Bob Perkins Consulting

Stage II - Lay the Foundation

On a cold Canadian night in November of 1995, I sat in a living room filled with key businessmen whose support would be essential if I was to be successful in Ontario fielding their questions about my ability to do the job.  After the obligatory niceties were exchanged, and the obvious questions were answered (Why do you want this job? How does your family feel about moving to Canada? Etc.)  one man who hadn’t muttered a word to this point, and had sat crossed like a Philly pretzel finally said, “Do you have any idea what you’re getting yourself into?”

Every eye was focused on my answer to this question.  It seemed to be the question they were all thinking, but hadn’t wanted to ask.  They wanted to know, “Could this American make the cultural adjustment and do the job in Canada?”

Summoning all the self- confidence I could muster I said, “Yes, I think I do.”  Of course, nothing was further from the truth.  In fact, I had no idea what moving to another country and a different culture was going to be like.  But that didn’t matter because what he was really asking was “Are you equipped for the challenges that will come when you move here?”  “Do you have the ability to adjust and perform in this cultural context?”  He was saying, “This won’t be easy.  Are you ready for that?”   

The essential question when you take on the task of leading change is: “Are you equipped to handle the challenges that the new situation will bring?”  No one can predict all the challenges that a new leadership assignment will face, and it is folly to assume you can know all of the things that will occur as you change the organization.  The question is, “Are you equipped to lead the change?”

There are three stages to a change and every leader must lead his team through these stages.  They are 1) Clean up the mess, 2) Lay a foundation, and 3) Build on that foundation.  In the last newsletter we talked about cleaning up the mess.  This month we’ll address laying a foundation for growth.

In the first stage (clean up the mess) you must deal with the obvious problems that can be changed immediately – the systemic problems.  In the second phase there are three key issues that must be dealt with to address endemic change.   They are 1) Identify Core Values, 2) Set the Vision, and 3) Form a Strategy.  The question for leaders of change is: “Are you equipped to address those key issues and take your organization through the second stage?”

I.    Core Values:  There is a lot of talk today about Core Values, and most organizations have a set of Core Values that they profess to adhere to.   Your job is to look at those Core Values and determine if a) those are the right Core Values, b) if in fact they are the right Core Values, then is the organization really living congruently with those Core Values, and c) how will you solidify those Core Values among all facets of the organization.

For example, if your organization has Customer Service as a Core Value, and if it is the right Core Value, are your customers experiencing high levels of service, and how does every person in the organization connect to Customer Service?

II.    Set the Vision:  It may seem that the vision setting should come in the initial phase of a turnaround, but in reality you don’t know enough when you move into the change leadership position to really set a good vision. When you first take on the job you don’t know what you don’t know. When I moved to Ontario I didn’t know my way into Toronto, didn’t know that Ottawa was the capital of the country (and only has about five weeks when it is worth visiting) or if we should be in Kitchener or London or neither. After I was in Canada about eight months I began to look at the map of Ontario and think about what would be the right vision (yes, we should be in Kitchener).  It takes time to come up the learning curve of a new culture and until you have invested the time you can’t set the vision.

As any of you who have been through the Vision For Your Life process know, Vision is about what you see.  The vision for the organization is about your pictures.  What pictures do you see when you think about the organization once the change has been accomplished?  This is the picture you will paint for all the members of the organization and this picture is the vision that will guide your future decisions.  The key is to base the picture on the Core Values.

If the Core Value is Customer Service then the Vision must be a picture of serving customers.  In order to clarify your picture you must ask questions like:  How many customers are in the picture?  Where is the picture?  What products are in the picture?  Who is in the picture (both customers and employees)?  The answers to those questions must fit into your vision/picture.

III.    Strategy:  Once you have established your Core Values and Vision it is time to set a strategy.  The strategy is simply the specific steps that will be required to make your picture a reality.  Again the right questions are everything:  How much money will it take?  Who are the key people to make it happen?  What plans will be necessary?  What has to change?  What is your “winning move?”

Once you have worked through these three issues, you have laid the foundation for growth and you are ready for stage three:  Building on the Foundation.

 

Cleaning Up The Mess

When the voice on the other line is a recruiter, chances are there is a mess to be cleaned up.  When things are going badly and a company decides it needs someone to change the situation, there is usually a mess, and they are looking for someone to clean it up.  They are looking for a leader who can bring change.

