Leading Change

by John P. Kotter

Error #1: Allowing Too Much Complacency 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. This error is fatal because transformations always fail to achieve their objectives when complacency levels are high.

Without a sense of urgency, people won’t give that extra effort that is often essential. They won’t make needed sacrifices. Instead they cling to the status quo and resist initiatives from above.

Error #2: Failing to Create a Sufficiently Powerful Guiding Coalition

Failure here is usually associated with underestimating the difficulties in producing change and thus the importance of a strong guiding coalition. Even when complacency is relatively low, firms with little history of transformation or teamwork often undervalue the need for such a team or assume that it can be led by a staff executive from human resources, quality, or strategic planning instead of a key line manager.

Error #3: Underestimating the Power of Vision

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.

In many failed transformations, you find plans and programs trying to play the role of vision.

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.

Error #4: Undercommunicating the Vision by a Factor of 10 (or 100 or Even 1,000)

Three patterns of ineffective communication are common, all driven by habits developed in more stable times. In the first, a group actually develops a pretty good transformation vision and then proceeds to sell it by holding only a few meetings or sending out only a few memos. Its members, thus having used only the smallest fraction of the yearly intracompany communication, react with astonishment when people don’t seem to understand the new approach. In the second pattern, the head of the organization spends a considerable amount of time making speeches to employee groups, but most of her managers are virtually

silent. Here vision captures more of the total yearly communication than in the first case, but the volume is still woefully inadequate. In the third pattern, much more effort goes into newsletters and speeches, but some highly visible individuals still behave in ways that are antithetical to the vision, and the net result is that cynicism among the troops goes up while belief in the new message goes down.

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. And yet this happens all the time,

Error #5: Permitting Obstacles to Block the New Vision

One well-placed blocker can stop an entire change effort.

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

Error #6: Failing to Create Short-Term Wins

Real transformation takes time. Complex efforts to change strategies or restructure businesses risk losing momentum if there are no short...

In a successful transformation, managers actively look for ways to obtain clear performance improvements, establish goals in the yearly planning system, achieve these objectives, and reward the people involved with

recognition, promotions, or money.

Commitments to produce short-term wins can help keep complacency down and encourage the detailed analytical thinking that can usefully clarify or revise transformational visions.

Error #7: Declaring Victory Too Soon

Declaring victory too soon is like stumbling into a sinkhole on the road to meaningful change. And for a variety of reasons, even smart people don’t just stumble into that hole. Sometimes they jump in with both feet.

Error #8: Neglecting to Anchor Changes Firmly in the Corporate Culture

Until new behaviors are rooted in social norms and shared values, they are always subject to degradation as soon as the pressures associated with a change effort are removed.

Making any of the eight errors common to transformation efforts can have serious consequences (see figure 1–1). In slowing down the new initiatives, creating unnecessary resistance, frustrating employees endlessly, and sometimes completely stifling needed change, any of these errors could cause an organization

to fail to offer the products or services people want at prices they can afford. Budgets are then squeezed, people are laid off, and those who remain are put under great stress. The

A globalized economy is creating both more hazards and more opportunities for everyone, forcing firms to make dramatic improvements not only to compete and prosper but also to merely survive.

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.

The Eight-Stage Change Process

All diagrams tend to oversimplify reality. I therefore offer figure 2–2 with some trepidation. It summarizes the steps producing successful change of any magnitude in organizations. The process has eight stages, each of

which is associated with one of the eight fundamental errors that undermine transformation efforts. The steps are: establishing a sense of urgency, creating the guiding coalition, developing a vision and strategy, communicating the change vision, empowering a broad base of people to take action, generating short-term wins, consolidating gains and producing even more change,

The first four steps in the transformation process help defrost a hardened status quo. If change were easy, you wouldn’t need all that effort. Phases five to seven then introduce many new practices. The last stage grounds the changes in the corporate culture and helps make them stick. People under

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.

Successful change of any magnitude goes through all eight stages, usually in the sequence shown in figure 2–2. Although one normally operates in multiple phases at once, skipping even a single step or getting too far ahead without a solid base almost always creates problems.

Normally, people skip steps because they are feeling pressures to produce. They also invent new sequences because some seemingly reasonable logic dictates such a choice. After getting well into the urgency phase (#1), all change efforts end up operating in multiple stages at once, but initiating action in any order other than that shown in figure 2–2 rarely works well. It doesn’t build and develop in a natural way. It comes across as contrived, forced, or mechanistic. It doesn’t create the momentum needed to overcome enormously powerful sources of inertia.

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 (see figure 2–3).

successful transformation is 70 to 90 percent leadership and only 10 to 30 percent management.

The creation of an overmanaged, underled corporate culture

Transformation requires sacrifice, dedication, and creativity, none of which usually comes with coercion.

Many people need to help with the leadership task, not by attempting to imitate the likes of Winston Churchill or Martin Luther King, Jr., but by modestly assisting with the leadership agenda in their spheres of activity.

People will find a thousand ingenious ways to withhold cooperation from a process that they sincerely think is unnecessary or wrongheaded.

Employees saw no tornado-like threat, which was one reason their sense of urgency was low.

Sources of complacency

Second, that meeting was taking place in a room that screamed “Success.”

Third, the standards against which these managers measured themselves were far from high.

Fourth, the organizational structure focused most people’s attention on narrow functional goals instead of broad business performance.

Fifth, the various internal planning and control systems were rigged to make it easy for everyone to meet their functional goals.

Sixth, whatever performance feedback people received came almost entirely from these faulty internal systems.

Seventh, when enterprising young employees went out of their way to collect external performance feedback, they were often treated like lepers.