McKinsey Quarterly

Real change leaders

| Book Excerpt

Real change leaders are seldom found in executive suites. Though top-level involvement is essential to organizational change, the real change leaders (RCLs) who affect how the majority of people perform come from the ranks of middle and frontline managers. A recent study of nearly 150 mid-level change leaders in 29 different change efforts explored what makes RCLs stand out from traditional middle managers, and what top management can do to ensure a critical mass of this emerging new leadership capacity.

Wrenching change programs are today engulfing company after company with their relentless demands on change leaders. Since such individuals are invariably in short supply, it is no coincidence that most of these efforts stall part way through. They simply become bogged down in the middle, even when they have been well thought through and are driven by enlightened top management groups.

The most difficult aspect of major change has little to do with getting the right concept, core process redesign, or even a team at the top. It lies in changing the people system—the skills and behavior of hundreds of employees down the line. And it relies on the ability and attitudes of mid-level and frontline managers.

What distinguishes real change leaders

Unfortunately, traditional managers seldom make good change leaders. The reason is in the mindset. Good managers try to keep things under control; RCLs are determined to shake things up. Good managers drive results via budgets and quotas; RCLs achieve objectives by mobilizing a broad base of people. Good managers are often motivated by personal success; RCLs want to make a difference in performance. Good managers like to delegate; RCLs enjoy getting their hands dirty.

Good managers can probably learn RCL skills if they acquire the right mindset, but few seem to be doing so. The critical gaps are in four areas:

  • Linchpin linkages, or forging rock-solid connections among marketplace realities, and top leadership aspirations, and workforce capabilities.
  • 360-degree impact achieved by influencing people all around—superiors, subordinates, and peers—to change.
  • An expandable toolkit with a diverse range of approaches that is constantly being revised and improved.
  • Switch-hitting leadership. Like baseball players who bat from both sides of the plate, RCLs have the capacity to employ more than one style of leadership.

Linchpin linkages

RCLs connect top management aspirations and strategic intent with fresh market insights and responsive workforce actions. They hunger for marketplace reality; denial is not in their vocabulary. Nor do they take anyone else's word for that reality. They regularly talk with customers and find out at first hand what competitors are up to. And they use this intelligence to energize the people who work around them.

Consider a few examples:

Like all major oil companies, Mobil had undergone a downsizing spiral in US production and exploration. After three rounds of headcount reductions, it was virtually impossible to motivate workers. Then a small group of RCLs developed a compelling imperative: "Become the one the others copy." Its impact was dramatic. Mobil's operating performance soared, taking it from near the bottom of its peer group to first in less than three years.

A similar effort is producing remarkable results at Texaco, where RCLs are giving frontline workers a greater say in how to revive US oil fields. Production has surged from 150 barrels per worker per day three years ago to 250 barrels today. "We're getting oil that we never knew was there," declared Clarence P. Cazalot, Jr, president of exploration and production.1

In Fort Wayne, Indiana, General Electric has transformed its electrical motors business from zero percent returns to nearly 25 percent ROI by using almost daily doses of market reality to enhance employee innovation and productivity. Change leaders at GE Motors employ such techniques as customer visits, competitor product analysis, and a simple idea borrowed from Wal-Mart, "quick market intelligence." Every Monday morning, managers and supervisors gather to share information they have picked up from their marketplace. Not only does this keep them alert, it often enables them to take immediate steps to exploit competitor vulnerabilities. RCLs believe there is no better motivator than the marketplace.

360-degree impact

Change efforts are often conceived as waves of initiatives that sweep through an organization from the top down, or the bottom up, or both, and flow across functions. Seen through the eyes of the change leader in the middle, however, change looks more like pebbles dropped in a pond, creating expanding waves of energy that spread out to impact people at all levels. The RCL is the pebble that makes these waves.

RCLs are able to bring about change in the actions of those around them. Though they focus primarily on the people they are directly responsible for, that is never enough. They must also influence executives at higher levels and work in concert with other managers and peers.

When Texas Commerce Bank embarked on a massive redesign of almost all its processes, top management wanted the focus to be a meaningful number—a $50 million cost reduction. But change leaders and other staff found this mission less than inspiring. As the effort began to flounder, a small group of RCLs persuaded top management to abandon its financial target in favor of a simple imperative: "Eliminate what annoys customers and employees." The phrase quickly seized the imagination of thousands of employees. It has already secured results that meet the original financial target.

TCB's change effort continues to be led by a unique partnership between CEO Marc Shapiro and dozens of RCLs in the middle—people who have learned how to leapfrog over rigid vertical hierarchies, work informal networks, and form teams and groups that energize people to find solutions to the problems that encumber their performance. Immersed in the issues, these RCLs have the courage and conviction to speak up about the reality they face. Shapiro admits that without their constant feedback, he might have overlooked the importance of reaching beyond cost reduction.

