HOW TO IMPLEMENT CHANGE IN YOUR COMPANY
Carmen López Hernández
CEO at Carmen López | LEADERSHIP & STRESS EXPERT: Do you want to succeed as a leader? Do you need to reduce your stress?| PSYCHOLOGIST | Executive Psychologist | Human Resources Consultant🌐 German-English-Spanish.
Last week, someone asked me about a problem in their company: change is needed to keep the company relevant in a changing market, but the senior staff does not want to hear about it. What's worse, they are successfully luring the young generation to the old ways.
The bad news is that according to McKinsey (1), Forbes (2), and Harvard Business Review (3), 70% of change initiatives in companies fail. However, there is no empirical evidence for this number (4). While I don't have a reliable number, I'm afraid that these three institutions are falling short based on my experience.
Companies that don't change disappear. In today's world, the challenge of keeping pace is greater than ever. According to McKinsey, in 1958, the lifespan of a company on the S&P 500 was 61 years. Today, it is less than 18 years. Look around you and try to find a business that is more than 40 years old (5).
The failure rate difference between companies and employees could not be greater: the employees of a sinking company will soon retire or find another job. In the worst cases, they will receive unemployment payments until they find another company more in sync with the market. Interestingly, these employees will change instantly on their first day in their new job to fit into their new environment. All their resistance to change will be gone.
So, the picture is as follows: you have at least a 70% chance of failure in your change initiative, and failing to change will eventually lead your company to oblivion.
Are we failing to change?
We are not failing to change. Change happens: innovation follows its course, and we enjoy it as consumers with new products and services every year. The problem is that change doesn't typically happen at the company level but at the market level. The market evolves, much like nature, destroying old companies and nurturing new companies that fit better in new environments.
What can be done?
There are three main solutions to this problem:
Which solution is better?
Surprisingly, doing nothing, with a failure rate of over 70%, seems to be the most popular solution. I do not recommend this one.
The first solution, swift structural changes, can work, especially in the short term. Large layoffs can put finances in place quickly due to significant savings, but in the long term, the consequences can be disastrous. You lose a lot of know-how, and employee commitment will plummet. This process can break core business units that were functional and reliable, albeit imperfect. Twitter is an example of this approach.
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In the second solution, gradual cultural changes, leadership presents the problem, challenges, and opportunities that the market presents. The change is made from the bottom up, engaging employees in the search for solutions. They can experiment, communication is open, and the company's structure is flat. The problem is that this solution takes time, usually between 2 and 10 years, depending on the company's size and the change they are trying to implement. However, in the long run, loyalty, engagement, and productivity are much higher. This strategy often fails because investors lose their patience and press the executive team to make swift structural changes.
My recommendation? Gradual cultural changes combined with ambitious goals and clear KPIs. Your role as a leader should be as follows:
The devil is in the details and each company has to develop a plan that defines its own behaviors, goals, and KPIs. The solution has to be tailor-made, patience is crucial and little adjustments have to be made during the process.
Carmen López
Business Psychology
Trilingual 🇪🇸 🇫🇷 🇺🇸 TEDx Speaker 🎤 Motivational Speaker / Master of Ceremonies / Expert in Customer Experience & Motivation & Leadership with Audacity / Author ✍️ / VP PSA SPAIN 🇪🇸 / Ranked #11 Global Top Guru
1yThat is completely true Carmen López Hernández 👏👏
Chief Operating Officer Aon México, Caribbean & Central America en Aon
1yExcellent article and advice Carmen López Hernández (as always!) and it really works! If I may, only add a few things: 1. Set clear and specific commitments and goals. Always include efficiency and profitability metrics. 2. Build an agile and flexible structure, I mean in terms of culture and ways of work, to gain stretch and a cohesive and collaborative team. 3. Periodically socialize your delivered results, about business as usual and projects. 4. If you’re not accomplishing, share with your team and do those adjustments you mentioned before. 5. If company plummet, ask for your contribution and act immediately with your team. Be honest with them. In my experience with this, you’ll be part of the “core” of the business, no matter wich area you are and can give support to other hard decisions in the rest of the company. You’ll be part of the solution, not other victim with your team. Thanks a lot!
Passionate C level Interim-Executive, Advocate for Inclusion, Speaker, Serial Entrepreneur
1yspot on Carmen López Hernández. this is a major challenge these days in many companies i am able to support. as the markets are changing fast and the world is turning even faster, i many times go for a two step approach wich would be your solution 1 and 2 combined. first step is one to simply change people that are absolutely refusing to change themselves. nobody needs anyone who is hindering an important process to survive. then step two which is changing the culture with the ones that are willing to support a cultural change. i made good experience with this approach.
Providing B2B Effectiveness for Industrial Consultancy-Services and Provision of Expert Knowledge and Thinking Tools
1yThe hardest lessons which I haven’t fully processed yet have been taught by situations in which I was fragile with my business model, value preposition, product offering or profit formula. Knowing your competitors is key. And it requires a flywheel. Jim Collins is an impressive teacher when it comes to routines which provide agiliy, which spot triggers for change. It’s about a belief. Another practitioner is John Hagel III, „The Journey Beyond Fear“ is an „old“ book. Today‘s success rates of companies cause… a waste of rival and non-durable goods, a no-go in our transformation of the economy as a subsystem of the ecology. Herman Daly explains this politely. He could do it bluntly too. People? Experts? Their value must be in sync with the profit they provide. There is an excess of such people, maintaining them as useful providers, consumers, stakeholders is a difficult task. And now imagine, the exploitation scale of resources and the profit scale, let alone the stuff on which the particular business runs on are restricted?!?!? We, as a society of homo-economicus move towards a synchronised economy with restricted resources as a subsystem of the ecology.