Driving Successful Organizational Change
By James S. Still
The numbers are stark and the statistics alarming. Despite the second quarter 2009 upward movement in the public markets, stock prices remain far below historic levels. M&A activity is expected to reach the lowest levels since 2002 after a burst of activity from 2005 – 2007 that was unparalleled in American business history. Consumer and business confidence levels remain low in the face of reports of economic glum.
The American Bankruptcy Institute (“ABI”) reports that business bankruptcy filings in 2008 totaled 43,546, which was a 54% increase in over a decade and a 54% increase over prior year. According to ABI Executive Director Samuel Gerdano, total bankruptcies, including households, “will continue to spike upward in 09. We expect to reach 1.4 million of even more this year.”
In the face of this data, what are organizations to do to drive change and increase shareholder value?
Global experts in transformational management point to a series of consistent themes that characterize successful long-term change. Considering that a 2006 McKinsey poll of CEOs indicated that only 38% of executives felt that a recent transformation had been “completely” or “mostly” successful, and that over 10% felt that the change had been “completely” or “mostly” unsuccessful, there is obvious room for improvement in long-term planning. Findings from McKinsey and others indicate that the following “best practices” lead to more effective long-term change.
Setting clear, transformational goals
Organizations that set “startlingly high ambitions” are far more likely to undergo significant transformational change as compared to those who set a lower bar. As important, the organizations that set these ambitions need to effectively communicate the goals at all levels of the organization on a consistent basis. By doing so, the message of change affects all parts of the company – organizational, operational and commercial.
Utilizing several different tactics
Companies that limit the number of tactics that are used to drive change are far less likely to succeed, in part because a wider net of tactics is most effective in broadening the constituency within the organization.
Active CEO involvement
One of the critical elements of long-term transformational change is the active engagement on the part of the Chief Executive Officer. The role of the CEO in effecting change is not only to articulate the tactics and goals of the change, but to remain as the energy source driving change over an extended period of time.
Time
A prolonged effort at change is not a luxury but a requirement. Many organizations excitedly announce an ambitious plan and then abandon the effort due to short-term priorities taking precedence over long-term initiatives. It is essential that companies which embark on a plan of change commit to effecting the change over an extended period of time, sometimes months but often time years in duration.