Category: Organizational Transformation

Building Trust In An Organization

Trust in any organization is a big deal. We have consulted companies around the world, and it is obvious that when trust is present in an organization, performance is far superior than if trust is missing. Trust is an expression of and evidence for a good organizational culture.

There are two key elements to work with when organizations want to elevate levels of trust:

  1. Behaviors and actions of people in the organization = are readily seen (like symptoms of a disease)
  2. The source of those behaviors and actions = are invisible to the organization and consist of deep-rooted mindsets about trust (like the causes of a disease)

Changing Trust in an Organization

In his article in Forbes, David Horsager wrote:

“Trust garners better output, morale, retention, innovation, loyalty, and revenue, while mistrust fosters skepticism, frustration, low productivity, lost sales, and turnover. Trust affects a leader’s impact and the company’s bottom line more than any other single thing.”

If trust is so foundational to the health of a culture, transforming an organization’s trust levels will have a significant impact on the culture. Professors John Kotter and James Heskett performed a Harvard Business School study documenting the significant impact of culture on performance over an 11-year period. The financial performance differences were “staggering”, to use one of Dr Kotter’s descriptions.

“For example, the companies with good cultures achieved 756% growth in net income during the same time period that companies with poor performing cultures saw just 1% net income growth.”

Recently, I heard of a large multinational company that is in the process of generating more trust in its people and operations. From looking at the potential returns, it is understandable why the executives want to improve trust levels in the organization. However, their approach is to drive a change in employee behaviors within the organization through a series of training programs and follow up modules. In our experience, this effort may have some positive outcomes – getting people to learn about trust and how they behave is certainly going to make some difference. However, this approach of focusing only on employee behaviors and actions is just “the tip of the iceberg,” Real transformation will only come when the source of the behaviors is discovered, thought through, and transformed. Once this occurs, people then create changes in behaviors and actions consistent with this new way of thinking about trust and the organization. Both are required for a successful transformation.

Getting to the Source of Trust Issues

A good question to ask yourself :

What might the mindset of an organization be if executives, managers and employees are not trusting each other?

From an organizational perspective, the mindset would come from some learned experiences from the past, generally among positions or groups. Examples of mindsets we have heard before:

  • “Sales doesn’t trust manufacturing”
  • “Marketing doesn’t trust sales operations”
  • “Finance doesn’t trust anyone”
  • “Management can’t be trusted”
  • “Unions can’t be trusted”

These mindsets are very generalized statements that likely began at some point a long time ago. Additionally, these mindsets have little to do with specific people in any of the functions. Clearly, if these are the prevalent mindsets within an organization, no amount of new behavior changes will make a significant difference. Focusing only on behavior changes will lead to checklist activities, no substantive change, and a high degree of cynicism.

Being Trusting and Trustworthy Requires a New Mindset

To be trusting and trustworthy starts with the senior executives of the organization. They must actively engage in understanding and transforming their own mindsets around trust among each other as well as their managers and employees. In transforming their mindsets, they must create new behaviors that they will apply consistently to demonstrate and model the new ways of being trusting and trustworthy with people in the organization.

These new behaviors and actions will start to manifest themselves in profound ways, such as:

  • As an executive, you can own what has happened in the past, and that it happened on your watch; that you recognize the negative impact you may have had on employees in the past, and that you are committed to changing the mindsets, the behaviors and the culture for the benefit of everyone in the company.
  • As an executive, you can acknowledge that trust has been an issue, that you are looking to improve trust, and that you recognize that you will need to change too. That you also need everyone in the company to embrace the change knowing that there may be times that it is not easy to do so, but you ask for their help and efforts.

These are two examples – the key is that whatever the message, executives are being trusting of them and trustworthy for them.

However, for trust to be the norm throughout the organization, relying only on the senior executives will not be enough. All leaders throughout the organization must be engaged in these new mindsets. This include the leaders of the business who have authority and titles, as well as the thought leaders, influencers, and people in the organization who are widely respected. These leaders must also be engaged in this new way of being trusting and trustworthy with new actions invented and taken.

A global manufacturing organization with whom we worked was committed to a transformational growth strategy. Part of the transformation had to start at the top of the organization. The leaders of the business had to transform their mindsets about the unions from “they can’t be trusted” to “they are our partners for growth”. The leaders could see where the old mindsets came from – painful events happened when the company was going through a major downsizing a decade before, resulting in broken trust between the executives and the unions. By recognizing this, they were able to authentically commit themselves to adopting and behaving consistent with the new mindset.

A great example of this new mindset’s behaviors in action was demonstrated by interactions with one of the former union presidents who was a “known troublemaker” in the company and was very vocal in his distrust of the leadership of the company.

