Driving Change, One Step at a Time
January 14, 2008
In the pages that follow, we’ll outline the process we’ve developed to support productive, organizationwide conversations about barriers to performance (summarized in the exhibit “The Strategic Fitness Process”).We’ll focus on important points to remember as this conversation unfolds. These points – and the principles underlying them – hold true in any setting where top management truly wants strategic change.
• What are the company’s objectives and aspirations?
• What are the market threats and opportunities?
• What is the value proposition you are delivering?
• What are the most critical things the business must do to deliver on the value proposition and create or sustain competitive advantage?
• Which organizational capabilities are needed to implement the strategy?
• Which values should guide the organization?
Draft your best managers to collect data and engage the organization in a conversation. The two conventional approaches to collecting data about strategic and organizational problems are to survey thousands of employees anonymously or to ask outsiders (consultants or HR specialists) to conduct interviews. The assumption is that only anonymous surveys and outsiders can elicit objective, truthful information. The problem is that out of a desire for objective data, the senior team is distancing itself from the people who have seen and experienced problems. That distance makes it possible for executives to underestimate or even deny problems and to delay action. In many companies we have studied, the senior team had massive amounts of survey data but had taken little action as a result of anything it had learned.
When a senior team appoints a task force of up to eight of its best managers to interview pivotal people in all parts of the organization, the team sends a clear message that it is serious about uncovering the truth and making changes. To ensure that the task force is seen as representing the interests of the entire organization, the senior team collectively selects its members. If anyone on the senior team expresses a concern about a proposed individual, that individual’s name is stricken from the list.
Lynne Camp and her senior team, like many other senior teams, hesitated to appoint their best managers because these were also the busiest managers.We have learned the hard way, however, that if you do not appoint your most effective managers, the task force’s feedback will have less credibility with the senior team and with the larger organization. It becomes all too easy for the senior team to discount or explain away painful truths.
Even if a credible task force is appointed, skepticism in the larger organization is likely to linger. Managers are apt to remember previous information-collecting efforts that yielded few tangible results. The firm can allay this skepticism by having the task force, rather than the senior team, select the 100 or so people who are to be interviewed. This helps to assure the organization that the task force members – not senior management – control this piece of the process. The interviewees should be a representative sample of people, including managers, from the areas most responsible for implementing the strategy. The number of interviews can almost always be kept to 100 or less, regardless of whether the strategy being assessed is for a worldwide Fortune 50 corporation or a small start-up. Data collection focuses on company strengths and barriers to the implementation of strategy, not employee satisfaction and morale. Thus, the interviews can be limited to those in pivotal roles along the value chain.
Readers may wonder whether a task force handpicked by top management will confront the senior team with the truth. The answer, emphatically, is yes. Provided that certain safeguards are in place (we will describe these in a moment) and that task force members believe the leadership team is prepared to make changes, the task force quickly becomes a cohesive group, even when it is made up of people from warring factions of the organization. Moreover, task force members come to feel a deep obligation to those they have interviewed. Many see the assignment as a once-in-a-lifetime opportunity to make things better – and they don’t shy away from confronting the brutal facts. As one task force member at SGDU put it, “People had spilled their guts to me in the interviews, and I owed it to them to really see this through.”
First, and most important, the confidentiality of interviews must be safeguarded. Task force members report back general themes that come up in multiple conversations, not comments that can be attributed to any one individual. In addition, task force members interview people outside their own parts of the organization, making it less likely that they have an ax to grind or that the interviewees will feel intimidated.
The task force members have their own fears to deal with, of course. In going out to the organization on behalf of the senior management team, they risk their own rep- utations.As one task force member at SGDU pointed out, “We’re going to put our careers on the line assuming the top team is going to follow through. If we do the interviews and nothing happens, then we’ll look stupid.” In addition, they are fully aware of the political costs of speaking uncomfortable truths. Many task forces, especially in organizations that have a history of top-down management, are anxious about these risks (although our research shows that a disproportionate number of task force members are later promoted). In one instance, it took three hours to assure an anxious task force that its members had not been given a careerlimiting opportunity. More than one task force has begun its report with a plea not to “shoot the messenger”; one created buttons saying this, and members wore them into the meeting with the senior team.
