Leading Culture Change, Part 1
The Halo Group talked to consultant Chris Houston of The Change Alliance about when it is time to bring in a change agent and how a CEO can effectively lead an organization in a new direction.
How does the need for a change agent arise within an organization?
A leader always has two fundamental challenges. The first is to run the organization they have today; they have a responsibility to serve and deliver products to their current customers. The second is to change their model, so that tomorrow's performance is in some way different, better, or sustainable. And the difficulty is that both of these goals need to be achieved simultaneously. Often, the management process pays particular attention to one task or the other, usually today's performance - best reflected in the numbers that show the current economic strength of a corporation. But the results today are the outcome of previous decisions, so today's change agenda is intended to produce results for tomorrow.
The quarterly earnings cycle forces a transactional response. CEOs feel that they have to do something today - preferably Now! - which is why it is sometimes helpful to have an outside opinion and perspective, one not caught up in the issues of producing today's output. A change agent has an eye on the horizon as opposed to the immediate crisis. It's that ability to simply think beyond the immediate issues of today, but do so fully cognizant of the present realities.
How does the need for a change agent arise within an organization? A leader always has two fundamental challenges. The first is to run the organization they have today; they have a responsibility to serve and deliver products to their current customers. The second is to change their model, so that tomorrow's performance is in some way different, better, or sustainable. And the difficulty is that both of these goals need to be achieved simultaneously. Often, the management process pays particular attention to one task or the other, usually today's performance - best reflected in the numbers that show the current economic strength of a corporation. But the results today are the outcome of previous decisions, so today's change agenda is intended to produce results for tomorrow.
The quarterly earnings cycle forces a transactional response. CEOs feel that they have to do something today - preferably Now! - which is why it is sometimes helpful to have an outside opinion and perspective, one not caught up in the issues of producing today's output. A change agent has an eye on the horizon as opposed to the immediate crisis. It's that ability to simply think beyond the immediate issues of today, but do so fully cognizant of the present realities.
When is it time to consider bringing in a change agent?
Change ultimately happens because of either pain or gain. The first question to ask when considering using an outsider is: "Does the potential for value exist?" Simply put, is it worth it? There is a rhythm or cycle in every business that lends itself to opportunity. A consolidation might offer the chance to steal market share from a competitor. A distribution channel is closing, a product is at the end of its life cycle, or competition moves into our space. Traditional markets seem less attractive or costs are moving in a way that you can't understand or control. Slowing revenue growth is always a good indicator. But these are slow-moving variables - the CEO must have a sense of urgency that others need to feel. Timing is crucial and the very best indicator is the gut instincts of the leader that "now is the time."
The CEO needs to sense that she/he should address a need, crisis, or opportunity. It's critical that you don't bring in outside resources unless the organization is ready to move with them; otherwise, you're just wasting money.
What's the biggest challenge for CEOs as their organizations mature?
I often see leaders struggle with change because what made them successful initially is often not what will make them successful in the next stage. For example, in professional service firms, competence is determined by your ability to bring a particular service to a client. That's a very different skill from managing a firm of people looking to deliver services effectively. If you come up through a functional organization, you'll likely only see one portion of the system. Whereas CEOs need to lead a complex organization, managing all arenas. Thus one of the biggest challenges for the leader is being able to see and sense the whole organization and then to act with the same kind of confidence that they have used in this broader and bigger frame. Two issues arise: hesitancy or overconfidence. Both are crippling. But to break through resistance to change, an uncomfortable boldness and unaccustomed humility are required. Both are sometimes in short supply and the change agent may sense which is required and deliver the appropriate "medicine."
Change ultimately happens because of either pain or gain. The first question to ask when considering using an outsider is: "Does the potential for value exist?" Simply put, is it worth it? There is a rhythm or cycle in every business that lends itself to opportunity. A consolidation might offer the chance to steal market share from a competitor. A distribution channel is closing, a product is at the end of its life cycle, or competition moves into our space. Traditional markets seem less attractive or costs are moving in a way that you can't understand or control. Slowing revenue growth is always a good indicator. But these are slow-moving variables - the CEO must have a sense of urgency that others need to feel. Timing is crucial and the very best indicator is the gut instincts of the leader that "now is the time."
The CEO needs to sense that she/he should address a need, crisis, or opportunity. It's critical that you don't bring in outside resources unless the organization is ready to move with them; otherwise, you're just wasting money.
What's the biggest challenge for CEOs as their organizations mature?
I often see leaders struggle with change because what made them successful initially is often not what will make them successful in the next stage. For example, in professional service firms, competence is determined by your ability to bring a particular service to a client. That's a very different skill from managing a firm of people looking to deliver services effectively. If you come up through a functional organization, you'll likely only see one portion of the system. Whereas CEOs need to lead a complex organization, managing all arenas. Thus one of the biggest challenges for the leader is being able to see and sense the whole organization and then to act with the same kind of confidence that they have used in this broader and bigger frame. Two issues arise: hesitancy or overconfidence. Both are crippling. But to break through resistance to change, an uncomfortable boldness and unaccustomed humility are required. Both are sometimes in short supply and the change agent may sense which is required and deliver the appropriate "medicine."
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