Leading Change

“These errors are not inevitable. With awareness and skill, they can be avoided or at least greatly mitigated. The key lies in understanding why organizations resist needed change, what exactly is the multistage process that can overcome destructive inertia, and, most of all, how the leadership that is required to drive that process in a socially healthy way means more than good management.”

The eight errors Kotter lists are imposing, but he comforts the reader here by noting that these errors can largely be avoided or mitigated. Not all organizations need to face the full power of each error. Instead, proper preparation and motivation can make change easier. Success lies in understanding what change is, why it is hard to enact, and what an organization needs to do, broadly speaking, when implementing change.

“People often try to transform organizations by undertaking only steps 5, 6, and 7, especially if it appears that a single decision—to reorganize, make an acquisition, or lay people off—will produce most of the needed change. Or they race through steps without ever finishing the job. Or they fail to reinforce earlier stages as they move on, and as a result the sense of urgency dissipates or the guiding coalition breaks up. Truth is, when you neglect any of the warm-up, or defrosting, activities (steps 1 to 4), you rarely establish a solid enough base on which to proceed. And without the follow-through that takes place in step 8, you never get to the finish line and make the changes stick.”

Kotter clarifies that none of the eight stages for successfully enacting change are optional. Each stage serves to prepare the organization for the next stage; progressing through the stages in order will be key to enacting the change and then ensuring the change remains in place. There may be a temptation to skip one or more stages. Kotter is quick to note, though, that skipping stages or neglecting follow-through will negatively affect the lasting effects of an attempt at change.

“Managing change is important. Without competent management, the transformation process can get out of control. But for most organizations, the much bigger challenge is leading change. Only leadership can motivate the actions needed to alter behavior in any significant way. Only leadership can get change to stick by anchoring it in the very culture of an organization.”

Though Kotter emphasizes the need for leadership over management, he refines that argument here, acknowledging the importance of management, even in times of change, as a critical element in maintaining an organization’s integrity and operation. The theme of The Difference Between Leadership and Management is evident in this clarification. Notably, Kotter is mainly concerned with the abundance of managers in comparison to the lack of leaders. He observes that leadership is the quality most commonly lacking in organizations. As such, leadership is the skill that Kotter spends more time discussing, urging organizations to foster and hone this quality among employees.

“In those rare circumstances in which a committed group does exist inside a canyon of complacency, its members may be able to identify the general direction for change, to reorganize, and to cut staffing levels. If these executives run a corporation, they might even make an acquisition and put in new compensation systems. But sooner or later, no matter how hard they push, no matter how much they threaten, if many others don’t feel the same sense of urgency, the momentum for change will probably die far short of the finish line. People will find a thousand ingenious ways to withhold cooperation from a process that they sincerely think is unnecessary or wrongheaded.”

This passage includes a list of elements that would likely contribute to change. Kotter lists them to show how, in fact, those individual actions and plans do not actually create change. Rather, they are simply tools that can help further change. Before true change can begin, people need to feel that the actions they will be called upon to make are necessary components of a change that will have a positive influence on their own lives. Otherwise, change will not last or even begin. Support from all levels of employees is necessary.

“For people who have been raised in a managerial culture where having everything under control was the central value, taking steps to push up the urgency level can be particularly difficult. Bold moves that reduce complacency tend to increase conflict and to create anxiety, at least at first. Real leaders take action because they have confidence that the forces unleashed can be directed to achieve important ends. But for someone who has been rewarded for thirty or forty years for being a cautious manager, initiatives to increase urgency levels often look too risky or just plain foolish.”

Urgency, as Kotter notes here, can be frightening. Nonetheless, he argues, leaders need to pursue actions that increase urgency despite the risks of anxiety and fear. As Kotter notes in the beginning of the book, some pain and discomfort is inevitable with change; that discomfort is what prevents managers from engaging fully and independently with the change process. Because managers are taught to value stability, the destabilizing actions necessary to enact change go against managers’ training and experience.

“A guiding coalition with good managers but poor leaders will not succeed. A managerial mindset will develop plans, not vision; it will vastly undercommunicate the need for and direction of change; and it will control rather than empower people. Yet companies with much historical success are often left with corporate cultures that create just that mindset that rejects both leaders and leadership. Ironically, great success creates a momentum that demands more and more managers to keep the growing enterprise under control while requiring little if any leadership.”

The critical nature of leadership stems from leaders’ ability to influence mindset. Kotter’s description of leadership here relates to The Importance of Vision and Direction in Organizational Dynamics. An individual or group needs to shift their perspective on a topic to move forward successfully. In this passage, Kotter highlights how corporate cultures in successful corporations end up valuing stability, which prevents change. Changing that mindset is a crucial first step in enacting change, and leadership, which embodies a mindset toward change, is key to doing that.

