Change Management

Startups | The Early-Stage Scaling Process

As a business starts out, its first change process is typically “scaling up”—the process of building an organization from the ground up in order to turn an idea into a profitable business. One of the toughest challenges in that process is to instill a sense of discipline in an environment that has had few clear rules, roles, or responsibilities. Many young entrepreneurs fail to do this and the startup fails. 

Let’s create a fictitious company, M-tech, for the ease of more in-depth analysis: Mark is the COO at M-tech, a small tech startup that specializes in producing a new toolkit, which has the potential to upend an emerging, niche industry. Since joining the company, Mark has principally been responsible for helping to scale up the organization, both in terms of people and key operations. During that time, Mark has grown M-tech from a team of four to almost 30. He's also been responsible for managing the group's operations, adding discipline, as well as more clearly-defined tools and approaches that support increased production and greater efficiency. Three years after taking on the job, Mark and his CEO had already surmounted many of the early scaling-up challenges of a new company: validating its technology, connecting with potential customers in a variety of industries, tightening up internal processes and systems, and developing an organization structure with more clearly-defined roles and responsibilities. But early this year, M-tech was entering a pivotal new stage in its history. The firm had promised investors that it would increase capacity substantially and significantly reduce variable costs in two years, leading to profitability. A bold commitment, given the net loss of a couple of millions the year prior. Would the team at the top be able to continue to scale and build a profitable business? 

Mark describes the challenges at M-tech this way: “M-tech had spun out of a college lab. When I started, M-tech was four people. It was the CEO, two senior researchers, and one technician. Originally, I came into M-tech to really serve a supporting role to the CEO. The CEO had raw talents, but he was also relatively inexperienced. I helped him navigate the fundraising process, working with the team on what the priorities should be, helping him think about how to get the team to deliver those priorities, and so forth. In addition, we soon needed to build a board. He didn't have any experience with the board of directors, and so he wanted my help to figure out what the right board would be and to manage that process.

Since the company’s beginnings, M-tech has surmounted many of the challenges of a young firm managing its scaling process. By shining a spotlight on M-tech, we will examine some key techniques for shaping that process. We’ll also touch on some of the current challenges that M-tech faces as it attempts to build a viable business.

Scaling-Up: Getting Out of the Garage: Virtually all startups begin as small, informal, loosely run operations. As they add people and expand their product portfolios, they become more complex and difficult to manage. What worked for three or four friends in a room no longer works. Better coordination, control, and discipline become essential—as long as they don’t stifle creativity, flexibility, and growth. Thus, scaling up is a delicate balancing act—an art rather than a science. It’s a process that takes time while you experiment to find the right tempo and pace. By now, you probably won’t be surprised to hear that scaling is a process—in particular, a type of change process. It’s what a startup goes through as it grows, striving to ensure smooth, effective operations at larger and larger sizes. Scaling typically involves the creation and deployment of organizational and managerial processes, planning and control systems, and formal structures and reporting relationships. The goal of the process, as we noted before, is to maintain control of the organization, its workflows, and its outputs, but without hampering creativity or adaptability. In many cases, scaling up involves a profound shift in mindset that occurs during a defined period of time—a move from ad hoc approaches to repeatable practices; from an unstructured to a structured organization; and from a spirit of inquiry to a spirit of urgency. The shift is often triggered by a lack of direction, focus, and discipline—the group recognizes, sometimes the hard way, that in order for the firm to channel its good ideas, it will need to install some type of systems and procedures for doing things efficiently. Scaling is, in essence, the launch of the organization’s very first change process.

It often helps to think of organizational change as a process with stages. For example, M-tech’s scaling process can be divided into three stages: 1) getting people ready for change, 2) introducing new ways of operating, and 3) institutionalizing the new approaches. 

Stage I: Adopting a Disciplined Mindset: To scale up their technology and produce a reliable product, the group would need to become much more methodical and disciplined. In particular, they would need work plans, goals, and a more systematic approach to problem-solving. M-tech set out to develop a more disciplined mindset one year after Mark joined the company. And that would require Mark to lead the startup’s very first change process, which would proceed in three stages.

In the first stage of scaling up, Mark aimed to unfreeze the organization and make employees more receptive to operating systematically. Even in such a small company, that change in approach would not be easy. For some time, the key engineers and scientists had done things a certain way, ad hoc. Upon sitting down with Mark to discuss using a Gantt chart, the chief scientist remarked that he felt like the yoke of management was upon us. The chief engineer joked that it must have felt to Mark like herding cats. Still, the group began to meet regularly and develop a rhythm to their work. Mark's goal in this stage then, was to help the team understand the need for change and recognize the benefit of using simple processes. He aimed to help the group see that there was freedom — freedom to produce a great product, freedom to build better reactors, and freedom to build a legitimate business with discipline. To be the business they wanted to be, let's try this and see would no longer be enough. By the end of this stage, people admitted that some stability was in fact crucial in turning their idea into a reality.

Throughout the first stage of the change process, Mark helped the group adopt a more systematic approach to work. He brought in discipline, but without the rigidity that typically breeds resistance from employees used to doing things their own way. This is how Mark described the process: “I'd say I primarily have two areas that I saw in my past that could be valuable here but needed to be managed carefully. The first one is when I was at a big management consulting firm. I spent a lot of time with people that came from Tesla, and knew the Tesla production system very well. And so that area I thought was very powerful, and there were some things we could learn from and bring to M-tech. The second area was in the early Unilever days, and this was probably the opposite of what I learned from Tesla. The processes at Unilever, to me, were very crippling, yet the intent was correct. So the idea for me was how to take processes that I know had a good intent, but was overly powerful, overbearing to a large organization, and make sure they didn't do the same thing to a small organization. So the idea at M-tech was, how do I bring the right few processes, based on the needs we have, and make sure they are very simple, very, fast very flexible, and apply them with the team. And so my objective is always to bring with me those things that I thought added value for a company that's anywhere from five to 20 people. So I was quite conscious of heaviness, and probably biased towards simple, and fast, and try and then adjust. So that's kind of one philosophy that we've adopted here that I think is working.”

Mark moved M-tech at a measured pace through stages of increased formalization and structuring. Knowing the need to impose some discipline and order (sooner rather than later) but wary of creating overly rigid processes too early, he wisely sought the sweet spot. Major changes will only be accepted after people understand the firm’s goals, understand how new processes will help achieve those goals, and feel like they “own” the new processes. Such a shift of mindset takes time, which is why “laying down the law” (which has often been formulated by consultants) is so seldom successful. How did Mark manage to do it? Not by changing the group’s systems or structures. With so few people early on, there weren’t really too many structures or systems to change. That would come later.  Instead, he altered M-tech by changing the group’s mindset—and in particular, their approach to critical work processes. Mark started to take M-tech to the next level by emphasizing what he called the “5 P’s and a C.”:

1)Planning, 2)Priority setting, 3) Pacing, 4) Problem-solving, 5) Project management, 6) Communication.

