Kotter 8 Step Process for Change

I have written previously about the challenges of adjusting organizations to our rapidly changing environment in my Slideshare “Digital Transformation and the Customer Experience: Overcoming Barriers and a Framework for Success”. The reality is that over 70% of all major change efforts in organizations fail, so any sort of strategies to help mitigate this and achieve success are welcome additions to this framework.

One of the most referenced change strategies comes via John Kotter and his Kotter International Consulting Firm. Kotter’s 8 Step Process for Leading Change offers a great starting blueprint for organizational adaptation, and will be explored in this essay.

Defining the Problem

Kotter offers a fantastic overview of the problem at hand via this short video:

The rate of change in both markets and our lives is creating unprecedented uncertainty. Between new software platforms underpinning new and existing business models, and the growth of interconnection and complex adaptive systems, digital disruption is an ever present threat.

Members of the S&P500’s lifespan has dropped to just 15 years. Billion dollar businesses can now be built by a few entrepreneurs in a few years, often rising and falling just as quickly. With entire entrenched industries being threatened by much nimbler competition, the need to rethink bloated middle management, global divisional structures lacking connectivity, siloed departments operating as fiefdoms and toxic internal politics is an ever present reality.

Organizations facing this challenge without a plan often fall back on reflex behavior like outsourcing perceived problems to overpriced business consultants which often just repeats the cycle in the long term. Worse, when faced with the need to make decisions when facing this complexity, organizations let paralysis take over moving into a slow decline.

Reorganizing to be more nimble, intelligent and reactive to ever present change (especially from the influence of digital) requires a lot of hard work and diligence. Kotter outlines a great framework to hopefully drive greater success in these efforts.

Defining Success Goals

Before we jump into the process itself, it’s good to understand three categorizations of urgency where organizations are on the spectrum of change - Complacency, False Urgency and True Urgency. By defining a successful mindset first, we can get a better handle of what we are aiming for when we initially begin change efforts.

Kotter Urgency Scale

Kotter Urgency Scale

Complacency

As the name suggests, this is the worst place to be in within our theoretical organization. Dangerously, complacency often occurs as a result of achieving success when the business is at the top of its market, or at the point of bankruptcy.

Complacency is defined by employees and leaders refusing to search for new opportunities and hazards in their environment. While problems may be obvious to outsiders, individuals within the organization have strong ingrained mental models that resist questioning the status quo or shifting focus from being inward.   

There may be a lack of initiative. The general feeling is business-as-usual, even in the face of falling profits or changing customer expectations. It can be hard to shift gears, or drive new momentum.  

Kotter describes the following checklist for potentially complacent activity:

  • Are discussions inward focused and not about markets, emerging technology, competitors, etc?
  • Do people hesitate to question bureaucracy and politics that are slowing things down?
  • Do people regularly blame others for problems instead of taking responsibility?
  • Are failures of the past discussed not to learn, but to stall new initiatives?
  • Do assignments around critical issues regularly miss deadlines?
  • Do cynical jokes undermine important discussions?
  • Are highly selective facts used to shoot down data that suggests there is a big hazard or opportunity?

False Urgency

In the middle of our spectrum lies False Urgency. This is particularly dangerous because it can easily masquerade as True Urgency - the defining elements can be subtle.

With False Urgency, managers may see lots of energetic activity; employees running from meeting to meeting, endless presentations and multi slide powerpoints, agendas with huge lists of items etc. The problem is this is often hollow activity.

This busy work may be an expression of Parkinson’s Law (in short, work expanding to fill the time available), or worse, employees spending the majority of their time justifying to managers that they are doing work, rather than actually doing it.

This circular behavior drains energy, diverts focus from what is necessary, and can lead to serious organizationalal burnout.