Steeped in this new mindset, the president of the company met with this person along with other informal leaders and had several conversations with them to establish a new baseline of trust. The president’s behaviors demonstrated to these employees that he was committed to the transformation and growth strategy and was being humble and authentic in his new mindset and behaviors. It was only a matter of months and we began to see that the former troublemaker was becoming the biggest advocate of the transformational efforts and growth strategy. During a large town hall, he stood and shared his support in quite an emotional way, influencing many of those in the audience to begin to make changes in their own mindsets and behaviors around trust.

As more formal and informal leaders are transforming their mindsets to being trusting and trustworthy, getting employees engaged will be supported by the formal and informal leaders.

Conclusion

The need for any organization to have high levels of Trust as part of its organizational culture is fundamental and will make a significant difference to the performance and bottom line of the organization. In order to make a transformational and lasting impact on this kind of change, the two elements to consider:

  1. The behaviors and actions that we can see. That is, what the executives, managers and employees are doing and how they are behaving.
  2. The source of these behaviors and actions. That is, what are the mindsets and fundamental beliefs that are driving those behaviors and actions?

A change in behaviors is definitely an outcome that must be seen from any change initiative. However, focusing only on behaviors will likely result in an expensive, time consuming and marginally effective undertaking. Discovering the source of behaviors and actions can be incredibly hard to pin down. That is what we here at KingChapman have been doing with organizations globally for the past 30 years and is one of the great tools that we provide.

It is imperative, possible and doable, and well worth the effort, to transform the source of trust in an organization, creating new behaviors and actions to drive significant value.

Building trust is just one element of transformation, performance and growth. Growing a business is a daunting task for many, if not most, executives. While growth is considered fun, and what executives dream of being engaged in, achieving sustainable growth is another story.

Download our PDF: “Executive Challenges” and learn the Execution of Growth Strategies and Organizational Transformation.

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Premortems: Technique for Improving Strategic Thinking

I recently was looking through blogs from McKinsey Quarterly and ran across one of my favorites. It is entitled Bias busters: Premortems: Being Smart at the StartThe authors advocate the use of Premortems as a tool for identifying biases which can get in the way of good decision making. I agree as I use a similar process with clients who are developing strategies and transforming their organizations.

Reading the blog from McKinsey & Co. also brought back fond memories of a great man who originally taught me about Premortems. Marty Leaf was an accomplished lawyer in New York. He began his career as a trial lawyer and later expanded to handle dispute resolution as well as complex contract negotiations. Marty also provided a great service to humanitarian organizations such as the Buckminster Fuller Institute, Hunger Project and a United Nations NGO. Marty’s clients were typically large, well-known businesses, but also included a diverse group of individuals such as Lhamo Dondrub, the 14th Dalai Lama, John Denver and Werner Erhard.

I met Martin Leaf through a mutual friend, and then got to know him better as we sorted through some knotty corporate legal issues in New York. In addition to being excellent as an attorney and extremely bright and gracious, Marty was also fun to be around. As an example of his humor, when we were in a very tense moment sorting out this legal matter, I turned to Marty and had this exchange:

Me: “Marty, is it better to be dealing with a crook or a fool?”
Marty: “A crook.”
Me: “Why is that?”
Marty: “Because you can go have a nice meal with a crook since you know who you are dealing with, where it is much more difficult to deal with a fool!”

During this process Marty introduced me to his version of a Premortem. He said that at the completion of a trial, one of two things happen:

  1. The winning side goes out to a fabulous restaurant to celebrate. During the meal the client toasts the legal team for their brilliance. After winning a big case, collecting the last of the fees is seldom an issue for the winning attorneys.
  2. The losing side schleps back to the client’s offices, orders sandwiches, and immediately begins a postmortem to analyze what went wrong. Of course, the client’s opening presupposition is that the lawyers screwed up and lost the case. During the postmortem, however, new information often emerges which would have been helpful in the trial.

It was during one of these postmortems that it occurred to Marty that it would be a really good idea to have this conversation before they went to trial. Hence his use of the term Premortem. Marty graciously gave me permission to use the term, so I have for many years.

Marty’s view of a Premortem was designed to:

  • Create strategic thinking from the future
  • Discover information which existed in the company but was for some reason not being communicated upward
  • Explore the blind spots and biases in the company’s thinking about the topic being litigated. It was easy for the legal team to be influenced by this mindset and not see the flaws in their client’s points of view

 

Create Strategic Thinking from the Future

Premortems are useful tools for vetting business strategies, designing a culture change and organizational transformation, as well as large capital projects. This value comes from creating a conversation regarding the future. One of the biggest challenges in helping executives develop strategies and plan for the execution of those strategies is confronting that the future is not knowable. Ironically for a trial lawyer this is easier, as the company either wins or loses the case. There are two clear and defined futures to consider.

