Chapter 1
The Challenge Of Leading
Strategic Change

With over a hundred books on leading strategic change to choose from, why read this one? The answer is simple. Most other books on change have it backward. They take an "organization in" approach; in other words, they outline all the organizational levers you should pull to change the company so that individual change will follow. Our experience and research commands the opposite conclusion. Lasting success lies in changing individuals first; then the organization follows. An organization changes only as far or as fast as its collective individuals change. Consequently, instead of an "organization in" approach, we take an "individual out" approach. To repeat—to strategically change your organization, you must first change individuals.

Unlocking individual change starts and ends with the mental maps people carry in their heads—how they see the organization and their jobs. Just as actual maps guide the steps people take on a hike through the Himalayas, mental maps direct people's behavior in daily organizational life. And if leaders cannot change individual's mental maps, they will not change the destinations people pursue or the paths they take to get there. As a result, successful strategic change requires a focus on individuals and redrawing their mental maps. If what is in people's heads is not remapped, if you cannot break through this "brain barrier," their hearts and hands have nothing new to follow. As a result, leading strategic change requires becoming an effective mental cartographer, or Map Maker.

Perfecting this capability is probably one of the most profitable things you can do for your career and for your company. In our research, just over 80% of companies listed leading change as one of the top five core leadership competencies for the future. Perhaps more importantly, 85% felt that this competency was not as strong as was needed within their high-potential leaders. In a nutshell, when it comes to leading strategic change, demand is high (and growing), and supply is short.

To understand why a shortage of capable leaders of change persists, we need to consider only a few factors. First, change has never been easy. For example, consider this quote written 500 years ago by Niccolo Machiavelli:

There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle than to initiate a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders by all those who could profit by the new order. This lukewarmness arises from the incredulity of mankind who do not truly believe in anything new until they have had actual experience with it.

Clearly, resistance to change is not a modern concept. In fact, resistance to change seems to have endured through the ages, in part because humans are biologically hard-wired to resist change. Yes, that's right. We are programmed not to change. Although plants may evolve and survive through random variation and natural selection, people do not. We do not generate random variations in behavior and let nature take its course— selecting and deselecting those who fit and do not fit the environment. We are wired to resist random change and, thereby, avoid random deselection. We are wired to survive, so we hang on to what has worked in the past.

This map-hugging dynamic happened to Hal a few years ago, when he was teaching in the Amos Tuck School of Business at Dartmouth College. Even though Hal lived only about a mile from work and had several possible ways to get there, he had quickly settled in on a habitual driving route that took him to work quickest. One cold winter morning, though, Hal had driven about halfway to work when he confronted a detour barricade and sign. Construction workers were laying new pipe under the road, so Hal had to turn around, backtrack halfway home, and follow a detour route to work. At the end of the workday, Hal started his short drive home. But again, he took his "usual" route and ended up stuck at the detour sign once more. He backed up (just like he did in the morning) and ultimately rerouted himself home. The next day, Hal woke up and hurried off to work and— you guessed it—Hal's a slow learner. He took his "usual" route again and ended up staring once more at the detour sign. Like the day before, he turned around, backtracked, followed the detour route, and made it to work. Finally, on the afternoon of the second day, Hal started to alter his mental map of how to drive home and actually rerouted himself before running into the detour sign.

Unfortunately, modern times conspire against this ancient biological code of hanging on ferociously to what works until undeniable evidence mounts against our map that it no longer fits the environment. For example, the rate and magnitude of required change has grown exponentially. We now talk about 90-day years (i.e., Internet years, which are almost as short as dog years.) Pundits pull out charts that show the half-life of products dropping in half. In fact, many of us face change of such enormous scope, size, and complexity that it is nearly overwhelming:

• transforming a business unit that succeeded for years by focusing on technological prowess to a unit that must now focus on customer service,
• leading an organization from domestic competition to the global battlefield,
• accelerating growth by focusing not just on building things but on all the services that go with after-sales support,
• changing the culture from one of considered deliberations to a fast, first-mover approach,
• redesigning jobs to incorporate new technology that we hardly understand, or
• something else just as daunting.

Bottom line, the pace, size, and complexity of change are greater than ever before. Consequently, the costs of changing late are not just inconvenient but often catastrophic.

