In preparing for battle, I have found that plans are useless, but planning is indispensable.

—GENERAL DWIGHT D. EISENHOWER

Effective leaders use an open-door policy to obtain early notice of emerging changes and help their people escape from tight spots. They tell high potentials, “My door isn’t open so that you can dump problems on me—I have a desk full of my own. Rather, bring me a set of solutions, and I’ll help you look at trade-offs and get the resources you need. Then we’ll decide what actions to take together.”

Of course, open-door conversations are effective only when your people trust you. They need to know that when they take reasonable risks and circumstances change, you will support their actions no matter what the outcome. And they expect you to recognize and reward them when they anticipate change and take risks that succeed.

Unfortunately, organizational change has become synonymous with downsizing, outsourcing, and layoffs. Yet a strong case can be made that more jobs have been lost when organizations did not take the necessary actions to address change than when they do. Polaroid, Blockbuster, Kodak, and the U.S. Postal Service were once innovative organizations that ultimately fell into difficult times by ignoring or resisting change. Their business models, once fabulously successful, no longer worked when they did not anticipate or fully understand the importance of market changes.

That lack of vision generally exists in organizations that are obsessed with conversations about profits and costs while neglecting conversations about innovation and change. Yet organizations can rebound from trying times by embracing change. One company, IBM, was on the verge of being broken apart when the computer market shifted to distributed processing; but it reinvented itself in the technology services sector by changing its mindset, and has since thrived. Many organizations experience nonstop success by evolving continuously to suit a new world. Yours can too.

This chapter is about mindsets and conversations that are effective in leading the actions that produce change. Some organizations initiate change by hiring consultants who move across the organization, interview executives, and deliver a plan to the top leaders. The consultants usually understand world-class systems and processes and are well grounded in finance, IT, and systems design. Yet too often they recommend sweeping organizational and technological changes, assuming that employees will adapt. But employees are the pivotal ingredient in change. Strong leadership is essential to maintain trust during times of extensive and uncertain change.

Change Is the Natural Order

You and your organization can change proactively or reactively. Either way, eventually you must change because the world is changing. As a leader, you must stay in front of change, or jobs will be lost—possibly yours. The better your current performance, the more conversations you should hold to find the next breakthrough. It is hard to catch the next wave when you are contentedly riding high on the current one. The management mindset extracts maximum benefit from the current wave, while the leadership mindset looks for the next wave.

People are generally more afraid of uncertainty than of change. Yet every time you try a new strategy, undertake a new venture, implement a new system, or switch to a new supplier, you are introducing uncertainty. People become concerned if they do not know how a change will affect them or if the change process is not honest and transparent. To align them behind the actions required to change, ensure they believe that

• The change is necessary for sustained success.
• Their concerns and ideas have been heard and considered.
• The process of defining the approach to change has been fair.
• They will receive help to overcome adverse effects of the change.

During periods of change, it is important to define the actions that will be taken, who will be impacted by the change—and how—and steps that will mitigate any adverse impacts.

What people fear most are the effects of a hidden, poorly designed, or improperly implemented change. The perceived unfairness of such changes undermines trust and disrupts the organization. People assume that if a change was designed secretly, there must be something to hide. Their actions will be halfhearted and less effective than when pursued with passion. In poorly implemented changes, valuable employees can be left wondering why their old jobs are gone when mediocre performers kept theirs. That is a question worth considering. For example, eliminating a function and sacking everyone, even those who could be productive elsewhere in the organization, may be easy to implement, but it is not smart.

Tackling sensitive issues up front in a transparent manner is not easy. One top executive who filled politically appointed positions in two federal agencies under two presidents said that he thinks in terms of a four-year action plan for a major change. It takes that long to define the change, develop the implementation plan, deal with the resistance, execute the plan, and perfect and institutionalize the change. Directing people to work diligently while their jobs are changing or when they might lose their jobs is operating in a management mindset. Investing as much thought in eliminating disruptions to employees as in designing the change is operating in a leadership mindset.

Tell your people precisely why the change is necessary. Describe the core problem it addresses or the opportunity it creates. When you are up front with people about change, you can deal with their concerns in an atmosphere of trust and respect. Conversations about concerns are easier and more effective than ones about fear: fear evokes emotional responses, whereas concerns can be addressed logically.

