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Leading Change

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Kotter, John P. "Leading Change. Why transformation efforts fail", Harvard Business
Review, January 2007, pp 92-107

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T H E T E S T S F A L E A D E R 8 H S TS F

1995

ultimate test of a leader no busrness
Editors Note: Gulding changemay be the itself' But' human nature betng survives over the long term if it can't reinvent resistedmighttly by the people it most what it is, fundamental changeis often leading change is both affects: thosetn the trenchesof the business'Thus' absotutelyessentialand incredibly difficult change better of organizatronal
Perhapsnobody understandsthe anatomY
P Kotter'Thisarticle' professorJohn than retiredHarvard Business School prevtewedKotter's1996book Leadtng of spring 1995' in originallypubtished the a factors f rom establishtng sense of ergnt criticalsuccess
Change.lt outlines
("lhe
wins' to changtngthe culture to e\traordinarY urgencY, creating short-term famitiarwhen vou read it' in pan way we do things around 6srs") lt will feel becauseKotter'svocabularyhasenteredthelexiconandinpartbecauseit containsthekindofhometruthsthatwerecognize,immediately'asifwe'd work on leadtngchange remains alwaysknown them.A decadelater, his definitive. Change
Leading
Efforts whyTransformati0n Fail

theydo them do businesses eightthingsr ight( and y w
L e a d e r s h o su cce ssfu l ltra n sfo rm in t h e r i g h to r d e r). by John P.Kofter

I
L
l lt I
DECADE,have watched more than loo
THEPAST
vER try to remake themselvesinto significantly companies organizabetter competitors'They have included large
(Ford)and small ones(LandmarkCommunications)' tions Motors)and else(General in based the United States companies that were on their knees corporations where (sritish Airways), that wereearninggoodmoney and companies
Airlines),
(Eastem
Theseefforts havegoneunder many ban(erir,ol-lt4y.rs Squibb). rightsizing'rereengineering, ners:total quality management, change,and turnaround' But' in almost structuring, cultural to makefundamenau.ry .ur", the basicgoalhasbeenthe same: is conductedin order to help cope
,ul .hung., in how business with a new,more challengingmarket environment' been very sucA few of thesecorporatechangeefforts have in utter failures'Most fall somewhere beA cessful. few havebeen
The
toward the lower end of the scale' tween,with a distincttilt areinterestingand will probablybe relthat canbe drawn lessons competitive in evantto evenmore organizations the increasingly

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Review I January2007 I nbr'org
Business
96 Harvard

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business environmentof the coming decade. The most general lesson to be learnedfrom the more successful cases is that the changeprocess goesthrough a seriesof phases that, in total, usuallv r e q u i r e c o n s i d e r a b l e n g t ho f t i m e . a Skippingstepscreates only the illusion of speedand never producesa satisfy_ ing result.A second very generallesson is that critical mistakes any of the in phasescan have a devastating impact, slowingmomentum and negating hard_ won gains.perhapsbecause have we relativelylittle experience renewing in organizations, evenvery capable people often make at leastone big error.

Error NotEstablishing
1:
a Great
Enough
Sense Urgency of o

:
I

Most successful change efforts begin when someindividualsor somegroups start to look hard at a company's com_ petitivesituation, market position, tech_ nologicaltrends, and financial perfor_ mance.They focus on the potential revenue drop when an importantpat_

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ent expires, flve-year the trend in declin_ the downsidepossibilities.
Thev worrv ing margins in a core business, an that employees or with seniority wilt beemergingmarket that everyoneseems come defensive, that morale will drop, to be ignoring.They then find waysto t h a te v e n t s i l l s p i no u t o f c o n t r o lt,h a t w communicate this information broadly short-term business resultswill be ieop_ and dramatically, especially with re_ a r d i z e dt,h a t t h e s t o c kw i l l s i n k ,a n d spectto crises, potential crises, great that they will or be blamedfor creatine opportunitiesthat are very timely.This a crisis. first step is essential because iust get_
A paralyzed senior management ting a transformationprogram started o f t e n c o m e s f r o m h a v i n gt o o m a n y requiresthe aggressive cooperationof managers and not enough leaders. many individuals.
Without motivation, M a n a g e m e n t ' s a n d a t e i s m to mini_ peoplewon't help, and the effort goes mize risk and to keep the current sys_ nowhere. tem operating.Change,by definition,
Comparedwith other stepsin the requirescreating a new system, which changeprocess, phaseone can sound in turn always demands leadershio. easy. is not. Well oV€rloyoof the com_ P h a s e n e
It
o i n a r e n e w a lp r o c e s t y p i _ s paniesI have watchedfail in this first cally goes nowhere until enough real phase.What are the reasonsfor that leadersare promoted or hired into failure? Sometimesexecutives under_ senior-level jobs. estimate how hard it can be to drive
Transformationsoften begin, and people out of their comfort zones. begin well, when an organization hasa Sometimes they grosslyoverestimate new headwho is a good leaderand who how successful they have alreadybeen sees needfor a major the change. the
If
in increasing urgency. Sometimes they renewal target is the entire company, p gh l a c l < a t i e n c e : " E n o uw i t ht h e p r e l i m - the CEO is key.Ifchange is neededin a inaries; let's get on with it.,' In many division, the division generalmanager cases, executives becomeparalyzedby i s l < e y . h e nt h e s ei n d i v i d u a l s
W
areiot nbr.org January 2007 i Harvard
Business
Revjew 97

