As companies grow and become successful, they build up large amounts of momentum – they hire people with particular skill sets and attitudes, they develop formal processes for sustaining a particular way of working, and they often focus on a fairly narrow set of measures of performance. But the competencies they build up over time can quickly become liabilities when there are major shifts in the business environment. In cases of mighty companies falling from grace, such as Nokia, Kodak, or Blockbuster, the story is always about executives failing to achieve the scale of change that was required. Typically, there is a good level of awareness of what is happening (for example, Kodak actually invented the digital camera and Nokia had touchscreen phones in prototype before the Apple iPhone was launched), but the challenge of fundamentally changing the structures, processes, and people in a large company is often too difficult.

The ability to manage change is, therefore, hugely important – and not just at senior executive levels. Midlevel managers have to be able to lead change programs within their areas of responsibility, and they also have to take an active role in large-scale change efforts. Most of the techniques in this book have been about working within a fairly clearly defined framework – even the techniques for creativity and innovation assumed a certain level of stability in the company as a whole. But in this chapter, we take a different approach and look at the various techniques needed to make major change happen. By major change, we mean the sort of thing that makes many people uncomfortable, that has losers and winners, and that requires real leadership to help people make sense of it.

The starting point is to understand the stakeholders of your change program – who they are and what their needs are (#91). Then we discuss the key steps needed in a change process (#92) using Kotter's well-known eight-step guide. We describe a technique for understanding the emotional reactions of people as they go through a change process (#93). We also look at the tactics for persuading and influencing people effectively (#94).

These four techniques all assume you have a reasonable level of seniority and some formal authority over the people you are trying to take with you on a change process. The final technique is different – it is for managers at lower levels who are trying to lead change when they lack formal authority (#95).

91. Understand Stakeholder Needs, and Bring Stakeholders Along with You (Stakeholder Management and Power/Interest Grids)

We have all seen projects fail because of people issues. Money and energy are expended to make change happen, only for key people to reject it or for end-users to avoid using new tools given to them.

This often happens because the right individuals have not been consulted or informed about what is happening or they have not “bought in” to the need for the project. This is why stakeholder management is a vital part of change projects; and the larger the project and the more people it affects, the more important it is likely to be.

Stakeholders are the people who have an interest in the success or failure of a project and an ability to affect its outcome. They can be obvious groups such as employees and managers, but they can also be less obvious such as investors, governmental organizations, trade associations, trades unions, pressure groups, or the press.

To maximize the chance of success for your change project, it is wise to start managing stakeholders from the outset. To do this, follow these steps:

1. Identify relevant stakeholders. Brainstorm the people who are interested in your project and might be affected by its outcome. Figure 17.1 is a list of possible stakeholders.

   

2. Assess their power, interest, and support. For each stakeholder, assess how much influence they might have over your project, their level of interest, and whether they are likely to be positive or negative about it.

   Plot this analysis on a power/interest grid like in Figure 17.2. This helps make it clear where you need to focus your communication and your influencing efforts. It also shows you what approach you should use with different people.

   

3. Plan how you'll “manage” your stakeholders. For each significant stakeholder, think about their most important interests and issues, what support you want from them, and how you should work with them to win that support. (See our next tool, Kotter's eight-step change model, for more on this.)

Source: Adapted from Mendelow 1981.

92. Understand the Key Steps Needed to Succeed with a Change Process (Kotter's Eight-Step Change Model)

Once you've identified the most important stakeholders in your project, the next step is to communicate with them and “manage” them so that they support it enthusiastically. This is where John Kotter's eight-step change model can help you. Published in 1995, this model is based on lessons from more than 100 change projects. To use it, follow these steps:

1. Establish a sense of urgency. Look at your organization and your market situation, and communicate why it's important and urgent that this change go ahead.
2. Form a powerful coalition. Bring together a group of influential people with the power and enthusiasm to push the project forward (ideally, it should include many of the stakeholders you identified above – see #91).
3. Create an inspiring vision for change. We've seen the importance of vision many times in this book. Develop a short and motivating statement that encapsulates the desired future state of the organization (or one part of it) once the project has been implemented.
4. Communicate the vision. Don't just do this once and move on – communicate it at every opportunity, keep it fresh in people's minds, and discuss people's concerns openly and honestly with them.
5. Empower others to act on the vision, and remove obstacles. You cannot do everything yourself, so empower others to help build momentum, and do what you can to make it easier for them to support you.
6. Plan for and create quick wins. Demonstrate the potential success of your project by notching up some initial “wins” that show you are on track. This will help you build and sustain enthusiasm for the project.
7. Consolidate improvements and build on change. Some of the projects Kotter studied failed because managers “declared victory” too early and moved on, but the changes failed to take root, and their benefits gradually dissipated. To sustain change, you need to set fresh goals periodically and bring on new change leaders to maintain forward movement.
8. Institutionalize new approaches. Finally, for changes to stick, they need to become part of corporate culture. Continue “selling” the change project at every opportunity, celebrate people who support it, make sure that review and reward systems are aligned around the change, and ensure that new managers in key roles are natural champions of the new approach.

Source: Adapted from Kotter 1995. Reproduced with permission of Harvard Business Publishing.

93. Anticipate and Manage People's Emotional Reactions to Change (The Change Curve)

Kotter's eight-step change model is great for initiating and inspiring change, but it doesn't describe the emotions that people experience if they're affected by change but are not in control of it. These emotions can be intensely negative, and they can seriously undermine or stop a change project if you're not prepared for them.

This is where it helps to know about the change curve and to understand how to help the people affected by change through its stages. Often attributed to psychiatrist Elisabeth Kübler-Ross, it draws parallels with her work on personal transitions in grief. You can see an example of it in Figure 17.3.