Stage I (continued): Six Key Processes for Scaling: The first “P” is planning. Since the team had no formal planning system, Mark pushed them to engage in rigorous and detailed action planning, working backward from annual goals to quarterly, monthly, and weekly targets. This served as a stabilizing force and helped the group with the second “P,” priority setting. This meant, for example, keeping the technical team focused on a small set of critical targets each week, even if management was pushing for changes related to business development and other areas. Here’s Mark on these first two P’s: “So we had several different processes. They change based on the need. As we got larger, we needed to have more structure in place in order to make sure the goals that we set were achieved. I could no longer look at five people, knowing what everyone was doing. We had to really put in someplace where we created a span of control break. We had a set of goals, we had a set of deliverables. We then outlined those goals as what needed to happen before we could then raise the next set of money at a decent valuation. And then we worked back from that, in terms of what we had to achieve by quarter, by month, and eventually by week. So that goal-setting process and the cascading of it back into actual work that had to be done was one of the first things that we put in place. Related to that was, how do we manage it going forward? So now you have a detailed plan of how to deliver those goals. You now have to manage it. So we talked about putting in place daily meetings so that we knew we were on track to deliver the weekly goals. Those would be quick. They might be 10 minutes, sometimes they might be 30 minutes. But it was a check-in first thing in the morning on what was accomplished yesterday, what barriers need to be resolved to be successful today, and then get on to being successful that day. And then we reviewed it each day. And then as time went on, once a month, we'd say, are we still on track for the monthly goals, which gets us to the quarterly goals, which gets us to deliver what we had promised to investors. And that process, because it's short and focused on what we're doing, was all in line with the business. It's a very important communication process. Everyone, when there are four or five or six people, knows exactly what everyone's doing during the day, how it's contributing to those goals. And it became a very valuable exercise to work through. We've used that many times since.”

In terms of the third “P,” pacing, probably the most important thing that Mark introduced was the notion of a “cadence” or rhythm for staying on schedule and getting tasks done on time. But unlike the pace of a manufacturing floor or a production center, he was able to set pacing much more in line with an experimental environment in which the firm was still trying to develop a viable product. Here’s Mark describing the importance of pacing, even early in a firm’s life: “So in the case of operations in your manufacturing role, you've got a product, it's established, and the question is, I have so much capacity and I have demand, and how do I make sure I am working through that demand at the right level. And so you can come up with a cadence of how frequently am I producing a certain product. The concept is knowing when you're off track, so you can make adjustments to get back on track. Development is much more uncertain. It's far less about am I on track. That's a really important piece but is equally important to stay in touch with where we are and learn where we need to go based on what we've just learned. I think it's almost impossible in our environment to write a work plan for more than two weeks out because every week we learn something new. We then adjust what our plan is going forward. And the question is, are we efficiently working through those plans as best we can? As opposed to I set a plan that's three or four or five months down the road and I'm able to make sure I'm on track to do that. You have to really think hard about-- in the short term-- just about am I working on the right experiments, is it tracking me to the right place, am I learning the right things, and then picking up the next one. So that cycle of experiment, learn, adjust is really what this is about.”

The fourth “P” is problem-solving. Mark worked hard to find problems early, break them into manageable chunks, and allocate responsibilities to individuals for coming up with solutions. But he made sure that this systematic approach did not squelch his young group’s adventurous spirit. For the fifth “P,” project management, Mark introduced simple tools, such as Gantt charts and capital budgets, to identify interdependencies and to highlight tasks that were on a critical path. Here’s Mark to describe his approach to these final two P’s: “I think the other benefit in the things I brought with me would be all around the problem-solving approaches. So, the whole PDCA approach is something we're trying to embed here. It's a fast-paced focused problem-solving approach. And then if we're going to be spending a lot of money, we think of capital projects as something we want to have formerly documented in a proposal that's written with the justification of what the comparisons were so we know we're getting a reasonable cost, and we know the project is articulated well, and we know the reason for doing it, and it's an easy way for us to get everybody's mind around it. So that formality is relatively simple, yet we still think it's important. And, it works pretty well for the organization when we're spending. So those are the kinds of things I brought with me from a process formality point of view. I think that spans the vertical, as well as the horizontal areas in an organization.”

The “PDCA approach” Mark mentions is an iterative four-step management tool used to improve processes and products. It stands for “Plan-Do-Check-Act.” 

• Plan. Establish output goals and the processes that could accomplish them.

• Do. Implement the plan and collect performance data for analysis.

• Check. Study the actual results, comparing them to what was expected. Look for deviations from the plan and whether the process was realistic.

• Act. If the results are better than expected, adopt the specifications of that iteration as the new baseline. If not, stick with the existing process. Either way, if the group achieves something different than expected, it will learn something from documenting the process that it can then test in the next iteration.

Most companies use some version of PDCA, although one or more of the steps might be lacking. 

Finally, the C, communication. Mark instituted regular meetings that combined progress reports, decision-making, assignment of responsibilities, and efforts to ensure alignment. This improved integration across roles, which was becoming more difficult as more people were added to the group.

Note that Mark was able to institute discipline with a minimum of rules, tightly specified procedures, and formal processes because he first worked to instill a more disciplined mindset. Only after that had proven its value and been accepted by key employees did he move to more formal structures and specialized roles and responsibilities. Note also that Mark managed changes with a sense of a “just enough” process. Although many changes were necessary, he didn’t try to implement them all at once. Instead, he sought to gain acceptance and buy-in from key employees throughout, instituting a new process only after people had gotten on board with earlier changes. In this sense, Mark has followed the advice of scholars to use “semi-structures”—partial, intermediate structures that lie between the extremes of very rigid and highly chaotic organizations—as a transitional step for accommodating the continuous change. Semi-structures prescribe some features of how the organization will operate (like responsibilities, projects, and timelines), but leave others up to the individuals who know what they’re doing.

