BUSINESS: The Ultimate Resource™ September 2006 Upgrade 48

MANAGEMENT LIBRARY Leading Change by John Kotter

Why Read It? Kotter is regarded as one of the world’s leading figures in change management. His article, ‘Leading change’, published in the March–April 1995 Harvard Business Review, quickly became the Review’s best-selling reprint. Readers commented that its analysis defined the real problem of change management. They also found the 8-stage change framework ‘compelling’. The book builds on the success of the article and includes dozens of examples of effective change management in action.

Getting Started Kotter believes that successful change takes place when organisations operate an 8-stage process. The stages are: 1. establishing a sense of urgency 2. creating the guiding coalition 3. developing a vision and strategy 4. communicating the change vision 5. empowering employees for broad-based action 6. generating short-term wins 7. consolidating gains and producing more change 8. anchoring new approaches in the culture

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Contribution 1. Why change fails Kotter opines that most business transformations fail because they do not meet the criteria set out in his 8-point plan. These omissions would not be important in a slowermoving world, but the volatile forces of competition mean companies must change to survive and prosper. He believes that the pace of change is driven by forces such as technological development, international economic integration, the maturation of markets, and the globalisation of markets and competition. The result, according to Kotter, is that there are either more opportunities or more hazards, depending on whether an organisation can adapt or not. He then explains how successful change, the sort that enables companies to grasp opportunities, goes through the 8-stage process. He adds, however, that it is essential to go through all the stages in sequence. He also believes that change must be led, rather than managed. 2. A sense of urgency Establishing a sense of urgency helps to get the co-operation needed for change. A committed group, Kotter argues, can drive change through. He suggests a number of approaches for increasing the urgency level: • • • •

creating a vision setting targets so high they cannot be achieved through business as usual getting staff to talk to disgruntled customers showing people that great opportunities cannot be achieved by the present organisation

3. Building the guiding coalition Kotter’s second stage is the ‘guiding coalition’. He believes that an isolated chief executive or a weak committee cannot cope with the pace of change. The coalition must comprise people with power, expertise, credibility, and leadership. Leadership is key, because change must be led not managed. He explains why the coalition must be built on trust and a common goal, noting that team-building exercises can be an important part of that process. 4. Developing a vision According to Kotter, a vision clarifies the direction of change. Other decisions must be in line with the vision. Vision also helps to align individuals and motivate them in an efficient way. He believes that a vision should be imaginable, desirable, feasible, focused, flexible, and communicable. 5. Communicating change

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Kotter argues that a vision has real power only when it is communicated effectively. Effective communication is vital because employees receive vast amounts of information, and communications about change can easily get lost. Kotter’s advice is to keep it simple, use metaphors, keep repeating the message, listen, and lead by example. 6. Empowering employees Turning the vision into action means removing structural barriers to change so that employees are empowered, says Kotter. That may require training, reorganisation, aligning information and systems to the vision, and confronting people who try to restrict change. 7. Short-term wins According to Kotter, short-term wins are essential. They are visible and show that change is producing results. They also help to fine-tune the change process, build momentum, and reward the people who are delivering change. Pressure and challenging targets can help to deliver the gains. 8. Consolidating gains Kotter believes that all gains need to be consolidated to keep the process moving. This is particularly important in companies where there is a high level of interdependence. Maintaining momentum also requires strong leadership, effective project management, and support for the people who are effecting change. 9. Anchoring change in the culture The final stage in Kotter’s process is anchoring the new approaches in the corporate culture. He argues that the new behaviour should become the norm. Ideally, everyone in the organisation should have shared values. Kotter believes that achieving this level of acceptance depends on results. It may even require changing key people.

Context The study of change has gained importance as competition has intensified and other structural factors impact on the business environment. Kotter’s work demonstrates the positive aspects of effective change. It also shows that strong leadership is essential if change is to succeed. Rosabeth Moss Kanter’s book The Change Masters (Allen & Unwin, 1993) puts a similar emphasis on the importance of strategic leadership.

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BUSINESS: The Ultimate Resource™ September 2006 Upgrade 48

William Bridges, on the other hand, in Managing Transitions (Nicholas Brealey, 2002), puts more emphasis on management of the personal consequences of change, highlighting the need to reduce anxiety and manage the process he calls ‘transition’. Hammer and Champy’s book Reengineering the Corporation (Collins, 2004) took change to a logical conclusion and showed how companies would have to transform themselves to compete effectively. Unfortunately, re-engineering has been widely associated with downsizing, and this has given change management negative connotations.

The Best Sources of Help Kotter, John P. Leading Change. Boston, Massachusetts: Harvard Business School Press, 1996. Further Reading Kotter, John P. A Force for Change: How Leadership Differs from Management. New York: The Free Press, 1990. Kotter, John P. The New Rules: How to Succeed in Today’s Post-corporate World. New York: The Free Press, 1995.

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