Mar 27, 2014

Why Transformation Efforts Fail: Lesson 1.

John Kotter, Konosuke Matsushita Professor of Leadership, Emeritus, Harvard Business School, in “Leading Change, Why Transformation Efforts Fail,” (Harvard Business Review, January 2007) discusses why companies seeking to change the way they operate in a new “more challenging market environment” often encounter internal institutional resistance from “those in the trenches of the business,” and why “leading change is both absolutely essential and difficult.” In my experience, for companies seeking to transform their compliance programs and cultures, there are important lessons to be learned from this writing, which was originally published in 1995 as a preview of Kotter’s 1996 book Leading Change.  Nonetheless, the lessons, short of twenty years later, remain just as relevant, if not more so, given the recent trends in FCPA enforcement. I will follow Kotter’s outline by focusing on his “common errors” as to bring the reader through the process and “avoid the common pitfalls.” For those who are interested in learning more, including the details of eight unique steps to transformation, here is a link to the work.
What is the end result of all this? I remember working for someone who was leading a major initiative and I asked him what was his goal; he stated that the goal was to avoid “kidney stone management.” In his definition,”kidney stone management”  is change which is “painful while it is occurring,  but if you wait long enough, it passes, and everything goes back to normal!” Thus, each day I will post one of Kotter’s eight deadly errors and invite comment in hopes of helping others to avoid future “kidney stones.”

Error 1: Not Establishing a Great Enough Sense of Urgency. When implementing a change, the entire organization needs to understand the sense of urgency. I have seen examples of organizations which want to change their culture and implement FCPA compliance; according to Kotter, this kind of change (in a general sense) needs to be more revolutionary, as opposed to evolutionary. What defines revolutionary? According to Kotter, it is when “about 75% of a company’s management is honestly convinced that business as usual is totally unacceptable. Anything less can produce very serious problems later on in the process.” 

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