Transformational Leadership Transformational Leadership Professor Debbie Nightingale Professor Debbie Nightingale November 13, 2002 November 13, 2002 2 Management Vs. Leadership Management Vs. Leadership ? Planning & budgeting ? Organizing & staffing ? Controlling & problem solving ? Establishing direction ? Aligning people ? Motivating & inspiring ManagementManagement LeadershipLeadership ? Produces a degree of predictability & order ? Has potential to consistently produce short term results expected by various stakeholders (e.g., for customers always being on time; for stockholders, being on budget) ? Produces change, often to a dramatic degree ? Has potential to produce extremely useful change (e.g., new products that customers want, new approaches to labor relations that help make a firm more competitive Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 1 2 3 4 5 6 7 8 8 Steps to Transforming Your Organization 8 Steps to Transforming Your Organization Establishing a Sense of Urgencyy Source: John P. Kotter, Leading Change, Harvard Business School Press Forming a Powerful Guiding CoalitionForming a Powerful Guiding Coalition Creating a VisionCreating a Vision Communicating the VisionCommunicating the Vision Empowering Others to Act on the VisionEmpowering Others to Act on the Vision Planning for and Creating Short-Term WinsTerm Wins Consolidating Improvements and Producing Still More Changeovements and Producing Still More Change Institutionalizing New ApproachesInstitutionalizing New Approaches Nightingale ? 2002 Massachusetts Institute of Technology 3 ? Examine market and competitive realities ? Identify and discuss crises, potential crises, or major opportunities ? Create the “burning platform” ? 50% of companies fail at this stage ? Underestimate difficulty in driving people out of comfort zone ? Lack of patience - “get on with it” ? Complacency Establishing a Sense of Urgency 1 1 Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 4 5 Sources of Complacency Sources of Complacency Complacency Complacency Too many visible resources Low overall performance standards Organizational structures that focus employees on narrow functional goals Internal measurement systems that focus on the wrong performance indexes A lack of sufficient performance feedback from external sources A kill-the-messenger-of- bad-news, low-candor, low-confrontation culture Human nature, with its capacity for denial, especially if people are already busy or stressed The absence of a major and visible crisis Too much happy talk from senior management Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 6 Ways to Raise the Urgency Level Ways to Raise the Urgency Level Source: John P. Kotter, Leading Change, Harvard Business School Press ? Create a crisis by allowing a financial loss, exposing managers to major weaknesses vis-à-vis competitors, or allowing error to blow up instead of being corrected at the last minute ? Eliminate obvious examples of excess (e.g., company-owned country club facilities, a large air force, gourmet executive dining rooms ? Set revenue, income, productivity, customer satisfaction, and cycle-time targets so high that they can’t be reached by conducting business as usual ? Stop measuring subunit performance based only on narrow functional goals. more people be held accountable for broader measures of business performance. Nightingale ? 2002 Massachusetts Institute of Technology Insist that 7 Ways to Raise the Urgency Level (cont.) (cont.) Source: John P. Kotter, Leading Change, Harvard Business School Press ? Send more data about customer satisfaction & financial performance to more employees, especially information that demonstrates weaknesses vis-à-vis the competition. ? Insist that people talk regularly to unsatisfied customers, unhappy suppliers, and disgruntled shareholders. ? Use consultants & other means to force more relevant data and honest discussion into management meetings. ? Put more honest discussions of the firm’s problems in company newspapers & senior management speeches. management “happy talk.” ? Bombard people with information on future opportunities, on the wonderful rewards for capitalizing on those opportunities & on the organization’s current inability to pursue those opportunities. Nightingale ? 2002 Massachusetts Institute of Technology Stop senior 2 2 Source: John P. Kotter, Leading Change, Harvard Business School Press ? Assemble a group with enough power to lead the change effort ? Encourage the group to work together as a team ? Grow team to 20 to 50 range in large companies ? Failures due to: ?No history of teamwork at top ?Undervalue importance ?Select wrong leadership (staff vs. line) Forming a Powerful Guiding Coalition Forming a Powerful Guiding Coalition Nightingale ? 2002 Massachusetts Institute of Technology 8 9 Building a Coalition That Can Make Building a Coalition That Can Make Change Happen Change Happen Source: John P. Kotter, Leading Change, Harvard Business School Press ? With strong position power, broad expertise & high credibility ? With leadership & management skills, especially the former Find the Right People Find the Right People ? Through carefully planned off-site events ? With lots of talk and joint activities Create Trust Create Trust ? Sensible to the head ? Appealing to the heart Develop a Common Goal Develop a Common Goal Nightingale ? 2002 Massachusetts Institute of Technology 3 3 Source: John P. Kotter, Leading Change, Harvard Business School Press ? Create a vision to help direct the change effort ? Develop strategies for achieving that vision ? A vision says something that clarifies the direction in which and organization needs to move ? The vision “magnetically” pulls the organization Creating a Vision Creating a Vision “The soul never thinks without a picture.” -Aristotle Nightingale ? 