The Idea in Brief
Two years after launching a change program to counter competitive threats, a bank CEO realized his effort had produced…no change. Surprising, since he and his top executives had reviewed the company’s purpose and culture, published a mission statement, and launched programs (e.g., pay-for-performance compensation) designed to push change throughout the organization.
But revitalization doesn’t come from the top. It starts at an organization’s periphery, led by unit managers creating ad hoc arrangements to solve concrete problems. Through task alignment—directing employees’ responsibilities and relationships toward the company’s central competitive task—these managers focus energy on work, not abstractions like “empowerment” or “culture.”
Senior managers’ role in this process? Specify the company’s desired general direction, without dictating solutions. Then spread the lessons of revitalized units throughout the company.
The Idea in Practice
Successful change requires commitment, coordination, and competency.
1. Mobilize commitment to change through joint diagnosis of problems. Example:
Navigation Devices had never made a profit or high-quality, cost-competitive product—because top-down decisions ignored cross-functional coordination.To change this,a new general manager had his entire team broadly assess the business. Then, his task force of engineers, production workers, managers, and union officials visited successful manufacturing organizations to identify improvement ideas. One plant’s team approach impressed them, illuminated their own problem, and suggested a solution. Commitment to change intensified.
2. Develop a shared vision of how to organize for competitiveness. Remove functional and hierarchical barriers to information sharing and problem solving—by changing roles and responsibilities, not titles or compensation. Example:
Navigation’s task force proposed developing products through cross-functional teams. A larger team refined this model and presented it to all employees—who supported it because it stemmed from their own analysis of their business problems.
3. Foster consensus for the new vision, competence to enact it, and cohesion to advance it. This requires the general manager’s strong leadership. Example:
Navigation’s general manager fostered consensus by supporting those who were committed to change and offering outplacement and counseling to those who weren’t; competence by providing requested training; and cohesion by redeploying managers who couldn’t function in the new organization. Change accelerated.
4. Spread revitalization to all departments—without pushing from the top. Example:
Navigation’s new team structure required engineers to collaborate with production workers. Encouraged to develop their own approach to teamwork and coordination, the engineers selected matrix management. People willingly learned needed skills and attitudes, because the new structure was their choice.
5. Institutionalize revitalization through formal policies, systems, and structures—only after your new approach is up and running. Example:
Navigation boosted its profits—without changing reporting relationships, evaluation procedures, or compensation. Only then did the general manager alter formal structures; e.g., eliminating a VP so that engineering and manufacturing reported directly to him.
6. Monitor the revitalization process, adjusting in response to problems. Example:
At Navigation, an oversight team of managers, a union leader, an engineer, and a financial analyst kept watch over the change process—continually learning, adapting, and strengthening the commitment to change.
In the mid-1980s, the new CEO of a major international bank—call it U.S. Financial—announced a companywide change effort. Deregulation was posing serious competitive challenges—challenges to which the bank’s traditional hierarchical organization was ill-suited to respond. The only solution was to change fundamentally how the company operated. And the place to begin was at the top.