John Kotter illustrates and elaborates the process that needs to be followed when implementing changes during the transformation process. The mistake during any of these transformational process will adversely affect the potential for growth or even defeat the purpose of its existence to make profit.
The First Problem the organisation faces during the transformation process is that they are not able to establish a great enough sense of urgency.
Error 1: Not Establishing a great enough sense of urgency:
John Kotter suggest that most changes are implemented when group of individual or some groups start to focus on an Organisation’s competitive situation, market position, technological trends and financial performance.
It starts to attract attention only when there is a possibility of potential fall in revenue due to the expiry of patents, the five year trend in declining margins in a core business or an emerging market for which everyone had turned a blind eye.
The group then gets engaged in trying to find ways to communicate this information broadly and dramatically especially with respect to crises, potential crises or great opportunities that are very timely. The first step of transformation then requires extensive focus on engaging cooperation of many individuals, which only comes through great deal of motivation, as people are resistant to changes and are adaptive of their comfort zone.
John Kotter argues that his observation suggests that 50% of the organisations trying to implement transformation fails in first phase, even though the first phase seems easy when compared with the other transformation phase.
John Kotter suggest the following reasons for failure: * Sometimes executives underestimate how hard it can be to drive people out of their comfort zone. * Sometimes they grossly overestimate how successful they have already been in increasing urgency * Sometimes they lack patience: enough with the preliminaries, let’s get on with it * In many cases executive becomes paralysed by the downside possibilities. They worry that employees with seniority will become defensive, that morale will drop, that events will spin out of control, that short-term business results will be jeopardised, that the stock will sink and that they will be blamed for creating a crisis.
A paralysed senior management often comes from having too many managers and not enough leaders. Management’s mandate is to minimise risk and to keep the current system operating. Change by definition requires creating a new system which in turn always demands leadership. Phase one in a renewal process typically goes nowhere until enough leaders are promoted or hired into senior level jobs.
It is argued that transformation of an organisation often begins and begins well. When organisation has a new head who is a good leader and who sees the need for a major change. If the renewal target is the entire company, the CEO is the key. if change is needed in a division, the division general manager is key. When these individuals are not new leaders, great leaders or change champions, phase one can be a huge challenge.
Bad business results can be regarded as both a blessing and a curse in the first phase. On the positive side losing money does catch people’s attention. But it also gives less maneuvering room. With good business results , the opposite is true: convincing people of the need for change is much harder, but you have resources to help make changes.
But whether the starting point is a good performance or bad, an individual or a group always facilitates a frank discussion of potentially unpleasant facts about new competition, shrinking margins, decreasing market share, flat earnings, a lack of revenue growth or other relevant indices of a declining competitive position. Because there seems to be an almost universal human tendency to