Kotter's 8-Step Process for Leading Change
Kotter's 8-Step Process for Leading Change, also referred to as the Kotter Change Model guides organizations and leaders through the process of transformation.
The current rate of change is creating unprecedented uncertainty. The accelerated growth of mobile has created a new epoch defined by massive interconnectedness, creating a new dynamic in a constantly evolving complex adaptive system.
The lifespan of the members of the S&P500 has dropped to below 15 years. Billion dollar businesses can now be bootstrapped by a handful of savvy entrepreneurs in a year of two, often collapsing just as quickly.
With entire entrenched industries being threatened by much nimbler competition unencumbered by legacy systems, the need to evolve away from bloated middle management, silo departments operating as fiefdoms and toxic internal politics has become an imperative.
Organizations facing this challenge without a plan often fall back on reflex behavior like outsourcing perceived problems to overpriced business consultants which often just repeats the cycle in the long term. Worse, when faced with the need to make decisions, paralysis sets in, exacerbating a slow inch towards decline.
When the umwelt, or environment changes, organizations need to react to the new unceretainty through transformation, one of the hardest challenges that impacts the very culture of the entity.
John Kotter, author, Harvard Professor and founder of Kotter International has developed an 8 step process for leading change efforts, designed to provide a macro level methodology to achieve transformation.
One of the biggest problems with even beginning transformation is the sense of urgency present in an organization. It is very easy to get caught up in the day-to-day or the hear and now, which can push aside an urgency to think long term - one of the key characterizations of Disruption Theory.
A CEO may understand the need for change, but outsource it to a single department in silo. In turn, an individual may try and push for change but not have consensus from the wider entity - both are recipes for any change efforts to fail.
There are three key categorizations of change - Complacency, False Urgency and True Urgency. It is important to understand these definitions before the methodology can be applied.
Andy Grove, the formed CEO of Intel had a famous maxim;
"Any degree of success will breed complacency. Any degree of complacency will breed failure. Therefore only the paranoid survive".
The most dangerous part about complacency is that it often occurs at the extremes - as a result of achieving massive success, or right at the point of bankruptcy. In both cases, leaders are characterized by tunnel vision and a refusal to acknowledge the hazards that exist in the environment.
Complacent organizations are characterized by a mindset of 'playing to not lose' rather than 'playing to win'. While existential threats may be obvious to outsiders, individuals within the organization have given up questioning the status quo or the search for new opportunities or threats, and their outlook is best characterized as inward.
One of the key signs is a lack of initiative. The general feeling is of business-as-usual even in the face of falling profits or new customer expectations, and there is no appetite to even attempt to switch gears or experiment.
Kotter describes the following checklist to diagnose Complacent Activity:
- Do stakeholders regularly discuss markets, the business model, emerging technology or competitors, or are most conversations inward focused?
- Do people hesitate to question bureaucracy and politics that are slowing things down?
- Do people regularly blame others for problems instead of taking responsibility?
- Do stakeholders discuss failures in order to learn and change, or to stall new initiatives?
- Do assignments around critical issues regularly miss deadlines?
- Do cynical jokes undermine important discussions?
- Are highly selective facts used to shoot down data that suggests there is a big hazard or opportunity?
In the mushy middle lies False Urgency. This may be a more dangerous place to be as it can easily masquerade as True Urgency - the defining elements can be subtle.
False Urgency is defined as an understanding of the need to change, but with out clear vision and definition of the tasks needed to achieve transformation. Managers may see lots of energetic activity - employees are running from meeting to meeting, or there are endless presentations in hundred slide Powerpoint. The problem is this is hollow activity.
Busy work is an expression of Parkinson’s Law (work expanding to fill the time available), or worse, employees spending the majority of their time justifying to managers that they are doing work, rather than actually doing it.
This circular behavior drains energy, diverts focus from what is necessary, and can lead to serious organizational burnout.
Kotter again provides the following checklist to diagnose False Urgency:
- Do people postpone scheduling meetings on important initiatives because they are too busy?
- Do people spend long hours developing presentations for every initiative?
- Do people regularly blame others for problems instead of taking responsibility?
- Are new initiatives stalled because of fear of past failures?
- Are assignments around critical issues regularly not completed on time or with sufficient quality?
- Do meetings on key issues end with no decisions about what must happen immediately (except the scheduling of the next meeting)?
- Does passive aggression exist around big issues?
- Are new approaches to new problems undertaken every week?
- Are people motivated by a sense of fear and anxiety?
- Do people run from meeting to meeting exhausting themselves and rarely focusing on the most critical hazards or opportunities?
The optimal state for transformation is True Urgency. The important distinction here is mindset - this is not a belief that all is well, or that everything is a mess. It's that the world contains great opportunity and great hazard, so change and momentum are needed to leverage these emergent opportunities or threats.