Stage II: Adding Structure, Roles, and Responsibilities: As employees at M-tech became more receptive to a disciplined approach, Flavin moved into the second stage of change, seeking to revise the company’s structure and its members' roles and responsibilities. In the second stage of the change process, Mark sought to expand the organization and create a formal organizational structure with differentiated jobs, roles, and assignments. Up until this point, most employees were jacks of all trades with broad responsibilities and limited specialization. But now, they were given more specialized tasks. M-tech's expansion proceeded in two overlapping phases. The first expansion was horizontal. It involved hiring new people who would be responsible for separate functions, including business development. M-tech added 30 people in the last two years. These hires dramatically changed how M-tech operated and were viewed by Mark and the CEO as necessary for ramping up. The business needed more people to run the existing reactors, develop the next generation of manufacturing technology, build a composites testing laboratory, and seek out potential clients. The second was vertical, as it involved the creation of an additional level of hierarchy to the middle of the organization to help manage the increased workload. By first making the easier-to-accept move to horizontal differentiation, the later shift to vertical differentiation and a hierarchical organization led to far less resistance. With the vertical expansion, original members of the team were given new responsibilities and reports. The chief scientist was put in charge of the production of a new unit, and the chief engineer was put in charge of the development of all exiting product lines. As a result of the change, their roles shifted from doing to managing and delegating. They now had to be less hands-on and more focused on communicating, coordinating, and ensuring alignment, establishing healthy team dynamics, and getting the best performance from their direct reports. At the same time, they had to make sure that they communicated back and forth and kept everyone in the loop. Having worked in a tiny organization since the start, this could require some getting used to.

Here’s Linda Hill, an esteemed American ethnographer, describing how new managers have to change their own mindset concerning delegation:

“Delegation was one of the issues that new managers struggled a lot with. The basic problem they had is, first off, they didn't understand what their role was. They didn't really yet fully get what it meant to be the manager, as opposed to the doer, because so many of them thought they were the super-doer. And as the super-doer, let me help you. Let me come in and show you how to do something because I know how to do it really well, and you just have to copy me. Once they got over that, and they began to really understand what the difference of the role of management was, as compared to being the doer, then they really began to think about delegation. And part of it is that they saw it as all or nothing. Either you're delegating or you're not. And there are lots of choices you have when you delegate. And they didn't have good judgment about how to figure those things out. For instance, how do you make the judgment that someone is trustworthy to do X? How do I know that that person is ready to do this? And how often should I follow up? But I have to tell you, it's not infrequent that I hear a very experienced manager say to me, if only the people would go away, I could do my job. That is if they would go away, and I could just go in and do it myself, we could get it done more efficiently and more effectively. And then, of course, they all chuckle and say, but of course, the people, they're my job. So that reality is one that you really have to feel deeply. And one of the things that I did learn about new managers before they could get better at delegation, is it's not simply about acquiring competencies. It's about getting a whole new mindset. It's really a transformation of your own identity. You have to see yourself in a very different way. You actually also need to learn how to get satisfaction from work, in a very different way. How do I get satisfaction from work when other people are doing it? And when I'm basically creating the conditions that will enable them to do that? They have to actually learn that process. So one of the things that evolve, over time, is, one, is they begin to adopt the managerial mindset, as opposed to the superstar doer mindset. And so that shifts.”

Both horizontal and vertical differentiation were essential in M-tech’s push to scale up. But they came with costs. As M-tech adopted more differentiated roles and responsibilities, integration became more difficult. Most notably, knowledge was harder to come by. As the Chief Engineer noted, “When we made this organizational change, I began to lose my understanding of the complete process.” The Chief Scientist, added: “Now I spend a large part of my time communicating—making sure that I understand what the four or five people on my team are doing, integrating that into my head, and communicating that to other teams in the organization. Sometimes it feels as if I am not doing work, just synthesizing what others are doing. They are not alone in their frustration. As a business grows, there is a natural tradeoff between differentiation and integration. As employees are added and people begin to specialize, processes must be put in place to make sure key knowledge is disseminated and everyone is aligned. M-tech’s Monday team meetings and daily standups help, but as the company keeps growing, it may need even more formal means of communication.

Stage III: Institutionalizing Discipline and Process: As change began to take hold at M-tech, Mark’s final goal was to make it stick. The third stage, and the one in which M-tech currently finds itself, is one in which it's pursuing improved documentation, standardization, and repeatability. In a sense, Mark is looking to institutionalize the change in mindset the firm adopted in the first stage and the change in structures, systems, and processes they introduced in the second stage. There have been two main drivers of this push toward documentation and standardization. The first is the company's growing headcount. As the business expanded, it's needed to find a way to move from a strictly oral tradition of information transfer to a more explicit, codified one that can be articulated to a large number of people. To that end, the firm adopted simple tools such as spreadsheets, databases, and weekly reports to communicate progress and create a log of institutional and technical knowledge. The second driver has been market-based. As the company has scaled its operations and technology development, it has also scaled its business development. The company now has customers from numerous industries looking to sample its product and potentially sign deals. Consistency has become an especially key area of focus as the demand for test materials has increased and customers have demanded a product with the same properties and performance with limited variability. M-tech has needed to change its production process from an art to a science to meet customers' demands of consistent, unvarying output. Such consistency requires repeatability, standardization, and a move from ad hoc learning to a more disciplined form of experimentation.

Getting knowledge and then putting it in a way that other people can use it is a constant challenge at M-tech. There are two different systems. One is a technical system, it's for the technical leaders. And then there's the business development system. So both of those are very relevant to the notion of, how do you capture information for the organization to use? Most of our organization is technical. So let's say it's 20 to 25 people that are technical in nature. All these people do experiments, they learn from those. They then move on to the next experiment. Other people build off of those experiments, so finding a way to get those things captured. Unlike a place like McKinsey, which has a very standard language, a very standard approach to documenting things, we're creating our own. Everyone has their opinions and we do our best to get this together in some form of a Google Doc and database. Another piece to this is capturing the process information as you create it. Not just a qualitative summary from the experimenter, but out of the processes you had to build to gather the data outside of each of those process steps that are automated processes. Things like temperatures, pressures, chemical conditions, or whatever. And putting it in place so that people could have a history for what a recipe might be one day versus a recipe the next day, and we can then compare results. The other one is pretty easy. It captures all of our interactions with clients, and the team uses it on a weekly basis when we have our business development operations review. And we talk about what's the status of the most recent conversations. It allows us to make sure we know the timing of when we can repeat. We should repeat, we should follow up, et cetera. When we expect quotes when we expect a purchase order to go out if we've issued a purchase order, what's the status of it. So it really does capture that information reasonably well. It's not really a production management system, and we will eventually have to put something in place there.

Balancing Discipline and Discovery: The challenges faced by M-tech’s managers—and the company as a whole—have been difficult. As the company grows—as it continues to define roles and responsibilities, add more people, and build its business—frictions are only likely to intensify. At least some of the processes Flavin worked so hard to implement will become problems instead of solutions and the change process will have to start up again. Here’s Mark on the challenges that his company has faced and the growing pains they may face in the future: “So having people that work well together is just key. And I probably have spent more of my time on people issues, from founder issues to investor issues, to team issues, way more than I ever could have imagined. How do you get this really diverse group of people working together? And as you get larger, that gets more challenging. That's kind of one big area. And the other one is all about scaling and meeting supply and demand. Those two areas, for M-tech, I think cover 80% of the challenge that we've seen overgrowing. And the first one has resulted in people having to leave the company. It's resulted in people being put in positions of greater responsibility. It's resulted in really hard conversations at times. It's all about communication with the business development team and us, and that's how you have to work through that challenge, which is making sure our capabilities match what we're selling in the marketplace. And, that's constantly evolving so we have to have a communication approach to that that works well.”

