The man who views the world at fifty the same as he did at twenty has wasted thirty years of his life.

—MUHAMMAD ALI

After making a big decision, most executives tend unconsciously to gather information that justifies their decision and then to make other decisions that support the first: “Let’s stick with this approach until it has had a chance to work,” or the classic “We’ve always done it that way.” Sticking with the status quo may feel safe; yet in a rapidly changing world, “safe” potentially means missed opportunities, lost market share, and stagnation. Your challenge as a leader is to avoid defaulting to safe decisions.

You might consider change to be complex and risky—something to be undertaken only in desperate circumstances. This attitude ignores change  . . .  until it is too late. Instead, understand that change is inevitable and that the pace of change is accelerating. Although change for change’s sake is disruptive, sustained success is possible only when you and your team are willing to embrace new ideas, new technologies, and new ways of doing business in your decisions.

Making a major change is challenging under any circumstances, but it is virtually impossible when business is going well. The more successful an organization, the larger the faction that resists change. Paradoxically, that phenomenon makes successful organizations especially vulnerable to decline in times of rapid change—like the foreseeable future. Success makes it easy to deny that the world is changing. If you feel that your organization is humming along and does not need to change, consider retiring to a tropical island. (But even there, global warming may change the environment and affect your decisions.)

Staying Ahead of Change

Jack Welch, the former CEO of General Electric, challenged his executives to “change before you have to.” For example, imagine you were a forty-year-old executive with a manufacturing company in 1996 when 6.5 percent of the U.S. population (17.5 million people) worked in manufacturing to produce 16 percent of the U.S. GDP ($1.2 trillion). In 2007, you still were not old enough to retire (just fifty-one years old) when only 4.5 percent of the U.S. population (13.5 million people) was employed in manufacturing to produce 12 percent of the U.S. GDP ($1.7 trillion). Some of you may be among the four million workers, managers, and leaders who were forced to change careers because of massive changes in the manufacturing sector. If you feel safe because your expertise is outside the manufacturing sector, beware. It is just a matter of time before game-changing transformations affect your industry, your career, and your people’s lives. Are you and your organization making decisions that put you in the position of leading change, or are you at risk of suffering through the consequences and stress of forced change?

A tsunami of acquisitions, reorganizations, new technologies, process improvements, offshorings, and outsourcings is accelerating change in today’s global economy. Social scientists forecast that the rate of technological and cultural change that we have been experiencing could double. One reaction is to resist change by making decisions that maintain the old “normal.” Yet change is not going away, and it will not slow down. Whether you choose to ignore change, resist it, or integrate it into decisions about your future and the future of your organization, the world will continue to change.

Many executives treat events that do not fit their expectations as anomalies. But change happens incrementally, sometimes in ways that are hard to recognize. If you are not looking for change, you may not see it until it is too late to react. Ask the following questions regularly in your decision-making conversations:

• What changes will occur in the next quarter, the next year, the next two years?
• Are we focusing on those new possibilities, or are we consumed by today’s priorities?
• What mechanisms are in place to warn us that customer needs, demographics, or technologies are shifting?
• How well are we using feedback from those mechanisms in our strategic plans?
• How certain are we that our vision of the future is realistic?

Train your people to anticipate and respond to change in their everyday decisions. Even when a change does not affect you directly, evaluate what might happen next. You can ride the upside of change by making decisions that use change to your advantage. If you are not already making those decisions, this chapter will assist you in exploiting change to expand your success and that of your organization.

What is Driving Change?

We hope that you are among the few leaders who recognize the early signs of changing markets. Yet that knowledge is essentially worthless unless you are willing to adapt to the new environment through decisions that unlock the treasure chest of opportunities. The following four factors drive rapid and dramatic changes in today’s business world:

• Ubiquitous communications. Today’s world is powered by the Internet, smartphones, iPads, and other devices that enable people to communi­cate with anyone, anytime, virtually anywhere, on any subject. Instead of the weeks or months it used to take, a decision can be imple­mented today in hours or days over the Internet. Furthermore, mobile applications and cloud computing have eliminated time and location constraints on the collection, analysis, and redistribution of massive amounts of data.
• Global relationships. Organizations and people in every corner of the globe and every sector of the economy are working together more creatively than ever before. This seismic change promises to deliver worldwide prosperity—and success and wealth to those who make it happen. Strategic relationships are becoming increasingly vital in decision-making processes.
• Intense competition. International organizations are competing for market share in first-, second-, and third-world countries. For example, Mercedes, BMW, and Toyota make decisions not only on the basis of the market share of General Motors, Ford, and Fiat-Chrysler in Europe and the United States; they also must worry about autos that Tata and Hyundai are marketing in Africa.
• Large investors. The concentration of capital in mutual funds, pension funds, and venture capital funds has reshaped investment markets and influenced CEOs and government executives alike. The funds hold investment positions in companies that give them power to force executives to bend—or lose their jobs. Armed with up-to-the-minute data about markets and competitors, institutional investors raise the performance bar by monitoring the daily decisions of executives and shrinking the time allowed to produce results.

The Industrial Age was linear. Decisions that changed the organizational structure, processes, or tools produced proportional increases in output. By contrast, the levers in the hands of today’s decision-makers work geometrically. They can multiply success overnight through innovative decisions that couple a relatively small idea with creative new relationships. Change will never stop. Once you grasp that simple reality, you instantly add change to your repertoire of decision-making strategies. You begin to anticipate and exploit tomorrow’s changes, instead of chasing the status quo.