With True Urgency, the organization will defer from only gazing inwards to looking out into the environment. When critical issues arise, they are addressed immediately, not when it fits the schedule. As a result, leaders become a highly positive and focused force.
Another important factor is avoiding the burnout associated with False Urgency. Employees actually mitigate stress because there is a constant urge to rid themselves of the chores that are superfluous or add little value to the organization (in other words busywork). The business-as-usual mindset becomes business-as-needed.
Episodic vs Continuous Change
Once the decision to make change occurs, our next step is to understand if it is episodic or continuous.
Episodic change is usually defined by urgency in spurts. Energy is applied for the lifecycle of the initiative in order to sustain it, and then it peters off. This usually revolves around a big ticket business item or initiative; think a major restructuring, a new product launch, a large acquisition, or some form of revenue growing activity.
Episodic change is dangerous because it can be a gateway to False Urgency or Complacency.
The antithesis is Continuous change. This is a ceaseless flow of a combination of a lot of smaller incremental changes that bring about adaptability.
As stated by Arie de Geus in his theory on the living company;
"The ability to learn faster than your competitors may be the only sustainable advantage".
Continuous change is marathon, not a sprint. Kotter defines an urgent, continuous environment by the following key factors:
- A "want-to" attitude
- A gut-level determination to move, and win, now
- People are alert and proactive, constantly looking for information relevant to success and survival
- When faced with a problem, people search for effective ways to get the information to the right individual, now
- People come to work each day ready to cooperate energetically
The 8-Step Process for Leading Change
Now we have a better sense of what mindset is required, we can jump into the methodology.
Note, these steps are not necessarily linear (some may require development in tandem), but all steps are necessary.
Step 1: Create A Sense of Urgency
To begin transformation, a Change Agent must create a sense or urgency in why change is needed in the first place.
At its core, the goal here is to “help others feel a gut-level determination to move and win, now”.
This step cannot be underestimated - close to 50% of companies that fail to change make their mistakes at the very beginning, so leaders need to understand the effort and patience required to drive people out of their comfort zones.
In order to build the business case internally and build momentum within the entire organization, a Change Agent must appeal and influence both Thinking (rational) and Feeling (emotional).
Unfortunately there is no magic bullet - it requires leveraging the influencer tactics of Empowerment, Interpersonal Awareness, Bargaining, Relationship Building, Organizational Awareness, Common Vision, Impact Management, Logical Persuasion and Coercion. A sense of urgency also often requires a Controlled Crisis, which can build solidarity around a Common Cause.
As a storytelling mechanism, apply the Hero's Journey - the world has changed, and in the new world there will be winners and losers. You need to embrace the call to adventure and the challenges and temptations to reach the promised land.
Sense of Urgency Checklist:
- Make a compelling story
- Use metaphors, analogy and imagery
- Use simple language and avoid jargon and acronyms
- Create frequent, consistent and aligned communication
- Infuse energy and enthusiasm
- Have careful use of data – don’t overuse
- Do your homework to understand what people are feeling
- Create a high level of visibility
- Bring the outside in
- Communicate with what you DO not just what you SAY
Step 2: Build A Guiding Coalition
Change can only come about with the right leaders. You need to create a group with the power to lead change.
No one person in the organization is capable of single-handedly;
- Developing the right vision
- Communicating it to vast numbers of people
- Eliminating all of the key obstacles
- Generating short term wins
- Leading and managing dozens of change projects
- Anchoring new approaches deep in an organization’s culture
A coalition must have the right composition, a significant level of trust, and a strong shared objective. In other words, the elimination of individualistic ego, and the fortitude to work through ongoing inertia.
The Guiding Coalition should feature the following four qualities;
- Position Power: Enough key players should be on board so that those left out cannot block progress.
- Expertise: All relevant points of view should be represented so that informed intelligent decisions can be made.
- Credibility: The group should be seen and respected by those in the firm so that the group’s pronouncements will be taken seriously by other employees.
- Leadership: The group should have enough proven leaders to be able to drive the change process.
Step 3: Form A Change Vision
In this step, the Guiding Coalition need to clarify how the future will be different from the past. This is achieved through an Organizational Vision.
This vision must take into account the current realities of the organization, but also set forth stretch goals that are truly ambitious. Combined with a strong, credible Strategy to bridge to this vision, it can help influence stakeholders into believing it is more than a pipe-dream.
There are six characteristics of effective visions;
- Imaginable: They convey a clear picture of what the future will look like.
- Desirable: They appeal to the long-term interest of those who have a stake in the enterprise.
- Feasible: They contain realistic and attainable goals.
- Focused: They are clear enough to provide guidance in decision making.
- Flexible: They allow individual initiative and alternative responses in light of changing conditions.
- Communicable: They are easy to communicate and can be explained quickly.
Step 4: Communicate The Vision For Buy In
In this step, the Guiding Coalition need to ensure that as many people as possible understand and accept the vision.