We don't need to look far to see the consequences of not meeting this challenge. Xerox, Lucent, and Kmart in the United States, De Beers in Europe, and Mitsubishi in Japan are just a few examples of companies that faltered, brought in new leaders to champion change, and still failed to recover. Beyond these visible company examples are literally thousands of invisible individual examples—middle-level leaders whose seemingly fast-track careers derailed when a change initiative they were leading crashed and burned.

Although likely frustrating, the fact of the matter is that, no matter how good we have been at leading change in the past, the future will demand even more of us—especially because people are programmed to resist any effort to redraw their mental maps and walk in new paths. The mental terrain of their brains poses a significant set of barriers that we must break through to meet the increasing demands of leading strategic change.

The Crux of the Challenge

This brings us to the crux of the challenge. Clearly, change has always been and remains difficult. Unless we can dig beneath the surface and expose the fundamentals of why this is so, we have no hope or prayer of meeting these ever-escalating demands on leaders of change.

To better understand these fundamentals, we might take a page from the fundamentals of flight. Breaking the bonds of earth and soaring above the clouds has never been easy. Gravity has been a natural, fundamental force in keeping us down from the beginning. Flight requires thrust, lift, and aerodynamics. We must master these key factors to overcome gravity and break through the barriers of resistance.

Take a moment to study the picture in Exhibit 1-1. This incredible photo captures an F/A-18 Hornet fighter jet hitting Mach I, the speed of sound.

Exhibit 1-1. F/A-18 Hornet jet breaking through the sound barrier. (Photo John Gay/©AFP/CORBIS)

When approaching Mach I, powerful but usually invisible sound waves bunch tighter and tighter together, forming a massive wall of energy that tries to buffet and shake the plane right out of the sky. Without sufficient thrust, lift, and proper aerodynamic design, disaster is inevitable as this sound barrier combines with the forces of gravity to crush the plane and bring it crashing back to earth. Lucky for the pilot of this plane, the designer possessed an in-depth understanding of these fundamentals to achieve breakthrough, letting her punch through the sound barrier as though it were a puff of smoke.

Change in organizations follows the same path. The faster a leader tries to force change, the more shock waves of resistance compact together, forming a massive barrier to success. Instead of a sound barrier though, leaders confront a "brain barrier" composed of preexisting and successful mental maps. These incredibly powerful maps determine how people see the world of work, guiding their daily steps and behaviors. Indeed, our heads are chock full of such maps, and just as the court jester shown in Exhibit 1-2, the maps in our head—far more than the eyes on our face—frame our personal views of the world.

Exhibit 1-2. The court jester's mental map. (Fools Map of the World, c. 1590, reference [shelfmark] Douce Portfolio 142 (92) Bodleian Library, University of Oxford.)

The power of these mental maps surprised our colleague several years ago. He was hired as a consultant to help transform a meat-packing factory from an authoritarian top-down management system to a high-involvement, participative one. After three days of intensive training focused on the opportunities, challenges, and everyday logistics associated with self-managed work teams, a burly 300-pound butcher stood up in the back of the room, slammed a meat cleaver into the table, and demanded in no uncertain terms that he still had "a right to have a manager tell me what to do and when to do it." Clearly, this butcher's maps of his world at work had not budged an inch. And for significant organizational change to take hold of peoples' hearts and hands in this meat-packing plant—or anywhere else, for that matter— Map Makers of change must comprehend, break through, and ultimately redraw individual mental maps, one by one, person by person, again and again.

The challenge of remapping mental terrain brings us to the critical barriers that prevent sustainable strategic change. What are the natural gravitational forces that suppress change and build brain barriers to breakthroughs? The answer lies in three questions that capture the essence of failed change. And if we can understand why change fails (which it most often does), we can figure out what the necessary thrust, lift, and aerodynamics are for pulling off breakthrough change.

• Why, when opportunities or threats stare people in the face, do people fail to see the need to change?
• Even when people see the need, why do they often still fail to move?
• Even when people move, why do they fail to finish— not going far or fast enough?

If we can grasp why people fail to see, move, and finish, and if we can break through these three barriers, we can deliver strategic change. This book reveals not only how mental maps create these three barriers, but how mental maps also generate the key to breaking through them.