Shifting the focus to the things that frustrated customers and employees made a big difference. It echoed what taskforce members already sensed:

"What we found was all this stuff tying people's hands. We made money in spite of ourselves in the early eighties, and then we had a downturn. In reaction, we jumped in with a policy to cover everything that went wrong. We policied ourselves to death."

"My thoughts were never to mention the number. Just say, 'Go out there and streamline the way we do business and remove the impediments; the dollars will come.' "

As CEO, Shapiro made the environment receptive. He worked with taskforce leaders to understand people's concerns. He listened. He also took time for personal introspection about what motivates people. He was willing to try, learn, and try again.

For their part, change leaders down the line had to acknowledge the problem, take the personal risk of objecting to top management's declared target, and speak out for a different mission. RCLs knew they had to confront top management, and they did. And when Shapiro was convinced, it was the RCLs who carried the new message back down the line.

Most traditional managers in this situation would simply follow the path of least resistance and support the official program. To do otherwise would seem like heresy—if not mutiny—to them. By contrast, RCLs do not seem to worry about political or career risks if they believe in the value of the change they are pursuing.

The notion of 360-degree impact involves more than a mindset. It starts with having the courage to change yourself, build new skills, and take career risks. It also requires the mastery of a broad array of tools and approaches.

Expandable toolkit

Rarely do RCLs apply standard "off-the-shelf" approaches. They look for what will work in the situation at hand. Sometimes they start with a specific problem-solving process or team structure that has worked for them before, but they never leave it at that. They supplement past approaches with new techniques learned from others; they redesign, cut and fit, and keep on tailoring as the change effort unfolds.

At AT&T, Mary Livingston headed a team of 30 change leaders in a two-year effort that transformed the skills, behavior, and performance of a 10,000-strong salesforce. In the process, she used dozens of mobilizing and focusing approaches, from structured performance improvement processes, to targeted skill-building programs, to reengineering. Many of these initiatives did not work at the first attempt, but Mary and her RCLs stuck with it, retrofitting as they went. The result: millions of dollars in increased sales and reduced costs.

Another RCL who uses a variety of tools is Fred Smagorinsky, the manager in charge of world-class manufacturing at Sealed Air, which makes plastic bubble packaging wrap. He employed a simple five-step problem-solving process to help plant managers remove bottlenecks to productivity. After expanding this approach to encompass inter-plant issues, he modified it again to include customers. He also employed joint customer work sessions, process redesign, and self-directed teams. To him, the only difference between reengineering and total quality efforts lies in their scope; no matter what, you always have to tailor your approach to fit the needs of the people whose performance you are trying to improve.

Switch-hitting leadership capacity

RCLs are never addicted to a single leadership approach. They realize that their personal favorite style is not always the best way. When they cannot adapt their own approach, they find others to lead portions of the effort with whatever approach it takes to achieve the results they need.

Take Sally Beck, a department manager at Enron. "So I have decided to move to a team-based approach in leading my department," she concluded, having just outlined her new plan for her 60-person department before a group of peers and superiors. She was met with complete silence.

Though not surprised, she had hoped for more. But she realized that her strategy sounded risky in an environment dominated by numbers and individual accountability. She also knew that pursuing a radically different leadership approach would mean stepping outside her own personal comfort zone.

Enron's leaders do not object to teams; indeed, they have many working at their pipelines, in their power plants, and in development. Few of these are real teams, however. For the most part, they are actually working groups with a single leader who is accountable for their results.

Sally Beck was talking about real teams—teams in which leadership and accountability are shared and results mean more than just profit figures. Others in the room found this notion scary, particularly her supervisors, who could see themselves being hung from the yard-arm if her experiment made them miss their targets. The meeting ended on an awkward note.

But Beck firmly believes that the only way she can keep her department achieving better and better results is to open up leadership capacity without adding people. Reshaping her leadership approach around teams seems to her the most practical strategy. She is well aware of the risk she is taking, and knows she must strive to change her own leadership style before others can be expected to follow suit. But such considerations pale beside her determination to tap her people's full potential.

