DO WE NEED GREAT LEADERS TO ACHIEVE TRANSFORMATIONAL CHANGE?

We live in a time where politicians and business leaders talk about the need for ‘transformation’.  We are told about the need to now ‘transform’ the economy post Covid-19 , fundamentally changing the way we do business, the way we react to each other, the way we work together.

That’s all easy to say.  Typically, we are resistant to major change, unless it is thrust upon us.  In a corporate setting, our Boards, Management and Administration struggle with articulating the need for and importance of change. It takes a long time to build our relationships, supply chains, our way of doing things, so they are hard to tear down.  We see this in companies that have failed, and companies struggling to deal with the new issues now facing them. Measuring change and the impact of change objectively, is an important part of our Business Evaluation and Safe Harbour processes.

Measuring and reporting on change – as a consultant and advisor – that’s easy.  Some businesses have reams of reports on strategy and change but implement none of them.  I have recently seen a business with eight different governance and strategy reports, and now considering another.  But how do you go about making real change from inside a business?  This is a question that in 2020 we will get asked more and more!

WHERE DID ALL THIS TALK COME FROM?

There are as many transformational leadership models as there are leaders and books about the subject.

The term was advanced by leadership expert and presidential biographer James MacGregor Burns in the 1970’s.  According to Burns transformational leadership can be seen when “leaders and followers make each other advance to a higher level of morality and motivation”  Wow.  By 1985, Bernard Bass had defined and developed transformational leadership whereby leaders possessed traits like “idealized influences”, “charisma”, and “inspirational motivation”.  In 1996 John Kotter’s international bestseller Leading Change struck a more practical chord. It acknowledged the cynicism, pain, and fear they faced in implementing large-scale change—but also provided an eight-step plan of action.

WHY DO TRANSFORMATION EFFORTS FAIL?

With all the talk about transformation I was reminded about an article in HBR some time ago Leading Change HBR, where Kotter reflected on his eight steps and why they do not succeed:

Error 1:  Not establishing a great enough sense of urgency	Communicating objectively around the reasons for the crisis and need for change are critical – the failure of a project, the loss of a customer, elimination of a supply chain, real impact of a pandemic, and the resultant destruction of value. Businesses often fail to properly and meaningfully articulate that urgency and bring stakeholders with them, or worry that employees will become defensive, or believe that ‘business as usual’ is the way forward.  Properly describing the crisis and the change is key
Error 2:  Not creating a powerful enough guiding coalition	Change needs to involve cross-organisational input.   Rather than just ‘leadership from the top’ it is important a large enough group of people, from outside the usual hierarchy, are committed to change.  Often the role is confined to the top or is delegated to HR or strategic planning executives when the input of the Board, equity, leaders and line managers is all needed, or else opposition to the plan gathers itself together and stops the plan.
Error 3:  Lacking a vision	Without a sensible, realistic vision, the transformation effort can dissolve into a list of confusing and incompatible projects that take the organisation in the wrong direction or nowhere at all.  Often you find lots of plans, directions, and programs spelling out the goals and deadlines in detail, but no compelling statement of where it is all leading, Unless there is something the stakeholders agree with, that can be presented in less than 5 minutes, in an understandable and interesting way you are just left with a lot of documents, confusion and alienation.
Error 4:  Under-communicating the vision by a factor of ten	Transformation requires effort, and it requires people, often employees to take pain and sacrifice.  This will only happen if they believe useful change is possible.  and without communication, you won’t capture hearts and minds.  Often the transformation vision and plan are delivered once, a single communication that reflects almost none of the overall communication effort. Leaders have to ‘walk the talk’.  If they behave in ways that are antithetical to the vision and not communicating it compellingly, there is no chance of real change.
Error 5:  Empower others to act on the vision	The more people involved in and acting on the change, the better the outcome.  The guiding coalition can empower others, but it is also essential to remove obstacles.  Often the organisation itself, and its policies and procedures, and narrow job descriptions are the obstacle. Other times there are people blocking the vision.  Failure to remove powerful individuals to resist the change effort and who have something to fear from change, will damage the credibility of the effort.
Error 6:  Not systematically planning for, and creating short term wins	Individuals won’t go on the long March unless they see compelling, regular evidence that the march is getting results.  The measurement of the wins needs to ne unambiguous, not just a judgement call that can be discounted by those opposing change. Short term success is often left to chance.  Wins need to be created rather than hoped for and must be scored early in the process.
Error 7:  Declaring victory too soon	Change needs to sink deeply into an organisations culture. Often victory is declared too soon, allowing resistors to declare the ‘war has been won’ when the war has not begun. It is important to ensure initiators to not overreact to initial wins, and that resistors do not then spot an opportunity to stop further change.
Error 8:  Not anchoring the change in the Corporation’s culture	If the whole company needs renewal, the CEO is key.  It is critical that the change, where positive is institutionalised in the culture of the business.  Often the positive change is reflected in the Leader, whereas the changed behaviors of the staff should be highlighted (because Leaders come and go). Often people are placed into leadership positions in businesses requiring change, who don’t personify the necessary approach.  It is critical people are promoted into positions who share values consistent with the change.

WHAT CAN WE EXPECT?

This article was authored in 1996, but over 25 years it seems not much is different.

The pressures on organisations to change will only increase over the next year.  We will see equity, and lenders place increased pressure on companies to ‘transform’ to receive needed capital.  Yet the methods leaders have used to strengthen their companies – total quality management, re-engineering, right sizing, restructuring, cultural change, and turnarounds – routinely still fall short because change is hard

In summary, leadership is important, but change requires more than leadership.  Often we expect too much from Leaders, and a great speech alone ‘Charge it to my head, and not to my heart“ won’t be enough to “lift the boats stuck at the bottom”

Disclaimer

Wexted Advisors communications are intended to provide commentary and general information. They should not be relied upon as financial or legal advice. Formal financial or legal advice should be sought in particular transactions or on matters of interest arising from this communication.