Simplify and Apply

As we explain brain barriers and how to break through them, we try to follow an important principle reflected in the following quote attributed to Albert Einstein: "We should make things as simple as possible, but no simpler." In our view, the eight mistakes, twelve steps, and so on offered by others about change are often correct in direction but overly complicated in reality. But wait—we just got through arguing that today's changes are bigger and more complicated than the past and that changes in the future are likely only to get more daunting. Why would simplifying change help us lead ever more complex changes? There are two reasons.

First, something is practical only if we can remember and recall it. No matter how comprehensive a model, framework, theory, or idea, if we cannot remember and recall it when application is demanded, it ends up making very little practical difference. If change in today's organizations is more prevalent, fast, unexpected, and complex than ever before, it is equally critical for us to act when change is necessary. Whatever tools of change we hope to use well must be remembered, recalled, and applied.

However, long history and scientific evidence teaches us that humans are limited when it comes to remembering and recalling models, frameworks, or even strings of numbers that are too long or complicated. For example, ever wonder why most phone numbers around the world contain only seven digits or less? It is because 80% of the population can remember seven digits, but that percentage drops dramatically as you add digits. In fact, you need to add only three additional digits to those seven, and the percentage of people who can remember them (ten digits versus seven) drops from 80% to only about 2%. If a change strategy sounds great on paper but can't be remembered by people in the field, it really isn't worth anything. For this reason, we take a very pragmatic approach in proposing a framework for leading change. We offer a framework that can be remembered, recalled, and—most importantly—applied.

Second, we argue for simplification because achieving 80% of the desired results rapidly is much better than never attaining 100%. If 80% quickly is your target, then 20% of the factors are the key.

For example, we commonly see cases in which 20% of a firm's customers account for 80% of sales (known as the 80/20 principle). In sports, we see many situations where 80% of the team's points come from 20% of its players. And although a firm cannot ignore its other customers or a team its full roster of players, both organizations get the best bang for their buck by focusing on the critical core—the fundamentals. For this reason, we focus on the most critical elements of change.

One of the most important differences about Leading Strategic Change is that we keep the concepts simple and focus on the fundamentals. We have found through our work with a variety of firms that if you get the change fundamentals right—the critical 20%—the rest comes more easily. Conversely, you can spend truckloads of time on all the fancy frills of change, and ignored fundamentals will steal success away.

In fact, breakthrough change requires a complete mastery of the fundamentals. Just as mastering the fundamentals of gravity and friction allowed designers to narrow the nose and sweep back the wings on planes for pilots to break the sound barrier, mastering change fundamentals delivers the key to breaking through powerful and persistent mental resistance barriers.

The Fundamentals of Change

What are the fundamental dynamics of leading strategic change? The diagram in Exhibit 1-3 attempts to capture this process, and subsequent short sections describe these dynamics relative to each stage of the matrix. And as we mentioned, real mastery of these concepts will come as subsequent chapters walk you through these dynamics in much greater detail.

Exhibit 1-3. Strategic change matrix.

Virtually every major change has its roots in success (Stage 1). In almost every case, the need for change is born of past success—of doing the right thing and doing it well. The more right it is and the better it has been done, the more likely that it has a long rather than short history. For example, IBM did the right thing (making mainframe computers) and did it well. It did it better than anyone else for nearly 50 years. Xerox was so closely tied to the invention and commercialization of copying that the company name became a verb ("Please Xerox this document for me.")

Change starts with a history of doing the right thing and doing it very well, but then something happens: The environment shifts, and the right thing becomes the wrong thing. A new competitor comes on the scene with equal quality but significantly lower price, or a new technology renders past standards of product reliability obsolete, or government regulations disallow previous business practices, or customers change their preferences, or a million and one other shifts.

As a consequence of the shift, what was once right is now wrong (an initial shift from Stage 1 to Stage 2). And the really frustrating thing is that, although the old right thing is now wrong, we still do it well. In IBM's case, computing power soared while cost remained constant; and servers, minicomputers, and even desktop computers began to replace the role of some mainframes. Just making big boxes was no longer the right thing, but IBM continued doing it so well. People's hearts and souls, their self-worth and image were tied up in years and years of making "big iron" (mainframes in IBM's vernacular). This persistent desire to travel along old, familiar and successful paths of the past is why the first stage of change often results in no change.

