Friday, January 21, 2011

Winning During the Slog - Part 9 – “From Ignorance to Results: Understanding Stages of Change from the CEO Perspective”

(From Issues for Growth Vol. 20, No.3)

This is the ninth of a series of articles about how companies and individuals are winning during the “The Long, Slow, Hard Economic Slog” that we are in (Issues for Growth Vol. 19, No.13). This article is written by Christy Pearson, Ph.D., of Opus Leadership Group , who works with The Mead Consulting Group. – DPM

Without much argument, it can be said that CEOs cannot run their businesses as before and for many, the need to adapt is an obvious statement. However, determining how and where to start continues to be a challenge. A good first step is to understand how people respond to change. By understanding this dynamic, leaders can more easily adapt their leadership and help their leaders and the organization begin to adapt as well.

In the previous segments of this series, there has been much discussion about the need to adapt strategy, culture and leadership in response to these tough times. This requires CEOs and his/her leaders to do something different and for most people, this is a huge request. Despite a CEO’s best effort to develop an adaptive organization, nothing happens because adults are notorious for their resistance to change.

In the psychological literature there are two well-known and respected researchers of change, James O. Prochaska and Carlo C. DiClemente. These individuals created a model to explain how individuals change behavior, break old habits and develop new ways of adapting to their environment. Their model can easily apply in the business sector. According to Prochaska and DiClemente, people respond to change in the following ways: (names of stages have been changed for the purpose of this article)

Stage 1—Ignorance - Leaders are unaware that problems exist

This is the time that leaders are unaware that problems exist. Others may be aware of the problem but the leader believes the problem lies elsewhere or that no problem exists. Early in the downturn, CEOs may have believed that their company was immune from impact because of their industry, company size or global location. However, it soon became evident that the economy impacted all organizations in some manner and for some CEOs, the problem did not become evident to them until there was a consistent lack of growth or worse, declining profits over many quarters. Often, it was this smack in the face that prompted leaders to begin more thoroughly analyzing their business strategy and its relevance to the new economy. While ignorance is bliss, failing is misery and as a response, leaders will move to stage 2—Awareness.

Stage 2—Awareness - CEOs have an understanding of a problem and the consequences, but defer action

It is during this stage that CEOs have an understanding of a problem and the consequences it presents. CEOs begin to seriously think about their organization’s problems and its impact and begin to contemplate what should change. Common statements by leaders in this stage include “we should be okay right now, maybe in six months we will do something” or “we know there is a problem but we just don’t have the time or resources to address it”. Leaders spend a significant amount of time in this stage, likely hoping that things will return to “normal”. Leaders can also spend a significant amount of time in this stage developing the ideal strategy. This act of substituting thinking for action only delays the necessary response and the business continues to suffer. It is only with acknowledgement of the need to adapt can a CEO move to Stage 3—Planning.

Stage 3—Planning – CEOs begin to think less about the problems and more about the solutions

Movement in the right direction is evident when CEOs begin to think less about the problems and more about the solutions. CEOs also become more future oriented rather than ruminating upon what happened in the past and have realized the benefits of adapting are greater than the costs. It is also during this stage that CEOs have finalized their planning and have communicated the need for change to others within their organization. The risk here is planning continues but true action and adapting does not occur. Committees are formed, consultants are hired and meetings are scheduled but there is no movement in the organization or its leaders (if so, the leader is still in Stage 2). How does a CEO get from this stage to action—determine a goal, set a date, and begin making the changes. Any step in the new direction is progress and should be acknowledged as such. Adapting is a process and a process takes time. CEOs should avoid discouragement by acknowledging that any movement is better than before and momentum will build as others also move through their own stages of change.

Stage 4—Action - New organizational initiatives begin to be implemented

This is when the magic happens. CEOs have evolved their strategies and the new organizational initiatives have been implemented. This stage requires commitment and focus by the CEO and his/her leaders to ensure that the necessary changes are understood by others in the organization and that recognition is occurring. At this point, it is important that what CEOs have set into motion is something than can be measured, tracked, and rewarded. Action is only movement, it is not true change and regression to previous stages can occur at any time. For a CEO, regression may mean reverting back to old strategies, old approaches to problems or relying on a style of leadership that is no longer relevant or effective. To continue with progress, CEOs should remain focused on the determined solution and the future benefits to the organization.

Stage 5—Sustainability – Making it part of the ongoing culture

People live for this stage. This is when leaders and their organizations have worked through the problems, addressed them in a thoughtful manner, and are focusing on sustaining the change and related results. To remain in this stage and avoid reverting back to previous stages, it is important to ensure that the culture is supporting the change, senior leaders are aligned on expectations and outcomes and that further forward progress is recognized and rewarded. Change can occur quickly and be short-lived so the CEO and his/her senior leaders need to continue to focus attention on the implemented initiatives and remain aware of any barriers that may inhibit progress.

If a CEO wants his/her organization to adapt to the new business environment, they must first understand how they respond to change to better determine how their leaders will respond. If an organization and its leaders have not responded to the new business world by adapting its strategy, leadership and culture, it is likely the CEO has not led the charge. It is only with insight and understanding that a CEO can then provide the necessary direction and guidance to move his/her organization to a more successful outcome. Adapting one’s leadership, strategy, and organization can be less challenging by understanding the process and the dynamics that promote or inhibit progress.

Some companies are experiencing significant “new thinking” results. What are you doing to change how you think about your business and create a culture of adaptability? Email us your comments.

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