In working with executives though, it is often more complicated since at the beginning they can think only from one place or future. Their thinking about the future is some form of a continuation of the past or present. Getting the executives to think from the future perspective, rather than just a continuation of the same from the past can be challenging since it is not knowable.

The future is not knowable because it has not happened yet. Since the future has not happened yet and is not knowable, it requires thinking strategically. That is, thinking without the comfort of analytical predictions which are based only on the past. Thinking strategically requires thinking from points in the future which are not necessarily a linear progression from the past. Given we naturally think from the past to today and project that forward, thinking from a future that is not necessarily like the past is a challenge. Hence, the value of being able to locate one’s thinking at a point in the future. In other words, providing a place to stand in the future in order to observe and think about big challenges to be faced in execution.

I find it useful to have executive teams think from two scenarios:

#1 Invented Future. Invented Future is created by executives to describe a future in which the intent of the organization is being fulfilled and stakeholders are thrilled. Conversations from the future rather than about the future provide a new and much improved perspective for strategic thinking. This Invented Future can be achieved through:

  • Changes in mindsets
  • Creativity and innovation
  • Breakthroughs in how employees think about the business
  • Improved listening to customers’ needs

 

#2 Failed Future. This provides opportunity for Premortem. This Premortem begins with a point in the future in which the strategies and execution plans have failed. Often there is a triggering event which led to the overall failure. These triggering events can include:

  • Customers changing preferences for products and services
  • Large customers being acquired or going out of business
  • Digital disruption which radically reshapes the competitive landscape
  • Global competitors entering a market with different financial drivers and product offerings

Discover “New” Information

A major risk to developing and executing strategies is critical information which is known by people in the organization but NOT communicated upward to decision makers in the organization. This dynamic can lead to catastrophic failures and safety issues. An excellent example of this is the case study of the events surrounding the deadly failure of NASA’s Columbia. In that case, managers who were responsible for safety were aware of issues which ultimately caused the disaster but chose not to communicate that information upward to those managing the mission.

Marty said that similar things happen in trials. During the trial the other side introduces facts or information which Marty and his team did not have. Often this new data was important to the outcomes. During the Postmortem, they discover that new facts and information existed within the client company but, for whatever reason, they were not communicated upward. The reasons for not disclosing this important information varied, but the consequences were still final.

A key question in conducting a Premortem is “What important data and information exists within our organization which we are currently not aware of but will be crucial in our strategic deliberations and execution?” I find that at first, there are blank looks on executive’s faces, but as we engage more people, we start to uncover very important information. This is among the reasons I recommend expanding the size of the group when planning execution of strategic projects.

Explore Biases, Blind Spots and Unproductive Mindsets

There is an abundance of evidence that cognitive biases are a major threat to strategic thinking. As an executive group begins to explore opportunities for growth, innovation and performance enhancement, it is useful to review some of the more common cognitive biases that could occur. If the group is candid, they will readily identify examples in which cognitive biases affected previous decisions. When a group can acknowledge the risks they face based on cognitive biases, it greatly expands its capability to think strategically. To illustrate the risks, I may ask the group to start with a future and then imagine how cognitive biases could negatively impact their conversations and deliberations.

I also use the term blind spots to encourage executives to explore dynamics in their thinking. Blind spots are often assumptions held by the group, but they have forgotten they are only assumptions. Challenging blind spots allows the group to uncover assumptions that need to be revisited and assessed. Among the most important set of assumptions to be revisited are those which involve external drivers that have huge impact on a company’s operations, as well as its customers. Examples include financial interest rates, number of housing starts, number of new autos built in a year, oil prices, number of active drilling rigs working on shore, etc.

Conclusion

Martin N. Leaf died in New York City after a long illness on May 23, 2015. At the time of his death he was surrounded by his family. The acknowledgements of the difference he made in people’s lives poured in. I loved one such acknowledgement which read,

“To Marty Leaf, a man for all seasons. You were a mighty influence in my life and the world”.

That sentiment expresses how many of us who knew Marty felt about him.

I hope this story about Marty has given you a new perspective about the use of Premortems. It is a simple, but highly effective tool in improving strategic thinking through identifying biases and blind spots.

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What Henry Cavendish Can Teach Us About Organizational Culture

Organizational culture is one of the most important and yet misunderstood aspects in business today. Culture has profound impact on a business organization’s performance. For example, a Harvard Business School study documented the significant impact of culture on performance. Heskett and Kotter documented the dramatic differences between companies with good cultures vs those with poor cultures on key performance measures. For example, the companies with good cultures achieved 756% growth in net income during the same time period that companies with poor performing culture saw just 1% net income growth.

