Leading Sustainable Change: A Case Study

Background

The client is a listed public company that provides a broad and diverse range of products and services to the construction and mining industries.

 

The company has delivered below average industry returns for many years and overall group performance was declining.

 

The company had become ‘fat’. There was a culture of entitlement without accountability. A large proportion of the staff were long-term employees. People were in their comfort zones. Fiefdoms had evolved with divisions operating independently, under different brands and in impenetrable silos. Systems were fragmented and operated under different platforms. There was little or no commercial nous. Communications were irregular and inconsistent across and within divisions. As a consequence, there were several legacy loss-making financial ‘black hole’ projects that ultimately could have put the entire group into liquidation. A new Managing Director was brought into the organisation to turn it around.

 

A New Chapter Begins

The new Managing Director, being an astute and prudent leader spent his first several months talking to employees, clients and other stakeholders to get a better understanding of the organisation and was really going on. He presented his observations, his vision for the organisation and his proposed strategy to the board who endorsed his approach.

 

As with any corporate turnaround there were many tough decisions that had to be taken. The company was ‘sick’ on so many different levels – structurally, culturally, commercially, financially etc. A thorough and comprehensive transformational program was required to bring the organisation back to health.

 

 

 

Developing Pressure for Change

The first step was to create pressure for change. Without pressure for change, there would be widespread denial.

 

A thorough review had been undertaken of both individual competences and corporate capabilities. Areas of duplication, competence gaps and weaknesses were identified. The attitude and behaviour of key personnel was assessed. Key talent was identified.

 

The organisation was redesigned to remove resource duplication, eliminate silos, leverage shared services and implement a strategy of ‘one business, one culture.’ Some new positions were created, whilst others were regarded as superfluous. A significant number of people were made redundant at top and middle management levels. Some new and existing positions needed to be filled with the ‘right’ people for the ‘right’ roles. Some people were asked to accept different roles more suited to their skills and capabilities. The Managing Director assembled a world-class executive team. Entitlements that were not warranted or properly authorised were terminated with immediate effect. The implementation of these changes was thoroughly communicated, and well orchestrated. The changes were implemented across all divisions and in all geographies simultaneously.

 

The shock to the system was dramatic and immediate. Long-term senior people left with little or no notice and ceremony. The uncertainty and insecurity of those who had ‘survived’ was palpable. Shock rapidly turned into anger. Motivation and productivity plummeted. Over the next six to eight months a number of people, who were unable to see a future, also left. Regrettably, some were good people that the company wanted to hold onto. In addition, some of the new recruits who appeared to have the right experience and a good fit with the emerging culture failed to perform and were also asked to leave.

 

In this phase, the objective was to unfreeze old entrenched behaviours.

 

Creating a Shared Vision

Although the Managing Director’s major priority was to get the right people into the right roles, he also turned his attention to developing the new strategic architecture for the business.

 

He started by creating a vision, and developing the mission & values with his executive. He knew that, without a shared vision, people would resist the changes. They would push back and not become invested in a new and different future; a future that they would want to become part of; a future that is bigger than each individually and one that they felt they could make a definitive contribution towards making the vision a reality.

 

Next, with his executive, the team developed a three-pillar strategy to be implemented over the next three plus years – Foundation, Development and Leadership. High-level priorities were agreed under each pillar.

 

He then turned his attention to removing all the symbols of the old ‘siloed’ structure. He had the logo restyled to reflect the ‘one culture, one business’ philosophy and appointed a team to attend to all the actions necessary to rename and rebrand the organisation.

 

The ‘survivors’ had been given several months to ‘grieve’ the loss of the past. During this period, the Managing Director kept up a program of ongoing communications with all of his people, including personal Q&A sessions to reduce the level of uncertainty and reassure people that there is a bright future ahead. Now it was time to begin the next phase of change.

 

Building Capacity for Change

Until people become emotionally invested in and committed to the cause, the executive team knew that it would be difficult to give effect to the changes, particularly when everyone is outside of their ‘comfort zones’. Without capacity for change, there would be some exploration but little commitment. Like a rubber band, as soon as the pressure subsides, the band snaps back to its original position. People would revert back to their old comfortable patterns of behaviour.

 

So, some seven months after he joined, the Managing Director brought the top thirty leaders of the company together for an off-site three-day leadership retreat. If you imagine that the senior leadership team (SLT) were apprehensive, defensive, guarded, negative and un-participative, you’d be spot on. We began with a half-day session on the difference between managing and leading. We focused on the soft leadership skills of self-awareness, attitude and behaviour. We reframed terms that are instinctively perceived to be negative e.g. ‘accountability’ and ‘feedback’ by providing a positive frame of reference. We also created a common language with a framework to keep people ‘Solution Focused’ rather than being ‘Problem Centred’.[1]

 

We spent the whole afternoon of the first day with the Managing Director reiterating the strategic architecture (including the structure) and creating a safe open forum for discussion, questions and debate. This session provided the logic and rationale for all the decisions up to that point. It allowed people to express their opinions and feelings without any consequences. The Managing Director took everyone through the reasons for the changes – the ‘why’ together with the consequences for the company and its stakeholders of not changing. Many useful insights came to the fore and the new structure was refined.

 

The next two days focused on selected high-level Foundation and Development priorities. The objectives were to:

  1. Work together as one united team; and
  2. Create a single, standardised platform for all policies, methods, procedures and systems across all business streams; and
  3. Look for increased efficiencies and productivity; and
  4. Begin the process of growing the business.

