How to lead business change

In times of the increasing challenges for growth, competitiveness, and innovation, business change is constant.  Business change challenges include client and market shifts, legal and regulatory requirements, strategic re-direction, and cultural transformation requires firms to effectively and efficiently manage change on multiple fronts.  To reach this level of change capability, firms need to take a joined-up, balanced and customised approach to change management.  There is no ‘one size fits all’ solution.   Despite increased recognition of business change as a critical competency, the challenge for many firms is that they don’t have a good track record in managing change and making it stick.   Sadly, there are many reports on the high failure rate of business change initiatives.  

Typically, when firms embark on change initiatives, the leadership (change leaders) tend to focus on the strategic, financial, structural issues, tactical plans and process.  However, to succeed, change leaders also need to understand and address the people aspects of change management:  guiding their firm toward the new vision, transforming their culture and values, behaviours, encouraging new learning and development, and communicating to achieve the desired results.   So often, change leaders are frustrated by the amount of time it takes their people to adopt new ways of doing things, structures, systems and processes, when in their view the need for faster change is obvious.   A key source of people’s resistance stems from uncertainty and fear - often due to lack of clarity by the leadership in making the case for change.  In professional services firms, people are trained and expected to think and behave rationally, and while they may understand the need for change at a rational level, both their hearts and minds need to be engaged so that firms can embrace new ways of thinking and acting, not just going through the motions. 

Although there is no 'one size fits all' solution for successfully leading a firm through change, there are a range of practices, tools and techniques that change leaders, can adapt and apply to the specific culture and business needs of their firm.   In adopting a systematic, comprehensive framework, change leaders will better understand what to expect, how to manage and engage the whole firm in the change process.  Business change initiatives should address, integrate and reinforce both the structural and people dimensions of change to ensure that the change sticks.

If you want people to change you must provide clear direction - start with a change vision and make a compelling case for change. 

In our experience, where change leaders are vague and unclear in making the case for change, those affected will inevitably begin to question, doubt, and sometimes, challenge whether change is really necessary.  People also need to understand why change is necessary, before they can decide whether to commit to supporting and making the change happens.

Three steps that should be followed in making the case for change are: 

  • first, why is the firm doing this - what is broken?  There should be a compelling reason for change; 

  • second, what will be the consequences if the firm doesn’t change –?  In responding to these questions, the change leaders need to demonstrate their belief that the firm has a viable future and the leadership to deliver this; and  

  • third, provide a roadmap to guide behaviour and decision making.   Change leaders will also need to adapt and tailor this message for their different internal stakeholders, by describing the proposed change in terms of what it means for them, as well as for others involved.  

A shared vision reduces stakeholder confusion about how things will change.  Well managed, articulating the case for change and the creation of a written vision statement also provides invaluable opportunities to build and develop alignment within the change leadership team.

Develop a business change strategy

Business change initiatives should be strongly aligned with the goals for advancing the firm’s strategic goals in the long term, and sustainable.  After creating a vision, internal stakeholders will need to understand the following:

  • how their roles and work will be affected; 

  • what new skills and abilities will be required;

  • what resources will be available them;

  • what is expected of them during and after the change initiative;

  • how they will be measured; and 

  • what success or failure will mean for them and those around them?  

People will react to what they see and hear around them, and need to be involved in making the change.   Change leaders may not know all the answers but, should be as honest and open as possible.  The leadership should indicate and reinforce their approval where appropriate, by rewarding both individual and team behaviours and contributions that advance the change initiative.   Any reward and recognition of behaviours and contributions should be consistent with, and support the new values and culture.  At the same time, the leadership team should deal with people who are persistent in their opposition to change - difficult as it may be, it will demonstrate and reinforce the firm’s commitment.

Create ownership, be champions of change – don’t just tell them, show them by doing 

For successful change to occur, change leaders must start behaving differently and became roles models.  People need to know that their leaders are personally committed to the success of the change.    As change is inherently unsettling for stakeholders at all levels of a firm, they will look to the MP/CEO and change leaders for direction, guidance, reassurance and support.  The leadership themselves must show the way by behaving differently, adopting the new structures, systems and processes, both to challenge and motivate the rest of the firm.  They must speak with one voice and consistently model the desired behaviours.  The leadership team needs to understand that, although its public face may be one of unity, it too, is made-up of individuals who are going through stressful times and may need support.   Both individual and team coaching should be made considered where as appropriate.  

From our experience, we know that change leadership teams who work collaboratively are best positioned for sustained success.  They are aligned and committed to the direction of change, understand the culture and behaviours the changes require, and can model those changes themselves.  This goes beyond paying lip-service or passive agreement that the direction of change is the right one.  It demands ownership by leaders willing to accept responsibility for making change happen in all the areas they control or influence.  Sometimes, ownership is best created by involving other people in identifying problems and providing solutions.  