I led major change in each of the areas I was assigned to (Bethlehem, PA, St. Louis, and Ontario) and each change had the same three steps.  This month I will take a look at the first of three stages in any turnaround: clean up the mess.  The second stage is to lay a foundation for growth, and the third stage is to build on that foundation, and I will look at those in the next couple of newsletters.

We typically think that changes have a beginning, a middle and an end, and that we should start with the beginning, but that is really not true.  When you clean up a mess you need to begin with the end.  You begin by putting an end to the old problems that created the mess.  Then you have a middle – a time of establishing the foundation for how things will be different – and then the beginning of the new thing.

When I arrived in Bethlehem for my first assignment I found a pretty sad state of affairs.  At the first meeting there were twelve kids and thirteen leaders.  The leaders were using electric guitars and a huge sound system (including microphones) for the twelve kids.  It took less than a minute for me to realize we had a mess and the first step was to put an end to it.  We cancelled that meeting for the rest of the year.  I ended it.   The next issue I had to deal with was the volunteer leaders.  I assembled them and gave some guidelines for leaders and began to cast the new vision.  More than half of those leaders quit.  The third issue was to assemble some of the kids who had been at that first meeting.  Most of them quit too.  The mess wasn’t even close to being cleaned up, but to paraphrase Winston Churchill, it was the beginning of the beginning of cleaning up the mess.

Two things are true when you clean up a mess.  First, most of the mess involves people and money, and second, while the three stages of cleaning up a mess must be done in sequence the thinking behind them must be done simultaneously.

The People:  When we think about the core issues of a turnaround situation we are really talking about changing the way the people in the organization think and behave regarding the organization.  The most important factor in changing an organization is changing the way the people think about their jobs, the organization, their customers – and sometimes themselves.  We need to change the way they perceive themselves and their place in the organization before we can change their behavior. 

In other words, we need to change both the endemic and systemic realities of the people in the organization.  The leaders in Bethlehem that quit weren’t bad people – in fact they weren’t any better or worse than the people who stayed – they simple could not change the way they thought about what we were doing.  It wasn’t a question of their ability or their hearts, it was a question of their minds – the way they thought about what we were doing. 

The most desirable scenario is not to have a wholesale departure of people, but rather to be able to change the people who are already established in the organization.  They bring experience, knowledge, loyalty and wisdom to the turnaround and it is best if they can re-imagine the organization and get on board with the changes.  But sometimes you just have to find new blood.  The old saying, “it’s easier to make babies than it is to raise people from the dead,” is true.  It is always easier to find fresh minds who can grasp the new vision than it is to try to “teach the old dogs new tricks.”  There is, however, a cost to finding new people, and what is easy is not always what is best.

The best-case scenario is to spend as much time as you can afford to help the old guard adopt the new vision, while recognizing that at some point you are probably going to also have to bring in new people.  That mixture of grey hair and fresh minds is the right combination for going forward.

The Money:  You can tell a lot about an organization by understanding its financials.  One of my first jobs at a bank in Baltimore was to do a financial comparison of the annual reports of the five major banks in the Baltimore market.  By understanding the financials of our competitors, we understood how we fit into that particular marketplace.  My advice to people who are leading a change-effort is to begin by mastering the financials of the organization. When you understand how the money flows you understand how and where profit is generated, and your strategy will then be informed by the economic realities of the business; the litmus test of a company’s true value.

The Process:  While you must see the process in it’s three component parts (clean up the mess, lay a foundation, build on that foundation) you must also recognize that all three parts of the process must be thought about simultaneously.  In other words, you must be thinking about what kind of foundation you are laying, and how you will build upon it at the same time you are thinking about cleaning up the mess.  You can’t lay the foundation before you clean up the mess, but you must think about the kind of foundation you are laying while you are cleaning up the mess.  Each stage in the process has significant bearing on the other stages.

For example, when I was thinking about cleaning up the mess in Bethlehem I was also thinking about what kinds of precedents I was setting that would establish a foundation for the way we treated people in the organization.  The way we treated the people leaving was going to be a building block for laying the foundation of the new thing.

