Leading an organisation through change is tough.  Knowing what to change, when to change and how, are crucial skills required by leaders if they are to stay ahead of the game, reports Gary Ashton

The business is forging ahead of the market. But the board recognises that it needs to change tack within the next 12 months to avoid an equally dramatic reversal. Because of its current success, the rest of the organisation sees no need to change. This challenge encompasses all that leadership demands – spotting the trends, determining when to change and how to make the change.

It is imperative that the CEO recognises the need to change, identify when it needs to change, and how it will lead the transition, all at the right moment. Too soon, and you will be ahead of the market and lose valuable cash flow. Too late, and you risk losing the potential for future market leadership. Managed too slowly, and the business can spiral out of control as the managers of the business get confused. Managed too quickly, and the managers lose the plot and descend into anarchy.

There are times in every organisation’s development when it needs to adjust its focus and resources to the changing external and internal landscape. This in turn may require the capabilities and mix of the executive board to adapt. If undertaken successfully, the business maintains a positive dynamic and balance through its organisational life stages, without collapsing during each transition.

“The most effective leaders can ‘read’ organisation situations and adapt the leadership approach to take the organisation into a new and different future”

Because of the nature of the change process, this adaptation often takes place as a step change, rather than in a smooth continuous manner. During this step change, a phase of turmoil can arise which has the potential for destabalising the business. The trick is to minimise that turmoil as you cross over to the next stage in the organisation's life.

ER Consultants recently sponsored research on leadership, entitled: Leadership in Context (the process of leadership as sense-making and sense-giving in early stage firms), carried out by Sonia Bicknell when she was a member of the ER Consultants team. One of the findings from that research revealed that effective leadership is integral to understanding and responding to context –  i.e. how internal and external factors affect business success. The most effective leaders can ‘read’ organisation situations and adapt the leadership approach to take the organisation into a new and different future.

These leaders are capable of spotting ‘what’ to change, determining the timing of ‘when’ to change, and ‘how’ to make the change. Let’s explore these capabilities in more detail:

Capability 1: Spotting what to change

“The first responsibility of a leader is to define reality,” quoted Max De Pree, author of Leadership is an Art. This is not as easy as it sounds. Spotting the patterns emerging from the systemic effects of the broader social, technological, environmental, economic and political influences, combined with observing and anticipating the behaviours of your suppliers, customers, competitors and new entrants, and how all that will impact on your business, requires a high degree of intuition that goes beyond the rational interpretation of data. Furthermore, the leader then needs to impose this insight onto the life stage of their organisation to assess what changes are necessary. 

Significant change will mean a shift in focus, power, resources and capability across the organisation. Take the mobile telecommunications market. A few years ago players in this market had to move from maximising sales from its 2G technology, to focusing on building a new technological capability, and providing rapid product development using 2.5 and 3G technology. Now the pressure is on to gain global brand, supply chain and technological synergies and faster global product development. Each of these changes in focus has required a corresponding organisational and leadership shift.

Bicknell’s research on leadership suggests that spotting what to change starts with sense-making – engaging in a process of harnessing environmental information in order to add meaning to the business context and business direction. “Sense-making is an active process, whereby, in making sense of the world, actors in turn impose their beliefs upon that world, constructing it as opposed to passively interpreting it,” quoted Karl E. Weick, in his book, Sense Making in Organizations (1995).

At ER Consultants, we have found a most useful first step is to work with the CEO in mapping the historical and projected future changes in the market place. We then explore how that impacts on their business model, how they interact and how decisions are made. Once defined, we can then interpret the consequences for the organisation’s leadership style and competence.

“Keeping the vision alive, leading the pace of change and managing the resistance along the way are a few of the many challenges the leadership team need to endure”

Capability 2: Determining when to change

Timing is everything. Deciding when the organisation should make the shift requires not only a systematic review of the facts, but often requires a gut feeling about when the organisation is ready to shift. Often this needs to be sooner than is comfortable, in order to stay ahead of the pack. But this is not always the case; with one of our clients, the need to shift from a cost to a market-focus was anticipated months before the move actually took place. The CEO first ensured that the management team were fully on board, and the business was technically ready before making the shift. In other words, he focused on establishing the right time of when to make the shift.

Capability 3: Defining how to change

Leading such a transition from one stage to the next starts with a committed senior team that understands the degree of change, and how that will impact on their own positions of power and capability mix. This journey starts with the leader not telling it ‘as it is’, but telling it as it might be by giving what 'is' a different ‘face’.  The leader is a sense-giver, providing the leap in imagination for the business and its stakeholders.

So, effective leadership requires you to be a master in, what is in effect, social re-engineering - working on both the rational and emotional levels at an individual, team and organisational level simultaneously. Changing the way in which people behave at work is not a linear, rational task. According to Bicknell's research, keeping the vision alive, leading the pace of change and managing the resistance along the way are a few of the many challenges the leadership team need to endure. A mature leadership team, willing to open itself up to understanding how they operate at an individual and team level, and what they personally need to change to make the organisational shift a success, is also vital.

In short, spotting patterns in the changing landscape requires a degree of intuitive ability. Deciding what, when and how to change your own organisation requires capability in social re-engineering; and to shift power and ways of working requires a strength of purpose. Leading an organisation through its life cycle is undoubtedly tough, but the effort is often well worth it.