Leading Change

by John P. Kotter

Management makes a system work. It helps you do what you know how to do. Leadership builds systems or transforms old ones. It takes you into territory that is new and less well known, or even completely unknown to you.

By far the biggest mistake people make when trying to change organizations is to plunge ahead without establishing a high enough sense of urgency in fellow managers and employees.

They overestimate how much they can force big changes on an organization. They underestimate how hard it is to drive people out of their comfort zones.

Too much past success, a lack of visible crises, low performance standards, insufficient feedback from external constituencies, and more all add up to: “Yes, we have our problems, but they aren’t that terrible and I’m doing my job just fine,” or “Sure we have big problems, and they are all over there.”

But in the most successful cases, the coalition is always powerful—in terms of formal titles, information and expertise, reputations and relationships, and the capacity for leadership.

In the behind-the-scenes struggle between a single executive or a weak committee and tradition, short-term self-interest, and the like, the latter almost always win. They prevent structural change from producing needed behavior change. They kill reengineering in the form of passive resistance from employees and managers. They turn quality programs into sources of more bureaucracy instead of customer satisfaction.

Failure here is usually associated with underestimating the difficulties in producing change and thus the importance of a strong guiding coalition.

Vision plays a key role in producing useful change by helping to direct, align, and inspire actions on the part of large numbers of people. Without an appropriate vision, a transformation effort can easily dissolve into a list of confusing, incompatible, and time-consuming projects that go in the wrong direction or nowhere at all.

A useful rule of thumb: Whenever you cannot describe the vision driving a change initiative in five minutes or less and get a reaction that signifies both understanding and interest, you are in for trouble.

Communication comes in both words and deeds. The latter is generally the most powerful form. Nothing undermines change more than behavior by important individuals that is inconsistent with the verbal communication.

Sometimes the obstacle is the organizational structure. Narrow job categories can undermine efforts to increase productivity or improve customer service. Compensation or performance-appraisal systems can force people to choose between the new vision and their self-interests.

Whenever smart and well-intentioned people avoid confronting obstacles, they disempower employees and undermine change.

Most people won’t go on the long march unless they see compelling evidence within six to eighteen months that the journey is producing expected results. Without short-term wins, too many employees give up or actively join the resistance.

People often complain about being forced to produce short-term wins, but under the right circumstances that kind of pressure can be a useful element in a change process.

In the final analysis, change sticks only when it becomes “the way we do things around here,” when it seeps into the very bloodstream of the work unit or corporate body.

Anchoring change also requires that sufficient time be taken to ensure that the next generation of management really does personify the new approach. If promotion criteria are not reshaped, another common error, transformations rarely last. One bad succession decision at the top of an organization can undermine a decade of hard work.

First, useful change tends to be associated with a multistep process that creates power and motivation sufficient to overwhelm all the sources of inertia. Second, this process is never employed effectively unless it is driven by high-quality leadership, not just excellent management—an important distinction that will come up repeatedly as we talk about instituting significant organizational change.

At the beginning, those who attempt to create major change with simple, linear, analytical processes almost always fail.

Management is a set of processes that can keep a complicated system of people and technology running smoothly. The most important aspects of management include planning, budgeting, organizing, staffing, controlling, and problem solving. Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances. Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles

Success creates some degree of market dominance, which in turn produces much growth. After a while, keeping the ever-larger organization under control becomes the primary challenge. So attention turns inward, and managerial competencies are nurtured. With a strong emphasis on management but not leadership, bureaucracy and an inward focus take over.

Arrogant managers can overevaluate their current performance and competitive position, listen poorly, and learn slowly.

urgency is not an issue for people who have been asked all their lives merely to maintain the current system like a softly humming Swiss watch.

down deep we underestimate the enormity of the task, especially the first step: establishing a sense of urgency.

In an organization with 100 employees, at least two dozen must go far beyond the normal call of duty to produce a significant change. In a firm with 100,000 employees, the same might be required of 15,000 or more.

no decision of any consequence was made at the end of the meeting, since you can’t make important decisions without talking about the real issues.

First, no highly visible crisis existed.

when enterprising young employees went out of their way to collect external performance feedback, they were often treated like lepers. In that corporate culture, such behavior was seen as inappropriate because it might hurt someone, reduce morale, or lead to arguments (that is, honest discussions).

