms aren't willing to pay the price.

But these are extraordinary times. When it requires hard work simply to survive, perhaps you're ready for the hard work of change. Even if your firm has dodged the worst of the recession, the downturn should serve as a warning shot across the bow. It's a good time to consider what changes are needed to better prepare your firm for an uncertain future.

If you're ready for change, let me suggest you plan for the four stages of organizational change that almost always occur in successful efforts. Shortchange any one of these stages and your change initiative is likely to disappoint.

Stage 1: Edict

For your change initiative to succeed, your staff must perceive a compelling reason for it. As we examined in a previous post, most people inherently resist change. It pushes them out of their comfort zone. It forces them to break entrenched habits. There is pain involved in changing. And when the pain of change is greater than the pain of staying the same, meaningful, lasting change is unlikely to occur.

So people need an Edict, a compelling reason for submitting to the pain of change. This may come in the form of a management mandate. A client mandate is better still (another good reason for soliciting regular feedback from your clients). It may be some other circumstance, such as a severe recession or a shift in the marketplace, that compels people to change lest they face something worse. The change must be viewed as required; the result you initially want is compliance.

Stage 2. Effort

With your Edict established, the change initiative gains momentum. The focus shifts from why to how. A plan is developed, tasks are assigned, new procedures are established, and systems are put into place to support the new approaches. The Effort stage is evidenced by a surge of activity. Most actions at this stage are prescribed, although they are ideally developed through collaboration--which is a critical outcome you want. Change is more likely to happen if colleagues are working together to make it happen.

This stage is also where change initiatives usually stall.
Just as you are beginning to see change occurring, the force of the Edict weakens. Your progress, in fact, can work against you as the sense of urgency begins to fade (plus other urgent matters have typically intervened). It's important to keep the Edict alive at this critical juncture. In some cases, it may evolve into a different set of compelling circumstances. In others, you may need to produce new evidence that your Edict is still valid. Whatever the case, you need to keep pushing to keep change moving forward--until you get a boost from the next stage of the process.

Stage 3. Ethic

A vital milestone in your change initiative is when people begin to move beyond the necessity of change to appreciating the value of change. Yes, progress can mute the power of the Edict, but hopefully it also is producing positive outcomes. Your colleagues start to see the benefits of the changes you're making. These benefits must be realized at the personal level, not just at the corporate or business unit level. As they become evident, the change is increasingly seen as strategic. This hopefully helps generate enough momentum to ensure the continuation of the change effort.

The new ways of doing things are now viewed in a positive light by the "functional majority" (not a simple majority, but a majority of the people who most influence group behavior). The new ways now constitute a corporate Ethic about how things should be done. While this is a necessary milestone, there is still another you must reach to ensure the change is sustainable over the long term.

Stage 4. Ethos

In order to complete the change process, you need to move beyond mere agreement that it is necessary and good. It must become embedded in your culture, "the way things are done around here." Now the change shifts from being externally motivated to being internally motivated. It's moved from the head to the heart. It's no longer just what you do; it's who you are. It's still hard work, but people wouldn't accept the alternative. The change has become characteristic, the result of a significant cultural change.

The importance of culture in change efforts is well established both in research and experience. You can shortcut the change process somewhat if you can anchor the change in some facet of your existing culture. The better the desired change fits within that culture, the easier the change effort. But organizational change often involves a significant cultural change; that's where the hard work really comes from. But once you've reached the Ethos stage, all the effort will have been worth it.

In my next post, I'll illustrate the four stages of change in a real-life example of a successful change initiative.

Monday, April 13, 2009

Build Relationships on Principle, Not as Strategy

If your firm is among the enlightened ones, no doubt you've been talking about the importance of pursuing client relationships rather than merely projects. The latter is a common trap in our business. Technical professionals are usually more adept at sizing a pump or footing than sizing up a client's personal peculiarities. There's a natural preference for the objective and predictable over the subjective and whimsical.

Yet the strategic value of long-term client relationships is impossible to ignore. A/E firms have long boasted of their repeat business rate. We understand that the most profitable and enjoyable work tends to come from our most enduring relationships. These clients provide the stable revenue base we need, enable us to stretch into new service areas, reduce our business development costs, and, well, they make us feel appreciated.

So if such relationships yield strategic value, it's not surprising that our pursuit of them becomes our strategy. We target prized potential clients. We train our staff in the skills of relationship-based selling. We write capture plans. We scan the business aisle of the local bookstore for more how-to wisdom on building great customer relationships.