Given the importance of culture on performance, one would assume that those of us in business would have an excellent understanding of what culture is. While this seems obvious, it is not the case. Most of us have an incomplete understanding of organizational culture. We assume that culture is:

  • The artifacts which can be seen in the organization. These artifacts include the behaviors which can be seen. It also includes how communication is delivered, the workplace is organized as well as how practices and processes deployed. While declaration is given that those artifacts are the culture, less consideration is given as to why those artifacts occur. Said differently, identifying what the cultural artifacts are is useful, however, meaningful change can occur only after determining why that culture occurs.
  • The values of the organization. It is common practice for executives who seek to change or improve their organization’s culture to use exercises to develop the exact wording for the desired values and principles of the organization. The assumption is that by identifying and claiming these new values that they will now occur in the culture. While this is a popular approach to culture change, it seldom works out for any length of time.

So, the state of play is that we have strong evidence that culture has significant impact on an organization’s performance, yet we do not have a good understanding of what or why a culture is or how to improve it. This is startling given that we have spent most of our lives in some form of organization, each of which had unique cultures. Think about it, most of us went to kindergarten or preschool before we were age six and have been in various organizations ever since. Each of these organizations had distinct cultures which impacted our experience, yet we do not have a good understanding of organizational cultures. This is because the culture of the organization was established before we arrived in that organization and functioned so much in the background that we could not see it. Chances are we felt the impacts of the culture from time to time, but never were able to see the entire culture nor understand the origins of the culture.

Who Discovered Water?

This reminds me of one of my favorite rhetorical questions that I use in helping others understand culture. The question is “who discovered water?” Think about it. We take water so much for granted that at first the question seems daft or stupid. Yet thinking provides an important clue in understanding organizational culture.

One response to this question that I like is “I don’t know, but I’m pretty sure it wasn’t the fish.” This response has an interesting parallel to our experience with cultures. The fish spends all its entire life in water and yet it has no concept of water. The fish begins to experience water only when it is pulled out of the water; that is, when some fundamental change occurs. Often that is how we first begin to encounter culture -when some fundamental changes occur.

The question remains “Who invented water?” This question brings us to the title of this blog: What Henry Cavendish Can Teach Us About Organizational Culture? If you do a search for the question “Who invented water?”, the most common answer is Henry Cavendish. A sample response is:

Henry Cavendish. (1731 – 1810) was a chemist, who discovered the composition of water, when he experimented with hydrogen and oxygen and mixed these elements together to create an explosion (oxyhydrogen effect).

Consequently, Cavendish is generally credited with discovering water. A more thorough description of Cavendish’s is:

A natural philosopher, the greatest experimental and theoretical English chemist and physicist of his age, Henry Cavendish (10 Oct. 1731 – 24 Feb. 1810) was distinguished for great accuracy and precision in researches into the composition of atmospheric air, the properties of different gases, the synthesis of water, the law governing electrical attraction and repulsion, and calculations of the density (and hence the weight) of the Earth.

The story of Henry Cavendish is fascinating. He was born into English aristocracy. His father, Lord Charles Cavendish, was active in politics and science. Henry was painfully shy and had no interest in politics, however, he did share his father’s passion for science. His father introduced Henry to the Royal Society, where he became an active member. He spent his life involved in a wide range of problem solving and research. He was a pioneer in scientific research and discovery. So, what can we learn from Henry Cavendish that helps us understand organizational culture?

Lessons on Organizational Culture from Cavendish

The statement “Cavendish was distinguished for great accuracy and precision in researches” gives us a clue and says much about his approach to problem solving. Cavendish experimented to increase the understanding of complex phenomenon. He was also noted for his great accuracy and precision. Perhaps the first lesson from Cavendish for us about culture is experimentation. I frequently encounter executives who think they know culture and consequently have closed off inquiry and thinking strategically about culture. I use this expression know culture to describe a mindset which I frequently encounter that executives have:

  • Read articles about culture
  • Been involved in processes to identify the organization’s values
  • Can talk convincingly about the importance of culture to performance of business

Unfortunately, this is based on surface level understanding of culture which in turn provides little access to action. What most of us miss is that there is a third level of culture which determines how the organization functions.

The Third Level of Culture

Edgar Schein first identified this third level which he called Basic or Tacit Assumptions. This third level is based on the shared learning of the group which is used in orienting new people to the organization and has over time become so taken for granted that it is no longer visible to participants in the organization. It becomes the context for that organization.

To deepen our understanding of culture, let’s think about how this context based on tacit assumptions is formed. An organization’s culture begins forming as soon as people come together as a group to address a common opportunity or problem. The culture begins being shaped by the attitudes, decisions and learning of this group. Cultures are built on shared learning by the group as to what works and what produces success and/or avoids failure. Each culture is unique since it is shaped by the nationalities of people involved, personalities of early leaders, professional backgrounds, technologies with which working, etc. Over time there is additional experiences and shared learning by the group which modify and refine the culture. Once we understand how culture is created, we realize that every organization’s culture is unique and so complex that it is virtually impossible to completely know or understand. The most we can hope to achieve is learning enough about how a culture functions that we can develop possible interventions.

