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Summary of the book "Leading Change" (Kotter)
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Complete summary of the book Leading Change written by "John P. Kotter" Complete samenvatting van het boek 'Leading Change' geschreven door John P. Kotter
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Summary of the book ‘Leading Change by John P. Kotter’.1. Transforming organizations: why firms fail
Organizations make errors. The most common errors are:
1. Allowing too much complacency (inschikkelijkheid)
The biggest mistake is made when people try to change something, but don’t
establish a high sense of urgency. They fail to create sufficient urgency at the
beginning of the transformation. They overestimate in forcing changes and
underestimate how hard it is to drive people out of their comfort zones.
Nowadays complacency is high in companies.
2. Failing to create a sufficiently powerful guiding coalition
For a major change is a coalition needed of smart, high, well-known people in
that firm, because they have the power together. Individuals never have all the
assets needed for overcome tradition and create a change. A strong guiding
coalition is needed for producing change.
3. Underestimating the power of vision
Visions play a key role in producing useful change by helping to direct, align and
inspire actions on the part of large numbers of people. Without a good vision a
change can easily dissolve into a list of confusing, incompatible and time-
consuming projects that go into the wrong direction.
4. Under communicating the vision by a factor of 10
Major change is only possible when employees are willing to help, by doing short-
term sacrifices. But people will not make sacrifices, until they think the benefits
of the change are attractive and that the change is really possible. Therefore
good communication is needed.
5. Permitting obstacles to block the new vision
Errors often occur, because the organization permits obstacles which block the
change. Those obstacles can be in the organizational structure or supervisors
who refuse to adapt the new circumstances. One well-played blocker can stop an
entire change.
6. Failing to create short-term wins
Major changes takes time. Short-term goals are needed, in order to prevent that
people give up or actively join the resistance. People want to see results. In a
successful change, managers actively look for ways to obtain improvements,
goals and to reward the people involved in it. People don’t see the urgency in
long-term goals, but short-term wins can help to keep complacency down.
7. Declaring victory too soon
Celebrating a win is fine, but any suggestion that the job is mostly done is a
terrible mistake. When the first wins are there, it costs many time until changes
sink down deeply into the organization culture. When the victory is declared too
soon, the changes come to a halt and irrelevant traditions creep back in the
organization.
8. Neglecting to anchor changes firmly in the corporate culture
Change stays only when it becomes the bloodstream of the organization. There is
the possibility that the change disappears, until the new changes are rooted in
social norms and shared values. In order to make the change the bloodstream of
,the organization, there is a conscious attempt needed to show people how the
change have helped in improving performance and time is needed.
Those 8 mistakes would be that costly in a slower-moving world. But nowadays
stability is not the norm. Making those mistakes can have serious consequences.
2. Successful change and the force that drives it
Evidence shows that organizations can be significantly improved at an acceptable
cost, but that we often make terrible mistakes when we try, because history
hasn’t prepared us for transformational challenges.
In the past the norm was stability, people were not used to change. Nowadays
the globalized economy is creating both more hazards and more opportunities,
which forces firms to make dramatic improvements to compete and survive.
Globalization, in turn, is driven by technological changes, international economic
integration, maturation of markets in developed countries and the fall of
communist/socialist regimes (see figure 2.1).
A successfully change includes 2 patterns. First, useful change tends to be
associated with a multistep process that creates power and motivation sufficient
to overwhelm all the sources of inertia. Second, this process must be driven by
high-quality leadership.
The eight-stage process is a process for creating effective major change. The
steps are: establishing a sense of urgency, creating the guiding coalition,
developing a vision and strategy, communicating the change vision, empowering
broad-based action, generating short-term wins, consolidating gains and
producing more change and anchoring new approaches in the culture (see figure
2.2).
The first 4 steps help to defrost a hardened status quo, step 5-7 introduce new
practices and step 8 grounds the changes in the corporate culture and helps to
stick them. People (under time pressure) often try to transform an organization
by only step 5 till 7, but doing this you rarely establish a solid enough base on
which you can proceed.
Most major change initiatives are made up of a number of smaller projects that
also tend to go through the multistep process. Those smaller projects all have a
role in the overall transformation. Because of those multiple steps in multiple
projects, the end result is often complex, dynamic and messy. Therefore there is
much more involved than only gathering data, identifying options, analyzing and
choosing.
Management is a set of processes that can keep a complicated system of people
and technology running smoothly. It includes planning, budgeting, organizing,
staffing, controlling and problem sovlving. Leadership, on the other hand, is a set
of processes that creates organizations in the first place or adapts them to
significantly changing circumstances. It includes establishing direction, aligning
people, motivating and inspiring. In a successful change leadership is much more
important than management (see figure 2.3).
The creation of overmanaged, underled corporate culture (see figure 2.4):
, The combination of visionary entrepreneurship and luck creates a successful
business strategy, which leads to a dominant position. Therefore the firm
experiences much success.
Managers begin to believe that they are the best (arrogant). But the managers
also have to cope with the growth. But they believe in their own strong traditions.
A strong and arrogant culture develops. The managers fail to cope with the
growth.
Overmanaged and overled efforts to change try to eliminate the 8 steps. The
initiative is handled mostly by a small group of managers.
In the future the environmental movement and the pressure to transform will still
increase. Therefore, we have to learn more about successful change. This
includes two things: both the various steps in the multistage process and the
driving force behind the process: leadership! We have to turn from managing
change to leading change.
3. Establishing a Sense of Urgency
Establishing a sense of urgency is crucial to gaining needed cooperation. In many
companies there are problems, but no one has the feeling that he/she can do
something about it; the complacency is too high. There are 9 sources of
complacency:
1. The absence of a major and visible crisis: if employees don’t see a tornado-
like threat, there don’t have a high sense of urgency.
2. Too many visible resources: the company’s visible resources say we are
rich, we are winners!
3. Low overall performance standards: managers measure things with too low
standards.
4. Organizational structures that focus employees on narrow functional goals
instead of business performance: this leads to the fact that if performances
of a company are going down, no one feels responsible. Everyone is only
responsible for his own goals/tasks.
5. Internal measurement systems that focus on the wrong performance
indexes: the internal planning/control systems make it too easy for
employees (too easy goals).
6. A lack of sufficient performance feedback from external sources: feedback
that people receive come almost always from internal sources. People can
work from day one until retirement and never hear directly from an
unhappy external stakeholder.
7. A kill-the-messenger-of-bad-news, low-candor, low-confrontation culture.
8. Human nature, with its capacity for denial, especially if people are already
busy or stressed: if we can get away with ignoring information about
evidence of a big problem, we often will. Because life is less pleasurable
with problems.
9. Too much happy talk from senior management: ‘Sure we have problems,
but look at what we already accomplished’. This happy talk is mostly a
product of past success.
Those 9 sources of complacency shows that even if you have smart people in
your organization, there will be high complacency, due to the power of subtle and
systemic forces that exist in organizations. Big egos and arrogant cultures
stimulates this.
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