Kotter again describes the following checklist for potentially falsely urgent activity:

  • Do people postpone scheduling meetings on important initiatives because they are too busy?
  • Do people spend long hours developing presentations for every initiative?
  • Do people regularly blame others for problems instead of taking responsibility?
  • Are new initiatives stalled because of fear of past failures?
  • Are assignments around critical issues regularly not completed on time or with sufficient quality?
  • Do meetings on key issues end with no decisions about what must happen immediately (except the scheduling of the next meeting)?
  • Does passive aggression exist around big issues?
  • Are new approaches to new problems undertaken every week?
  • Are people motivated by a sense of fear and anxiety?
  • Do people run from meeting to meeting exhausting themselves and rarely focusing on the most critical hazards or opportunities?

True Urgency

This is our optimal state within the organization. The important distinction here is mindset - this is not a belief that all is well, or all is a mess. It is that the world contains great opportunity and great hazard, so change and momentum leads to leveraging these opportunities or threats.

With True Urgency, the organization will defer from only gazing inwards to looking out into the environment. When critical issues arise, they are addressed immediately, not when it fits the schedule. As a result, leaders become a highly positive and focused force.

Another important factor is avoiding the burnout associated with False Urgency. Employees actually mitigate stress because there is a constant urge to rid themselves of the chores that are superfluous or add little value to the organization (in other words busywork). The business-as-usual mindset becomes business-as-needed.  

Episodic vs Continuous Change

Once the decision to make change occurs, our next step is to understand if it is episodic or continuous.

Episodic change is usually defined by urgency in spurts. Energy is applied for the lifecycle of the initiative in order to sustain it, and then peters off. This usually revolves around a big ticket business item or initiative; think major restructuring, new product launches, acquisitions, IT integration or growing revenue activity.

Episodic change is dangerous because it can be a gateway to False Urgency or Complacency.

Our antithesis is Continuous change. This is a ceaseless flow of a combination of lots of smaller incremental changes that ultimately leverage opportunities or avoid hazards.

At its heart, Continuous change is marathon, not a sprint. Kotter defines an urgent, continuous environment by the following key factors:

  • A "want-to" attitude
  • A gut-level determination to move, and win, now
  • People are alert and proactive, constantly looking for information relevant to success and survival
  • When faced with a problem, people search for effective ways to get the information to the right individual, now
  • People come to work each day ready to cooperate energetically

 The 8 Step Process for Leading Change

Now we have a better sense of what success looks like, we can jump into the 8 step process to bring this change about, and move towards true urgency and continuous change.

Note, these steps are not necessarily linear (some may require development in tandem), but all steps are necessary.

Kotter's 8 Step Process for Change

Step 1: Create a Sense of Urgency

After defining things above, the first step is pretty obvious. Change Agents must create a sense or urgency in adapting the organization and bringing about change in the first place.

At its core, the goal here is to “help others feel a gut-level determination to move and win, now”.

This step cannot be underestimated - close to 50% of companies that fail to change make their mistakes at the very beginning, so leaders need to understand the effort and patience required to drive people out of their comfort zones, and develop the appropriate urgency.

In order to build the business case internally and build momentum within the entire organization, a Change Agent must appeal and influence both Thinking (our new Rational brains) and Feeling (our older Reptilian brains).

Unfortunately there is no magic bullet strategy here, it requires leveraging the influence strategies of Empowerment, Interpersonal Awareness, Bargaining, Relationship Building, Organisational Awareness, Common Vision, Impact Management, Logical Persuasion and Coercion. A sense of urgency also often requires a controlled Crisis, which can build solidarity around a common cause (the trick is to know the magnitude of the crisis required).

Logical or Thinking strategies often involve collecting relevant supporting data, analyzing it, and then presenting it concisely. As we know from neuroanatomy, appealing to Feeling strategies often have a bigger impact on behaviour change; this is normally achieved by creating surprising, compelling, and if possible, visual experiences and stories to convey things.

Experiences change how people feel about a situation, which can go a long way in the difficult task of behaviour change.