Edgar Schein uses the concept of human personality as an analogy to demonstrate that culture is way too complex to understand. He says, “Culture in that sense is like personality or character for an individual, once you’ve learned to be a certain kind of person that is you in all aspects of your functioning and you don’t want to be any different. Which is why culture is hard to change.

Schein advocates identifying a specific problem or issue that needs to be addressed, and then begins inquiring into the nature of that problem. The assertion is that the presenting problem will likely reflect deeper issues in the organization which can only be identified and addressed through this inquiry. This is where Henry Cavendish can teach us about great accuracy and precision. Cavendish discovered water by identifying the component parts and seeing how these parts interact with each other. As we start to examine a particular problem or opportunity to identify how the culture is influencing it, we want to avoid introducing our favorite explanations or theories. Instead we want to use “great accuracy and precision” which was the hallmark of Cavendish’s career. We want to examine and observe based on what presents itself, rather than our opinions about what is being seen.

Application

At KingChapman we assist clients to develop strategies to change their culture and transform their organization. This intervention begins with identifying the Default Future of their organization. The Default Future is what is going to happen if nothing dramatically changes. That is, if the organization continues on auto pilot what will probably occur. This Default Future is based on the current context and is business as usual. Once the Default Future is identified, the question is “Do you want it?” If the answer is yes, then no further changes are needed.

If the answer is a rousing no (often expressed as “Hell No!”), then the next step is to design a new future which is more attractive and robust for the organization. The next step is to create a new future in which dramatic cultural change and performance improvements occurs. We call this the Invented Future since it is created or literally made up. The Invented Future provides a platform from which clients can see the existing culture as well as design changes in the culture which will enable the organization to make dramatic improvements.

In order to determine areas of the culture which need to be changed, we at KingChapman use our Breakdown Methods. We say that a breakdown is an interruption of a commitment. That is, a group of people are committed to something and for whatever reason that commitment is not kept. This lack of keeping a commitment provides a view for our clients to inquire into the bedrock of their culture, which is the tacit assumptions. Using the Breakdown Methods as a tool, clients are able to separate the observable facts from the opinions and stories which invariably accompany any perceived problem. This separating of observable facts from opinions allows our clients to clearly see a specific part of their culture that is causing problems and interfering with improvements. And with this clear vision of it, clients can see and address the underlying implicit assumptions to implement changes which will improve organizational performance.

What our clients find when they declare a breakdown and begin inquiring into the breakdown is that an unexpected element of the culture has shown itself and caused unexpected behavior by people in the organization. Something surprising occurs. When our methodology is used to identify and inquire into problems which are a reflection of commitments being kept, our clients see specific examples of how a culture is impacting performance. With these insights, our clients can create new ways of thinking and approaching understanding the culture and ultimately making the desired changes.

Conclusion

Who discovered water? Henry Cavendish. What can he teach us about organizational culture? To inquire and observe using great accuracy and precision about how the context and tacit assumptions shape how an organizational culture perceives situations and elicits specific actions. Through great accuracy and precision, we are able to discover the third level of culture which will allow us to be successful in making  changes in organizational culture.

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Appreciating I.M. Pei and Architecture for Transformation

A remarkable man died at the age of 102 on May 16th, 2019. I.M Pei lead the design of some of the most unique buildings, which blended daring visual effect with practicality. Among his most notable projects were Boston’s John F Kennedy Library and Museum, Bank of China tower in Hong Kong, Japan’s Miho Museum, Suzhou Museum in China and Dallas City Hall with fellow architect Theodore J Musho. Remarkably, Pei was in his eighties when he designed the spectacular Islamic Museum of Art in Qatar.

I came to appreciate I.M. Pei for his work on Louvre Museum in Paris. This project was for me a masterful example of architecture for transformation of a building. I have adopted some of the lessons I observed from the Louvre project to my work with clients as an architect for organizational transformation. Let me explain.

A crucial aspect of organizational transformation is developing the architecture. That is, the use of design principles to uniquely visualize and plan for implementing transformative changes in an organization. Unless you have been involved in designing and initiating the transformation of an organization, you may be unfamiliar with the term architecture for transformation. This term came into use in the 1980’s and continues to be used. The basis for architecture for transformation:

  • Translating the executives’ vision for the future of the organization into words. “Painting a word picture” of the commitments and intent of the executives with the future of the organization is the crucial first step. This involves identifying what the future is likely going to look like, called the Default Future. With the Default Future articulated, the next step is for the executives to create a new future that if achieved would fulfill the needs and wants of key stakeholders of the organization. This Invented Future is one which becomes the basis for developing an architecture for transformation.
  • Combining the core elements which have proven to be important for achieving success in other transformations. McKinsey refers to these as “transformational tactics”. These core elements or tactics include changing mindsets, inclusion of groups in planning and implementing the specific projects and etc.
  • Execution or implementation plans which establish urgency for undertaking the transformation as well as creating tangible results in the business. The challenge is to create action and momentum without overstraining the capabilities and resources of the organization.