 

Attempting to consolidate and grow the business simultaneously is not easy, particularly when so many things were ‘broken’  – things that needed to be re-engineered, redesigned, standardised, streamlined or replaced.

 

By the time the senior leadership team (SLT) left the retreat, we had agreed project teams to implement a number of initiatives with action plans for our agreed Foundation and Development priorities.

 

The most amazing outcome from the retreat was the change in mindset. When the SLT walked in, they were negative and felt that the company had very few growth opportunities and most people genuinely didn’t want to be there. Having better understood the upside potential by unlocking the cross-business synergies, most of the SLT walked out truly believing that it was possible to at least double the size of the business within 3-4 years.

 

As with most retreats, people walk out feeling highly motivated. However, when they get back to day-to-day business, the enormity of the challenge hits home. And, because the projects would be ‘on top of the day job’, not part of it, motivation drops off very rapidly. It is therefore important to ensure that the momentum gained at the retreat is maintained and built upon. This can only happen by achieving some quick wins that create confidence and build trust.

 

At the conclusion of the retreat, there were a significant number of ‘Volunteers’ (those for the changes), some ‘Doubters’ (those who are neutral) and a minority of  ‘Connivers and ‘Saboteurs’(those who are against the changes).1 The challenge was to increase the momentum for change by getting the ‘Volunteers’ to enrol the ‘Doubters’ and reframe the mindset of the Connivers. One of the big mistakes that leaders tend to make is that they spend a disproportionate amount of their time trying to convince the ‘Saboteurs’ to change rather than moving them quickly out of the organisation. Generally, not always, ‘Saboteurs’ will undermine everything management attempts to do. It is truly a case of ‘the rotten apple spoiling all the apples in the bowl.

 

 

Actionable First Steps

Actionable first steps is where the ‘rubber hits the road’. Planning without action is useless. Without actionable first steps, there can be no commitment. Taking action is imperative to the success of any change intervention. Achieving early wins builds confidence. It reduces the level of resistance that some people may be feeling or expressing overtly or covertly. Success also breeds success and commitment.

 

Predictably, the project groups were over-optimistic about what they could realistically achieve and they also under-estimated the amount of work that was required. In addition, most of the work fell onto the shoulders of a few willing ‘Volunteers’.

 

The enemy post-retreat is organisational inertia. In the past, there had been no follow up after off-site retreats.  Accordingly, many participants were sceptical that the past would be proxy for the future. To maintain momentum, a summary of the outputs was quickly disseminated to all members of the SLT. Managers agreed on the content and process for updating people in their businesses on our discussions together with the agreements reached and future courses of action. In addition, Managers were to share the strategy with everybody to enrol as many new ‘Volunteers’ as possible.

 

Because everyone was so busy with the ‘day job’, progress on the agreed initiatives was slower than what was expected. The initial rationale in relation to project group membership was to create cross-functional teams, thereby compelling people to work together to break down the silo mentality. However, the theory was different from the reality. Some people became frustrated, whilst others opted out of the project groups that they were assigned to work in.

 

A second corporate off-site retreat was convened some six months following the first retreat. Forty of the senior managers were invited. Approximately two-thirds had attended the first retreat. The newer members of the senior leadership team (SLT) were generally new appointees or people who could not attend the initial meeting for whatever reason.

 

The focus of this retreat was to:

  1. Demonstrate that people can achieve big hairy audacious goals (BHAGs);
  2. Prove that we can achieve better results working as a team rather than as individuals;
  3. Review progress of the initiatives that had been agreed at the first retreat; and
  4. Demonstrate the breadth and depth of the organisation’s capabilities across different business streams.

 

Following this retreat, members of the SLT who had previously been neutral or against the changes were generally now totally committed to the way forward. Although everyone acknowledged how much work had been done, everyone agreed that there was still a huge amount of work to be done to provide a solid foundation to support future growth. Although still early days with, undoubtedly many challenges and obstacles still to confront, the Chairman and board are ‘delighted with what has already been achieved in such a short period of time.’

 

Building capacity for change and taking action are required to give effect to the planned changes.

 

Concluding Observations

Although it is still relatively early in the overall change process, there is sufficient evidence to suggest that transformational change has already taken place. The author has, through observation, one-on-one discussions and telephone surveys concluded that:

  1. There is a strong commitment to both the vision and mission (8+/10);
  2. People are, by and large, ‘living’ the values’ day-by-day. This means that they are:
    1. Calling on others who are not exhibiting the values; and
    2. Behaving and making decisions consistent with the values;
    3. Old business unit names are rarely referred to. Everyone is unified around the new name and branding;
    4. The entire executive and senior leadership team have confronted the brutal facts about the company’s current position, the catch-up work that still needs to be done and the challenges that lie ahead. Having already met some environmental, market and internal challenges, they are still focused on key initiatives and action plans. People are feeling the pressures and most have exhibited enormous resilience;
    5. Although key performance indicators have yet to be finalised to measure and monitor ongoing performance, there is a much higher level of personal responsibility and accountability;
    6. There are ongoing cross-business open and transparent communications, both formal and informal, to unlock synergies and optimise resource deployment. And this is increasing!

 

The challenge is to make it stick (refreeze new attitudes and behaviours) and deliver results. Sustainable change can only occur when all four elements of the change framework are present simultaneously – Pressure for Change and a Shared Vision, and Capacity for Change and Taking Action.

 

About the author: Ivan Nurick, strategic business consultant with over 30 years experience and developer of the Strategic Fit Program.


[1] Source: Leaders Developing Leaders by Ivan Nurick and Many Diamond

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