2002 Massachusetts Institute of Technology 10 11 Characteristics of an Effective Vision Characteristics of an Effective Vision Source: John P. Kotter, Leading Change, Harvard Business School Press ? Imaginable - conveys a picture of what the future will look like ? Desirable - appeals to the long-term interests of employees, customers, stockholders, and others who have a stake in the enterprise ? Feasible - comprises realistic, attainable goals ? Focused - is clear enough to provide guidance in decision making ? Flexible - is general enough to allow individual initiative and alternative responses in light of changing conditions ? Communicable - is easy to communicate; can be successfully explained within five minutes Nightingale ? 2002 Massachusetts Institute of Technology 12 Features of a Vision Features of a Vision ? It will be cohesive, providing a common thread through business mission and subsequent strategies ? It will be specific enough to provide direction yet general enough to remain relevant despite fluctuations in the short term ? It will be inspiring, aiming at “excellence” as defined by the organization ? It will describe the core values strongly held by the organization ? It will provide a yardstick by which to judge the future performance of the organization Source: Stephen Connack (1991) Nightingale ? 2002 Massachusetts Institute of Technology You must translate the vision from words to pictures with a vivid description of what it will be like to achieve your goal. Source: James C. Collins, Building Your Company’s Vision, Harvard Business Review, September - October 1996 Nightingale ? 2002 Massachusetts Institute of Technology 13 14 Features of a Vision Features of a Vision ? Is a powerful way to stimulate progress ? Is clear and compelling ? serves as a unifying focal point of effort ? Acts as a catalyst for team spirit ? Has a clear finish line ? Should not be a sure bet - it will have perhaps only a 50% to 70% probability of success - but the organization must believe that it can reach the goal anyway Source: Stephen Connack (1991) Envisioned Future should contain Big, Hairy, Audacious Goals Nightingale ? 2002 Massachusetts Institute of Technology What’s needed is such a big commitment that when people see what the goal will take, there’s an almost audible gulp. Source: James C. Collins, Building Your Company’s Vision, Harvard Business Review, September - October 1996 Nightingale ? 2002 Massachusetts Institute of Technology 15 16 Creating an Effective Vision Creating an Effective Vision Source: John P. Kotter, Leading Change, Harvard Business School Press First Draft ? The process often starts with an initial statement from a single individual, reflecting both his or her dreams and real marketplace needs. Role of the guiding coalition ? The first draft is always modeled over time by the guiding coalition or an even larger group of people. Importance of teamwork ? The group process never works well without a minimum of effective teamwork. Role of the head and the heart ? Both analytical thinking and a lot of dreaming are essential throughout the activity. Nightingale ? 2002 Massachusetts Institute of Technology 17 Creating an Effective Vision (cont.) (cont.) Source: John P. Kotter, Leading Change, Harvard Business School Press Messiness of the process ? Vision creation is usually a process of two steps forward and one back, movement to the left and then to the right. Time frame ? Vision is never created in a single meeting. sometimes years. End product ? The process results in a direction for the future that is desirable, feasible, focused, flexible, and is conveyable in five minutes or less. Nightingale ? 2002 Massachusetts Institute of Technology The activity takes months, 18 The Relationship of Vision, Strategies, The Relationship of Vision, Strategies, Plans and Budgets Plans and Budgets Source: John P. Kotter, Leading Change, Harvard Business School Press Vision Strategies Plans Budgets A sensible and appealing picture of the future A logic for how the vision can be achieved Specific steps and timetables to implement the strategies Plans converted into financial projections and goals ManagementManagement CreatesCreates LeadershipLeadership CreatesCreates Nightingale ? 2002 Massachusetts Institute of Technology 4 4 ? Simplicity ? Communicating the Vision Communicating the Vision Key Elements in Effective Communication of Vision: Key Elements in Effective Communication of Vision: Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 19 Metaphor, analogy, and example ? Multiple forms ? Repetition ? Leadership by example ? Explanation of seeming inconsistencies ? Give-and-take 5 5 Source: John P. Kotter, Leading Change, Harvard Business School Press ? Get rid of obstacles to change ? Change systems or structures that seriously undermine the vision ? Encoure risk taking and nontraditional ideas, activities, and actions ? Make tough decisions in removing people who do not ascribe to vision Empowering Others to Act on the Vision Empowering Others to Act on the Vision Nightingale ? 2002 Massachusetts Institute of Technology 20 21 Barriers to Empowerment Barriers to Empowerment Employees understand the vision & want to make it a reality, but are boxed in.. Formal structures make it difficult to act. A lack of needed skills undermines action. Personnel & information systems make it difficult to act. Bosses discourage actions aimed at implementing the new vision. Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 22 Empowering People to Effect Change Empowering People to Effect Change ? Communicate a sensible vision to employees ? Make structures compatible with the vision ? Provide the training employees need ? Align information & personnel systems to the vision ? Confront supervisors who undercut needed change Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 6 6 Source: John P. Kotter, Leading Change, Harvard Business School Press ? Create and plan for visible performance improvements ? Recognize and reward employees involved in the improvements Planning for & Creating Short Term Wins Planning for & Creating Short Term Wins Nightingale ? 2002 Massachusetts Institute of Technology 23 24 The Role of Short-Term Wins Term Wins Source: John P. Kotter, Leading Change, Harvard Business School Press ? Provide evidence that sacrifices are worth it: Wins greatly help justify the short-term costs involved. ? Reward change agents with a pat on the back: After a lot of hard work, positive feedback builds morale and motivation ? Help fine-tune vision and strategies: Short-term wins give the guiding coalition concrete data on the viability of their ideas. ? Undermine cynics and self-serving resisters: Clear improvements in performance make it difficult for people to block needed change. ? Keep bosses on board: Provides those higher in the hierarchy with evidence that transformation is on track. ? Build momentum: Turns neutrals into supporters, reluctant supporters into active helpers, etc. Nightingale ? 2002 Massachusetts Institute of Technology 25 The Relationship of Leadership, Management, Short Term Results & Successful Transformation Leadership Leadership ManagementManagement Transformation efforts can be successful for a while, but often fail after short term results become erratic. Short le, especially through cost cutting or mergers & acquisitions. transformation programs have trouble getting started & major, long term change is rarely achieved. Transformation efforts go nowhere. All highly successful transformation efforts combine good leadership with good management. ++++ ++ +++00 Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology term results are possib But real 7 7 ? Use increased credibility to change systems, structures & policies that don’t fit the vision Consolidating Improvements & Producing Still More Change & Producing Still More Change Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 26 ? Hire, promote & develop employees who can implement the vision ? Reinvigorate the process with new projects, themes & change agents ? Confront even bigger issues and problems 27 Increasing Amounts of Change Required for Successful Transformation Successful Transformation 1 2 3 4 5 6 7 8 9 10 1 3 6 YearsYears Degree of Change Degree of Change Nightingale ? 2002 Massachusetts Institute of Technology 2 5 4 7 28 What Stage 7 Looks Like in a Successful, What Stage 7 Looks Like in a Successful, Major Change Effort Major Change Effort ? More change, not less ? More help ? Leadership from senior management ? Project management and leadership from below ? Reduction of unnecessary interdependencies Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 8 8 Source: John P. Kotter, Leading Change, Harvard Business School Press ? Articulate the connections between the new behaviors & corporate success ? Develop the means to ensure leadership development & succession ? Anchor change in a new culture Institutionalizing New Approaches Institutionalizing New Approaches Nightingale ? 2002 Massachusetts Institute of Technology 29 30 Anchoring Change in a Culture Anchoring Change in a Culture ? Comes last, not first ? Depends on results ? Requires a lot of talk ? May involve turnover ? Makes decisions on succession crucial Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 31 20 thth and 21 st Century Organization Compared Century Organization Compared ? Bureaucratic ? Multi-leveled ? Organized with the expectation that senior management will manage ? Characterized by policies and procedures that create many complicated internal interdependencies ? Non-bureaucratic, fewer rules & employees ? Limited to fewer levels ? Organized with the expectation that management will lead, lower-level employees will manage ? Characterized by policies and procedures that produce the minimal internal interdependence needed to serve customers 20 thth Century Century 21 stst Century Century Structure Structure Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology 32 20 thth and 21 st Century Organization Compared Century Organization Compared ? Depend on few performance information systems ? Depend on many performance information systems, providing data on customers especially 20 thth Century Century 21 stst Century Century Systems Systems Source: John P. Kotter, Leading Change, Harvard Business School Press ? Distribute performance data widely ? Offer management training and support systems to many people ? Distribute performance data to executives only ? Offer management training & support systems to senior people only Nightingale ? 2002 Massachusetts Institute of Technology 33 20 thth and 21 st Century Organization Compared Century Organization Compared ? Inwardly focused ? Centralized ? Slow to make decisions ? Political ? Risk averse ? Externally oriented ? Empowering ? Quick to make decisions ? Open and candid ? More risk tolerant 20 thth Century Century 21 stst Century Century Culture Culture Source: John P. Kotter, Leading Change, Harvard Business School Press Nightingale ? 2002 Massachusetts Institute of Technology