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CHANGE
Embrace Innovation and Adaptability

As the old saying goes, the only real constant is change.

Modern leadership involves more than just telling people what to do. Because you’re responsible for helping the company stay profitable, you have no choice but to embrace change. This keeps your team functional, making them more productive and building the bottom line—and around and around it goes, in a constant cycle of change and growth. Change is good for you as a leader and good for your business. Effective leaders don’t waste energy fighting inevitable change; they search for opportunities to use that change for the company’s advantage.

Change has become essential to the continued growth and development of global business. It stirs things up, cross-fertilizing ideas and aerating the waters of creativity. We may enjoy equilibrium, but inactivity soon sours into stagnation. You can’t afford complacency, because some hungry young company will always be pushing the envelope and trying to steal part of your market share.

And so it should be: competition makes us stronger, and embracing chaos is good! Corporate leaders sometimes forget this. They let their attitudes and strategies harden in place, assuming what worked well before will always yield success. But, as Harold Geneen, legendary CEO of ITT Corporation, pointed out decades ago: “We must not be hampered by yesterday’s myths in concentrating on today’s needs.”

There was a time not long ago when executives paid lip service to innovation but were the first to block it. For example, Yahoo executives are probably still kicking themselves for turning away the founders of Google, Larry Page and Sergey Brin, when they came looking for investors. Leaders have become much more adept at plugging innovation into their business and corporate cultures; however, some bureaucrats think most new ideas are dangerous, because new ideas can completely change a business when implemented. Often this change proves to be for the better, but naysayers prefer not to chance it—they want to keep doing what has made them successful in the past. The inability to change leads to the slow (or fast) downward spiral of death.

More often than not, the changes passing through our organizations transform them continually, so don’t let cultural inertia strangle productivity. You’ll inevitably outgrow the old ways of doing things, if only because the technology of business continues to advance at a rapid rate. Your job is to bring order from the chaos and achieve equilibrium from the flux of accelerating change.

IMPLEMENTING SUCCESSFUL INNOVATION

One of the many things Peter Drucker taught us was that only two things actually generate profit: marketing and innovation. Everything else is an expense. Nonetheless, many of us don’t want to deal with innovation, because it’s too much trouble. New ideas push you out of your comfort zone, requiring you to scramble, to work harder, to think more. For leaders already overstressed by challenging work environments, that’s asking a lot.

But we can’t just ignore innovation, or we’d all still live in trees and eat bugs. Circumstances force innovation, because it’s the only way to avoid stagnation. Innovation provokes changes that must occur for us to move forward. It can be tricky, but there are ways to handle innovation so you can advance your agenda without having the situation blow up in your face. For example:

1 DON’T TRY TO ACT ON ALL YOUR IDEAS AT ONCE. Focus on one or two innovations and carry them through to completion. You have only so much time and attention to spare, so pick your best idea and give it your all.

2 DON’T LET HISTORY HOLD YOU BACK. If I had a dollar for every time someone told me, “We tried that before, and it didn’t work,” I could get a nice steak dinner. The thing about change is that it’s change. Just because something didn’t work before doesn’t mean it won’t work now. A project that was prohibitively expensive five years ago might be ridiculously cheap today.

3 DON’T ASSUME THE EXPERTS ARE RIGHT. Experts once thought humans would never travel faster than thirty-five miles per hour, the speed of a galloping horse. Nowadays, airplanes regularly exceed five hundred miles per hour. In 1963, Thomas Watson, an IBM executive, stated there would probably never be a market for more than about five computers in the entire world. My family has ten computers in our household alone. One music company exec passed on the Beatles because, as he put it, “Guitar music is on its way out.” My point? Even experts sometimes get it wrong. Instead of dismissing an idea because someone’s scoffed at it, give it time to grow, then test it to see whether or not anything’s there.

Modern companies live and die based on how quickly they can face, embrace, and absorb change. Innovative thinking makes this process easier. But be aware that new ideas are risky and when pursued too enthusiastically can slow you down—or they can get shot down because they make people uncomfortable. Yet just because an idea makes someone uncomfortable or hasn’t worked in the past doesn’t mean you should dismiss it out of hand. No matter how necessary change may be, you’ll frequently encounter resistance; after all, it’s much easier to stay the same than change. The status quo has inertia on its side.