Involve all stakeholders

As the change progresses from defining strategy, setting targets to design and implementation, this will affect different levels of stakeholders within the firm.  An effective way to involve all stakeholders is by setting up Taskforces to address key elements of the change.  As well as being a sounding-board for proposals, a Taskforce can play a number roles of including cascading information to their peers and other stakeholders; providing feedback on  their peers and other stakeholders’ reactions to changes; influence and motivate others; help to define and shape specific aspects of the change; assist in the design and implementation.  The Taskforce should include both those who are aligned and support the change, and well as those who are sceptics, they can play a valuable role in providing a ‘reality check’ and making the case for change as they become more involved.

Communicate early and keep communicating until the change is achieved

Regular communication from the change leadership is essential.  All stakeholders affected by the change need to know to know what is involved, why and how it is happening, and what’s in it for them.  Sadly, change leaders frequently make the mistake of believing that people understand the issues, the rationale for change, and see the proposed change as clearly as they do.  If change leaders fail to actively communicate there will be no shortage of rumour and gossip to fill the vacuum.  Failing to communicate regularly with stakeholders will cause problems.  Unfounded stories, rumours, worse-case thinking will rapidly fill the gap.  People are naturally suspicious, more so in uncertain times and they will come up with their own rationale for actions and events that they don’t understand.  As change leaders, the management board must keep communicating, frequently.  Constant two-way communication is required to offset ambiguity, address confusion and gossip, to change attitudes and to keep everyone on course.

Communications flows from the bottom and the top – from the top it should be tailored to provide people with relevant information at the right time and to obtain their views and feedback – they should be asked what they think and how they are feeling – listen to what they have to say.    Managers and front-line leaders are the first line of communication to employees, once briefed by the change leaders’ communications from them should be frequent and consistent.

Handled well, the best change programmes plan and then reinforce core messages and progress through regular updates using multiple communication channels including, face-to-face (small group briefings, town hall meetings, Q&A sessions), a dedicated change programme intranet, voicemail messages from the MP/CEO etc. 

Assess the firm’s culture and change readiness 

Culture change lies at the heart of transformational change – change that engages everyone (leadership and stakeholders) involved to think and act in ways that reflect the new vision and goals.  A firm’s culture is shaped and influenced by a range of factors, including:

  • Leadership and management:  as people take their cues from the leadership, this is one of, if not the most important determinant of firm culture.  The leadership creates, shapes the beliefs and values, what is recognised and rewarded, and models the behaviours.

  • History of the firm: where and how it started, what it prides itself on provides the foundations for the culture.

  • Significant events in the firm’s history: mergers, acquisitions, re-organisations affect and challenges the existing culture, requiring stakeholders to reassess aspects of the culture to re-establish stability and predictability.

  • New beliefs, values and assumptions: brought in by new members’ especially new leaders, influence the existing culture through their views, experience, ideas and behaviour.

  • Structure and systems: the structure and systems of the firm embed values in work practices that influence the culture, for example, reward and recognition, performance management, controls and communication, protocols, procedures and processes.

As the change moves forward, it is critically important that change leaders assess, review and understand the culture and behaviours across their firm.  In our experience, firms often make the mistake of assessing culture either too late or not at all.  An in-depth cultural diagnostic can help to assess organisational change readiness – the extent to which people understand and are prepared to advance and implement change, identify any significant problems, conflicts and define factors that can recognise and influence sources of leadership and resistance.   Culture change is driven by the strategic direction of the firm – its aspirations and future goals.  Culture evolves from the firm’s strategic direction; it is not a standalone, independent of the firm’s business.

Cultural diagnostics can also highlight the core values, behaviours, beliefs and perceptions that must be addressed for transformational change to take place.  Research, market analysis, client feedback and surveys also inform the change.  They provide the baseline for designing important aspects of the change including the new firm vision and building the framework and solutions required to drive change.  

The absence or lack of change readiness can delay or break a change initiative.   Any problems identified should be addressed from the culture review and assessment should be addressed – what change leaders may think is a small issue may be a big problem for those affected.  

As culture concerns “the way we think and behave around here” understanding the hearts and minds of those involved is essential in creating and leading transformational change.  As the leadership team sets the tone for, shapes, and models the values and behaviours within a firm, they play a vital and powerful role in modelling the “new way that we think and behave around here”.  Once culture is better understood, change leaders should be explicit about the culture and behaviours required to support the new way of operating, and find opportunities to recognise and reward those behaviours.

Business change should go beyond just improving financial results to creating a bigger and lasting impact that enriches the firm, its stakeholders and clients.