What can M-tech do to handle these potential problems as it grows? The goal of growing up is not to reach your adult height. It’s to be an adult—a much more complicated affair. In the same way, the ultimate goal for a startup is not scaling, it’s building a thriving, profitable business. For M-tech, that requires a smart strategy for market penetration, with special attention to securing customers willing to adopt cutting-edge, often unproven technologies. As Mark mentioned, the company has to focus not only on making a solid product but also on reliably delivering it. So while M-tech scales its organization, it must also scale its business. And that process is just beginning. It certainly won’t be easy. But taking a process perspective will certainly help.

“I think M-tech has changed a lot culturally. When you go from, really four people when I started, to roughly 30 people now. We have people all over the globe. We have a CFO who lives in a different area. We have our BD person in the UK. We didn't have any of that stuff before. It was just four people in one room, and we have about ' 12 rooms now in an incubator facility. We have an open office space where most of our people are. So, you know, us versus everybody in one lab where all the work happens, and you had your desks and chairs and everything. So it's quite different. So I would guess the characteristic when we first started was very informal. Very science-based. Very focused on a few small things because they had to almost build everything themselves. When you now have multiple teams, multiple sub-organizations, you get more formality. All of a sudden you have an expense report policy. You have a harassment and discrimination policy. This policy A, policy B, plus C. All those things are being put in place now for good reason: to provide the right guidance for people, and the questions they have. To help us manage the 28, 29 people that are in the organization. All that creates formality. So, there's more formality now than there was then. I believe there's more structure around how people do work, and there are more requirements to make sure that work is documented. Some of the stuff we see in big companies they're there for a reason. As you get bigger, there are ways to manage a broader group, and those things will have to happen. Hopefully at the right level, and to the right extent so it doesn't take away from the entrepreneurial spirit that many of — many, if not all, of the scientists and engineers, have. That's what they love about the place. They love solving great problems. That hasn't changed, that won't change.” Mark reflected.

Large Corp| Inducing Change in a Mature Company

Even if a company manages the scaling-up process and the transition to formal management, its work managing change is far from done. One of the greatest challenges in a big successful company is maintaining the nimbleness of a small one. Remember how Jeff Bezos keeps rallying for a ‘Day One’ mentality? Big companies get set in their ways. So as time goes on and the environment—external and internal—changes, processes that were successfully become processes that are broken and need to be changed.

Here, we create our last fictitious company and its top manager on this page: Manu is the CEO of a global plastic surgery firm, M-center, overseeing over 50 in-patience facilities in three continents. The board appointed him the role amid a crisis - M-center had been in the red for thirty consecutive months. With one thousand technicians and five thousand support staff on its payroll, M-center was on the verge of being acquired out of financial necessity. The board had already identified the root causes: a systemic resistance to change, dysfunctional routines, leadership with no teeth or muscles, and above all, flawed and tangled legacy processes. Upon taking the job, Manu faced challenges in many domains — arbitrary decision making, years of flawed implementation, and non-existent change management. There were intense pressures from investors for a rapid turnaround. Manu needed to respond immediately to stop the bleeding and redesign how the organization functions. But after years of failed attempts at a turnaround, at this point, employees were already cynical about the top management’s ability to act. Would Manu succeed in altering the culture of the global operation and persuade employees that they needed to change? The diagnosis was far from encouraging.

Many companies face or have faced the same problem M-center faced—formalized processes that were outdated, ineffective, or harmful to the company’s progress. Here’s Kevin Sharer, the former chairman of Amgen, on his own experience with ineffective processes:

Where I became CEO of Amgen, I had been the president, the number-two person, and a member of the board of directors, for 7 and 1/2 years. The company was successful. But if you sort of pulled the covers back, we were in trouble. We didn't have a pipeline of new products that was sufficient. And we didn't have cooperation between research, product development, and marketing. So we had a bunch of silos. We also weren't very willing to take big risks to go outside the company to make the acquisitions that we needed to make. And we were actually fairly satisfied with how things were running. So the processes were ones that had been in place for about 15 years. People were fairly satisfied with them, but no one really asked the question, are these processes and their results going to get us through the next 10 years? So we actually had to make many, many changes to go from success in one era to what would be required in the next era.

How did Manu manage it?

Stage I: Setting the Stage: For new leaders attempting a turnaround, the early days are crucial. A fast start can mean the difference between success and failure. But a fast start does not mean forcing change down people’s throats. That’s almost guaranteed to fail in the long run. Instead, the objective is to set the stage for acceptance of new attitudes and behaviors by creating a receptive environment for change —that is, stage one of the change process we’ve been talking about. There are three interrelated elements to doing so, which Maplerivertree will call “Head, Heart, and Hands” after a successful change process used by Pepsi many years ago:

1. Heads. Employees understand the need for change at a cognitive level. They share an objective view of the causes of poor performance and they take responsibility for their own potential contributions to those problems.

2. Hearts. Employees feel a sense of emotional urgency to change. They are dedicated to the organization’s values, trust that its leaders share those values, and are committed to its survival and success.

3. Hands. Employees engage in new ways of working on the ground. They have had opportunities to practice the new behaviors, skills, and competencies expected of them.

To set the stage at M-center for the acceptance of dramatic changes soon to come, Manu felt he had to develop a bold message that gave people a compelling reason to do things differently.  Let’s hear from Manu himself how he got started:

I met with a search guy in November of 2001. I said to him then, unless I can be in the job by the first week of January, I'm not interested. And he said, why? And then I said, two things: one is if they can't make a decision in time for the first week of January, It indicates to me such governance problems that I don't want to be part of this organization. And two, The Garnter Report is coming out in mid to late January, and I need to be there before it comes out because I need to establish a foundation and a framework within which it will be received by the medical community that would be important for implementing whatever we do next. In mid-December, the board still hadn't decided what was going on. And so I asked for another meeting of the search committee. And I said, there are three things I need from you that are preconditions for my taking the job. First, I need the board to get out of the day-to-day operation of the firm. Part of the dysfunction of the organization is that people feel they can go around the management, complain to the board, and have decisions un-made by board members. And while I'm not going to take away your first amendment rights to talk to people, I'm going to insist that before you talk to anyone in this organization on the medical, or administrative staff, you call me first, and tell me who you're going to talk to and why. And I said to them, and I'm going to tell the medical administrative leadership the same thing, that if they get a call from a board member refer to me first. Second, I said, the board is too big, and I'd like a commitment from you that you're going to shrink it down to 15 or 18 members within the next six months. And third I said, unless I can be in the job by the first week of January, take me out of this process.