“Trust helps enormously in creating a shared objective. One of the main reasons people are not committed to overall excellence is that they don’t really trust other departments, divisions, or even fellow executives. They fear, sometimes quite rationally, that if they obsessively focus their actions on improving customer satisfaction or reducing expenses, other departments won’t do their fair share and the personal costs will skyrocket. When trust is raised, creating a common goal becomes much easier.”

Part of the challenge in encouraging change is fostering trust in both a vision and in one’s coworkers. There is no point in trying to change something in one department if the employees do not trust that the other departments will contribute equally. The coalition is a way to overcome this issue, as the coalition can draw in people from various departments and levels, building trust among them. That trust can then build as members return to their respective roles to influence those around them.

“Clarifying the direction of change is important because, more often than not, people disagree on direction, or are confused, or wonder whether significant change is really necessary. An effective vision and back-up strategies help resolve these issues. They say: This is how our world is changing, and here are compelling reasons why we should set these goals and pursue these new products (or acquisitions or quality programs) to accomplish the goals. With clarity of direction, the inability to make decisions can disappear. Endless debates about whether to buy this company or to use the money to hire more sales reps, about whether a reorganization is really needed, or about whether international expansion is moving fast enough often evaporate. One simple question—is this in line with the vision?—can help eliminate hours, days, or even months or torturous discussion.”

Vision is a powerful force, and Kotter embraces the ability of a strong vision to resolve disagreements that would overwhelm weaker attempts at change. Though there may still be disagreements about how certain actions contribute to the vision, the vision can serve as a guiding force in discussions of individual efforts toward change. With the vision in mind, many options will be immediately discarded as running contrary to the objectives of the vision, therein refining the focus of the company.

“A vision can be mundane and simple, at least partially, because in successful transformations it is only one element in a larger system that also includes strategies, plans, and budgets. But although it is only one factor in a large system, it is an especially important factor. Without vision, strategy making can be a much more contentious activity and budgeting can dissolve into a mindless exercise of taking last year’s numbers and changing them 5 percent one way or the other. Even more so, without a good vision, a clever strategy or a logical plan can rarely inspire the kind of action needed to produce major change.”

Kotter distinguishes between a “plan” and a “vision.” A plan may involve detailed strategies and goals, while a vision provides the guiding force and motivation behind any attempts at making plans. A group can make a plan independent from a vision, but the group will then likely struggle to motivate others to adopt the plan, and if something goes wrong, the group will be confused on how to pivot its efforts. The vision, while not necessarily including details, can help guide the creation of a plan and, critically, aid in selling that plan to others.

“Remember: An ineffective vision may be worse than no vision at all. Pursuit of a poorly developed vision can sometimes send people off a cliff. And lip service without commitment creates a sort of dangerous illusion. People will think they are building on a solid base, only to find that the bottom of the structure eventually collapses, destroying all their work. In either case, once they learn of the problems caused by the premature shitting off of the vision creation process, employees can become deeply cynical about transformation. With deeply cynical people, you rarely achieve successful change.”

Two reinforcements in this passage are that no stages in the eight-stage process can be skipped and that the process is designed to overcome challenges in effecting change. Without a well-thought-out vision, every subsequent stage is essentially poisoned by the ineffectual vision; that is, the effort is undermined by the choice to skip the third stage of the process. With an ineffective vision, firms are left vulnerable to the very errors Kotter’s process aims to help them overcome. The bitterness and cynicism Kotter cites in the end of the passage reflect an employee base that does not believe in the mission of the company overall.

“For people who have been trained only to be managers, communication of vision can be particularly difficult. Managers tend to think in terms of their immediate subordinates and boss, not the broader constituencies that need to buy into a vision. They tend to be most comfortable with routine factual communication, not future-oriented strategizing and dreaming. Of course, they can learn. But that requires time, effort, and, perhaps most of all, a clear sense of what the problem is and how it can be solved.”

Again, Kotter emphasizes the importance of leadership in driving change, noting how managers are not likely to include communication of vision in their daily activities. However, Kotter later notes how managers can become effective at repeating the values of a vision to instill it in the company mindset. In this passage, it is clear that an integration of vision into “routine factual communication” is needed to cement the vision within management techniques for the overall dissemination of the vision to the employees.