The top manager must clarify his or her expectations for openness if these fears are to be addressed. Camp told the task force at the launch meeting, “I want the truth; nothing should be sugarcoated.…We have confidence in you, and we are counting on you to help us identify and address the real issues.” In addition, what makes it possible for the task force members to speak the truth is that they are acting as representatives of the 100 people they have interviewed. We’ve also found that it helps if task force members can think of themselves as researchers with a job to do. They remind management of this reporter role by citing the number of people they interviewed and the general area in the company where they collected information (without, of course, revealing individual sources).
Distill the conversation to the issues that matter. The conversation between task force members and the people they interview is kept focused but open-ended. Interviewees are asked simply,“What are the strengths to build on and the barriers to address in implementing this strategy?” Task force members find that respondents are eager to discuss strategic issues because this is, in many cases, their first chance to talk to management honestly about the overall health and direction of the company. Task force members report long, emotional interviews. Employees who are not scheduled to be interviewed sometimes line up outside conference room doors, hoping for the chance to speak.
The task force’s job is to extract from its hundreds of hours of rich and emotionally charged discussions the critical issues that matter most. This is done through a series of screens. At the end of each interview, the subject is asked to summarize the two or three most businesscritical issues to be shared with senior management. Each task force member then reviews all of his or her interviewnotes and selects the three or four most commonly mentioned barriers to implementing business strategy, as well as the major organizational strengths that need to be preserved. When the task force members come together, they collate these themes. The most important ones form the basis for the presentation to the senior management team.
The task force is careful to illustrate the themes with descriptions of specific events or projects; these rich stories provide the top team with an in-depth view of how the organization really functions. The stories resemble well-researched case studies.We have found that these descriptions are vitalto convincing senior management that the data are real and valid. Senior managers also respond powerfully to quotes from (unnamed) interviewees, which tend to bring home the employees’ deep commitment as well as their frustration.
Enable truth to speak to power. The task force’s presentation to senior management is always a charged meeting. This stage, perhaps more than any other, needs to be carefully managed. When we first developed this process, the task force would use slides. But we quickly learned that the task force had great difficulty agreeing on a few words that would convey their rich findings. We also found that – for all the safeguards we thought were in place – task force members were apprehensive about their individual parts of the presentation. They felt exposed and vulnerable because they could be individually identified with some portion of the bad news.We now suggest that task force members present their findings in the form of a discussion. Task force members historisit around a table in the middle of a room– in what we call a fishbowl – while the members of the senior team sit at tables around the outside of the fishbowl, observing and taking notes. For each of the major themes, the task force members discuss the range of perspectives that emerged from their interviews and the questions that the themes raise. They do not recommend solutions, and they don’t deliver a written report of any kind; the depth of the senior team’s understanding and insight is far greater when the executives actively listen and take notes.
Certain ground rules are set at the beginning of these meetings to enable senior managers to hear what’s being said and to protect the task force members. Senior managers are not allowed to interrupt or challenge the task force; instead, at the end of each theme discussion, they are allowed to ask questions for clarification. They’re also encouraged, as they listen, to recognize that “perceptions are facts” in shaping behavior and determining effectiveness of strategy implementation.
In every process we’ve observed, the task force was able to speak the truth with a level of openness and richness that went well beyond the initial expectations of the managers involved. One senior manager described the task force as “operating much like a professional consulting firm, except unlike consultants, they were a part of the organization and knew it inside and out. I think they worked so well together because they believed in what they were doing.”
This is not to say that the task force feedback sessions are easy or painless. After all, senior management members are learning about the business consequences of their own actions.At SGDU,Lynne Camp learned that she was perceived as an authentic leader whom people liked
and trusted, but that she was letting down the organization by not moving more quickly to resolve the four major organizational problems facing the business:
• Slow decision making: “Our functional organization is killing speed.”
• Lack of business focus: “Lynne and her staff don’t know the business well enough to ask the right questions.”