 

Lessons Learned from I.M. Pei & the Louvre Project

Challenging Design

In redesigning a building or transforming an organization, the first step is to assess the level of complexity. The Louvre was an exceptional example of complexity. The first structures were built in the 12th century as a fortress on the banks of the Seine River. The building slowly evolved into a royal residence. Successive Kings built increasingly elaborate galleries, halls and residences. Architects of different eras had been asked to develop plans for construction of a new component or structure in the Louvre. Because the Louvre was the palace of the Kings, it played a prominent role in the French Revolution. The buildings were first opened to the public in 1793. This was during the French Revolution and came shortly after the executions of King Louis XVI and Marie Antoinette. After the Revolution, different buildings were used as governmental administrative offices and residences. Eventually it became a museum.

By the early 1980’s it was painfully clear that a major remodeling of the Louvre was required. The architectural challenge was to honor the magnificent history, protect the unique beauty and to remake the various buildings into an efficient, modern museum. The buildings were in need of renovation, core infrastructure was missing, and the gallery space was very inefficient. The building was “constructed as a royal palace and was fundamentally ill-suited to serve as a museum.” In addition, there was a problem with the entrance. It was too small to accommodate ever increasing numbers of guests. The Louvre Project was to change all of that, as well as add 650,000 square feet of much needed support space.

I’ve been involved in organizational transformations for over thirty years. Each one has had a plethora of surprises and unique dynamics. Each requires creative thinking about these unique challenges of the business and personalities of key stakeholders.

Diverse Stakeholders

If you have spent any time in France, you know that the French are very passionate about the beauty of their splendid country. This beauty is both natural and man-made. There are many magnificent buildings, of which the French are very proud, and certainly the Louvre is one of those buildings.

Excitement built as the initial plans for remodeling the Louvre were discussed in the early 1980’s. As you probably know, the French LOVE to hotly debate items of French life. During this time the Parisian cafes were filled with animated conversations about how the remodeling should be done, and of course everyone had their own unique views. That is, until the French government announced that it had hired I.M. Pei as the architect who would oversee a complete redesign of the Louvre. The first shock was that the government had not hired a Frenchman. A second shock came with the realization that the architect to whom this precious French treasure had been entrusted was not a European! Then there was a moment of stunned silence followed by outrage. What set the ‘tongues wagging’ in the cafes, restaurants, and homes was that the French government had awarded this most prestigious assignment to a Chinese born American! An AMERICAN!?!?!

Needless to say, there are many strongly held opinions about consultants in every organization. In developing the architecture for transformation, it is essential that each group of stakeholders are able to express their commitments and concerns. The willingness of consultants and executives to listen to the various stakeholders is a crucial first step. The second step is to consider how to address what stakeholders have said in developing the design for the transformation. Of course, not every point of view can be completely satisfied… but some elements can be included.

Disruptive Approaches

Organizational transformation requires disruption in approaches to communication, employee mindsets and ways of conducting the business. These disruptions are to interrupt the status quo so that new ways to working and thinking can be implemented. While this is completely logical, nonetheless it is upsetting to people when it is happening. This was clearly the case for Pei’s design for the Louvre. The focal point would become the plaza of the Louvre with the construction of a series of glass pyramids and fountains. For many onlookers, the construction of pyramids made of glass and steel was too modern and seemed completely out of line with the architecture of the existing buildings.

Sustaining Momentum During Execution

Given that meaningful transformation of an organization takes three plus years, the architecture must include plans for sustaining the commitment and engagement over that length of time. A building construction such as the Louvre clearly faces the same challenges. The Louvre project took six years to complete. During those long years there continued to be hot debate about the decision to hire an American and the radical changes this “rogue American” was proposing. While there were construction barriers, the citizens could see the beginning of the frames for the glass pyramids that became a focal point of the changes. The furor over hiring an American was compounded by the inevitable traffic jams that were created by renovation activities in the heart of Paris. Of course, the traffic jams were inevitable regardless of the nationality of the architect, but that was not the conversation among frustrated drivers at the time. I had the pleasure to briefly live in Paris during this time and was frequently in the Tuileries with my young children. Given my kids were playing at the boat pond and in the gardens, I often spoke with other parents and tourists. I found it interesting how often I was asked about what I thought about an American being hired as the architect for the Louvre…. given that my accent makes it clear that I am an American. That was one of those questions for which there was not a good answer.