Defining qualities

So what are RCLs like? They are all different—except in their determination to achieve better results through people. They share a common set of characteristics that help them further this aim:

  • Commitment to a better way. RCLs believe that their company's future depends on the successful execution of the change effort. They see their target as exciting, worthwhile, and essential to their personal satisfaction, as well as to the prosperity of the institution.
  • Courage to challenge existing power bases and norms—a courage developed in the face of opposition, failure, uncertainty, and risk. While RCLs do not welcome failure, neither do they fear it. By demonstrating an ability to rise again, they also build courage in those around them.
  • Initiative to break through established boundaries. RCLs take it upon themselves to work with others to solve unexpected problems, break bottlenecks, challenge the status quo, and think outside the box. Setbacks never discourage them from trying again—and again. Though responsive to the aspirations of top management, they do not wait to be inspired to action.
  • Motivation of themselves and others. Highly motivated themselves, RCLs create energy, excitement, and momentum in the people around them and provide opportunities for others to follow their example and take personal responsibility for change. More often than not, they use facts about customers and competitors to motivate their people to win in the marketplace.
  • Caring about how people are treated. RCLs are fair-minded and intent on enabling others to succeed. They never deliberately manipulate or exploit people. They are determined to help each person achieve their full performance potential.
  • A sense of humor. Far from trivial, a sense of humor often gets RCLs through when those around them have lost heart. It enables them to help others stay the course in the face of confusion, discouragement, and the occasional inevitable failure.

A critical mass of leaders with these qualities seems to be vital to any institution pursuing major change.

How to cultivate RCL capability

Change calls for initiative, energy, momentum, and leadership. If top management can build a critical mass of real change leaders in the middle of the organization, they stand a much greater chance of success. Though examples do exist of a dynamic CEO driving change from the top, they are few and far between. CEOs get far too much credit (and blame) for the results of so-called transformation programs.

Nor is it enough to have a committed team at the top. Whatever senior management may do, it still needs a cadre of RCLs in the middle to carry the effort right through the organization. Without this, there can be no lasting change in employee performance.

Our discussions with and observations of change leaders provide a clear perspective on how they see their emerging role and how a critical mass of RCLs might be developed. This perspective offers important insights for top management.

Short supply

Demand for change leaders far exceeds supply, and the continuing destruction of traditional middle management posts is making things worse. The causes of the shortage are evident. Most organizations face major changes in which employees at all levels need to acquire new skills to improve corporate performance. Yet the time frame for accomplishing these changes is shrinking, as is the interval between efforts.

Traditional managers have little experience of recurrent change, and their attitudes and skills make it hard for them to adapt. Top management cannot make change happen without RCLs in the middle. Nor can it eliminate middle management layers and assume that lower echelons will take up the slack.

The solution—obtain a critical mass of RCLs with the skills needed to fill the gap—is obvious, but easier said than done. Top management needs to start by answering a few basic questions:

  • What is "critical mass" in your situation? Do you need 200 RCLs, or will 20 do the job?
  • Where are change leaders essential, and where can you get by with traditional managers? Do you need RCLs to fill normal management roles, or can you cope by using them only on special projects?
  • How do you get change leaders where you need them?

Some argue that traditional managers can readily "convert" if you explain what that entails. Others contend that you have to obtain at least a core by hiring from outside. Most RCLs, however, believe that the answer lies somewhere in between. For them, a rigorous, high-priority development and support effort by top management can make the difference between being in short supply and attaining critical mass.

Real change leaders

RCLs recognize the bind their leaders are in, and want to help. They acknowledge that top management's role is as critical to successful change as their own, and seek a realistic partnership. Having experienced the difficulty of major change at first hand, they do not expect every initiative to work, nor do they believe that every setback should be blamed on top management.

Equally, RCLs have no patience with denial, finger-pointing, or excuses, and get upset when they see senior executives being soft on laggards. Holding themselves individually and jointly accountable for results, they are strong supporters of consequence management. They claim to be more interested in making a difference than in advancing up the hierarchy. Their job satisfaction comes from producing results beyond expectations and helping others to perform better than they thought possible. Recognition, for them, means being given the chance to have a still bigger impact next time.

But there are some pretenders to the RCL throne. Most change leaders recognize their shortcomings and genuinely try to build the skills and experience they lack. Some, however, maintain they can handle change by their usual management method—namely, by delegating the real work. Others adopt the jargon of change, but miss the fundamentals. They call every group a team, think empowerment just means involvement, and measure progress by activity rather than results. Both kinds of counterfeit RCL can do you in. Top management would be well advised to deal with them as soon as they emerge.

What RCLs look for

What RCLs want from top management is very demanding. They set high standards for themselves and their leaders. But they do recognize that things take time, and that getting close enough is better than chasing the holy grail of perfection. Their needs and expectations fall into three groups: discipline, support, and staying the course.