Overcoming Cultural Inertia

Inertia is simply a tendency to resist change. In physical terms, a body in motion tends to stay in motion in a straight line unless acted upon by an outside force, while a body at rest tends to stay at rest. But the concept of inertia can apply to people, too, and cultural inertia is something you’ve surely experienced plenty of, even if you didn’t have a name for it. You probably know all you care to about bureaucratic inertia, for example. Once a bureaucracy makes a rule, woe betide those who try to buck it.

Similarly, some corporate cultures resist change, often to their detriment, even as the world transforms around them. Some observers argue that the chief reason Hostess Brands went bankrupt in 2012 was because it failed to change with the times, making no attempt to introduce products that appealed to a more health-conscious demographic.¹ Because they did nothing, November 16, 2012, became known as The Day the Twinkie Died.

Facing Down the Juggernaut

In times of plenty, big, slow-moving companies can survive and even thrive; but when the economy turns upside down, often they can’t find enough resources to keep going. Yet even the largest company can weather the change-storms if corporate leaders take advantage of—even welcome—the change.

As one of those leaders, how can you divert your organization off a dead-end path?

1 ENCOURAGE INNOVATION AND INITIATIVE. “If I wanted your opinion, I’d ask for it.” “I don’t pay you to think.” “Stop complaining and get to work.” These dinosaur-thinking statements should never leave your mouth. Your people are your greatest resource, and you’ll never know what profitable ideas they might come up with if you refuse to listen. Take advantage of their experience, imagination, and desire to help; indeed, encourage it.

2 EMPOWER YOUR TEAM TO OWN THEIR JOBS. Tell your people the general direction you want them to go and let them tell you how to get there. Delegate enough responsibility and authority for your team to do whatever they feel they must without having to ask—and without punishment if something fails. Otherwise, people will keep their heads down to stay out of the line of fire, plodding away, while the go-getters leave to work for someone who appreciates initiative.

3 MAKE YOUR ORGANIZATION WORTH WORKING FOR. Everyone wants to be happy with and proud of their work, yet so few are. Change that. Celebrate the good things. Stop forcing your team members to follow hidebound rules and strategies. Lead by example, exercise scrupulous fairness, and tell your people exactly how their contributions help grow the company. Explain why the goals they reach matter and how each of them can change the world of work.

ADAPTABILITY: LOOKING INTO THE CRYSTAL BALL

When I was growing up, a lot of the items we take for granted now didn’t even exist. Those items include cell phones, CDs, email, DVDs, home computers, and satellite radio, to name a few. Now they’re commonplace. What will be commonplace ten or twenty-five years from now? There’s no telling, but what I can say is this: effective business leaders who are ready and willing to embrace the future now will be the ones who prosper for decades to come.

You can succeed in the future only by facing today’s challenges head-on, reframing them as opportunities, and taking advantage of them. Stay on top of the trials and tribulations your team will face in the near future. Here are the top five challenges facing today’s business leaders:

• Agile innovation. Modern business seems unlikely to slow down, thus requiring companies to cultivate an organizational culture of speed, fast decision-making, and quick action. But those can take you only so far if you lack vision.

Nokia learned this in the 2000s when its leadership decided to forgo smartphone development in favor of “dumb” phones. They had a superb technological team that could have given them a significant head start over everyone else, but they chose to efficiently develop the wrong product. After Apple and others hammered them in the marketplace, they came back with products like the high-end Lumia. Its innovative features and aggressive marketing have taken back a small piece of Nokia’s former market share.

• Competition from emerging nations. As modern capitalism takes hold in nations that traditionally followed other economic systems or that have begun to become wealthier, we’ll see more direct business competition from those countries. According to management consultants McKinsey & Company, by 2025 about 45 percent of the Fortune Global 500 companies will call emerging nations home.² Companies that stay on the ball, especially in those emerging markets, will have more opportunities to prosper.

• Data management. With the growth of cloud storage and Wi-Fi, data storage has become easier than ever—and data easier to steal. Even traditional data storage methods can fail due to poor management or programming errors. Today, legal regulation of and penalties for cybertheft vary from country to country. We lack overriding international laws, much less national and international task forces, to police crimes of this nature. Until the law and law enforcement can catch up with technology, we must take the initiative to protect and manage our data ourselves.

• Talent management. Workers no longer feel a need to stay with one company long term, especially if they dislike the working conditions. Add in the technological revolution, and many workers don’t need to go to an office on a daily basis. Some have found they don’t even need traditional leadership. As a leader, you’ll find yourself becoming more of a facilitator, visionary, and cheerleader to tech-savvy, independent-minded workers than ever before. Your challenge will be to keep finding new ways to encourage your people to own their jobs while motivating them to spend their discretionary efforts on the organization. You may also find that cost-cutting moves you toward less traditional workplace solutions, such as increased outsourcing and telecommuting for select workers.