“In short: Nothing undermines the communication of a change vision more than behavior on the part of key players that seems inconsistent with the vision. The implications are powerful: (1) Trying to sell a vision before top management can embody it is tough; and (2) even under the best of circumstances, carefully monitoring senior management behavior is a good idea so that you can identify and address inconsistencies between words and deeds.”

Kotter balances the needs of top management and the necessity of displaying the vision’s tenets in this passage. He does not instruct executives to sell all their possessions to create the appearance of poverty. Instead, he argues that opulence needs to be either removed or explained; executives have the option, in other words, of justifying their spending or behavior. This transparency is one way of emphasizing the vision to lower-level employees. Crucially, Kotter also hints that top management should be made aware of the vision before communicating the vision to the rest of the company; this proactive step gives managers a chance to modify their behavior before employees can spot inconsistencies.

“Sometimes we become so accustomed to one basic organizational design, perhaps because it has been used for decades, that we are blind to the alternatives. Sometimes people have so much invested in one structure, in terms of personal loyalties and functional expertise, that they are afraid of the potential career consequences. Sometimes senior managers know a redesign is needed, but they don’t want to get into a fight with middle management or with their peers. But often the basis for change hasn’t been firmly enough established. Middle management easily resists structural change when it doesn’t feel a sense of urgency, doesn’t see a dedicated team at the top, doesn’t see a sensible vision for change, or doesn’t feel that other believe in that vision.”

Regarding empowering employees, Kotter discusses the many reasons why managers and employees alike might be unwilling to change their methodology. Different ways of organizing are difficult to imagine when one method has been used for decades, and people tend to form emotional attachments to the processes with which they engage daily. If given any excuse to avoid a new method, most employees are likely to choose their traditional operations.

“One major reason why the Franks of the world aren’t confronted is that others are afraid that these people can’t change, yet they are unwilling to demote or fire them. Sometimes the unwillingness to act is driven by guilt, especially if the disempowerers are friends or former mentors. Political considerations also play a big role in these cases. People fear that if a fight erupts, the Franks may be powerful enough to win, perhaps even forcing the change agents out. In many other situations, the reluctance to act is related to the good short-term results delivered by people like Frank.”

“Franks,” in this quote, are “disempowerers” who use their authority to detract from attempts at change. Kotter notes that some Franks need to be fired or pushed into retirement, but the ideal course of action would be to convince Frank to join the change effort. Fear of confrontation can hold back a change process, and Kotter again notes that change is uncomfortable by nature.

“The kind of results required in stage 6 of a transformation process are both visible and unambiguous. Subtlety won’t help. Close calls don’t either. Having a good meeting usually doesn’t qualify as the kind of unambiguous win needed in this phase, nor does getting two people to stop fighting, producing a new design that the engineering manager thinks is terrific, or sending 5,000 copies of a new vision statement around the company. Any of these actions may be important, but none is a good example of a short-term win.”

Though Kotter does not include the listed events as short-term wins, he does not take away from their importance in the change process. Important meetings and resolutions are key to progress throughout the change process, but short-term wins need to be definitive and visual. If anyone can detract from a win, or might doubt its validity, then that win will not bolster the momentum of the overall change effort.

“In larger and older firms, the problem of insufficient management is typically associated with either a new strong leader who ignores his managers or a lack of commitment from those managers to the transformation. The former was true in the case of the charismatic division general manager who eventually lost his job. Deep in his heart, he thought people who kept the current system operating were of limited importance. He’d never actually say that, but you could read it between the lines. So when some of those people tried to advise him about short-term economic matters, he often ignored them.”

Kotter again balances the need for leaders and managers, noting how ignoring managers can lead to stagnation even with a particularly charismatic leader. Most changes happen in the lower levels of the company, which means that managers at all levels need to agree on the vision, urgency, and methodology of change. Empowering employees and managers alike is needed in stage five, and ignoring either will end in disaster.

“The consequences of a mistake here can be extremely serious. After watching dozens of major change efforts in the past decade, I’m confident of one cardinal rule: Whenever you let up before the job is done, critical momentum can be lost and regression may follow. Until changed practices attain a new equilibrium and have been driven into the culture, they can be very fragile. Three years of work can come undone with remarkable speed. Once regression begins, rebuilding momentum can be a daunting task, not unlike asking people to throw their bodies in front of a huge boulder that has already begun to roll back down the hill.”

A key element in change efforts is momentum, which needs to be sustained through a sense of urgency and forward motion. If the company celebrates a win for too long, many employees will feel that the hard work is over, leading them to a sense of complacency. With complacency comes regression, which gains momentum faster than change, as employees are always willing and ready to return to a sense of comfort. Once regression begins, it takes even more effort to subvert the regression to return to a pattern of forward motion and change.