In complex, layered organizations this can be incredibly difficult to achieve. Under communication and inconsistency due to fragmented fiefdoms in silo create stalled transformation efforts.
A good rule of thumb is to amplify communication of the vision by a Factor of Ten. A single memo or series of speeches by the CEO will not cut it - it needs to be communicated in hour-by-hour activities, anywhere and everywhere.
Communicating the vision has four guidelines;
- Simple: No techno babble or jargon.
- Vivid: A verbal picture is worth a thousand words – use metaphor, analogy, and example.
- Repeatable: Ideas should be able to be spread by anyone to anyone.
- Invitational: Two-way communication is always more powerful than one-way communication.
As a last point, actions definitely speak louder than words. Successful transformation organizations feature leaders who “walk the talk” and embody the vision through their action and behavior. An entire team of senior managers who do this sends a powerful message which can inspire confidence, decrease cynicism and change internal cultures.
Step 5: Empower Broad-Based Action
After the vision has been defined and communicated, the organization needs to remove as many barriers as possible and unleash their employees to do their best work.
Barriers usually take two forms - Structural and Supervisory.
Internal structures within an organization can often be at odds with the change vision. This can be manifested as bloated middle management, departments in silo, and an over-emphasis on managers over makers.
Besides complete restructures, two tactics work here.
First, realign incentives and performance appraisals to reward and reflect the thing you most value as a business. Incentives are hugely important in defining culture.
Second, concentrate on improving management information systems. The goal is to speed up Feedback Loops and provide the information necessary for employees to do their jobs more efficiently.
This basically refers to troublesome supervisors. They are often defined by locked, one sided mental models or a large number of interrelated habits that add up to an inability to accept change.
While a refusal to confront these people may have been masked in earlier stages, at this point it comes to a head and needs to be addressed. This can often mean extreme measures like having the person 'part ways' - elaborate strategies or manipulation can run the risk of derailment. As a start, ensure you begin with an honest dialogue.
Step 6: Generate Short-Term Wins
This step is predicated upon generating and making visible success as soon as possible. It is critical to drive short-term wins in any long-term change effort.
The Guiding Coalition should be tasked with identifying significant improvements within 6 to 18 months. Companies that experience significant short-term wins by 14 to 26 months after the change initiative begins are much more likely to complete the transformation.
Primarily this is probably due to the dual forces of increased optimism that efforts are paying off and the silencing or undermining of any cynics or self-serving resistors. Small wins also afford management important information that can allow fine tuning of visions and any necessary course-correction.
Short-term wins rarely happen on their own, and so require careful planning. The trick is to not be overwhelmed by the long-term tasks associated with the change effort or the additional pressures short-term planning may create - done skillfully this can actually drive greater momentum and cement the overall initiative.
Step 7: Sustain Momentum - Don’t Give Up!
This step is about consolidating gains and producing more incremental change. Resistance is always hiding in the wings trying to re-assert itself when you least expect it. Remember that this is a marathon.
This stage is vastly improved with strong leadership. Transformational Leaders will strive to launch more and more projects to drive change deeper into the organization, and more importantly, become part of the organization’s culture. A lack of consistent and sufficient leadership runs the risk of stalling plans.
Sustained Momentum is defined as;
- More projects are being added
- Additional people are being brought in to help with the changes
- Senior leadership are focused on giving clarity to an aligned vision and shared purpose
- Employees are empowered at all levels to lead projects
- There are reduced interdependencies between areas
- There is constant effort to keep urgency high
- There is consistent proof that the new way is working
Step 8: Institute Culture Change - Make It Stick
At this point, the focus is on anchoring new approaches into the culture for sustained change. New practices need to be deeply entrenched to remain there, especially as these are composed of Norms of Behavior (defining appropriate attitudes) and Shared Values (defining what is important).
Every individual who joins an organization is indoctrinated into its culture (even without realizing it), and its social forces and group conformity can be incredibly strong.
This is why cultural change is Step 8, not Step 1. It needs to build slowly from the edges to succeed.
Remember the Three C’s of Culture - Clear, Consistent and Comprehensive.
Kotter outlines a good checklist for Culture:
- Cultural change should comes last, not first
- You must be able to prove that the new way is superior to the old
- The success must be visible and well communicated
- You will lose some people in the process
- You must reinforce new norms and values with incentives and rewards – including promotions
- Reinforce the culture with every new employee
Transformation is hard, with many pitfalls throughout the process. But with the Kotter 8-Step Process for Leading Change, you can better define the maco level steps required to manage a transformation project, and have a framework to communicate and discuss your transformation vision with the right stakeholders to bring it about.
Author's note, all frameworks are inherently flawed, so apply them wisely. The utility of a framework is always dependent on the individual problem at hand.
If you are looking for additional resources on transformation, check out my Slideshare on Digital Transformation and the Customer Experience.