Businesses large and small are falling victim to the seduction of change management. To keep up with the joneses of an evolving marketplace and conniving competitor behavior, often times the popular decision is to change course (“change” being the operative word). I’ve personally worked with companies who have featured change as a blanketed corporate growth strategy but had a difficult time understanding what that really means. Most corporate execs understand that there’s a disruption and sometimes resistance that comes with incorporating any kind of change and accept that as a way of doing business. However, in my experience very few actually understand the why and how implementing “disruption” can water positive growth. In a profit sheet kind of way I look at implementing corporate change as a P&L process. Profit being your employee productivity, operations, sales & marketing, customer service etc, and Cost being your change management strategy, new policies, new direction, new leadership etc. If the Cost of change is greater than the Profit…then “CHANGE” as a growth strategy is probably a bad strategy. And yes, breaking even is not good either. It has been perceived as a good business practice when something goes awry albeit temporarily to CHANGE IT. Conducting a change management strategy has to involve a close to perfect positive growth outcome. The cost of a poorly executed change management plan can destroy a company and has for some of once the most recognized companies on the planet. Remember the beverage company Snapple? Ever wondered what happened to that brand/company? Below provides an example where the “good intentions” of incorporating a change management strategy doesn’t deliver “good results”:
Quaker Oats Company and Snapple Beverage Company
Quaker Oats successfully managed the widely popular Gatorade drink and thought it could do the same with Snapple. In 1994, despite warnings from Wall Street that the company was paying $1 billion too much, the company acquired Snapple for a purchase price of $1.7 billion. In addition to overpaying, management broke a fundamental law in mergers and acquisitions: make sure you know how to run the company and bring specific value-added skills sets and expertise to the operation. Quaker Oats’ management thought it could leverage its relationships with supermarkets and large retailers; however, about half of Snapple’s sales came from smaller channels, such as convenience stores, gas stations and related independent distributors. The acquiring management also fumbled on Snapple’s advertising campaign, and the differing cultures translated into a disastrous marketing campaign for Snapple that was championed by managers not attuned to its branding sensitivities. Snapple’s previously popular advertisements became diluted with inappropriate marketing signals to customers. While these challenges befuddled Quaker Oats, gargantuan rivals Coca-Cola and PepsiCo launched a barrage of competing new products that ate away at Snapple’s positioning in the beverage market. This was the start of Snapple’s decent.
Perhaps Snapple and in this case Quaker Oats fell victim to the seduction of change management, and did not understand the why & how implementing such disruption can return positive growth.
Conducting Effective Change Management
To avoid becoming prey to the seduction of change management there has to be a thoughtful and microscopic approach in outlining what the end game looks like. I think often times change management is used as a fire hose strategy to put out corporate infernos without much thought on what caused the inferno in the first place. It’s our human response to react and overreact on poor results that had poor vision and execution from the outset. The best prescription in dealing with a corporate pain-point is identifying the what/why/how the pain-point occurred and are there processes already in place that have solution mechanisms that can address the pain-points. In other words, before making an uninformed decision to place in a change management strategy determine whether or not such a decision will yield a positive outcome…and not just place a Band-Aid on the problem. After you’ve dotted your “I’s” and crossed your “T’s” and made the decision to incorporate a change management plan perhaps you can review my top 5 ways to conduct the most effective Change Management Strategy:
- Consider your most important asset: PEOPLE. When there’s a corporate behavior change…this creates “employee issues.” Typically corporate leaders will be asked to ratchet up, jobs will be changed and sometimes lost, new competencies must be developed, and employees will be confused and resistant. Companies who deal with these issues reactively could cause chaos. A more formal approach by communicating with the leadership team and then engaging key stakeholders and leaders should be implemented proactively, and consistently followed through as change moves through the organization. This requires much data collection and analysis, planning, and implementation discipline. Processes and Execution on steroids.
- Leadership has to LEAD. Because change is usually uncomfortable for people at all levels of an organization, in its undertaking usually the pitchforks point straight at the CEO and leadership team. If there’s a failure in support and direction from the CEO/leadership team chances of the transformation succeeding is slim to none. The leaders have to lead by example by embracing the new approaches and inspiring the rest of the organization to follow suit. The communication from the CEO/leadership team must be consistent and unambiguous.
- Vision and Culture Fit. Most change management initiatives fail because the specifics of the transformation do not correspond with the corporation’s vision or culture. You see this quite often with mergers & acquisitions where the decisions are based solely on finance and not infrastructure. Corporate leadership has to ensure that any change or transformation has to be in alignment with the vision and culture of the organization…even if the financial reward is too good to be true.
- Empower every layer. Usually while the change management processes are taking place especially during the strategy and design phase, every layer of the organization not only has to be acknowledged they should play a role in the transformation. There’s evidence that show the most successful change management initiatives incorporate every level of an organization and requests participation/involvement by its employees during the start and finish. This way of implementing change can also identify previously unseen leaders throughout the organization and create an opportunity for those who would otherwise go unnoticed. Additionally, a wonderful way of bolstering a company’s succession planning process…and instilling a change management culture.
- Have a plan A, B, and C. Because no matter how much planning and preparation you put forth in devising your change management initiative…something will be amiss. Employees and the environment may react in ways that the CEO/leadership team didn’t anticipate thus the normal reaction is to immediately stop the initiative…which shows frail and indecisive leadership. Effectively leading change requires repeated reassessment of its impact and the organization’s flexibility and yes planning to adjust the next phase of transformation. Driven by validated data internally which is supported by information and solid decision-making processes, CEO/leadership team can then make the adjustments necessary to maintain momentum and drive growth results.
“CHANGE MANAGEMENT”…a business seduction
AH2 & Beyond Consulting