What do you make of Manu’s strategy of taking charge before coming on board? What leverage does he gain by negotiating terms and conditions before he has the job? As with many CEOs recruited to fix a difficult situation, Manu’s first task was to gain a mandate for the changes ahead. He realized that securing support from those at the top would be best accomplished before he took the job when his leverage was the greatest. In asking to be in the job by January, Manu communicated a sense of urgency, a bias towards decisiveness and action, and a willingness to take ownership of the situation—all important elements of successful turnarounds and ones that had been lacking at M-center. In pushing for a smaller, more effective, less meddlesome board, he signaled that the relationship between the CEO and the board was about to change dramatically. Finally, by insisting that he be on board before the report from the Gartner, a consulting firm that had been conducting an analysis of industry trends, Manu wanted to make sure that M-center employees saw the change plan as their own, not as something imposed from the outside. This would make buy-in much more likely. The board accepted these unusual terms.

Stage I (cont): Creating a Sense of Urgency: Even before his first day at work, Manu found out that things were worse than he had thought: the board had been under pressure to start seriously considering a sale, ‘behind this back.’ The dire financial situations pushed the sales price to be so low, that the equity stakes of most early stages employees would be worth less than a quarter than what was long speculated. While the pressure from the board to sell may have appeared to be a bad omen for Manu, he realized he could actually use the pressure to his advantage: Right after I learned of this crisis, it all of a sudden struck me that the way to motivate the key group of mid-level management and the majority of technicians in the company was to make sure they knew the threat as well. To get it out in the open. Because to whatever extent, previous efforts at saving the place had failed because of inertia, or recalcitrant, or pushback from the doctors because they felt that life would just go on forever, could now be eliminated by the fact that a sale was something they would not like - premature exit and overly underpriced equity stakes. In contemplating using the threat of the sale to his advantage, Manu was following the advice of change management scholars to create a sense of urgency or “burning platform.” The idea is to make the situation so serious that people have no choice but to change their behaviors. While such a tactic may seem manipulative, it can often be the only way to save a company or department that is mired in dysfunction and about to go under. In this case, the M-center employees, in particular, would be quite motivated to change, out of financial fears. The threat of sales also helped persuade other employees to accept the changes to come. Manu immediately booked a meeting with the board to communicate that he was to use the news to rally the change from within, and importantly he insisted that this sale must be pushed out by X number of months to give him the change he is bringing a chance to work the magic. In doing this, he was also putting in place an early coalition of supporters that would back his vision and recovery plan—or, at the very least, not actively resist it. He did not want to take the job and get immersed in the culture of decision-making and implementation that was already there and obviously didn’t work. So he made them guarantee that a vote for him would be a vote for a turnaround and new ways of working. He aimed to start out with support from the top and a minimum of resistance.

Stage I (cont): Creating a Receptive Environment for Change: Upon starting his job at the M-center, Manu continued to set the stage for the acceptance of the changes to come—this time with key managers and staff. Here’s what he said about his first day on the job:

On Monday, I arrived at the company, and I sent an email to everybody in the company announcing that I was there looking forward to meeting with them. And telling them the story of the potential sale of the company and that it had been foreclosed for a while because I was coming. That same day I had editorial board and newspaper reporter meetings with the two major papers in town, and I went through it again with them so that they would know all of this. And at that point, I also put out the fact that we probably have to lay off two to three hundred people as part of the plan. So I'm sitting there with the editorial board, and so on. And The Gartner report had recommended laying off as well, in particular, post-treatment support staff. And sitting there in the editorial board a reporter says to me, are you going to lay off nurses? Moment number two happened, and I said, no. Because at that moment, I realized that her question was code for, what's the quality of care going to be like in the face of all these layoffs? And I said, no we're not going to lay off any support staff, and we're going to be known — we've been known for the quality of care in this company for years, we're going to maintain that trademark in this marketplace because that's what people expect of us. Here’s the email that Manu sent to the staff on his first day:

I am honored and pleased to join M-center as President and Chief Executive Officer, and I look forward to getting to know many of you personally. This is a wonderful institution, representing the best in medical treatment: exemplary patient care, extraordinary research, and community engagement. However, the place is in serious trouble, and we are going to have to work very hard during the next few months if we are to secure our future as a non-profit academic medical center. // I promise to have an open administration, sharing with you as much information as possible to help you be part of solving the problems of the medical center. // Here is where things stand, as of today. Over the last several years, during one of the most tumultuous economies in American history, hundreds of millions of dollars of the M-center’s assets have gone toward paying the operating losses. This was money that ordinarily would have been used as the source of funds for new facilities and equipment, for expansion programs, and as a cushion for hard economic times. For whatever set of reasons, there was a failure to act to stop this financial outflow. We now face our last chance to reverse this problem. The Boards have a fiduciary responsibility to preserve the assets of this charitable organization to serve the public good. Because of the current state of our finances and because of its curious inability to make decisions during the past several years, some observers believe that the best way to preserve those assets is to sell the M-center to an existing bidder. This would ensure that the beds currently serving our clients would continue to do so. In addition, the proceeds of such a sale, after paying off all of our debt, would be placed in a fund to support other healthcare services and programs in the region. // The good news is that my appointment by the Boards means that any plans to sell the company are, for the time being, off the table. Frankly, I would not have taken the job unless I received that commitment — because I know we can succeed. My assignment over the next few months is to take steps that will convince the Boards that saving M-center is a wise decision. I will be offering a specific plan for doing that, and we will be held accountable to extremely rigorous milestones. If we fall behind — either because of a lack of will or a lack of ability to implement changes — the result will be clear. // What specific steps will we take? I will announce these over the coming days and weeks. As you know, The Gartner report is soon to submit their recommendations to us. Having seen earlier drafts of these recommendations, I can tell you that many of them are sensible and well thought out, and way overdue. I am less certain that other recommendations are relevant to us, but all of them will get a thorough review by the administrative and medical leadership of the company. In addition, all of you will get a chance to review them and send comments to me, as the plan will be posted on our website. // Our review will result in detailed implementation plans and milestones for completion. One clear recommendation will be a reduction of staff throughout all medical centers. While the exact number is not yet clear, several hundred positions will be eliminated to bring our level of staffing down to what can be supported by our clinical volumes. Layoffs are distasteful, uncomfortable, and scary, but we will carry them out as humanely as possible and treat people with respect and dignity. The many people who remain will be part of a more efficient medical center, and one that will be able to continue to carry out our important mission. // I have not taken this job to be part of a failure. I have taken it because I believe in you, your commitment, and your ability to succeed through this period of adversity. I am looking forward to showing the world what we can accomplish together. Sincerely. // 

