Organizational Change: In The Business World, Adapting Is Surviving

“When you’re finished changing, you’re finished.” —Benjamin Franklin

Success in business, not to mention longevity, requires adaptability. The most successful and beloved brands have earned their esteem not through short-term gains but through consistent presence at the top. Market dominance is not given, it’s earned. Celebrating our 20^th year in business as the leading provider of hotel-specific accounting, labor management and business intelligence and analytics, we realize as much as anyone how important earning that business is, and we focus on it each and every day. Companies must continuously navigate an ever-changing sea of obstacles — cultural trends, technological advances and economic shifts — and adapt in order to stay afloat.

Adaptability is arguably more important than ever in this digital era in which we currently operate. Prior to the 21^st century, major market shifts were rare and gradual, but today disruptive innovations are as reliable as the changing of the seasons. And the corporate graveyard is rife with companies who failed to adjust to the times. During our 20^th celebration, I shared this fact with our company and reminded them of once-revered brands like Woolworth, Compaq, Enron and others.

Also coming to mind are the heroes and has-beens of home entertainment, for example. It seems strange when you recall that Netflix began in 1997 as a DVD rental service — a space nearly monopolized at the time by Blockbuster Video. Initially perceived as a niche, web-based service, Netflix.com eliminated the trip to the video store. Nevertheless, Blockbuster continued to dominate the movie rental market for some time with the company reaching its peak in 2004 when it enjoyed a market value of $5 billion. Perhaps it was Blockbuster’s market dominance that proved to be its fatal blind spot, with the company failing to recognize the changing preferences among consumers. Conversely, forward-thinking Netflix launched video streaming services in 2007, thus hammering the final nail in Blockbuster’s coffin. The company would declare bankruptcy just three years later. RIP, Blockbuster.

Blockbuster’s fate epitomizes how failure to adapt in business leads to ultimate failure. Even so, recognizing the need for change is just the first step. Developing, implementing and managing change is where the hard work lies.

Enacting organizational change presents many challenges. When top executives at a company ordain change, the burden of adoption is company-wide and affects even those that were not involved in the decision making process. Resistance to change is a natural human inclination and change in a place of work can feel especially personal for employees. Therefore, regardless of the scale, organizational transformation requires a strategic approach. A good over all study of change management is essential. Fortunately, there are many books written on the subject that may help in the strategic planning process.

Here are four principles of change management that will help your company to achieve successful implementation of organizational change:

1) Lead confidently and communicate openly.

Leadership is by far the most critical component of Change Management. Knowing that change is difficult, leadership must do their homework before acting on an impulse to shake things up because as important as adaptability is, it must be rooted in corporate-self-awareness, i.e. brand identity. Thorough research is required to make an evidence-based case that there is a better way to do what you do. Innovative companies don’t magically become that way, they establish processes for harvesting new ideas in conjunction with promoting total transparency in communication. Ideas flow freely when a company’s culture allows for open and honest communication, without the fear of reprisal. Leadership should foster an environment where innovative ideas are greatly valued, no matter which employee brings them to the forefront.

2) Establish top-down sponsorship.

Establishing unwavering support for approved transformation projects from the very top of the organization is simply an absolute. Once the project is green lighted, individuals responsible for implementation should know that they have authority to do so but should do so with humility and sensitivity. Moreover, a survey conducted by global consulting firm McKinsey & Company showed when senior leaders role model the behavior changes they’re asking employees to make (by spending time on the factory floor or in the call center, where work is done), transformations are 5.3 times more likely to be successful. Thus, the practice of leading by example is especially important in scenarios of transformational change.

3) Develop a strategic plan and see it through.

As simple as it sounds, developing an implementation plan can be one of the greatest challenges to organizational transformations, depending upon the scope and type of project that is being undertaken. Strategic thinkers recognize that employees “buy in” to what they help build and create, therefore effective plans need to incorporate input from multiple levels of the organization. A well-devised plan must take into account the company’s culture, anticipate employee reaction and incorporate a clear methodology to handle the resistance that will inevitably come.

4) Recognize dissidence and deal with it.

If proper due diligence has been performed — that the proposed change is expected to produce necessary results and that the first three items listed above have all been followed — realize that there may still be casualties. While we’d all like to believe that every team member will be a believer in the proposed change, that will not always be the case. If there are employees who do not embrace the change and if they spread resentment and plant seeds of doubt toward the leadership of the company, then those employees will likely be happier, and your organization will be much better off if they are encouraged to seek other opportunities. With effective change management, the squeaky wheel does not need grease; it may just need to be attached to a different wagon.

Whether your aim is a small-scale transformation project or completely restructuring your organization, these four basic takeaways are essential to effective organizational change. When contemplating whether to embark upon organizational change, just as cautionary tales like that of Blockbuster warn of the consequences of inaction, so too can inspiration be found in stories of successful corporate turnarounds. Take for example the reinvention of Starbucks as engineered by then CEO Howard Schultz. In 2007 Starbucks faced declining rates of growth, increasing competition and a pending financial crisis. Schultz responded swiftly and decisively, setting into motion a transformation plan that ultimately saved the company, and it all started with a memo. (For a comprehensive case study see “Starbucks Coffee Company: Transformation and Renewal” by Nancy F. Koehn, Kelly McNamara, Nora N. Khan and Elizabeth Legris.)

Schultz’s words from his book Onward: How Starbucks Fought For Its Life Without Losing Its Soul offer inspiration (and serve as a fitting conclusion) for leadership in the face of change:

“Grow with discipline. Balance intuition with rigor. Innovate around the core. Don’t embrace the status quo. Find new ways to see. Never expect a silver bullet. Get your hands dirty. Listen with empathy and overcommunicate with transparency. Tell your story, refusing to let others define you. Use authentic experiences to inspire. Stick to your values, they are your foundation. Hold people accountable but give them the tools to succeed. Make the tough choices; it’s how you execute that counts. Be decisive in times of crisis. Be nimble. Find truth in trials and lessons in mistakes. Be responsible for what you see, hear, and do. Believe.” 

Related: Mercer CEO Believes Executives Need To Navigate And Lead Change