Performance discipline

RCLs seek results above all else. They believe a performance ethic means that management should be as rigorous about results that benefit customers and workers as it is about profits that increase shareholder value. In their own words, this is what they would urge their leaders to do:

  1. Set goals that make sense to customers and employees. We perform best when we have clear objectives that are central to your leadership agenda. We can set our own goals, and are happy to do so, but the more we can integrate them with what you want, the better we can motivate our people and focus their efforts. We need to be able to measure results that are in sync with your aspirations and reflect what is going on in the marketplace.
  2. Be a demanding boss who "walks the talk." We are not looking for a comfortable path of modest achievement. We want to excel, particularly in relation to the competition, but also in terms of absolute quality. We need to be stretched—challenged to do more than we think we can. We may not possess your perspective on the opportunities and problems, nor do we always have the conviction to reach high enough. Your admonitions are most compelling when we see you pushing yourself just as hard, and when we sense that you expect no more of us than of yourself.
  3. Reward those who perform, and deal with those who don't. All too often, the system protects people who do not support the change program. We find this discouraging and unfair. We think we know who the dedicated performers are, and when we see the less deserving being given preference over them, we wonder how serious you really are. We expect to make a difference and have it recognized. We expect others to be treated the same way.
  4. Raise the bar in areas that are lagging. Every complex organization has some functions or businesses that fall behind in results. But if this is allowed to persist over time, those who are excelling in other areas will become frustrated, even hostile. Everybody should be expected to toe the same mark in the race for change. It isn't that we expect no differences in results or progress rates, but that we are sensitive when some department seems to be protected from the intensity we must face.
  5. Reward what you seek. If you demand teamwork, you should find a way to reward team—and not just individual—performance. If you are looking for superior customer service, don't reward volume alone. You need to put your money where your mouth is and provide rewards that foster and support the approaches you are advocating.

Unflagging support

For RCLs, the most troublesome top management trait to live with is wavering support. It is far easier to cope with downright negativity than a situation where support comes and goes. RCLs expect to be supported through the tough times as well as the easy ones. When they take risks for the right reasons and fail, they need even more support than when they succeed. They would ask top management to:

  1. Encourage us to tell it like it is—and listen when we do. We need you to solicit our opinions and encourage us when they are unpopular; we also need you to back us up in public confrontations with those who resist change or would divert or diffuse it. Our role is never welcomed by those who are comfortable with the status quo, and we need your support against them.
  2. Take the same risks you expect of others. We need you to wade into the hard issues. We recognize you often have to delegate important parts of the change effort to others, but if you remain above it all, our job will be much tougher. Nothing motivates people more than seeing top leaders take personal risks to further a cause. Equally, nothing is quite so disheartening as seeing them protect themselves while pushing others into risks.
  3. Allow us to make mistakes and fail along the way. No two change efforts are the same; what works in one may flop in the next. Finding the right approach often means taking a gamble on something we have not tried before. Sometimes we will make mistakes; sometimes we will fail. But we need that experience—not just to find a specific solution, but also to build our skills for the next challenge.
  4. Be consistent in what you say and do. Explain any actions you take that might seem contrary to your message. Our people are always looking for signals that the change program is a passing fancy. They are sensitive to the merest hint that they personally do not need to change, or that those who are sticking their necks out have been wrong. It does not take much to feed their doubts, so be alert to situations where you might inadvertently give them an excuse.

Staying the course

Change demands time, hard work, and perseverance. RCLs need to believe that their leaders will stick at it even when the going gets tough. Top management cannot declare victory early and expect to motivate its RCLs. The organization—change leaders included—can all too easily misinterpret senior executives' intentions.

Consistent reinforcement of the main themes of change is vital to RCLs down the line. It is the one means they have of knowing and showing their people that top management is committed for the long haul. RCLs press senior executives to:

  1. Strive to create change leadership opportunities. If we are to build the skills that change demands, we need on-the-job exposure to a wide range of problems. Books and classrooms are no substitute. Unless you take positive steps to create learning opportunities for us, the development of RCLs will continue to lag behind the growing need.
  2. Get—and stay—involved down the line. You need first-hand knowledge of the efforts we are making. You may not have time to become as immersed in them as we are, but try to spend a few days working alongside teams in problem-solving sessions or field pilots. This is more than symbolic participation; it is the best way to understand just how exhilarating change can feel at an individual level.
  3. Help us build a toolkit for change. Perhaps the most valuable resource we can have in sustaining change over time is a diversity of techniques and approaches. It is easy for change efforts to stall and for people to revert to comfortable familiar patterns. The more tools we can draw on, the better we can deal with any loss of momentum and energy. While we can develop such a toolkit ourselves, anything you can do to facilitate or augment our efforts will be appreciated. We need all the help we can get.
  4. Expand and diversify the skill mix. We are all learning on the job. It's good to have new blood to strengthen the critical mass of RCLs. Bringing experience in from outside can often be the only way to get it fast enough. We are reluctant to have our own people overlooked for roles they can fill, but pleased to have injections of skills that we cannot otherwise develop.

Real change leaders believe that top management cannot leave to chance the development of the attitudes, skills, tools, and approaches needed to steer through change. Their message is clear. Any organization facing change should pursue a rigorous program to identify, evaluate, develop, deploy, and accelerate the growth of a cadre of RCLs. These emerging leaders represent the single best source of leadership capacity and talent for the future.

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