Situation: A software company that has historically served large, enterprise clients has decided to begin the process of pivoting towards implementing AI into their service offering and targeting small- to medium-sized businesses (SMBs). 

Their first order of business was acquiring an AI company that has already been focused on SMBs and hiring a Chief Marketing Officer to focus on this new avenue of growth.

Prior to the acquisition of the AI company, the company had around 500 employees - all focused on the legacy enterprise business model. After the acquisition, the company sits at 550 employees, with some of the acquired executives being let go and around 30 of the legacy staff being transitioned over to the new AI initiative targeting SMBs.

The CEO and leadership team have held multiple offsites and roundtables to redefine their new core values, mission/vision, 10-year plan, marketing plan, etc., and all of it points towards this new AI focus.

Issue: The new CMO is all about this new plan, as she was brought on board to drive this initiative, but the team assigned to her is split. Some are part of the acquired company, some are new hires, and some are legacy team members. The acquired team members and new hires, for the most part, are fully on board with the new plan, but the legacy team members are really struggling.

“If we implement AI into our processes, what if someone from our legacy client management team accidentally inputs one of our large clients’ data into an AI system, causing us to be in breach of our contract? I wouldn’t feel comfortable with endorsing or participating in anything that could present that sort of risk,” a legacy team member would share.

When presenting the CEO with this dilemma, the CEO responds with:

“We are definitely transitioning from enterprise mode to startup mode, so I am all in on these new initiatives, but our legacy initiatives are what pay for these new initiatives, and I wouldn’t want to do anything to potentially jeopardize that.”

Almost like a giant bucket at a waterpark that is filling up, waiting to dump out over a water playground, the CEO is waiting for the bucket to get a little fuller (e.g., give him more confidence that this new direction will work) before dumping the bucket out and fully embracing the new strategy at the potential risk of inhibiting the work of the enterprise clients.

The unintended consequence is that it is unclear as to when the CEO will be ready to make this decision, and everyone in the organization, no matter what side of the aisle you are on, believes that they are right. Some legacy team members think the AI acquisition was a waste of money and a flash in the pan that won't materialize. Other legacy team members are jealous they aren’t on the new AI initiative and feel they are being left behind. Some legacy team members who are on the new initiative are confused as to why this work is being done and are culture-shocked at the idea of asking for forgiveness instead of asking for permission. 

This leaves new hires questioning, “Why was I even brought in here if we aren’t actually going to commit to this work?”

In the example shared in this article, the CEO neglected to align on the problem to be solved. Instead of saying:

“Our growth is stagnating in the current market conditions targeting our current client base, and I fear we may not be able to continue growing if we continue down this path.”

He says:

“We are acquiring this new AI company that will help us target small to medium-sized businesses, and we believe that this will help us grow into the future.”

Can you tell the difference between these messages?

The first one is the hard truth, informing everyone that this change may or may not work, but that if we continue along our current path, we will be left frustrated and potentially out of business.

The second one paints a vague, rosy picture that everything is okay and that we are going to try to give something else a shot. 

The issue with the second statement is that it doesn’t provide clarity to the team about the best course of action, what the main priority is, and what the expectations are moving forward. 

It is like a secret the CEO has with all new hires that the legacy team isn’t a part of, but has heard rumors of it and doesn’t believe it is true because they have no evidence to support it is true.

Therefore, if we want to effectively lead through growth without breaking the organization, we need to be clear about the problem we are solving by initiating change, be open that the change we are espousing may not work but that the current path forward is no longer viable, and that if we all don’t get everyone to buy into this change, the consequence could be that the company doesn’t exist anymore and we all lose our jobs. Until we are upfront with our people about these things, it will be incredibly painful and difficult to lead through change without breaking the organization.