Stunning Accomplishments

Transformation of organizations produces achievements and results which were previously thought impossible. Further, there are major changes in the organizational culture. There is an enthusiasm about the activities in the organization as well as what the future holds. So too was the time just before the grand opening for the renovations brought about by Pei’s design. For all the initial criticism and uproar, the Louvre project was a stunning success. I.M. Pei cemented his place in history as a great architect with this project. The architecture enabled remaking the Louvre from a very old palace into a modern museum. One part of the design was to shift the feel of the Louvre from being a series of long linear buildings into a coherent U-shaped configuration with multiple views of the courtyard or plaza. The courtyard now serves as the focal point for the Louvre. Highlighting the focal point of the courtyard or plaza are the pyramids.

Dennis Sharp says:

“Of all the Grand Projects in Paris, none created such a stir as the Pei Pyramids in the courtyard of the famous Louvre Museum. Spectacular in concept and form, they provide a startling reminder of the audacious ability of modern architects to invigorate and re-circulate traditional architectural forms”

Conclusion

He was a quiet, soft spoken person whose influence is enormous. I.M. Pei’s unique style and vision can be seen in buildings all over the world. Each is a unique expression of the location and intent for the building. His mastery of architecture and design can also be appreciated by those of us who engage in developing architecture for organizational transformation. Pei’s contributions during his 102 years of life were enormous. He serves as a model for creativity and innovation for the rest of us.

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7 Leadership Hurdles Executives Must Overcome to Transform a Business

The starting point for talking about business transformation is leadership. Leadership is the lifeblood of transformation. Transformation simply will not happen without leadership. This leadership begins with executives and senior managers. For this leadership to be successful, there are 7 hurdles which executives must overcome for success.

They involve understanding and accepting the following:

  1. Importance of Personal Involvement

  2. Leadership and Management are Different

  3. Embrace Feeling Odd or Strange

  4. Commit to Being a Team

  5. Engage and Unleash Informal Leaders

  6. Importance of Inspiring and Mobilizing People

  7. Prepare Your Team for a Breakdown

#1: Importance of Personal Involvement

The first obstacle they must overcome is understanding the importance of their personal involvement during the entire transformation, not just at the beginning. Too often executives assume they can begin a transformation and then delegate it to others. That assumption is a fatal flaw which will doom the transformation. Along the way somethings will happen which requires immediate intervention by the executives, which they will not see if not intimately involved. Using the analogy of leadership being the lifeblood of transformation, executives delegating and moving on to other things will result in the transformation “bleeding out” and dying at some point.

#2: Leadership and Management are Different

The second hurdle in changing the mindset of executives is regarding the differences in leadership and management. Leadership and management are NOT the same thing. Both are important, but distinct. Leadership provides courage to think differently and to challenge existing approaches, methods, strategies and techniques. Leadership demonstrates the willingness to explore new approaches and ideas. It encourages others to actively participate in the pursuit of breakthroughs for the business. Leaders encourage others to aspire to excel and to think innovatively. Transformations require leaders and leadership, not just more of the same management techniques which are already embedded in the organization. Commitment and courage are required for an executive to confront that they have been managing, not leading the organization. Those who do confront this can become excellent leaders. It is not that they give up their management capabilities, but instead expand their capabilities as executives by becoming leaders as well as managers. Executives who are committed to being leaders, not just managers, in the transformation is a crucial step.

This second hurdle is not easily overcome, as I’ve discovered the hard way. While most managers say they want those things from others in the organization, their actions often contradict their words. Most managers rely on being in control and having processes that inadvertently restrict change and innovation. Executives will say they want the organization to transform without appreciating how much they will need to change personally in order for the transformation to be successful. Saying the organization needs to change does not mean that “I also need to change”. Instead, what the executives are often thinking is “I want others in the organization to change and I will manage this transformation using my preferred management approaches and techniques”. While this is understandable, it is a recipe for failure.

#3: Embrace Feeling Odd or Strange

A third hurdle is that transformation feels odd or strange to executives. This is because most of their prior work in strategy was based on management principles of control and tight process to reduce surprises and variation. Again, designing transformation must be done primarily from a context of leadership in which the unexpected is expected. Transformative changes are not linear and tidy. Instead there will be periods of rapid acceleration, unexpected breakdowns, and stunning accomplishments … none of which fit in a tidy, linear package. By definition transformation is not easily controlled or predictable. This is why transformations require leadership. What makes this third hurdle difficult is that many managers say they want change and transformations, their actions often contradict their words. Most managers have gotten into their positions by being in control and having processes that work in stable situations, but inadvertently restrict change and innovation during transformation.