Some people think that it’s best not to do something dramatic when first starting a job. Better to try to fit in first, gain social credibility, and then make changes later. Manu, however, decided to get right to work tilling the M-center soil. On his first day on the job, Manu spent almost all of his time and effort creating a receptive environment for change to take hold. He did it by developing three broad messages and communicating them far and wide. These messages were, one, the need for change was urgent. Two, the days ahead would be difficult. And three, they would do it all together. At the very start of his first day, he sent a blunt, direct, and detailed email message to employees introducing himself, describing the financial situation at the company in frank terms, and making it clear that change was essential to the firm’s survival. The overall message of the email was, this is our last chance. Manu that he had spoken at length to the board. And if together, they didn't succeed, the firm would be sold. The burning platform was now clear and far better understood because Manu explicitly targeted the head. He conveyed a sense of urgency using other formats as well in his meetings with key leaders and with the press, noting that his comments would be widely read by employees in the local newspapers. In all cases, his message was clear and consistent. We have to get started now. Manu’s second message aimed to set expectations for the changes soon to come. Rather than sugarcoat the problems, the new CEO made it clear that change would be difficult. Poor financial results required a reduction in staff. His email stated that several hundred physicians would be eliminated. Making this message clear upfront would be crucial for eliminating ambiguity and removing any thought that change was optional or would be easy. He would go on to use such straight talk with employees throughout his time at M-center. It's important to recognize, however, that while Manu was frank in his messaging, he was sensitive to the organization and its values, the heart. His promise not to cut nursing jobs showed people that he would remain true to the overall mission of the firm and its long-standing reputation as a place that delivered health in a nurturing, warm setting. His final message was that his administration would be radically different from the ones that came before. In his email, he conveyed that he would use direct communication and aim to elicit feedback whenever possible. His approach to solving problems would be direct and transparent: an open administration. And employees would be part of solving the problems of the medical center. Unlike in the past, employees would now have a role in shaping and approving the changes to come. Decisions would no longer come out of anywhere. To that end, Manu’s most important decision was his promise to make the Gartner report public, giving all employees the chance to read it and provide suggestions and comments, engaging their hands. This one served to dramatically increase buy-in for the later turnaround plan and gain him immediate credibility with staff.

During the remainder of his first week, Manu continued to spend his time in much the same way as he did on his first day: extending public outreach to newspapers and journals, meeting further with M-center leadership as well as the steering committee, and holding a small number of open forums for staff. These efforts all served to raise awareness for the need to change and communicate the sense of urgency far and wide. Repetition of this message would continue to be crucial in the months to come.

Stage II: Drafting and Framing the Turnaround Plan: At some point, of course, the leader has to offer a detailed plan for change. But to gain commitment from employees, drafting the plan must be a joint problem-solving exercise, benefiting from the input of others who are more knowledgeable on certain topics than the leader is. Here’s Kevin Sharer on how he benefited from feedback while drafting his plans for Amgen:

Well, the first thing that I did, I had interviews with the top 150 people in the company, one-on-one, for an hour. And they were face-to-face, and I asked them five questions. What would you like to keep? What would you like to change? What would you most like me to do? What are you afraid I might do? And do you have anything else you'd like to tell me? And I listened, and if they didn't have anything to say, I let silence happen. From that process of listening — was a very structured process. I took notes. I summarized the notes. I was able to say, to the senior leaders of the company, I listened to you. Here's what you said. And collectively, this is what we believe. So it gave me legitimacy, politically, to do a lot of things that might have been difficult, if I had just announced them myself, as good ideas I had this morning. That's probably the single most important thing I did, upon getting the job. And the second most important thing I did was recruit some new team members for some of the critical senior management functions.

Past initiatives at M-center, led by prior CEOs, had been met with enormous resistance, in part because employees had not felt a collective sense of ownership for them. Plans for change were thrust upon them with limited notice or active discussion. Manu therefore took concrete steps to create an environment in which employees could help craft and “own” the ultimate recovery plan. Several studies have shown that getting people to support a course of action by, for example, signing their name in writing, can dramatically increase their commitment. As the psychologist Leonard Festinger showed, people avoid “cognitive dissonance”—the feeling that we are acting inconsistently with how we’ve acted in the past. Thus, one of Manu’s most important steps was to get as many people in the company as possible to literally “sign off” on the turnaround plan to which they had contributed. He believed that would help them buy into taking new actions and would also signal a commitment to the board.

Manu’s receptiveness to lower-level input and his preference for broad-based commitment before moving forward would be staples of the turnaround process at M-center. After the plan had been introduced, Manu made sure that the committees tasked with rolling it out did not include his top-level chiefs. Instead, he chose a mix of slightly lower-level medical and administrative personnel. He did this to broaden the base of participation and thereby empower employees to speak up, while also keeping active resisters off the task forces.  Once a plan has been formulated with input from various stakeholders, there will still be quite a few employees who either don’t understand the plan, don’t understand what they are supposed to do differently, or have misinterpreted the plan. That’s why skilled leaders often use “frames” to help provide context, make complex plans more digestible, and make sure employees  “keep their eyes on the prize.”

Here’s Manu describing how he used a short memo to frame his several-hundred-page turnaround plan to help employees understand its purpose and expected impact: That introduction is a key document. It serves many purposes and many audiences. If you read through it, it basically has three parts. One is a statement of principles, and vision for the organization. What's the first thing that matters? Well, the first thing that matters is that we retain, and maintain our reputation as a warm, caring environment within which patients and their families will be treated. That's key. That's our market niche in the plastic surgery market. We have really good doctors, but so does every other companies. Sure, we're an established international company, but there are many others. So how do we differentiate ourselves? Part two was a statement as to what our plan was going to be; how it related to the Gartner report, and how it did not. And in essence, we said, we're adopting a large part of what Gartner has proposed. There are modifications that we're going to pursue, but basically that their analysis was good. So it was a way for me to validate with the internal audience that the Gartner analysis was real, was objectively sound, was a path that we should and could follow. And then the third, and the final part of the introduction, which is I think critically important both for the internal and external audiences again, was an analysis of why the previous plans had failed and why the current one would be more likely to succeed? In short, the first part served to mollify critics and reduce the fears of doctors and nurses. The second part helped employees know what to expect. The third part offered a direct interpretation of what had gone wrong in the past—namely, the imposition of top-down directives without employee input or buy-in—and why this new plan was far more likely to succeed. Thus he framed his plan as something they needed, something that was on their side, and something that would work.