• Focus on adding value. How you respond to change can prove critical during mergers and downsizing. Sir Richard Branson, who has overseen hundreds of companies, emphasizes the need for tightening organizational structure and refusing to take on another person’s flawed legacy: better to restart the company altogether. If you find restructuring necessary, he suggests making your organization “very small, very specialized, and very expensive.”³

Star Trek borrowed Shakespeare’s phrase “the undiscovered country” to describe the future because we won’t recognize it until we see it. But while you lack a map, that doesn’t mean you can’t hold yourself and your team ready to blaze a trail into that new territory.

With these five challenges in mind, I invite you to move forward and colonize a prosperous new tomorrow, prepared in advance for what’s most likely to come. Stay loose, stay agile—and be ready for anything. Striding confidently into the future requires maximizing your preparedness for whatever comes. While perfection may not be possible, there’s no reason not to strive for it by continually and incrementally improving your systems, processes, and productivity over time.

Taking Your Team from Good to Superior

If upgrading is so easy, then why do merely good companies still outnumber the superior ones by a factor of hundreds to one? Surely, if the process worked, we’d have seen a flood of great companies by now—and clearly we haven’t.

But the problem often isn’t the concept—it’s the implementation. Leadership frequently fails because we can’t see our greatest flaws. It’s not simply a matter of not seeing the forest for the trees; we commonly can’t see our flaws because we aren’t humble enough to accept that a forest exists at all. So I recommended the following four practices:

1 SET ASIDE YOUR EGO. “Le etat, c’est moi!” (“The state, it is me!”) might have worked for Louis XIV of France, but you are not your company, your division, or your team. You lead and represent them, and thus you have an obligation to provide vision and guidance in all things.

So when you make a decision, don’t assume that because it works for you, it works for everyone. For example, a bonus structure awarding you $100,000 if your team reaches certain goals may seem great to you, but it means nothing unless the rest of the team enjoys bonuses as well.

Step up to the plate, lead by example, and take everything and everyone into account before you leap—keeping in mind that the French monarchy ended at the guillotine just a few generations after King Louis XIV made his famous statement.

2 CAREFULLY PICK A DIRECTION AND STICK WITH IT. You can’t become the expert in your field if you don’t stay the course long enough. Anyone remember Warner-Lambert? No? It began as a consumer products company with healthcare leanings. From 1979 until 1998, when Pfizer absorbed it, Warner-Lambert completely changed direction at least five times, prompting three major restructurings under three different CEOs. All this did was repeatedly kill its forward momentum, eventually killing the company.

Instead of shifting direction repeatedly, focus on growing what you do best. It’s always better to go from being good to being superior at something, rather than spending the same effort to go from abysmal to mediocre to sufficient. Additionally, all team leaders benefit from having a “Not To Do” or “Stop Doing” list—one that states where they shouldn’t expend the team’s energy and resources.

3 MODEL YOURSELF AFTER THE BEST IN YOUR FIELD. What can you learn from activities competitors have done right, as well as what they’ve done wrong? How can you do them one better by using their own methods against them? More than a century ago, the US Postal Service copied many of the business practices of the original Wells Fargo, including the Pony Express and the corner mailboxes still common in some parts of the country. Wells Fargo, after setting the standard, lost the postal game only when government legislation made the USPS the sole legal postal service.

4 COMMUNICATE INTENTIONALLY. Effective communication makes a huge difference. Steve Gangwish is a vice president at CSS Farms—a main supplier of potatoes for Frito-Lay, the largest maker of potato chips in the country, and other makers of potato-based products. As Steve pointed out when I talked with him,

What’s made the difference in our team’s performance is intentional communication. Every farm has farm meetings once a week, typically on Mondays, and everybody on the farm knows it. Everybody gets together, planning for the week and thinking ahead. It seems that that simple change, toward intentional planning and communication, has made pretty significant impacts in our farms. We’ve seen where a farm hasn’t done this, and as soon as we force them to implement that, all of a sudden they go from low average to above average.

Many other ingredients contribute to the good-to-great recipe, including willingness to work hard, inspiration and innovation, open communication, and encouraging empowerment. I hope these four tips help you break new ground, so you can give your best to anyone who depends on you and your team.