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THETESTSoFALEADERIgH'sTt}F'.{gRlLeadingChange:WhyTransformationEffortsFai| or great readers, change termfutureoftheorganizationisputin new readers, jeopardy' phase one can be a huge champions, high when is the urgency rate challenge. seen, the
I have bless- .norrgnl From whai
Bad businessresultsare both a oi is when about 75ozo u .o*urrr*.. on the ing and a cursein the first phase. management is honestly conpositive side, losing *o.t.y does catch lll^' usuar is iotatty givesless uin..a irrui uirri.r.r, as people,sattention. But it aiso pro .rrru.c"piuut". Anything r"r, L. maneuveringroom.withgoodbusiness later on in proulems d"*;;;;;ious results,the oppositelstru-e:Convincing process' the people of the need fo' tiungt is much

to but harder, have resources vou more

rocess'

outsideof thenormalhierarchybydefit is inition' This can be awkward'but
If the existinghierarclearlynecessary. be chy were working well' there would transformation'But no needfor a major sincethe current systemis not working' outreform generallydemandsactivity sideof formalboundaries,expectations' and protocol' the A high senseof urgency within

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But more is usuallyrequired'Someone help make changes'
-G-;iding
Frror2. Not Greating a Powerful together'help s t a r t i n gp o l n t l s ; - - ' to B u t w h e t h e rt h e needs getthesepeopre co-aritior rnough of or ;::, ,f ,ffi; sharedassessment good performance them develop a have witnessed,an Majorrenewalprogramsoftenstartwith their company'sproblemsand opportucasesI successful of just one or two people.In cases sucof nities, and create a minimum level individual or a group alwaysfac'itates off-site reof potentia'y un- ..rrfrrttrurrrformation"r*"r,,n.t."0;"t trust and communication' a frank discussion grows and ;;;;
.*il.;;;
one pteasantfacts about n.'* .o-p.,i ion, treats,for two or three days,are
-ini-.,market time. But wheneve*orn. accomplishingthis decreasing vehicle for shrinking margins, earryin the effort, popurar five to revenue *u$ ir rro, achieved iurt. I have seenmany groupsof share,flat earnings, a lack of worthwhile.h"nn*r. inarces of a .'o,t i"g -"rn a seriesof these reattend growth, or other ,.t.u*i ir 35executives
,f rr"or,.n said that -uiot iiu"g.
Because
months' declining competitive position.
.
orga- treats over a period of unlessthe head of the armost universal i-porriuil fail in phasetwo usuthat
Companies
there seemsto be an what nization is an active supporter. of the difficulties of ally human tendencyto shoot the bearer go., fu.b.yona,trur.
_underestimate thus the impor, if the head of the producing change and bad news,especiany
.nuit"*,"ir.i"g "uout tr, *...rrr,'t transformationrG iance of a powerful guiding coalition' organizationis not a changechampion, g*"r"r pr.rident or ai"irio" of companies often .nui o.
Sometimes they have no history executivesin these pr,,s another nut o' i' o' 'o unwanted in- -un#r, and therefore unthe top rely on outsidersto bring una"a"*ioo u teamwork at type of custom- ry"rrl, io*. tog"ttr", dervaluethe importance of this formation. wa, street analysts,
p.rio*
shaiedcommitment to exceir*
u. herpful they expect the coalition. Sometimes ers, and consurtantsc", "ii rn .nv from this ac- *""." through renewal
""p.ti
team to be led bv a staff executive in this regard.The purposeof all
*r""1::::T.:*;;uriortttt
former CEo quality' or strategic tiviry in the words of one be- human resources'
,,to ";;int, company'smost senior executives is insteadof a key rine manager' of a large European company, people lort *on't buy in, at planning more danger- aurrr" ,o*.
No matter how capableor dedicated make the statusquo seem r"urt*tatfirst.Butinthemostslccesshead' groups without strong ousthanlaunchingintotheunknown. i' u*u' n"T lhe :taff power cases, fJ-.ur"r, the coalition successful In a few of the most line leadershipnever achievethe
- in terms ti*t, i"r"t*u oo*"rrui a crisis.one
"r
a group has manufactured and thatisrequired' tion and expertise,reputations,
Effortt that don't have a powerful
CEOdeliberatelyengineeredthelargest
'-in his- relationships' apenough guiding coalition can make accounting loss in ihe company's uotrr^r*a' and large organizafrom wall
But' sooner for a while' tory, creating huge pressures
.
guiding team may parentprogress toone divisionpres- tions, a successful or later,the opposition gathersitself street in the process. three to nu."p.opt" aui customer .onrlra or or-rry first-ever gether and stopsthe change' ident commissioned
But
trie first year of a renewaleffort. full well satisfaction surveys,knowing lns coalitionneedsto
He in*bigcompanies'the that the resultswould be terrible'

avision
'.:,i::.Lackins
il"#.::ii:i"i:tr#i';',T:::ili:: m :lH[rT.,:rTj;rtiri:* praying it risky. But there is arsorisk in rate is not too safe:when the urgency

pumpedupenough,thetransformation

always anJbeyond. senior managers of tt" sr""pl ;uL sorneform the core timeryorrnnauou'a*"'if""'u"p"- transformation efI-n ev;rv successful coalifort that I have seen,the guiding of the future tion developsa picture

the cannot and processsucceed,rong##;.Jil*:\"J;::'-;;;;;;"' :xT;'#xiffy;1ilTJi:$ii'"1
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