Stage II (cont): Managing the Plan's Execution: Throughout a turnaround, leaders must not only ensure that employees understand the plan, but also manage employees’ emotions. Turnarounds can be depressing, painful events, especially if there is downsizing and restructuring.  Manu worked hard to ensure acceptance for his turnaround not only at an intellectual level but also at an emotional one. In particular, he managed the emotional side of receptivity through constant communication with staff and by presenting good and bad news in just the right proportions. For example, in early February, M-center had just laid off over one hundred employees and people were hurting. Manu felt it was imperative to send an email letting people know he was there for them:

Dear Colleagues, I have now been on the job for three weeks, and it has been an extraordinary experience. I am overwhelmed at the degree to which you have welcomed me into this community, and I really appreciate your good wishes, kind comments, and helpful suggestions. // This week is a sad one in many respects. We have carried out a rather large layoff of people throughout the medical center. This is obviously difficult for those people and their families, and I hope we will continue to consider these folks to be members of our community and offer them support and every assistance as they proceed on to other jobs and opportunities. It is also hard for those of us remaining, as we notice that offices and floors are somewhat emptier next week. In addition to the disruption in personal relationships, there will be increased work and logistical rearrangements for all of us. I know I can count on you, though, to be cooperative and helpful with one another as we adjust to those changes. Here's what is happening over the next week. We will shortly be giving our plan in response to the Gartner report to our Board. The plan we are submitting to the board is a result of a concerted effort of the medical and administrative staff over the past several weeks. It represents a level of teamwork and commitment that is unique in the history of this institution. It is designed to provide short-term financial relief, leading to long-term financial health. However, as I will make clear to the Board and outside audiences, a financial plan for a company like M-center must represent more than a simple reduction in expenses: The trademark of this company is its reputation for a warm, caring environment within which patients and their families receive the finest medical care. Our record on patient satisfaction is superb. If M-center fails to maintain this mission, it will fail. Accordingly, where a decision to implement an activity with potential short-term financial gain conflicts with patient care, we have chosen to err on the side of maintaining patient care. Such choices do not undermine the financial recovery plan: they enhance it. // Once the Executive Committee of the Board reviews and approves the plan later next week, it will be posted on our website for all to see. I want you to have a chance to read it and understand the broad view it represents, as well as particular parts that might affect your department or division. The plan becomes our agenda for the next two and a half years. Having now been through its preparation, I am more optimistic than ever about our future. As I have said to many of you, our target is not just survival: It is to thrive and set an example for what a unique academic medical center like ours means for this region. Each and every person here has a role to play in that dream. Thank you again for your good wishes and assistance.//

Manu wanted to give people time to grieve and recover from the layoff, to make them feel cared for and supported, but still ensure that changes proceeded as planned. He would continue to manage mood through alternating doses of realism and hope. In April, for example, two months into the restructuring process, Manu sent out a “Frequently Asked Questions” email, responding to employees’ confusion and concerns with the process. He was positive about progress so far but tempered it with a dose of reality—the need to control costs and to skip the merit pay increases that year. A month later, when things were beginning to improve, Manu sent out another email, setting the organizational thermostat a little higher towards hope:

All; Just a short note to keep you up to date. Today, we presented to the Finance Committee of our Board of Directors the financial results for the first six months of the fiscal year, which ended March 31. A few key facts: As a result of controlling expenditures and achieving higher than expected surgical volumes during January, February, and March, we ended the six months roughly $X million ahead of budget. We were cash-flow positive for the last quarter, the first time in six years. This means that we don't have to draw down on our "bank account," ea. bonus, employee programs, to help pay for operating expenses. And lastly, we actually booked a small profit in March. This is all very good news, and you should take credit for what you have accomplished. As I told the Board, though, we have made it from Hopkinton to Ashland, but there are another 20 miles in the Marathon. Even if these results hold, we have already lost $X million this year (which is more than we lost last year at this point) and will still have a loss of over $X million by the end of this fiscal year. One of the key differences this year, however, is that we have demonstrated success with the procedures put in place to closely manage our expenses, such as reviewing each and every request to fill a vacant position, tightening our purchasing policies, and improving our billing and collections. Our recovery plan depends on further increases in clinical volumes over the next two years, while maintaining these controls over our expenditures. // That being said, it's great to get a little boost, knowing our efforts are showing up on the bottom line. I am most proud, though, of our continued commitment to the highest quality care, and for that, I thank you most of all. I'd like to invite you to attend either of the Open Forums I am having… //

Stage III: Maintaining Momentum and Preventing Backsliding: Now that things were beginning to improve, Manu’s final task was to refreeze the organization—to reinforce the good habits that the organization was adopting and keep people from backsliding into dysfunctional routines. This is a difficult balancing act. He had to keep assuring employees that their sacrifices were producing some good results. Otherwise, at some point, they would lose faith in the change effort and find it easier to go back to doing things the old way. But he also had to keep them reasonably scared. They weren’t out of the woods yet—the gains could easily be lost—so declaring victory and taking it easy was not an option. In leading a change initiative, focusing on routines is very important. Breaking habits is hard for most people and most organizations. The way to instill a new habit is with a routine that, over time, makes the new behavior second nature and makes it harder to backslide.

Some of this requires the breaking of bad routines. Certain types of behaviors are particularly corrosive because they impede the capacity for change and contribute to obscuring or causing problems. Examples include:

• This too shall pass. Employees in many organizations have developed the habit of responding to crisis warnings from their leadership with an attitude of “this too shall pass.” (In other words, responding by not responding.) The habit seems reasonable because the leadership has a history of declaring crises and then doing little or nothing about them, as had long been the case at the M-center. And yet it was not a healthy response. It almost killed the organization.

• Ready, aim, aim, aim. There are proposals, reports, and fine-tuning, but never a final decision. Also known as “analysis paralysis,” this is common in cultures where a mistake can cost you your job.

• Dog-and-pony shows. Too much emphasis on process and procedures, not enough on content. How you present a proposal and how much buy-in you develop becomes more important than what you actually do. This is also known as “death by PowerPoint.”

• The grass is always greener. The organization ignores problems with its current products or services and focuses on new offerings. Managers work hard to expand product lines in the name of “innovation” and “diversification,” but are merely avoiding tough problems.

• A culture of yes. People seem to be cooperative and productive in meetings, but put up resistance—often, hidden resistance—afterwards. Politics trumps substance, meetings become empty rituals, and meddling in decisions becomes the norm. Also known as “after the meeting ends, the debate begins.”

• A culture of no. The organization is dominated by cynics and skeptics. There is always a good reason not to do something. Found in cultures that highly value criticism and have complex approval-ridden decision-making processes, such that anyone can say no, but no one can definitively say yes.