PUTTING FLEXIBILITY INTO ACTION

Inflexible things break, sometimes spectacularly, when stressed. Even metal will come apart if you apply enough strain. So you’ll need a flexible approach to survive the business weather. Obviously, the new doesn’t always work best. Continuous improvement has its flaws if applied to the wrong teams the wrong way, because too-rapid change can stifle ideas before they mature into usefulness. But successful businesses have always adapted readily to change. At no time in living memory—and likely at no point in history—has flexibility been a more desirable business trait than it is today. Change occurs almost daily, whether you want it to or not, so you’ve got to be able to change course to adapt to new opportunities.

The greatest obstacle to change is usually a reluctance to modify or abandon familiar, comforting procedures. But an agile organization has no choice but to change in the face of reality. Adaptation rules the day. As Nietzsche pointed out, “The snake which cannot cast its skin has to die.”

Today’s leaders should adopt these six change management methods:

1 EMPLOY ENHANCED FLEXIBILITY. In the change management arena, the need for flexibility is greater than ever. Projects and direction must become ever more flexible; no longer can you try to force them to fit your original specifications and strategies when those become outmoded. Instead of trying to meet requirements that no longer match reality, be open to modifying the scope and direction of projects as you move forward.

2 AIM FOR CONTROLLED GROWTH. Enhanced flexibility should occur within a limiting framework, much as the requirements of a sonnet shape and guide poetic creativity. As we move into a business landscape that has been decimated by recent economic troubles, we must take care not to expand too far, too fast. Take time when you need it so you can consolidate your gains. To the extent you have power to do so, you as a leader should carefully choose new directions.

3 CONSIDER CALCULATED ABANDONMENT. In the spirit of controlled growth, you may need to help your people adjust to changes that result when company leaders decide to cut losses by selling off or abandoning underperforming projects, markets, or locations. For example, aside from breaking up its Bell Operating Companies by government order in 1982, AT&T has split off whole branches of itself when it has proven expedient to do so—including equipment manufacturing business Lucent Technologies in 1996.

4 CONSTANTLY UPGRADE YOUR TECHNOLOGY. Not long ago, typewriters were a staple of office culture. They were displaced in quick succession by word processors, monochrome computers, PCs and Macs, handheld devices, smartphones, and cloud computing … all within two dozen years! Every advance toward the paperless office has made work easier, so we can do more of it per unit of time. But you can’t become complacent. Just because your team got software upgrades last year doesn’t mean they’re still cutting-edge; in fact, it might be time to buy new devices to boost their engagement and productivity levels. Given how fast our technology advances, the stuff you were using last year might be given away in cereal boxes next year.

5 RETUNE YOUR TEAM’S ACTIVITIES REGULARLY. Stringed instruments are surprisingly sensitive. By the time you’ve finished tuning each string, the first string may be discordant again. So it goes with work teams, too. While you rarely want to micromanage, check in with your people regularly to make sure they’re in tune—not only with the team but with the organization. It’s a never-ending process, but if you don’t keep up, you’ll end up so far off the beat, you may never find your way back to the orchestra.

6 EVOLVE WITH SOCIETY. No matter how much you love the product you make or service you provide, it can become obsolete overnight as society changes. There aren’t many buggy-whip makers anymore. You may have to change just to stay relevant, so be willing to reconsider your branding and reinvent yourself occasionally.

Managing Expectations about Change

Project and process management are the meat and potatoes of the manager’s daily work. As an effective leader, you can help your team become more flexible rather than set in its ways. How? Try these suggestions:

• Make sure your team understands the need for change.

• Communicate the organization’s primary goals clearly to everyone.

• Find and root out resistance quickly.

• Lead by example.

• Follow by example—i.e., take the path your front-line team members recommend, especially regarding strategic execution.

• Involve team members in both stating the problem and finding the solution.

• Urge buy-in among senior employees.

• Identify and support the change leaders of the future.

A Bare Beginning

Don’t think the pointers I’ve outlined in this chapter are the only things you can do to fight inertia; they’re barely a jumping-off point.

You know your team culture best. Just remember: the price of liberty is eternal vigilance—whether you’re talking political freedom or corporate freedom of movement. Conscious thought and continual innovation help. Never hesitate to trim organizational fat, drop dying projects, or blow past bureaucracies to get the job done on time and under budget.

If your organization seems to be headed the wrong way, throw your weight against that inertia every way you can. Effective leaders are the best defense against either a corporate charge down the wrong path or a refusal to move at all, but you must be willing to open your eyes to see the future.