However, after enough pain, blood, or at least red ink, we start the second stage of change by finally recognizing that the old right thing is now the wrong thing—we finally see the light. We then begin to envision what the new right thing might be. Over time, the new right thing becomes clear.

But, in almost every case, because the new right thing is new, we are usually not very good at it at first. Initially, we end up doing the new right thing quite poorly. This challenge forms the third and frustrating stage of change.

For example, not long after Lou Gerstner took over as CEO at IBM, people inside the company finally saw that just "selling boxes" would not work and that providing integrated solutions was critical to their future success. However, neither IBM nor its employees was good at making money from providing integrated solutions at first. Although analysts today tout the importance of "solutions" in IBM's revenue and profit growth, we quickly forget that, back in the early 1990s as IBM initiated this strategic change, the "integrated solution units" (ISUs, as they were called) were losing money, not making it.

Hopefully, after a time, we master the new right thing and start to do it well (a move from Stage 3 back to Stage 1). At this point, the sun shines again, and we bask in the warmth of its rays. Life is good. (Well, that is until the new right thing once again becomes the wrong thing.) IBM eventually did become proficient at providing integrated solutions. In fact, the service business was the largest revenue and profit growth engine for IBM during the late 1990s.

The fundamental process or cycle of change is just that simple. This is the 20% that captures 80% of the picture of strategic change:

• Stage 1: Do the right thing and do it well.
• Stage 2: Discover that the right thing is now the wrong thing.
• Stage 3: Do the new right thing, but do it poorly at first.
• Stage 4: Eventually do the new right thing well.

Anyone can understand, remember, and recall this framework. If the process is so simple why do a majority of change initiatives fail? The answer lies in the power of the three barriers we mentioned earlier. The failure to see keeps the change process from even getting started. Even when started, the failure to move keeps us from entering the path of the new right thing. Even if we start and move, the failure to finish keeps us from doing the new right thing and doing it well.

With this overall map, we have designed the rest of the book to help you master the challenge of leading strategic change. We dive into the dynamics that drive behavior in each step of our change framework, explore the power of mental maps that can often divert us from successful change, and show how to break through these brain barriers.

In Chapter 2, we examine the first remapping challenge. We investigate why—even when a threat or opportunity is visible—we fail to see it. Clearly, if we fail to see threats or opportunities, we will not make needed changes. In response to this challenge, Chapter 3 details how we can break through this barrier and help others actually see the need to change.

We explore the second barrier to change in Chapter 4. We examine why even when we see, we often fail to move. Although it sounds illogical that we would fail to move if we saw a threat or opportunity, there is ample evidence that failure to move is quite common. Effective change must overcome this powerful mental barrier, and Chapter 5 delivers the keys to overcoming it as we help people actually move once they see the need to change.

The third and final barrier to change consumes Chapter 6. We explore why, even when people move, they often fail to finish—by not moving far or fast enough. Although recognizing the need for change is the thrust that gets us going and moving down the new path lifts us off the ground, if the momentum cannot be maintained, the initial upward lift needed to fly is overpowered by the constant downward pull of gravity. We have seen and studied many cases in which change projects attained initial liftoff, only to falter and crash shortly after clearing the runway. Chapter 7 provides a simple but effective framework for overcoming this challenge and provides the specifics on how to break through this barrier and help people finish a major change initiative.

In Chapter 8, we apply these fundamental principles of change to a central challenge faced by most organizations today. Specifically, we examine how you can lead change in your organization for greater revenue and profit growth.

The next three chapters of Leading Strategic Change (Chapters 9, 10, and 11) provide the glue to ensure that all this sticks—sticks together and sticks to you, the reader. This glue is essentially a tool kit for you to lead change in your organization. Not only can this tool kit guide your change leadership, but it can also channel your efforts in training, educating, and empowering others to meet this challenge, as well.

The final chapter (Chapter 12) is perhaps the most important of all. Even though strategic change by its nature takes time to achieve and needs some endurance to produce results, holding on to whatever the strategic change has defined as the new right thing too long will only plunge the company into all the problems that led to the current strategic change in the first place. Consequently, in the final chapter we talk about how to get ahead of the change curve—how to master anticipatory change rather than always being subjected to reactionary or crisis change.