Kotter outlines a good checklist at this first step of head and heart strategies on presenting your case:

  • Make a compelling story
  • Use of metaphors, analogies and imagery
  • Use simple language and avoid jargon and acronyms
  • Frequent, consistent and aligned communication
  • Energy and enthusiasm are infused throughout
  • Careful use of data – don’t overuse
  • Do your homework to understand what people are feeling
  • Rid the channels of communication from junk so that important messages come through
  • High level of visibility
  • Bring the outside in
  • Communicate with what you DO not just what you SAY

Step 2: Build a Guiding Coalition

This step involves pulling together a group with enough power to lead change. As Kotter outlines, no single person, no matter how competent is capable of single-handedly:

  1. Developing the right vision,
  2. Communicating it to vast numbers of people,
  3. Eliminating all of the key obstacles,
  4. Generating short term wins,
  5. Leading and managing dozens of change projects, and
  6. Anchoring new approaches deep in an organization’s culture.

Creating the right coalition is critical to success, and often very difficult. It must have the right composition, a significant level of trust, and a strong shared objective. In other words, the elimination of individualistic ego, and the fortitude to work through ongoing inertia.

The Guiding Coalition should feature the following four qualities:

  1. Position Power:  Enough key players should be on board so that those left out cannot block progress.
  2. Expertise:  All relevant points of view should be represented so that informed intelligent decisions can be made.
  3. Credibility:  The group should be seen and respected by those in the firm so that the group’s pronouncements will be taken seriously by other employees.
  4. Leadership:  The group should have enough proven leaders to be able to drive the change process.

Step 3: Form a Change Vision

In this step, the Guiding Coalition need to clarify how the future will be different to the past. This is achieved through an organisational vision.

This vision must take into account the current realities of the organisation, but also set forth goals that are truly ambitious. Combined with a strong, credible strategy, it can help influence stakeholders into believing it is more than a pipe-dream, inspiring and guiding future action. Again, talking to the heart and the mind.

Kotter outlines six characteristics of effective visions:

 

  1. Imaginable: They convey a clear picture of what the future will look like.
  2. Desirable: They appeal to the long-term interest of those who have a stake in the enterprise.
  3. Feasible: They contain realistic and attainable goals.
  4. Focused: They are clear enough to provide guidance in decision making.
  5. Flexible: They allow individual initiative and alternative responses in light of changing conditions.
  6. Communicable: They are easy to communicate and can be explained quickly.

A good place to start in crafting an organizational vision is the Golden Circle - Start With Why.

Step 4: Communicate the Vision for Buy In

In this step, the guiding coalition need to ensure that as many people as possible understand and accept the vision.

In complex, layered organizationss this can be incredibly difficult to achieve. Under-communication and inconsistency due to fragmented or siloed departments as fiefdoms create stalled transformations.

A good rule of thumb is to amplify communication of the vision by a factor of ten. A single memo or series of speeches by the CEO will not cut it - it needs to be communicated in hour-by-hour activities and anywhere and everywhere - referred to in emails, meetings, and presentations.

Kotter outlines some guidelines for communicating the vision. These are:

  1. Simple: No techno babble or jargon.
  2. Vivid: A verbal picture is worth a thousand words – use metaphor, analogy, and example.
  3. Repeatable: Ideas should be able to be spread by anyone to anyone.
  4. Invitational: Two-way communication is always more powerful than one-way communication.

Again, keep the Golden Circle in mind as a reference point.

As a last point, actions definitely speak louder than words. Successful transformation organizations feature leaders who “walk the talk” who embody the vision through their action and behavior. An entire team of senior managers who do this send a powerful message which can inspire confidence, decrease cynicism and change internal cultures.

Step 5: Empower Broad-Based Action

After the visions has been defined and communicated, the organization needs to remove as many barriers as possible and unleash their employees to do their best work.

Barriers usually take two forms - structural and supervisory.

Structural Barriers

Internal structures within an organization can often be at odds with the change vision. This again is manifested as bloated middle management, siloed departments, and an over-emphasis on managers over makers.

