Why Transformation Efforts Fail: Lessons from John Kotter's 'Leading Change'

The Bleak Reality of Change Efforts

A summary of the article: "Leading Change: Why Transformation Efforts Fail" by John Kotter. Harvard

Business Review, March-April 1995.

Despite all the rhetoric, books, effort, and money thrown into change efforts in organizations today, most fail.Mega-consulting firms Arthur D. Little and McKinsey & Co. have studied hundreds of companies that enteredTotal Quality Management programs, but about two-thirds "grind to a halt because of their failure to producethe hoped-for results". Efforts at "reengineering" fared worse, with a 70% failure rate. Peter Senge puts itquite starkly in his 1999 book "Dance of Change": "this failure to sustain significant change recurs again andagain despite substantial resources committed to the change effort (many are bankrolled by topmanagement), talented and committed people "driving the change", and high stakes. In fact, executivesfeeling an urgent need for change are right; companies that fail to sustain significant change end up facingcrises. By then, their options are greatly reduced, and even after heroic efforts they often decline". Thisseems a bleak appraisal for any organization. Yet the equally important learning is that change efforts are still

mportant to face.... and the sooner the better.John Kotter (who teaches Leadership at Harvard Business School) has made it his business to study bothsuccess and failure in change initiatives in business. "The most general lesson to be learned from the moresuccessful cases is that the change process goes through a series of phases that, in total, usually require considerable length of time. Skipping steps creates only the illusion of speed and never produces satisfactoryresults" and "making critical mistakes in any of the phases can have a devastating impact, slowingmomentum and negating hard-won gains". Kotter summarizes the eight phases as follows.

1) ESTABLISH A SENSE OF URGENCY

Talk of change typically begins with some people noticing a vulnerability in the organization. The threat ofcosing ground in some way sparks these people into action, and they in turn try to communicate that sense ofurgency to others. Kotter notes that over half the companies he has observed have never been able to createenough urgency to prompt action. "Without motivation, people won’t help and the effort goes nowhere….Executives underestimate how hard it can be to drive people out of their comfort zones". In the moresuccessful cases the leadership groupfacilitates a frank discussion of potentially unpleasant facts: about thenew competition, flat earnings, decreasing market share, or other relevant indicators. It is helpful to useoutsiders who can share the "big picture" from a different perspective and help broaden the awareness oforganization members. When is the urgency level high enough? Kotter suggests it is when 75% of your

John Kotter's Insights on Successful Change

leadership is honestly convinced that business as usual is no longer an acceptable plan.

2) FORM A POWERFUL GUIDING COALITION

Change efforts often start with just one or two people, and should grow continually to include more and more who believe the changes are necessary. The need in this phase is to gather a large enough initial core ofbelievers. This initial group should be pretty powerful in terms of the roles they hold in the organization, thereputations they have, the skills they bring and the relationships they have. Regardless of size of yourorganization, the "guiding coalition" for change needs to have 3-5 people leading the effort. This group, inturn, helps bring others on board with the new ideas. The building of this coalition – their sense of urgency,their sense of what’s happening and what’s needed – is crucial. Involving respected leaders in this coalitionwill pay great dividends later.

3) CREATE A VISION

Successful transformation rests on "a picture of the future that is relatively easy to communicate and appealsto customers, stockholders, and employees. A vision helps clarify the direction in which an organization needswww.power-projects.comto move". The vision functions in many different ways: it helps spark motivation, it helps keep all the projectsand changes aligned, it provides a filter to evaluate how the organization is doing, and it provides a rationalefor the changes the organization will have to weather. "A useful rule of thumb: if you can’t communicate thevision to someone in five minutes or less and get a reaction that signifies both understanding and interest, youare not yet done with this phase of the transformation process".

4) COMMUNICATE THE VISION

Kotter suggests the leadership should estimate how much communication of the vision is needed, and thenmultiply that effort by a factor of ten. Do not limit it to one management meeting, a President’s address, or afew news articles. Leaders must be seen "walking the talk" – another form of communication -- if people aregoing to perceive the effort as important. Deeds along with words are powerful communicators of the newways. The bottom line is that a transformation effort will fail unless most of the members understand,appreciate, commit and try to make the effort happen. The guiding principle is simple: use every existingcommunication channel and opportunity.

5) EMPOWER OTHERS TO ACT ON THE VISIONThis entails several different actions. Allow organization members to make changes in their areas ofinvolvement. Allocate budget money to the new initiative. Carve out time on meeting agendas to talk aboutthe vision. Change the way your work is organized to put people where the effort needs to be. Free up keypeople from existing responsibilities so they can concentrate on the new effort. In short, remove any obstaclesthere may be to getting on withthe change. Nothing is more frustrating than believing in the change but thennot having the time, money, help, or support needed to effect it. You can’t get rid of all the obstacles, but thebiggest ones need to be dealt with.

6) PLAN FOR A CREATE SHORT-TERM WINS

Since real transformation takes time, the loss of momentum and the onset of disappointment are real factors.Most people won’t go on a long march for change unless they begin to see compelling evidence that theirefforts are bearing fruit. In successful transformation, leaders actively plan and achieve some short term gainswhich people will be able to see and celebrate. This provides proof to organization members that their effortsare working, and adds to the motivation to keep the effort going. "When it becomes clear to people that majorchange will take a long time, urgency levels can drop. Commitments to produce short-term wins help keep the

urgency level up and force detailed analytical thinking that can clarify or revise visions".

7) CONSOLIDATE IMPROVEMENTS AND SUSTAIN THE MOMENTUM FOR CHANGE

As Kotter warns, "Do not declare victory too soon". Until changes sink deeply into the enterprise culture -- aprocess that can take five to ten years -- new approaches are fragile and subject to regression. Again, apremature declaration of victory kills momentum, allowing the powerful forces of tradition to regain ground.Leaders of successful efforts use the feeling of victory as the motivation to delve more deeply into theirorganization: to explore changes in the basic culture, to expose the systems relationships of the organizationwhich need tuning, to move people committed to the new ways into key roles. Leaders of change must go intothe process believing that their efforts will take years.

8) INSTITUTIONALIZE THE NEW APPROACHES