Leadership: The Essence of Change

Organizations do not change; people do. When people change their viewpoints, their behaviors, and their actions, they change the way an organization performs and the results it achieves. But for people to change, they must be open to doing so. Change begins by recognizing trends in customers, technologies, and the marketplace that potentially create a new future for the organization and its people. Design and explain changes in a way that your people can rally behind. Spend as much time creating the people strategy for change as you do designing new processes and systems.

Historically, change initiatives are only partially successful because they

• Did not get people to change their actions and priorities
• Produced adverse unintended consequences
• Were abandoned before completion or replaced by a subsequent change

It is irrelevant whether the cause of failure was the strategy, the execution, or both. The important issue is that failure, especially in a culture of blame, drives high potentials to avoid change in order to minimize career risk. External factors are rarely the cause of failures. Leaders must engage with people in a way that connects and aligns them; change, like any core leadership activity, cannot be delegated.

For example, those who use LEAN manufacturing strategies know that the CEO and other top leaders make the process work by personally participating in Kaizen sessions side-by-side with people from the factory floor. These dynamic exchanges energize everyone. Leaders must believe in the change wholeheartedly and hold frank conversations with the people who will be affected. A small change that has wide support will produce better results in the long run than a more elegant change that does not align people.

Forced Change Doesn’t Work

We assisted a U.S. government agency in an A-76 initiative that required employees to compete for their jobs against private contractors. The purpose of the initiative was to increase efficiency and reduce costs by awarding the work to the party that offered the most attractive business case. The initiative was so controversial that agency executives worried about the potential for violence and sabotage in the workplace. Employees were justifiably afraid of losing their jobs after working in the agency for an average of twenty-two years—or the equally bad alternative of keeping their jobs at a lower pay grade. They knew that a contractor—if it won the competition—would fill their positions with lower-skilled workers who would accept reduced salaries and benefits and have less experience in performing the agency’s technical projects. Government employees won the competition and implemented the changes they proposed, but the scars of the forced competition took years to heal.

Agency executives struggled with conversations during the competition because they could not defend it with integrity to their people. Instead, they took action to ensure that as few employees as possible lost their jobs and to help those who were laid off to find a suitable position elsewhere. After the competition, those who remained continued to apply their talents and experience in a productive way, and the agency’s capability to perform its mission remained intact. At top levels, the A-76 competition was seen as a success because it appeared to cut costs and make better use of taxpayer funds. But what was not taken into account were the thousands of man-hours consumed by the competition, the productivity loss by a demoralized workforce after it was completed, and collateral damage to the agency’s customers. Many thought that these added costs exceeded the savings. As a leader, you are responsible to hold conversations which ensure that a change is the right change, for the right reasons, for quantifiable results, and for the benefit of all of the organization’s stakeholders.

Whether or not you personally have felt the sting of a difficult change initiative, we hope that you have learned critical lessons that enable you to plan and implement changes effectively. In any change, minimize the impacts on your people and make trade-offs that leave the largest number of people in the best possible situation when the actions are completed. The management mindset pushes to finish a change initiative as quickly as possible to realize bottom-line benefits. The leadership mindset ensures that the change offers opportunities for everyone.

Compassionate leaders help those who lose their jobs as the result of change to find a new position in the organization, or provide outplacement assistance. Even jobs that are saved may be so radically modified that people feel as though they lost their old job. Ironically, those who leave often find great jobs and are better off than those who remain, especially if subsequent layoffs occur. What few executives consider is that those who remain are under great stress, especially if they must do the work once done by those who are no longer there. Often they feel what is called “survivor’s guilt” for having kept their jobs while others were laid off. They also are afraid of what may come next. Anxiety lingers long after a change initiative is over, and it can cause productivity to drop unless you conduct leadership conversations with skill and empathy.

Conversations About Specific Actions

In a meeting to set goals and establish budgets for the coming year, Cynthia, the quality assurance director, told Andy, the vice president of manufacturing, that she planned to eliminate the backlog of quality deficiency reports (QDRs) and reduce the time to process new ones by half. Several of Cynthia’s peers nodded their heads in approval and agreed that timely QDR processing would improve their operations. Andy, also excited by her ambitious goals but concerned about how they would be achieved, said, “Cynthia, the goals are super. How will you achieve them? What resources will you need to change the process and support the new one?”