Besides complete restructures, two strategies work here. First, realign incentives and performance appraisals to reward and reflect the thing you most value as a business. Second, concentrate on improving management information systems. The goal is to speed up feedback loops and provide the information necessary for employees to do their jobs more efficiently.

Check out some of the more interesting internal structures from organizations as diverse as Google, Valve or Spotify for some new and innovative examples, or check out the more extreme Holocracy for some further inspiration.

Supervisory Barriers

This basically refers to troublesome supervisors. They are often defined by locked, one sided mental models or a large number of interrelated habits that add up to an inability to accept change.

While a refusal to confront these people may have been masked in earlier stages, at this point it comes to a head and needs to be addressed. This can often mean extreme measures, like parting ways, may be required - elaborate strategies or manipulation can run the risk of derailment. As a start, ensure there is an engagement in honest dialogue.

Step 6: Generate Short-term Wins

This step is predicated upon generating and making visible unambiguous success as soon as possible. It is critical to drive short-term wins in any long-term change effort.

The Guiding Coalition should be tasked with identifying significant improvements within 6 to 18 months. Kotter outlines research that shows that companies that experience significant short-term wins by fourteen and twenty-six months after the change initiative are much more likely to complete the transformation.

Primarily this is probably due to the dual forces of increased optimism that efforts are paying off leading to greater energy and momentum, and the silencing or undermining of any cynics or self-serving resistors. Small wins also afford management important information that can allow fine tuning of visions and any necessary course-correction.

Short-term wins rarely happen on their own, and so require careful planning. Praying won’t cut it. The trick is to not be overwhelmed by the long-term tasks associated with the change effort or the additional pressures short-term planning may create - done skillfully this can actually drive greater momentum and cement the overall initiative.

Step 7: Sustain Momentum - Don’t Give Up!

This step is about consolidating gains and producing more incremental change. Resistance is always hiding in the wings trying to re-assert itself when you least expect it. Remember that this is a marathon.

This stage is vastly improved with strong leadership. Transformational leaders will strive to launch more and more projects to drive change deeper into the organization, and more importantly, become part of the organization’s culture. A lack of consistent and sufficient leadership runs the risk of stalling plans.

Kotter outlines a good checklist that appears at this stage at a lot of successful change organizations:

  • More projects are being added
  • Additional people are being brought in to help with the changes
  • Senior leadership are focused on giving clarity to an aligned vision and shared purpose
  • Employees are empowered at all levels to lead projects
  • Reduced interdependencies between areas
  • Constant effort to keep urgency high
  • Consistent show of proof that the new way is working

Step 8: Institute Culture Change - Make It Stick

At this point, the focus is on anchoring new approaches into the culture for sustained change. New practices need to be deeply entrenched to remain there, especially as these are composed of norms of behavior (defining appropriate attitudes) and shared values (defining what is important).

Every individual who joins an organization is indoctrinated into its culture (even without realizing it), and its social forces and group conformity can be incredibly strong. Changes can be incredibly difficult to ingrain.

This is why cultural change is Step 8, not Step 1. It needs to build slowly from the edges to succeed.

Remember the Three C’s of Culture - Clear, Consistent and Comprehensive.

Kotter outlines a checklist for Culture:

  • Cultural change should comes last, not first
  • You must be able to prove that the new way is superior to the old
  • The success must be visible and well communicated
  • You will lose some people in the process
  • You must reinforce new norms and values with incentives and rewards – including promotions
  • Reinforce the culture with every new employee

Conclusion

Kotter’s 8 Step Process for Leading Change is a strong framework for driving transformation in an organization. From a Change Agent, through to a Guiding Coalition, and finally through to an ingrained organizational culture, this can guarantee a higher success rate in building a more nimble, intelligent and reactive organization to tackle the rapidly changing environments we face today.

To quote Arie de Geus:

“The ability to learn faster than your competitors is the only sustainable competitive advantage”.

This post continues my series on mental models.