To Change or Not to Change

Whether to change or not is a tough leadership decision. Multiple studies show that half of all organizational change initiatives fail to produce the target results despite backing from top leaders and a large investment of effort and resources. High potentials facing a need for change are justifiably scared, because a failed change makes the situation worse. After a failed change, the time to respond is reduced, the range of options shrinks, considerable resources have been spent, and people are skeptical about what will come next. Although this may be an overly pessimistic picture of change, the equally important truth is that leaders must decide to initiate change—the sooner the better.

Human reactions to change are complex. In large part, resistance grows at an emotional level: change stimulates confusion, anxiety, and fear. Decisions are relegated to “later.” As one would expect, people who struggle with those emotions will try to avoid change. Others find excitement in uncertainty and view change as an adventure. So a decision to change will excite some of your people and feel like a crisis to others. Most people, however, are between the two extremes. As the change leader, expect your people to relate to change in diverse ways.

Despite the diversity in responses to change, surveys show that a wide majority of people claim they are open or very open to changes in the workplace. If that is true, why do more than half of all change initiatives fail to achieve their stated objectives? In our experience, it is because some executives do not know how to lead their people—particularly high potentials—through the complicated layers of decision making inherent in the change process. They do not hold conversations that consider strategy and people to be equally important components of change. People are essential to the success of any change because they ultimately must embrace and implement it.

Some executives react too slowly, ignore change, or want to avoid risk in their decision making. They spend more time perfecting existing products and services than bringing new ones to market. Yet coming up with innovative services and products is how an organization maintains preeminence in changing markets. For example, Xerox’s innovative research group PARC invented an exceptional set of new products that became massive best sellers—for someone else. Unfortunately for Xerox, the products included the computer mouse and graphical user interface (GUI) that Steve Jobs introduced in the Apple Macintosh. Xerox’s versions languished in the lab for lack of support from its marketing department because they were used in computers rather than copiers.

Innovation is inherent in a leadership mindset. Leaders strive to uncover innovation in the high potentials and the environment around them. Xerox held management conversations about improving its copiers, while Steve Jobs held effective leadership conversations at Apple and decided to champion products that Xerox had invented but ignored. And as successful as Apple has been, the company missed web-based innovations that propelled start-ups like Google and Facebook to success. A leader’s most effective decisions are those that concurrently improve current performance and stretch for tomorrow’s greatness. Complacency in decision making is a consistent loser.

Given the hazards, why would any high potential risk championing a major change? The answer is survival. Entire industries are in turmoil. Some government agencies (the U.S. Postal Service, for example) are searching for a mission that is relevant and sustainable in today’s business world. Typically, organizations struggle because their decision-making conversations fail to anticipate and respond to technological advances, emerging global relationships, massive market implosions, or new competitors. Organizations that were state-of-the-art a decade ago are in decline today. Others have downsized, failed to innovate, or simply faded away. The fundamental decision you must make as a leader is not whether to change—it is how, how much, and how fast to change.

Working with Different Change Styles

People in your organization, including yourself, have different attitudes toward change and different ways of participating in decisions about change. If you recognize and accommodate different styles when you lead a change, you increase the likelihood that you will face less resistance, have fewer misunderstandings, and implement the change successfully. For purposes of this discussion only, we divide people into three categories to describe the change styles you are likely to encounter:

• Trailblazers are always willing to consider new and unusual ideas. They are comfortable with uncertainty and risk, and do not hesitate to challenge the status quo. You would think that as sources of breakthrough ideas, they would be a change leader’s best friends—but beware. Trailblazers can be impulsive in making decisions. Entrepreneurs often are trailblazers with respect to change.
• Traditionalists are basically okay with how things are today, and they seek only incremental improvements. They honor past successes and operate under proven assumptions. When facing change, tradition­alists are cautious and predictable. Actually, they can be assets to a change leader because they offer thoughtful advice when everyone else gets caught up in the passion of possibilities and the speculation about tomorrow.
• Fence-sitters can go either way, which makes them a good barometer of the effectiveness of a proposed change. They are outcome oriented and want practical decisions. When facing change, fence-sitters are flexible and can seem indecisive at times. They are catalysts for productive conversations because they will consider both sides before making a decision. As the change leader, you will do well to allow them to steer the conversation if you feel that a middle-of-the-road solution might be best. They are the ones most likely to sway the decision.

All three styles play a useful role in making decisions and implementing change. The key to having them work together is to understand how you are likely to interact with people whose style is different from yours. For example, if you are a trailblazer and are having a conversation with traditionalists, you may see them as inflexible and cautious; they worry about your impulsive and half-baked ideas. If one of your key assistants is a fence-sitter, you might see him or her as indecisive.

There is a tendency in decision-making conversations about change to view trailblazers as allies and traditionalists as enemies of progress. Besides jeopardizing relationships, that outlook is often entirely wrong. Sometimes, for example, trailblazers might be leading the organization toward a disaster, while traditionalists point out valid reasons why the proposed change is a bad idea. This situation would be a great time to seek the third alternative (discussed in Chapter 17). Bottom line: when it comes to change, do not confuse any of the styles with competence. All three play an important role in the to-change-or-not-to-change conversation.

When you became a leader, strategic change jumped to the top of your things-to-consider list—equal in importance to developing people. But change does not need managing as much as the high potentials who are participating need leadership. Some executives who are extraordinarily effective during day-to-day operations crash and burn when challenged to lead people through the uncertainty of change.

Regardless of the size of a change, be aware of how your style in regard to change—trailblazer, traditionalist, or fence-sitter—biases your decisions and affects the way others perceive you. In an ideal world, everyone would understand how his style affects his attitude toward change, his openness to new ideas, and his willingness to find the third alternative. Leading your high potentials toward that ideal by making change a regular part of your leadership conversations will separate your organization from those that are struggling to deal with yesterday’s change. It will enable you and your people to make decisive decisions relative to change and put them into action effectively.