But for all the talk about relationships, we're really not all that good at them--for the most part. I've cited the evidence in this space before: Two-thirds of A/E firm clients are open to switching from their current primary providers. Only one in four would recommend their primary provider to another client. Only 16% give their providers an A grade for service. Two-thirds who dump their A/E service provider do so because of perceived indifference.

Why do we struggle so much with relationships? We've all heard the common excuse: "Well, technically oriented people tend to lack basic interpersonal skills. They're just not people people." I don't think I buy that. Sure, the shortcomings are apparent, but are they inherent? Is it aptitude or attitude? Or might misplaced strategy be part of the problem?

When we pursue relationships predominantly for our own benefit, we're missing the most important ingredient: Mutual trust based upon mutual concern. Genuine caring for others is hard to fake, and phony concern compromises trust. That's the problem I have with most relationship-based sales tactics I've read about. They're motivated by self-interest, not sincere interest in the client. And most clients see through the facade.

Thus the truly enlightened firms pursue relationships on principle, not as strategy. They seek out new clients because they see opportunities to help, not primarily to help themselves. They listen because they want to understand client needs, not because it's the path to closing the sale. They find rewards in the relationships themselves, not just in the revenues they generate.

Relationships by strategy typically focus on our needs, and there are some A/E firms truly in need these days. But relationships built on principle transcend self-interest--and a recession--and focus on the client. It's grounded in a confidence that doing business the right way will bring the success we desire. But that success must be the outcome, not the object, of our business. Getting there requires a step of faith. But it's not an uncharted course; some of the very best firms have already walked the talk.

So what about your firm?

Monday, April 6, 2009

Why People Resist Change

The Apollo 11 spacecraft that carried the first astronauts to the moon burned 99% of its fuel escaping the earth's gravity (plus some atmospheric resistance). The remaining 1% was sufficient for the balance of the 480,000-mile trip to the lunar surface and back. That's an apt analogy for the challenge of organizational change.

The first and greatest obstacle is the gravitational pull of the status quo. People naturally resist change for a variety of reasons. Organizational dynamics often serve to strengthen their grip on the way things are. To get people to relinquish the present state and move on to the way things should be requires an understanding of both organizational "thrust" (the actions that enable change) and "gravity" (the forces that inhibit change). Let's start with the latter.

If you want people to change, you need to go beyond simply telling them how. You need to also uncover why they are apprehensive about it. Just as NASA engineers needed a thorough understanding of gravitational and atmospheric forces to properly design the Apollo rocket, leaders need to understand the human forces that will drag down the launch of their change initiative. Each situation is distinct, but following are some of the most common reasons why people resist change
  • Force of habit. Habits are extremely valuable because they enable us to perform many functions unconsciously, preserving brain power for other tasks. But they are also very difficult to break, and thus to change.

  • Low expectations. Because change is difficult, it's often hard to convince people it's possible. They may lack confidence in management, their coworkers, or the proposed change.

  • Past experiences (good or bad). Past success lulls people into thinking change isn't needed. Past failures often lead people to be skeptical that it will work this time (leading to low expectations).

  • Inadequate perceived personal benefit. Most people view corporate changes through the lens of what it means for them. If they don't see personal benefit, most won't be inclined to support the change, even if it looks good for the company.

  • Fear of diminished competency. Change often forces us to acquire new skills and knowledge, pushing us out of our comfort zone or eroding the strength of our expertise.

  • No sense of urgency. Unless leaders communicate a sense of urgency, people may agree with the change but put it off. There must be motivation to act now.

  • Not enough time or resources. Because we're busy and have other priorities, we may find it impractical to implement change, even though we may be convinced it's both important for the company and beneficial for us personally.

When it comes to change, company leaders have one distinct advantage that NASA engineers didn't--they can reduce the pull of gravity. Understanding why people resist change enables you to address those concerns in ways that can reduce or remove them as obstacles. Even if you don't fully understand the reasons your coworkers resist, simply showing that you genuinely care about their concerns can go a long way toward getting their support.

The opposite is also true. I've witnessed many firms thrusting change on their employees with seeming indifference as to how they are affected or what they think about it. This typically increases resistance, making the change even more difficult to fully implement. Like dealing with a rebellious child, you might get outward compliance. But the inner buy-in that makes change potentially transformational will be practically impossible to obtain.

So we've touched upon two important principles of organizational change. First, you need a compelling reason for change, a sense that the pain of staying the course will be greater than making the change. This helps move people out of their comfort zone. Second, you need to understand specifically what's holding people back so you can remove or reduce those obstacles. In the next few posts, we'll dig deeper into the how-to of change. As I noted in my previous post, the current economic crisis may present just the opportunity you need to make some long-overdue changes at your firm.