“Here, again, is where leadership is invaluable. Outstanding leaders are willing to think long term. Decades or even centuries can be meaningful time frames. Driven by compelling visions that they find personally relevant, they are willing to stay the course to accomplish objectives that are often psychologically important to them. While others shift jobs every two years, leaders will sit in a junior position for twice as long or in a senior position for more than a decade. Instead of declaring victory and giving up or moving on, they will launch the dozen change projects often required in stage 7 of a transformation. They will also take the time to ensure that all the new practices are firmly grounded in the organization’s culture.”

Kotter is not saying that change efforts will take centuries to enact; rather, he is noting that the mindset of a leader operates in the long term. While a manager may enact a policy to improve a metric over the course of a year, leaders try to enact change that will serve the company indefinitely. Such a vision may require remaining in the same position for longer than usual or even settling into a role that seems lackluster; these tactics, however undesirable, are ones that leaders are likely willing to adopt in order to enforce long-term, impactful change in the firm.

“Because this core value wasn’t diametrically in conflict with the change effort, the two coexisted, although uncomfortably. New practices forced attention first and foremost on customers. The core value would direct it to technology. The new practices were aimed at helping the firm move faster than competitors. The core value said to move at a pace dictates by rational internal technological development.”

Kotter highlights the fact that existing norms are difficult to replace, and they may remain in the company culture even when new practices and norms are layered on top of them. In his example, the focus on technology remains even though the focus of the company culture is shifting toward speed and customer service. Ultimately, such norms need to be addressed and removed before true cultural change can take place.

“Culture is not something that you manipulate easily. Attempts to grab it and twist it into a new shape never work because you can’t grab it. Culture changes only after you have successfully altered people’s actions, after the new behavior produces some group benefit for a period of time, and after people see the connection between the new actions and the performance improvement. Thus, most cultural change happens in stage 8, not stage 1.”

Again, Kotter emphasizes the need to complete the eight-stage process in the correct order, as later stages cannot be completed without the support of earlier stages. Cementing new cultural values in a company requires sufficient evidence and repetition to overwrite existing norms and practices, which requires urgency, leadership, vision, and empowerment. Even after the change seems to have taken place, effort is still needed to reinforce and support the new cultural ideals throughout the company to avoid regression.

“In a slow-moving world, all an organization needs is a good executive in charge. Teamwork at the top is not essential. In a moderately paced context, teamwork is necessary to deal with periodic transformations, but much of the time the old model will still work. In a fast-moving world, teamwork is enormously helpful almost all the time.”

Periodically, Kotter reflects on how business operations have changed over time. Though certain methods of operation worked in the past, they functioned specifically within the slower, lower-stakes environment fostered in the mid-20th century. Teamwork during that time was not as important as having a monarchical kind of leadership with a rigid hierarchy, but in the modern world, Kotter is asserting the importance of teamwork. Instead of focusing control among a small number of managers and leaders, Kotter emphasizes the need to disperse responsibility and power across a larger number of relatively even positions.

“The single biggest argument offered against the need for transformation is that organizations can succeed with incremental change. A 2 percent improvement here, a 5 percent cost reduction there, and you win. In the short run, in certain industries, this can be true. But look at the exhibit. How long do you think it will take to move incrementally from the twentieth-century model to the twenty-first? And what do you think will be the consequences if you don’t get there fast enough?”

The exhibit this quote refers to, which is on Page 172, lists the various tasks that organizations need to change to adapt to a modern world. Kotter’s questions aim to build urgency with the reader, as he is noting the importance of making change quickly and consistently as conditions vary over time. Small improvements will not be enough for a company to keep up with rapidly changing industries. Larger-scale change is necessary to survive. The consequence of failing to change rapidly is failing to keep up with competition and even bankruptcy.

“The single biggest error in the traditional model is related to its assumptions about the origins of leadership. Stated simply, the historically dominant concept takes leadership skills as a divine gift of birth, a gift granted to a small number of people. Although I, too, once believed this, I have found that the traditional idea simply does not fit well with what I have observed in nearly thirty years of studying organizations and the people who run them. In particular, the older model is nearly oblivious to the power and the potential of lifelong learning.”

Kotter relates to the outdated assumptions of leadership to build rapport with the reader, as the belief that leadership is innate or unique is still commonly held. However, Kotter reassures the reader that leadership is a skill that one learns over time and that lifelong learning can be focused on building and reinforcing leadership skills in business. Kotter relies on his experience of over 30 years to reinforce his claim, emphasizing the examples he previously used to demonstrate how leadership can be developed.