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Greetings once again, Troubleshooters! Thanks for tuning in to Troubleshooting Thursdays. If you’ve been following along lately, you’ll know that we’ve been covering several topics that are extremely relevant to manufacturing executives and VPs. Today we’re continuing with our series “Change Management 101.”
In Part 1, we noted that at some point in the life of every business, change will be necessary in order for the enterprise to survive. However, change is not always easy (as the story of William Sims clearly shows), even when it seems like the proposed change has nothing but upside. In Part 2, we saw that people are hardwired to resist change, so any transformative action may result in a struggle or even sabotage if not handled correctly…which brings us to the somewhat discouraging statistic that only about 30% of transformation projects are successful. If you’re a manufacturing executive whose organization is facing some form of transformative change, don’t let that get you down. Proper planning and execution will give you a much better chance of success.
Today we’re going to look at one model of organizational change management—John Kotter’s 8-Step Change Model—and next week, in Part 4, we’ll talk about the McKinsey influence model. Both models will help manufacturing execs manage organizational change for the best possible chance of success.
The average lifespan of a business is surprisingly short
Before we go on, though—just to drive home the point that change will eventually become necessary—did you know that the average life expectancy for a company is less than 13 years (de Rooij, 1996)? Even huge, well-established companies don’t do so well—the average age of an S&P 500 company is now under 20 years (down from 60 years in the 1950s).
Companies that don’t adapt when their environment changes are pretty much doomed to die, so manufacturing executives need to be paying attention. The auto industry, for example, is now looking at environmental changes that will affect them further down the road: recent polls are showing that younger generations are driving less (nearly 45% of the 18–34 age group surveyed made a conscious effort to reduce driving, compared to 24% of the 55+ age group). This shift poses a potential problem for auto manufacturers in the very near future, so the auto industry is facing major changes and has to think about how to manage them.
In order to cope with a shifting environment, organizations must turn to strategic renewal—new markets, new products, new business models. And to do that successfully, they must manage the change strategically as well.
Kotter’s steps for effective change management
John Kotter was a Harvard Business School professor who wrote the seminal organizational change book, Leading Change, in which he outlined 8 steps for successful organizational change. (If you haven’t read it yet, now’s a good time take a quick look at the top 6 reasons organizational change programs fail—all related to employee resistance.) Kotter’s steps address and help overcome the many psychological reasons people resist change.
- Create urgency
If most of the organization doesn’t buy into the change, it probably won’t happen. You need to create a sense of urgency to get the majority of the company on board. This doesn’t mean ginning up a false urgency, because if you’re contemplating a large-scale transformational change, it probably really is urgent. The life of the company and the jobs of the employees are likely at stake. The challenge is to transmit that sense of urgency to people who maybe never see the balance sheets and five-year forecasts. That includes management and staff alike; Kotter said that 75% of management need to buy into the change or it won’t work. Communicate the very real threats of what could happen without the change, and the benefits of making the change. Take your time with this step because it is foundational to the success of the rest of the steps.
- Build the guiding team
You need a team that will model the necessary changes and lead others. Most people will be influenced to take the necessary actions if they see them being performed by the people around them. Your team should include influencers who have bought into the notion of urgency, both management and non-management personnel, working as a team.
- Get the vision right
You will need a simple, clear, and easily communicated vision of the intended change so you can stay on message and help people know why the change is necessary. (Most people will not bother with a change unless they know the reasons it is necessary.) Determine the values that are central to your change, and create a strategy to execute it. Your change team should be able to describe the vision in 5 minutes or less.
- Communicate for buy-in
Once you have your clear vision, you must communicate it frequently and effectively to the whole organization (and everyone, including upper management) needs to walk the talk. Kotter said “deeds speak volumes,” so behavior has to reinforce the verbal message.
- Empower action
Remove the obstacles to action that your staff may face, such as policies, processes, structures, or even people that are creating barriers to change. Hold company-wide “town hall” style meetings where people can identify barriers. In addition, you can recognize and reward people for facilitating change, hire people whose main role is to make change happen, and identify people who are resisting change and dialogue honestly with them to help change their behaviors.
- Create short-term wins
This is a psychologically powerful tool. People need to see progress if you’re going to keep your momentum going. Look for “low-hanging fruit” opportunities that are easily achievable milestones along the road to success, and then celebrate them in a high-profile way when they happen. It’s encouraging for those who have been actively involved, and certainly takes the wind out of the sails of the cynics!
- Don’t let up
Don’t declare victory too early, but build on each successful element of the change. Set goals to continue building on momentum and think of ways to keep things fresh, e.g., by bringing in new change leaders or celebrating short-term goals in new ways. Continue to communicate the vision.
- Make it stick
Traditional ways of doing things will tend to continue to pull staff back out of the new behaviors. To make change stick, it has to become part of the corporate culture. Reward people who act according to the new norms. Make plans to replace old change leaders as they move on. Make sure new staff are fully educated in the change. Above all, keep communicating the vision and spreading the word about progress or victories as often as you can.
And that’s a wrap for this week, Troubleshooters! Tune in to TST again next week when we look at the McKinsey influence model of organizational change management.
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