Five Prerequisites for Effective Change

Organizational change is an imperative for most companies today. As the business climate becomes increasingly complex, many executives need to adapt their organizations to improve competitiveness. Yet few companies are achieving results at the level and pace required by their markets.

The primary reason most change processes fail is that they are used on unqualified businesses—companies that are executing a change project, instead of establishing new standards for "business as usual." To have a lasting impact, a change initiative should:

  Have a clear, enterprise-wide focus and well-defined, top-down goals
  Ensure that effective, candid communications forums are established
  Create real accountability for high-impact results
  Instill solid ownership of the change process throughout the business
  Be transferable to new issues as they arise—creating a "learning enterprise"

If any one of these prerequisites is missing, change won't be far-reaching—and lasting—enough to achieve competitiveness. What follows is a discussion of these prerequisites—and a process to fulfill them.

Prerequisite #1: Clear Focus—Enterprise-Wide

Businesses should begin by establishing specific goals to create value that all employees can understand—e.g., a company sets a goal to be the share leader in its industry within three years. This goal becomes the foundation upon which all initiatives are evaluated. When defining these goals, long-term vision is more important than short-term achievability.

Organizations are often too ambitious in targeting 15 or 20 separate, unrelated areas for improvement—and they scatter their resources too widely. Companies need to identify the four or five crossfunctional processes that have the greatest impact on competitiveness—then set measurable targets for improvement in each. It is essential that the focus is on customer priorities, rather than internal functional politics.

A common problem is identifying the specific improvements needed to create competitive advantages. GMT advocates an approach which begins with extensive management interviews and quantitative customer analysis to assess an organization's strengths and weaknesses from all perspectives. This process enables the organization to "look at itself in the mirror" as an entire enterprise and be constructively candid about what it sees.

As part of the process, the senior team and all functional managers openly evaluate the performance of each functional department. This phase culminates in a workshop in which top management, middle managers, and key professionals confront the same critical issues—in the same room—at the same time. Crossfunctional "advocate" teams are then set up to work in these areas, developing specific performance targets and strategies to achieve them.

Businesses don't need to abandon their "vertical" organization and move overnight to a "horizontal" team structure. To the contrary, this process creates a stronger organization by teaching functional managers and professionals to become enterprise thinkers, doers, and leaders. In essence, the advocate teams create an ad hoc parallel organization to deal with top-priority issues. Teams use outside facilitation for six months to develop momentum, accomplish their original objectives, and develop an "evergreen" capability to resolve other key issues.

Prerequisite #2: Effective Communications Forums

Most organizations send mixed messages to employees. They champion change efforts and encourage bottom-up involvement—yet fail to provide the time and forum for this involvement.

GMT's process sets aside one day each month for a meeting between senior executives and key team members. These meetings provide a forum for top managers and crossfunctional teams to discuss analysis results, recommendations, obstacles to progress, and ideas for overcoming them. These reviews continue until the teams' deliverables, defined in the original workshop, are achieved.

These monthly review-and-decision forums send a powerful message: The senior team is committed to transformation and is willing to provide the resources to make it work. These meetings create "pressure points" that motivate advocate teams and the senior team to make well-informed, strategically driven decisions—without the compromises of functional politics that often obstruct innovation.

Prerequisite #3: Accountability

All too often, companies define "accountability" very loosely. For example, if customer service is targeted for improvement, organizations often make everyone in the company "accountable" for improving customer service.

In this situation, no one is truly responsible for improving customer standards and practices across the business. After all, customer service is the single, overall impression customers develop, no matter whom they talk to within the organization.

This is one of the reasons advocate teams should represent all key functions. Teams are then held truly accountable for delivering a unified response for the entire business to its customers. Teams set stretch goals, conduct customer research, benchmark external performance standards and practices, challenge traditional practices, and recommend and implement action plans.

Because team members are empowered to change customer service policies and work processes for the entire enterprise, they feel accountable for all future customer impressions. They take their role very seriously, especially in decision meetings with the senior team.

Prerequisite #4: Ownership

Employees will be far more effective in implementing change if they have true "ownership" of the process and its results—goals are legitimate and have a self-interest in achieving them.

In order to create employee ownership, senior management must ensure that all senior team members understand and agree with priorities—not just in review meetings, but in daily decisions and behavior. This will empower employees to "buy in" to the change process—as well as share management's sense of urgency about issues.

This isn't as difficult as many executives seem to think. Because employees are close to day-to-day work processes—as well as customers and suppliers—they understand critical issues and their root causes. Advocate team members can become valuable extensions of senior management—and champion high-impact change efforts within their functions and across the enterprise. An unwavering commitment from management is critical to achieving team ownership and buy-in.

Prerequisite #5: Transferability

This is by far the most important prerequisite for lasting organizational change: the change process must have the built-in capability to be transferred to new issues and new teams after the initial assignments are completed. This creates a "learning enterprise."

Far-reaching and lasting change can't be a one-time effort or a series of disjointed initiatives. Instead, it is a continuous process in which issues are identified and attacked, as markets change. The advocate team process is learned as a business works on its most important issues, then is transferred to other issues and teams within the enterprise. After an initial GMT assignment in which the team process and high team-performance standards are established, the organization creates an atmosphere of proactive, continuous improvement.

This "transferability" makes business transformation both seamless and ongoing. In addition, the process speeds up and adds ever-increasing value, as senior managers and advocate teams become more collectively skilled at thinking creatively, resolving market-driven issues, implementing plans, and measuring results. While many change processes may bring short-term results, this advocate team process creates continuing results—without continuing external facilitation.

Senior management's up-front investment of time and effort to ensure that the change process is operating in the right environment is more critical than individual problem-solving tools. Any corporate change effort that doesn't meet these five criteria simply isn't working at maximum effectiveness. If the process fully satisfies these prerequisites, it will make a significant difference for any organization seeking solid, lasting results.