Chapter 2 Leading Complex, Continuous Change
TO AVOID the sensation of riding a roller coaster when leading complex, continuous change, you need to take control. To do that, you need a plan, an approach that works.
The new CEO of a consumer products company took over after an extended period of mediocre performance. After some investigation he soon realized that there would be no quick or simple fix for the problems the organization was facing.
The company had been built by a series of acquisitions that had never been fully integrated. As a result, each unit ran independently, with few synergies being achieved. Furthermore, the culture of each unit was distinct, and people from one culture had little respect for the others. To add to the challenge, each unit was headed by a vice president who sought to maximize his autonomy, making it difficult to reach consensus on the changes necessary to improve performance. From an operations standpoint, each unit ran on its own IT platform and fiscal calendar, making integrated financial management a challenge. Each unit had its own salesforce, meaning the company sent fmultiple salespeople to call on the same customers, with different terms being offered. The supply chain was not integrated, and manufacturing costs and quality varied widely from one location to another.
Across the units, job titles and compensation levels were not uniform, causing perceptions of inequality and confusion about who should be included in meetings. Because the units were not co-located, coordination was expensive and the geographical distances between them reinforced their separate identities. Very few common processes existed for managing innovation, customer service, human resources (HR), and financial planning and tracking.
Finally, the senior team was not aligned on the nature of the issues facing the organization or what to do about them. The former CEO had let these and other issues persist. He had been supportive of individual change efforts but did not step back to prioritize them or look for ways to integrate them and multiply their effectiveness. His support was actually benign neglect. He hoped that the efforts of each unit would address the issues, and he believed the reports he received regarding the progress being achieved. In truth he was deluding himself. He was unable to see the situation objectively and had no clue where to begin to drain the swamp he was in. He was riding the Comet, not knowing where it would take him.
The new CEO was an experienced hand who had seen a lot over the course of his career and understood that real change required focus, commitment, and sometimes unpopular decisions. He owed no allegiance to anyone and brought in a new head of HR to act as his adviser as he began clearing the decks. He understood that some issues were more important than others. He knew that so long as the units maintained their unique cultures and identities, he could not solve the other problems.
He began by prioritizing the issues that needed to be addressed, beginning with structural changes and replacing key leaders who held on to the past, including two of the unit vice presidents. Once these actions were taken, under the guidance of a cross-unit team, he began reappointing leaders to positions outside their original fiefdoms, with responsibility for developing common processes that cut across the entire enterprise. Duplicate functions were combined, the supply chain was consolidated, costs were slashed, and new policies were adopted. With the change of structure came job leveling, so that position titles meant roughly the same responsibilities and pay. Bright stars were promoted to positions of authority, and those who could not support the new order were allowed to either remain in less responsible positions or move on to other companies. Energy increased dramatically, and a belief that the organization could actually win grew and began shaping behavior. Results improved, as did morale, and people who had thought of leaving decided to stay. The change was dramatic but required the better part of five years to fully implement. Over this period the new CEO was constantly challenged but never flinched. He stayed the course until the change had settled in and was irreversible before he retired.