#4: Commit to Being a Team

A fourth hurdle is for executives to commit to collectively being a team that is accountable for the transformation. That is, being an executive team rather than a collection of individual executives who are each doing their own thing. Most executives understand that they are accountable for their specific function or business, but only give lip service to being accountable as an executive team for the overall performance of the business. While this is common in many organizations, it will not work in transformation. There must be a team of executives who hold themselves collectively accountable for design and execution of the transformation. Absent this alignment, the difficult challenges which the transformation is designed to change will be avoided and sub optimized. There are many reasons why three of four transformations fail, and I have found this to be a primary reason for the failures.

#5: Engage and Unleash Informal Leaders

A fifth hurdle is for executives to understand that the success of the transformation requires engaging and unleashing informal leaders through the organization. There are people in the organization who are capable and willing to step up to be leaders when allowed and asked to do so. The emergence of other leaders to form a cadre of leaders is essential for success in for transformation. Successful transformations happen because of the brilliance, commitment, and coordinated actions of people throughout the organization. People create and innovate in ways the executives could never imagine. Those inspired actions of others occur because of leadership coming throughout the organization. This inspiring action requires a cadre of leaders who are empowered and engaged to be and do things not normally done in that organization. Without a cadre of leaders, transformation will fail. Research data has consistently shown that most transformations fail to achieve the desired results. For example, a McKinsey survey reported that “transformations are three times more likely to fail as to succeed”.

#6: Importance of Inspiring and Mobilizing People

A sixth hurdle is for the executives to appreciate the importance of inspiring and mobilizing people through the organization. This inspiration reflects the quality of executive leadership as is the level of mobilizing people to participate in the transformation. Mobilizing an organization for transformational change cannot be mandated. Instead it is generated by leadership and may include participation in planning transformational actions, changing mindsets, etc. The importance of mobilizing an organization was described in a report by McKinsey & Company:

Notably, employee engagement as early as the planning process emerges as a key success factor. Indeed, in successful transformations executives say that identifying underlying mindsets that would need to change was the approach most often used. Moreover, three-quarters of the respondents whose companies broke down their change process into clearly defined smaller initiatives and whose transformations were “extremely successful” say that staff members were entirely or very able to participate in shaping those change initiatives. Collaboration and co-creation also are important: nearly a quarter of the extremely successful transformations were planned by groups of 50 or more, compared with just 6 percent of the unsuccessful transformations

In our practice, we also find that companies which are successful in transformation engage a cadre of employees to become informal leaders. As an example, employees are involved in identifying the mindsets which need to change and challenging the organization’s historical approaches to implementing change. These employees have important, needed perspectives on how best to design and implement transformation in the organization. This cadre of informal leaders provide valuable perspectives about what is required to drive change.

This idea of expanding the group involved in designing the transformation beyond those normally involved in strategy development often initially appears as a paradox to executives. From a typical management perspective these are not people who should be included in these meetings and this work. However, from a leadership perspective it makes “perfect sense”. Often without their unique perspectives, the discussions about transformation design devolves into how the organization has historically approached change. While it seems intuitive that had those previous change initiatives been successful, it is unlikely that a transformation would be needed at this time. Yet that logic is overlooked, and the group contemplating the transformation revert back to the comfortable and familiar approaches. Involving others in deliberations about design does not make the executive less powerful or take away accountability, but in fact often increases the credibility and effectiveness of the executives as leaders. The executives must be accountable even when a larger group is involved in developing the architecture.

#7: Prepare Your Team for a Breakdown

A seventh hurdle is for executives to remember that transformation projects and team invariably encounter breakdowns. In reality, these breakdowns are needed if breakthroughs are to occur. However, for those in the midst of the transformational projects, identifying these breakdowns if often hard to do. This is where the executives need to step in an assure the breakdowns are acknowledged, formally declared as breakdowns and then explored using the breakdown methods. Teams will often be clever if not outright devious in finding ways to ignore the breakdowns. Ironically, the successful resolutions of breakdowns is a major source of energy and momentum in business transformations.

Conclusion

In summary, leadership is the essential “lifeblood of transformation” and must overcome seven predictable hurdles, which are:

  1. Committing to their personal involvement during the entire transformation, not just at the beginning.
  2. Changing their mindsets regarding the differences in leadership and management, and commit to being leader
  3. Persisting to overcome the initial experience of the transformation feeling odd or strange
  4. Being a team of executives rather than a collection of individuals who are each doing their own thing
  5. Engaging and unleashing informal leaders through the organization is required for success of the transformation
  6. Appreciating the importance of inspiring and mobilizing people through the organization.
  7. Acting to assure that transformation projects teams declare and resolve breakdowns.

If these 7 hurdles are successfully overcome, the probability of success is much greater.

Growing a business is a daunting task for many, if not most, executives. While growth is considered fun, and what executives dream of being engaged in, achieving sustainable growth is another story. 

Download our PDF: “Executive Challenges” and learn the Execution of Growth Strategies and Organizational Transformation.

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