Never underestimate the magnitude of the forces that reinforce complacency and that help maintain the status quo.

Creating a strong sense of urgency usually demands bold or even risky actions that we normally associate with good leadership. A few modest activities, like the customer panel at the annual management meeting, usually fail in the face of the overwhelmingly powerful forces fueling complacency.

senior executives are usually the key players in reducing the forces of inertia. But not always. Occasionally a brave and competent soul at the middle or lower level in the hierarchy is instrumental in creating the conditions that can support a transformation.

Vision refers to a picture of the future with some implicit or explicit commentary on why people should strive to create that future.

With clarity of vision, managers and employees can figure out for themselves what to do without constantly checking with a boss or their peers.

Characteristics of an effective vision • Imaginable: Conveys a picture of what the future will look like • Desirable: Appeals to the long-term interests of employees, customers, stockholders, and others who have a stake in the enterprise • Feasible: Comprises realistic, attainable goals • Focused: Is clear enough to provide guidance in decision making • Flexible: Is general enough to allow individual initiative and alternative responses in light of changing conditions • Communicable: Is easy to communicate; can be successfully explained within five minutes

Reengineering, restructuring, and other change programs never work well over the long run unless they are guided by visions that appeal to most of the people who have a stake in the enterprise: employees, customers, stockholders, suppliers, communities.

Increasingly, the relevant question is not “do we cut costs or improve the product?” but “how do we both reduce our expenses and increase product quality?”

But as we will see in the next chapter, communicating even a simple vision to a large number of people can be enormously difficult. Simplicity is essential.

Remember my rule of thumb: If you cannot describe your vision to someone in five minutes and get their interest, you have more work to do in this phase of a transformation process.

1. They are ambitious enough to force people out of comfortable routines. Becoming 5 percent better is not the goal; becoming the best at something is often the goal. 2. They aim in a general way at providing better and better products or services at lower and lower costs, thus appealing greatly to customers and stockholders. 3. They take advantage of fundamental trends, especially globalization and new technology. 4. They make no attempt to exploit anyone and thus have a certain moral power.

The managerial equivalent to vision creation is planning.

But a plan can never direct, align, and inspire action the way vision can, and it is therefore not sufficient during transformation.

Third, both head and heart are required in this exercise. After seventeen or more years of formal education, most of us know something about using our heads but little about using our hearts.

Under these circumstances, the resulting vision is usually a small increment from the status quo or a bolder statement that most people on the guiding coalition don’t really believe.

Whenever you leave one of the steps in the eight-stage change process without finishing the work, you usually pay a big price later on. Without a sufficiently strong foundation, the redirection collapses at some point, forcing you to go back and rebuild.

When the urgency rate isn’t high enough, people don’t listen carefully to information about a new vision. If the guiding coalition isn’t the right group, it will have difficulty both creating and sending an appropriate message. If the vision itself is too blurry or just a bad idea, selling poor goods becomes a tough job.

The emotional work is even tougher: letting go of the status quo, letting go of other future options, coming to grips with the sacrifices, coming to trust others, etc.

The magnitude of the task unnerves people. If the guiding coalition spends a total of 150 hours working on the vision, and if we allow only 20 percent of that for communication to others, that’s still 30 hours per person times (let’s say) 10,000 people. At $14 an hour for wages and another $6 for benefits, that’s $20 × 30 × 10,000 = $6 million. Few firms have room for an additional expense of $6 million in their budgets.

The time and energy required for effective vision communication are directly related to the clarity and simplicity of the message.

Key elements in the effective communication of vision • Simplicity: All jargon and technobabble must be eliminated. • Metaphor, analogy, and example: A verbal picture is worth a thousand words. • Multiple forums: Big meetings and small, memos and newspapers, formal and informal interaction—all are effective for spreading the word. • Repetition: Ideas sink in deeply only after they have been heard many times. • Leadership by example: Behavior from important people that is inconsistent with the vision overwhelms other forms of communication. • Explanation of seeming inconsistencies: Unaddressed inconsistencies undermine the credibility of all communication. • Give-and-take: Two-way communication is always more powerful than one-way communication.

Remember the old saw: If I had more time, I’d write you a shorter letter. It’s much harder to be clear and concise than overcomplicated and wordy.