Executive Leadership

Change Management

Change Management Jonathan Poland

Change management is the process of planning and implementing changes within an organization. It involves analyzing the current state of the organization, identifying the need for change, and implementing a plan to make the desired changes in a way that minimizes disruption and negative impact on the organization and its stakeholders. Change management often involves strategies such as communication, training, and support to help employees adapt to new processes and systems. The goal of change management is to ensure that changes are made smoothly and effectively, so that the organization can continue to operate at its best.

Resistance to Change

Change management is based on the observation that organizations tend to resist change such that a management team that issues a change strategy would be naive to think this strategy will be implemented without significant direction and control on their part.

Voice

A primary reason that people resist change is that they don’t feel consulted or that change is pushed at them. As such, a basic approach to change management is to involve stakeholders early in the strategy formation process to give them a voice.

Message Framing

Change management requires communication designed to build support and understanding of a change. This resembles marketing whereby a change is sold. For example, a memorable catchphrase that helps everyone to understand the core benefit of an initiative.

Anticipating Objections

Anticipating objections is the process of planning to handle likely criticism. This is important to change management as change is hardened with criticism as opposed to pushed out with one-way communication.

Direction

Generally speaking, groups can’t form a reasonable strategy without a leader who provides direction and vision. That is to say, that group decisions tend to reflect the social dynamics of the group as opposed to rational thought. A change manager is a leader who takes charge to provide strategic direction.

Trust

Leaders must delegate responsibility to many people to achieve a large change. This can be described as a process of trust. Leaders essentially decide who to trust and communicate this trust by granting responsibilities, resources and authority.

Control

Control is the process of monitoring and measuring things. People are trusted to achieve their responsibilities but this is also monitored and measured as part of change management.

Visibility

Directly engaging people at every level of a change to understand it end-to-end. This is required to identify issues and agents of change.

Issue Clearing

Change management quickly detects and clears issues. This requires much authority and/or influence such that change management is an executive function.

Organizational Culture

A culture emerges within a firm with the shared experience of the organization. This is beyond the direct control of management such that influencing culture is a hard management problem. For example, an organization that has experienced painful failed projects may develop a culture of change fatigue whereby employees adopt a defeatist attitude towards aggressive new strategies.

Agents of Change

In any change effort, people will emerge to push things forward. It is the job of the change manager to identify these agents of change and give them resources, authority and rewards.

Sidelining

In any change effort, elements will emerge that try to derail change, slow things down or use the resources of change to pursue their own agenda. The change manager works to sideline these elements.

Stakeholder Management

Managing communication to stakeholders and influencing them to clear issues. In some cases, major stakeholders must be sidelined. Again, change management requires significant influence, leadership prowess and authority.

Scope Management

Change managers need not be project managers but they do need to understand project management issues such as scope management. For example, a change manager should be able to identify a project with runaway scope that is unlikely to be successful. In this case, the project is immediately restructured.

Risk Management

Allow everyone to identify risks, record them in a risk register and look for opportunities to treat each risk.

Change Management Plan

A change management plan maps out the activities of the change manger. This is mostly a communication plan that outlines how issues, risks and progress with be monitored, measured and communicated.

Change Failure

Managing failures to recoup value, restructure things and move forward again. Identifying and managing failure is usually better than operating in a state of denial.

Benefits Realization

Benefits realization is the process of owning a change until it produces business results. For example, a product manager who is both responsible for developing a new product and for its revenue upon launch. Separating implementation from benefits realization tends to be problematic.

Last Responsible Moment

It is often a mistake to spend months planning a change with the expectation that it will be implemented as planned. Change often involves significant discovery such that it is often productive to change, learn and change again in quick cycles. This can be described as a last responsible moment approach.

Chief Executive Officer

Chief Executive Officer Jonathan Poland

The Chief Executive Officer (CEO) is the top administrator of an organization, responsible for its overall performance. The CEO typically reports to the owners of the organization, often through a governing body such as a Board of Directors. In large firms, the average tenure of a CEO is less than 24 years, which suggests that CEOs often struggle to maintain an organization for more than one generation. Here are the common CEO profiles.