Such dysfunctional routines can be changed, typically when leaders provide opportunities for employees to practice the desired behaviors repeatedly, while personally modeling those behaviors themselves. Tone at the top is everything about how leaders behave. Starts with a CEO, but also applies to other senior leaders. Simple questions — do you behave in ways that are consistent with what you say you expect of others? That's a problem for a lot of people. They don't. Two, is your tone at the top one where you create an environment where it's safe to talk about things that might be uncomfortable? Do you create an environment of curiosity, of honesty, of don't shoot the messenger? Is the tone at the top one of construction or criticism? Do they see you as helpful or as a judge that you should be afraid of? How do you treat other people? Do you treat them with respect or not?

Coaching and support, however, are equally crucial. Change leaders need not only to encourage new ways of thinking (heads) but also actually get people to change their behavior (hands). A leader can stress values, such as openness and transparency, and model behaviors in line with those values. But values take hold in others only when leaders teach people the new behaviors, guide people in the behavior change, and signal a dislike for dysfunctional routines by pointing them out and criticizing them—publicly and repeatedly, if necessary. For Manu, teaching new behaviors to the chiefs of medicine, surgery, orthopedics, and other key functions was a special challenge, particularly because he was not a surgeon. They all led largely self-contained departments with their own faculty, staff, and resources. They were not accustomed to taking orders and had limited business and management experience.

In dealing with their resistance to change, Manu chose an approach that blended discipline with public reinforcement of good behavior (and punishment for bad behavior). For example, he developed a set of “meeting rules,” including such chestnuts as “state your objections during the meeting” and “disagree without being disagreeable.” He then led a meeting with the chiefs that followed exactly these guidelines and practices and praised anyone who observed these standards of good behavior.

Stage III (cont): Taking Stock of Progress: While behavior and cultural change are the main drivers of organizational change, performance, of course, is the ultimate measure of a successful turnaround. The culture had also changed dramatically. Decision-making was now swifter and more effective, although there had been little change in the company’s senior staff or medical leadership. Instead, people had learned new behaviors. Morale, not surprisingly, was also up. Here is a recap based on the three main steps of change management based on M-center’s case:

• Unfreeze. For the first month or so, Manu’s goal was to set the stage for employees to accept change. He aimed both to create a sense of urgency—the company was in big trouble—and to show some progress in solving those problems. His immediate objective was to “stop the bleeding.” Only then could he initiate more changes. He also worked on direction setting and signaling, laying the foundation for the future. That foundation was both tactical (a detailed plan of action for making the M-center profitable again) and cultural (a new set of attitudes, behaviors, and rules of interaction).

• Change. Manu’s goal was to build momentum for change and sustain it. In particular, he focused on removing the organizational roadblocks and dysfunctional routines that had prevented change in the past and on empowering employees with the skills needed to implement his change plan. He was convinced that most employees were not actively opposed to new ways of doing things—they just didn’t know what to do. A large, unwieldy board of directors, senior managers who did not model the desired leadership behaviors, and a lack of management skills amongst doctors and chiefs didn’t help. He worked hard to reduce or eliminate these barriers to change. He slimmed down the board, fired a controlling COO and continued to work with the doctors to improve their decision-making and problem-solving skills. He reinforced good behaviors and publicly disciplined bad ones but was always in service of teaching people the right thing to do.

• Refreeze: The turnaround was underway, new behaviors were taking hold, and employees were beginning to look to the future. Manu’s goal during this phase was to institutionalize the new ways and make sure that progress did not falter. He continued to work with his top-level team on new behaviors and to manage by walking around, wanting to see new behaviors and progress with his own eyes. During this time, Manu and the organization also began to look toward the future. Most notably, he began to address the concerns of key stakeholders—in particular, nurses and academic researchers—whose needs had not yet been fully addressed. The agenda over the coming months would thus revolve around capacity planning, nursing recruitment and retention, and research priorities—all crucial for the firm’s strategic priorities. More change was to come, but the first wave had proceeded spectacularly well.

Why had Manu succeeded where others had failed? There are many reasons, but here is Maplerivertree’s conclusion: He instilled more urgency in the organization. He worked with employees to craft the change plan and get their buy-in. He focused on showing people how to engage in new behaviors, rather than just telling them what to do.  But most importantly, he understood that he had to prepare the cultural soil before attempting to plant the seeds of change. He created a receptive environment for change, making it much more likely that employees would move from resistance to action.

That’s a Wrap for Now

There are four broad topics about change that Maplerivertree would like any reader to take away from this page. The first will come as no surprise — the idea that change is a process, one that occurs time and time again throughout the lifecycle of a business. Change comes in many varieties, but the two basic forms are incremental and transformational. The former occurs continuously, from the creation of a company to its disappearance or expiration. The driver is growth. As companies get larger, managers must constantly make refinements to deal with increasingly complex internal environments. Transformational change occurs less frequently but has the potential for much more upheaval. Frequently the problem is complacency — an unwillingness to alter longstanding behaviors, strategies, or modes of working even though performance is poor. But whether the changes are incremental or transformational, the same three stages apply. Using a process lens helps you determine where you are in this unfolding process, and what tasks and challenges remain.

The second topic is the importance of creating a receptive environment for change. In Maplerivertree’s experience, most managers, when attempting to introduce change in their organizations, don't do enough work upfront. They jump into action, crafting visions and plans without first getting people on board. And then they wonder why their efforts failed to take hold. Other managers start off well but don't follow through. They declare victory too soon, failing to recognize that a receptive environment must be continuously recreated and reinforced, otherwise old traditions will creep back in, and the organization will revert to its old state. Managers who understand the importance of creating a receptive environment for change do things differently. They work hard to persuade employees why change is necessary and pursue engagement in three ways — head, heart, and hands.

The third topic is the importance of awareness and rapid response — the need for the change agent to be sensitive to warning signals that suggest change is becoming necessary. As your business or organization grows, look for key red flags — unclear decision rights and accountabilities, widely varying performance standards across departments, or across geographies, ad hoc overloaded systems and processes. These should be a signal to you that you've hit, or are slowly approaching the Bermuda Triangle. At the same time, be on the lookout for dysfunctional routines that are likely to impede your efforts at change. 

Remember that while changes and transitions can be difficult, experience suggests that we only need to focus on a handful of levers to get things moving in the right direction. These leavers are best illustrated by the change formula, which is a handy tool to remember, even if the math is fuzzy. Your or your top management teams’ job is to increase the level of dissatisfaction with the status quo, articulate and communicate a picture of the desired future, craft a process for getting your organization from point A to point B, and lower the perceived cost of change to employees of moving forward. These are big jobs, but keeping them squarely in your sights will sharply improve the odds of success.

Today, few managers have the ability both to execute well and also to lead their organizations into an uncertain future. It’s our hope that this page provides some level of insight into how Maplerivertree looks at change management. The principles and the skeleton of the processes provided here are the backbones, although every organization's situation is different and required bespoke support, of Maplerivertree’s approach. As always, Maplerivertree is on standby should you or your organization need help. ■