• Lack of accountability: “Everyone reports to a function; no one is accountable.”
• Leadership ineffectiveness: “Management has no track record in taking action. This is the last chance for Lynne and her staff to get it right.”
The power of direct feedback from eight of their best people moves senior teams to effect changes they have otherwise been reluctant to make. This happened at SGDU.As Camp explained to the task force: “You lit a fire under us. Thank you for the unvarnished truth.…I take your feedback very seriously; it is my performance appraisal.… If the organization is going to change, I must change.”
Camp pledged to do whatever it took to address the issues raised; she even offered to resign if it turned out that she was not the right person to lead SGDU, as did the rest of the senior team. This act of leadership courage was not especially unusual. A collective and truthful conversation, our experience shows, enhances everyone’s willingness to put the organization and its objectives ahead of selfinterest. This is its power.
Diagnose the organization and develop a plan for change. None of us would feel comfortable agreeing to a recommendation for surgery before a full diagnosis had been made. Yet upon hearing about problems in their organization, managers often move too quickly to institute major changes without undertaking a rigorous diagnosis of root causes. Why? Time pressures prevent reflection and in-depth diagnosis. Managers also lack an analytical framework for diagnosing the situation. One senior team created a 49-item action list, one for each problem it had perceived. This enabled the general manager to avoid confronting the underlying issues, which included his own focus on short-term productivity improvements at the expense of longer-term investments, an ineffective senior management team unable to bridge functional silos, and his own top-down style.
To overcome such problems, we have concluded that the senior team should convene for a full three-day meeting at which feedback, diagnosis, and action planning occur. Such a meeting creates the discipline that a senior team needs to go beyond symptoms to root causes.
On the first day, the task force gives its feedback, and the senior team gets an overnight assignment: to identify the organization’s core strengths and weaknesses as they relate to its strategic objectives. The task force is done for now, but the senior team continues to meet for two more days. Using its overnight assignment, the team diagnoses the organization, deciding as a group what the company’s strengths and weaknesses are, which weaknesses will materially undermine achievement of strategic goals, and which organizational levers – for example, organization structure, corporate culture, management processes, human resource policies, the leadership team – are causing the weaknesses. On the final day, the senior team makes decisions about organizational changes and other priority actions.
At SGDU, Camp and her team wrestled with the fundamental but politically sensitive question of whether the functional departments, geographic entities, or businesses were going to drive the company. The team collectively agreed to move to a product-based rather than a geography-based business unit structure in which the geographic teams and functional departments played a supporting rather than a driving role. The businesses themselves would be responsible for R&D, product planning, marketing, and delivery. According to Camp, “We agreed to have the whole organization in place in six weeks. There was a real passion to demonstrate results [because of] the candid feedback and because we hadn’t histori cally done that.” Although Camp had favored a matrix organization, she was persuaded by her team’s fact-based discussion of the task force’s candid report that an organization built around several accountable product-based business units would be the best approach. The senior team had converged quickly on the new organizational design even though many of its members were functional managers who would lose power in the new structure.
Stress test the plan. Once the senior team has developed its plan, it meets again with the task force to present what it has heard, its diagnosis, and its action plan. This is a critical step in reinforcing the senior team’s accountability to the organization.
To ensure that it’s able to provide honest and thoughtful feedback, the task force takes time to deliberate alone before responding to the proposed plan.As a result of this review, the final meeting between the two groups is sometimes more contentious than it otherwise would have been– and it’s more productive as well. One task force (not SGDU’s) informed the CEO and his senior team that they had not fully addressed the need to streamline an overlayered divisional structure; a change in the structure would reduce the authority of a particularly influential member of the senior team. When the task force put this issue on the table, the CEO and the top team changed the plan. The revised plan had much greater credibility within the organization, and the task force was able to move beyond its initial role as a group of objective “reporters”and become a committed partner in the implementation of the plan. At SGDU, the task force gave useful feedback to the senior team about how to best communicate and implement the senior team’s plans; in general, they were positive about what the senior team had proposed.
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