Many people go through a predictable pattern of emotions as they experience unexpected change. In stage 1, they react with shock to the challenge to the status quo, and they may deny that the change is happening. In stage 2, as people start to experience the impact of change, they react with fear and anger, they may actively resist the change, and the organization may experience serious disruption to its performance as a result.

If people successfully navigate stage 2, they may move to stage 3. Here, people let go and accept change, and they start exploring what it may mean to them and how they can adapt to it. Finally, in stage 4, they embrace change, and everyone reaps its benefits.

The trick with managing these stages is to anticipate them and help people adjust – this allows you to reduce the downside risks, shorten the length of time it takes to settle in, and increase your chances of success.

In stage 1, focus on providing information and answering questions without overwhelming people with details (if they're seriously upset, they may only be able to take a small amount of information in at any one time).

In stage 2, you need to be prepared to deal with anger. Anticipate objections and concerns, and do what you can to address issues honestly so that you can win people over. (We look at a useful tool for doing this next, in #94.)

In stage 3, provide plenty of training and support for people to try out new approaches and explore the opportunities that change will bring. And in stage 4, celebrate the success of the project, and make sure that everyone's contribution is fairly and properly recognized.

94. Persuade and Influence People Effectively (The Influence Model)

It's all very well and good for us to talk about persuading people to support your change project, but this can be very hard to do, particularly if people feel threatened by it and become angry as a result.

This is where the influence model can help you. Published in 2006 by researchers Allan Cohen and David Bradford, it draws on the principle of reciprocity – i.e., fair exchange – to win people over. It's particularly useful where they don't support you, where you have a poor or nonexistent relationship with them, or where you've run out of other ways of trying to persuade them to help you. To use it, follow these steps:

1. Assume that everyone is a potential ally. Even if you've had no success getting the other person to cooperate, start with the presumption that they will come around if you work at it. If you assume that the other person is hostile and you act accordingly, all you'll do is trigger hostile behavior in return.
2. Clarify your own goals and priorities. Be absolutely clear what you want from the other person. Prioritize your goals so you know what to focus on, and separate real objectives from “being right” or “having the last word.”
3. Understand your potential ally's world. Try to understand what the other person cares about and what pressures they are under. A good way of doing this is to ask the person directly. If this isn't possible, try to put yourself in their shoes – for example, in terms of what their boss is demanding from them, how they are being measured or rewarded, and what it will cost them to agree to what you want.
4. Identify relevant “currencies” – the ally's and yours. Think about what matters to your potential ally – whether this is money, prestige, being liked, or something else. Then think about the resources you have available, whether concrete objects such as money or supplies or less concrete resources such as help, emotional support, meaning, connections, or respect from people who matter to them.
5. Approach the person in the right way. Start by thinking about the relationship you have with the person already; this will influence how you make your approach. Then think about their preferred style for receiving information – for example, in a face-to-face meeting, over lunch, or by e-mail. Listen carefully to what they want, and deal with them in a way that they're comfortable with.
6. Make the exchange. Once you know what the other person wants and you know what you have to exchange, you can make an appropriate offer (we'll look at win-win negotiation in #100). Do this in a way that builds trust – after all, you may have to deal with them again in the future. Show empathy and respect for the other person, and express gratitude for their help.

Source: Adapted from Cohen and Bradford 2005. Reproduced with permission of John Wiley & Sons, Inc.

95. Lead Change Without Formal Authority (“Stealth Innovation”)

It's not just people affected by change you need to persuade – sometimes you need to win over conservative senior managers who may not be prepared to fund the work needed to prove an idea. One way of doing this is to develop your idea quietly, behind the scenes, and prove success early on without getting prior approval.

This is particularly useful where ideas are radical and potentially disruptive internally, where they need more work to be fully shaped, and where they might end up being shot down by senior managers before they have a chance to prove themselves. (This is important because once an idea has been rejected by busy senior stakeholders, it can easily stay rejected, even if problems have been overcome and the idea has been significantly improved.)

This is where the notion of stealth innovation, as described by Paddy Miller and Thomas Wedell-Wedellsborg in a 2013 Harvard Business Review article, is useful. According to these researchers, to do this well, you need to:

1. Get the support of midlevel managers. Build a network of support for your idea among accessible managers who can help you make the project succeed. Pick people who trust and like you. Ask for their advice, and shape the project accordingly.
2. Prove the value of your idea. Build an inexpensive, working prototype of the product or service (ideally using spare time and borrowed or self-purchased resources), and test it out on a small, low-risk group of real users to see what they think of it. (See the design thinking tool – #44 – for more on this.) The idea here is to gather robust data showing that the idea is a success. Of course, if the data turns out negative, you can always abandon the idea at this stage, while it's still under the radar and little is at stake.
3. Beg, borrow, or scavenge for the resources you need. It's unlikely that you'll get a budget for a stealth project – so use your wits to access the resources you need. Tap into your network of contacts to borrow unused equipment, access spare or surplus resources, barter resources you have for ones you need, or beg a few hours of time from people with key expertise.
4. Have a communication plan. Know what you'll say and how you'll manage the situation if your project attracts senior-level attention before you're ready for it. Miller and Wedell-Wedellsborg recommend aligning it with existing projects or strategic priorities, many of which have indistinct boundaries. Another approach is to say you're doing research for a proposal that you'll make to senior managers when you've tested the idea properly.

At some point, your stealth project will need to be put forward in a formal way for senior management buy-in and funding, but if you have taken the steps above, your chances of success will be significantly greater.

Source: Adapted from Miller and Wedell-Wedellsborg 2013. Reproduced with permission of Harvard Business Publishing.