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Reprint: R0807M The rapid rate of change in the world of management continues to escalate. New government regulations, new products, growth, increased competition, technological developments, and an evolving workforce compel organizations to undertake at least moderate change on a regular basis. Yet few major changes are greeted with open arms by employers and employees; they often result in protracted transitions, deadened morale, emotional upheaval, and the costly dedication of managerial time. Kotter and Schlesinger help calm the chaos by identifying four basic reasons why people resist change and offering various methods for overcoming resistance. Managers, the authors say, should recognize the most common reasons for resistance: a desire not to lose something of value, a misunderstanding of the change and its complications, a belief that the change does not make sense for the organization, and a low tolerance for change in general. Once they have diagnosed which form of resistance they are facing, managers can choose from an array of techniques for overcoming it: education and communication, participation and involvement, facilitation and support, negotiation and agreement, manipulation and co-optation, and both explicit and implicit coercion. According to the authors, successful organizational change efforts are characterized by the skillful application of a number of these approaches, with a sensitivity to their strengths and limitations and a realistic appraisal of the situation at hand. In addition, the authors found that successful strategic choices for change are both internally consistent and fit at least some key situational variables.
The Idea in Brief Faced with stiffer competition and dizzying technological advances, companies often must change course to stay competitive. But most change initiatives backfire. That’s because many managers take a one-size-fits-all approach to change. They assume they can combat resistance, a notorious obstacle, by involving employees in the design of the initiative. But that works only when employees have the information they need to provide useful input. It’s disastrous when they don’t. Also, managers often don’t tailor the speed of their change strategy to the situation. For instance, they may apply a go-slow approach even when an impending crisis calls for rapid change. To lead change successfully, Kotter and Schlesinger recommend:
The Idea in Practice The authors suggest these steps for managing change successfully: 1. Analyze Situational FactorsAsk yourself:
2. Determine the Optimal Speed of ChangeUse your analysis of situational factors to decide how quickly or slowly your change should proceed. Move quickly if the organization risks plummeting performance or death if the present situation isn’t changed. But proceed slowly if:
3. Consider Methods for Managing Resistance
Editor’s Note: A lot has changed in the world of management since 1979, when this article first appeared, but one thing has not: Companies the world over need to change course. Kotter and Schlesinger provide a practical, tested way to think about managing that change. “It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.”1 A version of this article appeared in the July–August 2008 issue of Harvard Business Review.
Reprint: R1107M Traditional approaches to strategy assume that the world is relatively stable and predictable. But globalization, new technologies, and greater transparency have combined to upend the business environment. In this period of risk and uncertainty, more and more managers are finding competitive advantage in organizational capabilities that foster rapid adaptation. Instead of being really good at doing some particular thing, companies must be really good at learning how to do new things. Those that thrive are quick to read and act on weak signals of change. They have worked out how to experiment rapidly and frequently not only with products and services but also with business models, processes, and strategies. They have acquired the skills to manage complex multistakeholder systems in an increasingly interconnected world. And, perhaps most important, they have learned to unlock their greatest resource: the people who work for them. The authors, senior partners at the Boston Consulting Group, review these four types of organizational capabilities, showing what companies at the leading edge are doing to create them. They also discuss the particular implications of this fundamental strategic shift for large corporations, many of which have built their operations around scale and efficiency—sources of advantage predicated on an essentially stable environment.
Traditional approaches to strategy assume a relatively stable world. They aim to build an enduring competitive advantage by achieving dominant scale, occupying an attractive niche, or exploiting certain capabilities and resources. But globalization, new technologies, and greater transparency have combined to upend the business environment. Sustainable competitive advantage no longer arises from positioning or resources. Instead, it stems from the four organizational capabilities that foster rapid adaptation:
We live in an era of risk and instability. Globalization, new technologies, and greater transparency have combined to upend the business environment and give many CEOs a deep sense of unease. Just look at the numbers. Since 1980 the volatility of business operating margins, largely static since the 1950s, has more than doubled, as has the size of the gap between winners (companies with high operating margins) and losers (those with low ones). A version of this article appeared in the July–August 2011 issue of Harvard Business Review.
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When a company acts on its own to change some aspect of its current environment it is using strategies?
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