Multi-hit Wonder

A CEO who is able to achieve sustained organic growth with multiple business models. Allows for extremely high long term rates of return.

Organic Grower

Grows a very large business with organic growth and a single business model.

Organic Sustainer

Cultivates a resilient business that endures and generates attractive long term returns but doesn’t grow beyond a certain size.

One Trick Pony

A CEO, often a founder, who is able to launch a successful business model but is unable to do a good job operating the firm or growing it beyond the startup phase.

Moat Defender

Able to defend an economic moat enjoyed by a dominant firm such as a monopoly but can’t achieve organic growth. Buys smaller competitors but does nothing productive with them.

Cost Cutter

Operations specialist who cuts costs and is tough on an organization. Can’t achieve meaningful organic growth but at least pushes teams for results. Common in industries with high capital and competition such as airlines. Generally hostile to customers, partners and employees but optimizes.

Turnaround Specialist

A CEO who has established a career around making tough decisions. Able to cut entire divisions to save an organization. Unable to do anything about organic growth.

Relationship Builder

Develops valuable relational capital for the firm but isn’t good at growing or running the firm. Common at small firms, where a CEO’s relationship with major customers and partners may be critical to its success.

Visionary

A hands-off CEO who likes to talk to the media. Tends to acquire trendy small companies that they are unable to integrate. A visionary CEO is aloof such that another executive such as a CFO is actually running the firm.

Myopic Optimizer

A data obsessed CEO who will be successful in optimizing revenue or operational metrics. Has little interest in the big picture and is unable to seize opportunities that aren’t immediately measurable. Prone to failures. For example, may seek unit cost reductions until quality completely falls apart and brand value is lost.

Lost Emulator

Chases trends in the industry and tries to copy competitors. Incapable of original thinking or analysis that would indicate which trends are actually leading to revenue.

Charismatic Risk Taker

The charismatic risk taker is able to raise money and has a following of devoted fans. They have some industry insight and are able to achieve organic growth. Uninterested in profits or risk management and likely to shipwreck a firm in the long term.

Costly Revenue Grower

Able to grow revenue by spending a lot of money but unable to grow profitable revenue. This is essentially a parlor trick as anyone can grow revenue by spending a lot of money. Common amongst startups whereby a firm with high revenue growth is launched to market based on promises of future profitability that will never materialize because the firm and its business model are fundamentally flawed.

Kingdom Builder

Attempts to validate their compensation with mergers and acquisitions that make the firm bigger without improving its long term profits. Unable to achieve organic growth and may damage or destroy a firm to hide this fact.

Passive Rent Seeker

Interested only in their own compensation but unwilling to damage the firm to achieve this goal. Capable of running a stable business in a mediocre way but will not outperform.

Destructive Rent Seeker

Interested only in their own compensation and willing to damage the firm to achieve this goal. For example, willing to take on high debt for stock buybacks that allow them to meet revenue targets without actually succeeding in the market.

Destructive Seller

Quickly destroys value and share price and then sells the organization to another firm. Presents this as a success on their resume and goes on to their next gig where they do the same thing. People may incorrectly assume that an acquisition by a larger firm indicates the CEO was successful in growing the firm.

Crony Capitalist

Makes friends in high places to allow the firm to rent seek. For example, the CEO of an advertising agency in a corrupt nation with close ties to government that obtains a large number of government contracts under shady circumstances.

Incompetent Struggler

Has good intentions but nothing ever seems to work out for them. Often a CEO who reached the position without much competition. For example, a small firm that hires a mid-level executive from a large firm as a CEO.

Falsifying Struggler

Unable to grow or run a business such that they are quickly in trouble. Results to falsehoods to delay the inevitable collapse of their firm. This may start small but quickly spirals out of control.

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