Despite much rhetoric about ‘change management’ and nimble, responsive and flexible organizations, many business leaders periodically downsize, regularly restructure and inexorably destroy shareholder wealth. A research programme led by the author has examined the experience of over 2,000 companies to find out why there is such a wide gulf between intentions and outcomes. The findings set out in ‘Transforming the Company’* identify what needs to be done. Frustration is the inevitable consequence of how many people set about managing change.

When considering performance improvement, business development, re-engineering and transformation options, boards need to achieve a balance between change and continuity, and focus upon areas of greatest opportunity. As situations alter and circumstances change, capabilities, processes and working practices need to be reviewed. For many, change is an inevitable consequence of their roles and responsibilities. It may be both necessary and desirable, and the management of it is now a lucrative area for consultants.

However certain changes are more welcome than others, and some people are much better at managing them than their peers. In some companies managers may be assessed and rewarded according to the amount of change they bring about. However, directors, boards and senior managers should tread warily as change can be disruptive and costly. It can distract people who should be focused upon other priorities.

When mismanaged change can be stressful and destructive. Few changes affect everyone in the same way, and the impacts of certain changes may not be immediately apparent. There might be hidden and longer term consequences. Board members may be divided between those who are for or against particular changes. People who are indifferent or ambivalent may simply ‘go with the flow’.

Despite much rhetoric about ‘change management’ and nimble, responsive and flexible organizations, many business leaders periodically downsize, regularly restructure and inexorably destroy shareholder wealth. A research programme led by the author has examined the experience of over 2,000 companies to find out why there is such a wide gulf between intentions and outcomes. The findings set out in ‘Transforming the Company’* identify what needs to be done. Frustration is the inevitable consequence of how many people set about managing change.

Smart boards make adaptation and change a way of life. They read the road ahead and try to anticipate changes that may be required. They identify and approach those whose help they might need. They are proactive rather than reactive, and retain control. They introduce required changes when there is the greatest chance of success.

Much will depend upon the purposes of change and the capacity of the people involved to adapt. Directors should question the rationale for proposed changes, and ask whether an impact analysis has been undertaken of their likely implications. Are the potential consequences for employees, customers, suppliers, business partners and investors adequately assessed?

When deciding what to change, don’t confuse operational and strategic issues, or your personal interests with those of the organisation. Build an effective board of competent directors who understand the distinction between direction and management. Surround yourself with open-minded, pragmatic and competent contributors who will consider proposals for change dispassionately and objectively.

Particular attention should be paid to the interests of customers. When new models are introduced will the spare parts needed for earlier products still be available? Introducing changes without considering their costs or consequences can do great harm to reputations and relationships. Customers sometimes have more regard for a company’s offerings than its managers.

An ‘end-to-end’ perspective is required. People need to think through the likely consequences of changes for colleagues and business partners. Altering a task at one point in a process, or introducing a new activity, may cause problems for those operating elsewhere, either within the same process or in a related or dependent one.

Allies and opponents need to be identified. Some champion change. Others undermine it. Change can disorientate and disrupt, even when it is beneficial. People may also only be able to take so much of it. Organisational leaders need to think carefully about how much change they can handle before negative consequences wipe out desired gains.

Change for change’s sake should be avoided. A degree of continuity may be required. Smart organisations build upon an existing reputation and safeguard core values. Steps may need to be taken to protect what is important and prevent the compromise of cherished beliefs. What are the anchor points of the business? What is the cement that holds its people together?

There are other questions to consider. Might changes result in the loss of strategically important knowledge and understanding? Is sufficient effort devoted to building longer-term relationships with customers, suppliers, investors and business partners? How easy is it for people to speak up against change?

Directors should distinguish between goals, values, objectives, policies and activities that need to be changed and those that should be continued. Too many people passively ‘follow the herd’. Once a clear majority appears to favour a particular course of action they climb aboard the prevailing bandwagon.

Think also about longer term and strategic impacts. Imitating and copying others can be dangerous. People can sometimes be naïve or mistaken regarding their best long-term interests. Preferences and priorities can change. Nothing is more frustrating than finding certain options have been lost because a decision cannot be reversed.

Boards sometimes attempt to change too much. Is there sufficient continuity for people to have a sense of identity, belonging, direction and purpose? Are conscious efforts made to provide enough continuity for people not to feel threatened and insecure?

Certain rules of thumb emerge from the ‘Transforming the Company’ study. Present a compelling case for change. People should only be expected to make demanding changes for good reason. The visions and rationales offered by many boards are excessively general. Inspire and motivate with a distinctive vision, compelling purpose and clear objectives. Accentuate the positive. Sell the benefits, but avoid blather and hype.

Think through ‘what’s in it’ for those involved. People should be encouraged and enabled to work and learn in whatever ways best enable them to harness their full potential and give of their best. Individuals differ in how they react to certain situations and opportunities. Thus working from home may not be suitable for those who are not inwardly directed or self-motivated.

Effort should be concentrated where it is most likely to make a difference. Justifiable changes are more likely to be those that focus upon the critical success factors for achieving key corporate objectives and delivering greater customer and shareholder value. Winning business is particularly important for ambitious companies.

People need to be motivated, prepared, and equipped to achieve the changes they are expected to bring about. However, while general ‘change’ programmes are becoming more common bespoke initiatives and specific tools to help individuals bring about particular changes are few and far between. More effort needs to be devoted to them.

Think carefully too about how much change your team can handle. Change can disorientate even when it is beneficial. After a point negative consequences may wipe out desired gains. At the same time, don’t underestimate the potential of your colleagues. Be prepared to trust them and, when it is reasonable to do so, take calculated risks.

Changes occurring all around us represent challenges and opportunities. Boards should consider who are likely to be ‘gainers’ and ‘losers’ from significant trends and developments and assess whether new or alternative offerings would mitigate undesirable impacts or enable people to take fuller advantage of emerging possibilities. Those affected might represent a lucrative potential market for products and services tailored to their particular interests.

As a business grows its directors may be unable to become directly involved in the many and varied activities that more bespoke and imaginative responses to a greater variety of requirements demand. Organisations need to transform themselves into incubators of creative solutions and communities of entrepreneurs. Teams should be enabled to bring about whatever changes are required to enable them to achieve their objectives and deliver value to their customers.

Those who endeavour to bring about ambitious and fundamental changes should expect to encounter setbacks. Persist. Be confident, determined, pragmatic and positive. Value constructive criticism and invite feedback. Don’t rationalize disappointment. Learn from it. Achieving transformational change is often easier and usually more satisfying than rationalizing, managing and suffering the consequences of failure.

© Colin Coulson-Thomas, 2004

Further Information

*‘Transforming the Company, Manage Change, Compete and Win’ by Colin Coulson-Thomas is available from Kogan Page: Tel. +44 (0)20 7278 0433; Fax. 020 7837 6348; E-mail: kpinfo@koganpage.com or on-line at www.kogan-page.co.uk or https://www.policypublications.co.uk/transforming_the_company.php

Prof. Colin Coulson-Thomas, an experienced chairman of award winning companies and author of ‘Transforming the Company, Manage Change, Compete and Win’ (Kogan Page, 2002/4), leads the ‘leading performance improvement and corporate transformation’ research and best practice programme. After leading the EU’s COBRA re-engineering project, he became the world’s first Professor of Corporate Transformation and more recently the Process Vision Holder of major transformation projects. Colin has worked with over 80 boards to improve board effectiveness and/or corporate performance, and can be contacted by telephone: +44 (0) 1733 361 149, E-mail: colinct@tiscali.co.uk or via https://www.coulson-thomas.com/