Cynthia anticipated those questions from Andy and provided well-reasoned answers, but Andy pressed further: “Are your people behind the changes? How long will it take to change the process? What intermediate milestones can we use to measure progress?” Andy did not just accept Cynthia’s goals and approve her budget request. Instead, he pushed her to present details, encouraged her peers to contribute their viewpoints, and used the conversation to build a shared commitment to the new QDR process.

Effective implementation of a change requires leaders to get to the heart of the actions through constructive and persistent conversations. Because most conversations begin in partial ignorance, the following guidelines are useful:

• Set the tone of the conversation in opening statements: be challenging or helpful, whichever is more likely to produce the result you want.
• Ask questions to gain a full understanding: “What do you mean by  . . .  ?”
• Do not argue—neither side ever wins an argument.
• Remember that people take action to satisfy their needs, not yours.

Use these guidelines in conversations about goals, the strategies to achieve them, the measures of success, and the resources that will be required. Ultimately the agenda for change must be shared to be successful.

Don’t Assume—Discover

Executives risk drawing faulty or incomplete conclusions and taking ineffective actions when they make assumptions, especially about people. Assumptions about the priorities and needs of others seem accurate only because executives rarely inquire to find out what those others really are thinking. Many executives regularly assume that

• Everyone is using the same information to analyze the situation.
• Given the same information, everyone will take the same actions.
• Past actions are an accurate forecast of future actions.

All three of these assumptions are often wrong. Avoid making them and instead have conversations to discover what information others have, what actions they intend to take, and what they might do differently in the future.

Have you noticed that when you make an assumption, you normally make several and link them? Every time you do that, your probability of being right falls. For example, if you have a 50-50 chance of being right (two choices) and string three assumptions together, then you would have one chance in eight of being right on all three. If you have a 25 percent chance of being correct (four choices) and again string together three assumptions, you will be right one time in sixty-four. Why gamble your career on those odds when you can have a conversation that lifts the percentage into the 90 percent range?

What draws executives into making assumptions instead of asking questions? The primitive part of our brains instinctively works that way. The “Ladder of Inference” developed by Chris Argyris and his colleagues at Harvard over a fifty-year period provides insights into this human behavior. Drawing on the observations you make, you select data that fit your worldview and then attach your own meanings to the data. Then you fill any information gaps with assumptions, draw conclusions, make decisions, and take action. You go through this cycle in the blink of an eye. It is an instinctive behavior developed long ago when humans were in imminent danger of being eaten by saber-toothed tigers. Today, we have the time and the tools to fill information gaps, engage our logical brains, and ask questions to connect and align with others. Use them.

Terry, a brilliant but disruptive student in an executive education program, said to the class, “My assumptions about people are always right.” His fellow executive students were stunned—but this was an insight into why he behaved the way he did. Terry was always right in his own mind, but was unable to connect with others to align perspectives and coordinate actions. The assumptions he made, combined with his unswerving conviction in their accuracy, disrupted the class. Frustration grew rapidly until the students systematically ignored Terry and avoided being on his team during group exercises. It is likely that Terry experienced the same reactions from people in his organization—and the same isolation from his colleagues.

Assumptions send negative messages and stifle conversations. When you make assumptions, high potentials feel that you expect them to think as you think and do things the way you do them—which is far from empowering. They also think that you are saying they are wrong because their perceptions of reality are different from yours or their actions do not conform to your expectations. Furthermore, they presume that you are convinced you are right because you did not ask for their ideas or opinions.

Executives claim that they make assumptions to save time and avoid confrontation. They would rather not look someone in the eye and ask what she is thinking. Maybe so, but they also are missing potential opportunities and avoiding useful feedback. The desire to avoid conflict is understandable, yet holding conversations that address conflict is a leader’s job. When done effectively, handling small differences in a timely way is always preferable to allowing a conflict to grow to the point where it becomes a hurricane. Put on your leadership hat and hold those uncomfortable conversations where conflicting viewpoints are voiced and reconciled. To reduce conflict, eliminate assumptions.