Why do some companies consistently outperform their peers? When companies that face identical circumstances are compared, one variable stands out among the winners- leadership quality. The best leaders are able to effectively influence three determinants of organizational performance-adaptation, efficiency, and human resources.
Adaptation involves changes made to cope with external threats and to exploit opportunities created by new technology, changing markets, and the shifting needs and expectations of customers. The ability to adapt becomes even more important when the external environment is turbulent and uncertain, yet it’s often more difficult the larger the size of an organization.
Here are seven things leaders can do to better manage change and ensure their companies are able to adapt amid uncertainty.
The many difficulties involved in fostering adaptation in large organizations make it essential to have a culture with firmly embedded values and beliefs that support innovation and change. Relevant values include flexibility, continuous improvement, initiative, and a quest for excellence.
Instead of viewing adaptation as an infrequent reaction to dramatic, one- time events, it is better to view it as a continuous process that involves a combination of many and frequent incremental improvements and occasional major changes. In organizations with this type of culture, new ideas are nurtured and promoted, information is widely and freely shared, and people and systems are flexible and ready to respond to changes when they occur.
Monitoring the environment involves collecting and analyzing information about opportunities and threats in the external environment and identifying trends and opportunities to enhance business performance.
External monitoring is often assumed to be the province of senior leaders, but it is the people in direct contact with customers, such as sales and service representatives, who often first get wind of changes in customer needs or competitor actions. Thus environmental scanning and interpretation of events should not be left entirely to the CEO and other top executives.
External monitoring in organizations is more effective when people at all levels are involved and relevant information is recognized and used to improve strategic decisions.
Strategic planning is the process of determining where you are, where you want to be in the future, and how you will get from here to there. The process includes setting strategic objectives, identifying tactics and actions for attaining them, and deter- mining the resources and actions needed to implement the strategies.
Although senior management has the ultimate responsibility for strategic decisions, the most successful leaders find ways to involve people through- out the organization in the strategic planning process.
Painting a vivid, appealing picture of what your organization wants to accomplish or become helps to communicate the desired outcomes of a change initiative in a way that is understandable, meaningful, and inspiring. Envisioning change is about putting opportunities and threats in context and clarifying how the organization needs to respond. A variety of elements may be included in the vision, such as strategic objectives, key values for the company, general approaches for attaining the vision, slogans and symbols, and a description of what the vision will mean to people when it is attained.
Although most people would agree that change is essential if an organization is to adapt, grow, and remain competitive, change often produces anxiety and resistance. For people to support change, they must see it as necessary and feasible. Leaders can build such support by explaining the urgent need for change, building a broad coalition of supporters, identifying likely opponents and reasons for their resistance, and taking action to deal with resistance.
They must also be prepared to answer five critical question employees are bound to ask: Why is this change necessary? How will we manage the transition, Where are we in the process, What will I be expected to do, and Will I be able to do it?
It is impossible to anticipate all the potential problems created by a major change or to prepare detailed plans for carrying out every aspect of the change. A change program is less likely to be successful if a top- level leader tries to dictate in detail how it will be implemented in each part of the organization. Authority to make decisions and deal with problems should be delegated to the leaders who are responsible for implementing change in their sub- units.
It is important for leaders to create an appreciation for flexibility and learning among people at all levels of the organization. Major change will be more acceptable and less disruptive once people develop pride and confidence in their capacity to adapt and learn. To encourage an appreciation for learning, all practices should be considered temporary and examined regularly to see if they can be improved or eliminated.
Leaders also need to encourage an active sharing of ideas and new knowledge in the organization. Secrecy is the enemy of learning. Leaders should encourage employees who are facing difficult problems to reach out to other people in the organization to find out how they might have handled similar challenges in the past.
When innovations are developed in one part of the organization, leaders can facilitate diffusion of this knowledge to other parts of the organization in several ways. When it is not feasible for people to attend formal training, a team of experts can be dispatched to different sites to demonstrate how to use new procedures. Webinars and self-guided e-learning can also be used to promote broad idea sharing in a cost- and time-efficient manner.
The most effective leaders recognize when major change is needed and know how to develop support from the people who can make change happen.
Because many innovations in large organizations result from a bottom-up process, effective leaders understand how important it is to inspire and empower all members of the organization to learn from experience, develop creative ideas, and share new knowledge across subunit boundaries.
They understand that implementing major change is a slow and difficult process that requires their consistent attention to succeed. And they use programs, systems, and structural arrangements that are designed to encourage and facilitate innovation and collective learning.