Thursday, October 27, 2011

Driving Change from the Top is a No-No

"While in some companies, wave after wave of programs rolled across the landscape with little positive impact, in others, more successful transformations did take place. They usually started at the periphery of the corporation in a few plants and divisions far from corporate headquarters. And they were led by the general managers of those units, not by the CEO or corporate staff people." Beer, Eisenstaat and Spector--"Why Change Programs Don't Produce Change", Harvard Business Review. Can you guess the year? It was published over twenty years ago in November 1990. The three authors were reporting on their four-year study of corporate renewal. They highlighted a few successful ones. Their article has been in my back pocket ever since it came out. I refer to it often.

If change is driven from the top, it becomes too general and too broad to provide any impetus for real change. It affects everyone and really no one at the same time. It's better to drive change from the middle and be focused on a specific issue or business process initially.

Beer, Eisenstaat and Spector describe six steps for successful change (without a program, by the way). I often reduce it to three:

  • question a business process or practice to determine its success rate, and be willing to break with "tradition";
  • work with the people affected to develop new roles, responsibilities and relationships, assuring them that the "new" is not to be feared;
  • change the organizational structure or practices so that the new is supported and the old no longer exists.
I've written a bit about this in Guerrilla Change: How to Start a Corporate Revolution, available on and

Another tidbit...If corporate renewal is trying to change behaviors and attitudes, here's what's necessary according to Beer
"One way to think about this challenge is in terms of three interrelated factors required for corporate revitalization.

  •  Coordination or teamwork is especially important if an organization is to discover and act on cost, quality, and product development opportunities. The production and sale of innovative, high-quality, low-cost products (or services) depend on close coordination among marketing, product design, and manufacturing departments, as well as between labor and management. 
  • High levels of commitment are essential for the effort, initiative, and cooperation that coordinated action demands. 
  • New competencies such as knowledge of the business as a whole, analytical skills, and interpersonal skills are necessary if people are to identify and solve problems as a team. 
If any of these elements are missing, the change process will break down." (formatting is mine)

And twenty years later, parts of this article still sound radical for many businesses:
"As much as these steps [taken by a large financial corporation, including executive retreat to review mission and purpose, hiring a VP of HR to drive new organizational structures and pay-for-performance systems and roll out company-wide programs] sound like a textbook case in organizational transformation, there was one big problem: two years after the CEO launched the change program, virtually nothing in the way of actual changes in organizational behavior had occurred. What had gone wrong?
"The answer is “everything.” Every one of the assumptions the CEO made—about who should lead the change effort, what needed changing, and how to go about doing it—was wrong.
U.S. Financial’s story reflects a common problem. Faced with changing markets and increased competition, more and more companies are struggling to reestablish their dominance, regain market share, and in some cases, ensure their survival. Many have come to understand that the key to competitive success is to transform the way they function. They are reducing reliance on managerial authority, formal rules and procedures, and narrow divisions of work. And they are creating teams, sharing information, and delegating responsibility and accountability far down the hierarchy." [emphasis mine]

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