In a more current example there is no question that GM needs to change and a significant turnaround is necessary.  It’s a mess and it needs to be cleaned up.  I don’t know about you, but I am very uncomfortable with this building block for change within GM being established by the government.  It is a foundation that will inevitably undermine the ability of GM to attract and hire the best people from the private sector to run the company. This government intervention will also erode shareholder confidence and employee morale (have you ridden Amtrak lately?).  By “cleaning up the mess” with this heavy handed involvement, GM – and others - will struggle to build a more successful organization because the way the government “cleaned up the mess” will result in a shaky foundation.  The Obama administration is laying a foundation that will allow politicians to oust CEO’s from private corporations.  It seems to me the process of cleaning up the mess was done without simultaneously thinking about the foundation they are laying in the process.

Cleaning up a mess is never easy.  It is painful to deal with the transitions of people, and it is mentally exhausting to think about the process and all of its layers of complexity. The more work you put into this first stage of a turn-a-round the better the subsequent stages and the end product will be.

Cognitive Dissonance

Every time a freshman walked through the door of our fraternity house he was one step closer to joining – because of Cognitive Dissonance.

“Cognitive Dissonance” refers to the anxiety that results from simultaneously holding attitudes or beliefs that are contradictory or otherwise incompatible to one’s behavior.   When a person’s “Cognitive life” (the level of our psyche that is beneath the cerebral) is out of alignment with their “behavioral life,” then “dissonance” (two things occurring simultaneously which do not belong together) occurs in their psyche. This theory extrapolated means, that when people are put in a situation that causes a conflict between their beliefs and their behavior, they are internally driven to change either their beliefs or their behavior, to rid themselves of internal anxiety. Our internal desire to be congruent drives us to reconcile our beliefs and behaviors in order to be in harmony within ourselves. 

In the mid-seventies fraternities were at the low end of their popularity among college freshmen. The decline was due to the rejection of all things associated with the “establishment” by the counter-culture of the sixties, including the Greek system on college campuses. The survival of any fraternity depends on the recruitment of new members; therefore my fraternity devised a strategy involving Cognitive Dissonance to combat the decline.  Every time a freshman to walked through the door of our fraternity house –even if he was predisposed to not want to join – we created dissonance between his belief (I’ll never join a fraternity) and his actions (I’m enjoying myself at this frat house). In doing so, we moved each prospective member one step closer to joining as he reconciled his dissonance with a change in his belief.

A friend recently gave me a great example of how a person’s actions can change their belief.  He told me of a staunch Republican whose son gave her a ticket to Barrak Obama’s inauguration.  Even though she was a strong Rush Limbaugh fan and had been a Republican all her life, when she returned from the Inaugural she told everyone that she had become a Democrat.  This is a classic case of Cognitive Dissonance. She behaved in a way that was inconsistent with her beliefs, and she had to change her belief in order to be consistent with her behavior.

If you are going to change an organization it is necessary to be aware of the factors involving Cognitive Dissonance within the organization.  For example, assume you have been asked to lead an organization whose endemic problem is complacency. The initial challenge will be to change the belief/attitude of your leadership team. Your first step will be to get the leadership to act in a way that creates dissonance between their actions and beliefs. By instituting behavioral change(s) you will be able to change not only their complacent behavior, but also their belief/attitude about complacency. 

For example, you ask one of the members of your leadership team to fire one of his subordinates due to lack of performance. By having the leader actually do the firing you will have provoked dissonance within that leader. The leader will then need to resolve his or her own attitude (we’re a company that tolerates complacency) with their behavior (complacency isn’t tolerated).

Or if you are trying to recruit someone to your cause, one of the easiest ways to get the person interested is for them to give even a small amount of money to it.  The act of giving will cause the person to believe that you have a great cause, and a great organization because of the dissonance created between their belief (I don’t know anything about this organization) and their action (I am a supporter of this organization).

On a personal level, we can see the effect Cognitive Dissonance has on the deepest levels of our lives.  As we change our core beliefs to harmonize with our behaviors - even those behaviors which are not good – we change a part of who we are.  Many of us can remember things we used to believe, but don’t believe now. The change in our beliefs may have come, not because the belief was necessarily wrong, but because our actions were inconsistent with what we believed.

In conclusion, when dealing with a Change Leadership situation, you must first know the endemic core beliefs and attitudes of the organization, and the corresponding systemic realities.  Once you have identified the endemics and systemics, you will be able to apply the principle of Cognitive Dissonance to change the endemic behavior of the organization, and move to the first stage of a change, “Clean up the mess.”