“I told them that we are transitioning to this new process. Why are they still using the old process?”

As a facilitator of executive mastermind groups, I hear these things ALL THE TIME.

It is easy to just fire people and write them off as a lost cause and hope the next person will fare better. But the reality of the situation is that if the next person is better, it isn’t because of the leader’s ability to develop that employee, but because of what that person brought to the table that their predecessor didn’t. 

A leader can look at the hiring and firing of individuals as criteria for future hires - e.g., if my hires with 10+ years of experience in this field consistently perform better than those who have less experience, then I will just hire only experienced people. The issue with this is that:

If we are frustrated with our people for not performing the way we want them to or or for making requests we believe are unreasonable, the only people we can blame are ourselves.

This article will cover 3 crucial tips for ensuring our teams actually hear, digest, and respond to the information we share with them. 

The first step to ensuring that our teams actually hear, digest, and respond to the information we share with them is aligning on the problem to be solved.

There is a major gap between the way the CEO/Owner views a change initiative compared to the way a non-owner executive views a change initiative. A CEO/Owner feels far less pressure from a failed change initiative compared to a non-owner executive. Why? Because if they own the business, they eat the cost of the mistake. It stings, but it doesn’t come with the perceived scrutiny of a non-owner failing to successfully lead a change initiative. 

When a non-owner executive gets the opportunity to drive a change initiative, it is a special opportunity. To quote Eminem, “Are you going to capture it or let it slip?”

This perceived scrutiny can lead to doubling down on failed change initiatives, creating strain on the rest of the organization, and turning a minor mistake and turning it into a catastrophe. 

These executives often feel a deep sense of ownership over the change initiative - and oftentimes it was their idea! If it fails, will they get another chance to lead another change initiative? This is the question running through their minds.

As the CEO/Owner, we must align on the problem to be solved and make it the company’s mission to solve this problem. For example, if the problem is that we need a better way to track customers and past prospects, a potential solution could be to implement Salesforce. If the Salesforce integration fails, does that mean the company doesn’t need a better way to track customers and past prospects? No! The problem is still there and it requires a pivot to a new solution to solve the problem.

This helps reduce the pressure non-owner executives face when rolling out a solution. It gives them the comfort of knowing that everyone is aligned around solving the problem and that the proposed solution is simply our first attempt at addressing it.

If Salesforce isn't working, that doesn't mean we gaslight people who are struggling with the implementation by telling them that things will eventually get better. Instead, it means we start asking questions. Why isn't it working? What alternative solutions exist? Would those alternatives face the same challenges?

If we determine that every alternative would create similar issues, but solving the problem outweighs the pain of implementation, then we stay the course. However, if the pain outweighs the benefit, or if another option exists that would avoid these issues, then we pivot.

The point is that, as CEO/Owner, we must create a culture where the organization aligns around the problem to be solved rather than becoming overly attached to a specific solution.

The second step to ensuring that our teams actually hear, digest, and respond to the information we share with them is making it clear how the ramifications of failure impact everyone at the company, not just individuals.

When consequences are individualized, it creates a lack of empathy across the organization. 

“If we don’t get this project across the line in time, it will create a major loss for our department’s Profit & Loss statement and significantly impact our team!”

“That sucks…for you. But our team isn’t measured based on your Profit & Loss statement and we are working really hard on projects for other departments.”

If we are rolling out a change initiative across the company, the consequences of failure need to be real, authentic, vulnerable, and relevant to EVERYONE IN THE ORGANIZATION. 

Bad example, “We are rolling out a new ERP (Enterprise Resource Planning) system to help us manage our inventory and make us even better than we were.” Motivation for implementation = low. Why? There is no clear driving force for why the company needs to change and no clear consequences if change isn’t followed.

Good example, “We are rolling out a new ERP (Enterprise Resource Planning) system. We are currently less profitable than our competitors and because their ERP systems allow them to be more efficient, they can charge clients lower prices while still maintaining profit margins. As a business, at this rate with our current system, we fear we will not be able to compete with our competitors and if we aren’t able to compete with our competitors, we may not be able to exist as a business moving forward. I am not sure that this new ERP system will solve all of our efficiency problems, but we have to give it a try because failure to become more efficient means failure of the business. I am leaning on everyone in the company to help endorse and embrace this change so that we can more effectively compete and continue to do what we are doing with our business.” Motivation for implementation = high. Why? There is a very clear driving force for why everyone should buy into the new ERP system. If we don’t, it isn’t just 1 or 2 people potentially losing their jobs…we all lose our jobs because the business ceases to exist.

The third step to ensuring that our teams actually hear, digest, and respond to the information we share with them is making the rewards of following the change individualized.

When rewards are grouped, it creates a lack of incentive to work hard because if we hit a group metric, we all get rewarded. 

Individual rewards ensure that those who are working their tail off to implement a change and drive the business forward get rewarded for their efforts, and those who aren’t all in on the change aren’t. 

No action is still an action. When an organization has a poor performer and does nothing about it, it quietly tells everyone at the company that poor performance is tolerated. When individuals get rewarded for strong performance and buy into new change at a higher rate than those who don’t buy in, it sends a positive message that strong performance will be rewarded.

In essence, if we are to close the gap between what leaders say and what employees hear, we must align on the problem to be solved, make the consequences of failure group-based, and reward top performers and early adopters individually.

 

What makes a change initiative successful? Is it the vision of grandeur around all the possibilities of what could happen if every domino falls into place? Or is it the ability to get the entire organization to permanently change the way they behave at a small, day-to-day level? Is it even possible to enact big changes within an organization?

These questions will be addressed in this article.

Let’s start with the root cause of change. Change occurs because the business has identified that the current way it has been operating can be improved.

Change becomes painful when not everyone agrees that the current way of operating can be improved or when they are unclear about why it isn’t cutting it anymore.

Executives, typically, are reticent to share details on why a change needs to occur for fear that by sharing these details, it might cause panic. Oftentimes they compound this issue by doubling down with toxic optimism - sharing things like “We have never had a layoff and never will!” or “Everything is going amazing and we are crushing it in the market!”

This compounding of toxic optimism hurts change initiatives because if “nobody is in fear of getting fired” or if “everything is going amazing and we are crushing it in the market” it lacks the honesty of the hard truth that comes with implementing a change initiative - that the overtly optimistic message shared in the past was in fact wrong and that there are opportunities for improvement.

For those of you who are fans of the TV show The Office - it is reminiscent of the episode where Michael has money problems and as opposed to confronting his girlfriend Jan about her spending, he gets a second job and tries to convince everyone else he is fine and that he doesn’t have money problems - crumpling up a dollar bill and pretending to toss it away while secretly putting it back into his pocket. 

This sounds like a silly analogy but it is the truth. Most executives would prefer to meet with their executive team/board, determine a new direction or change, and pass that message on to the middle managers with the hope that they can turn that message around and implement the change in the exact vision in which the executive team drew it up isolated. 

And if the change initiative doesn’t work, whose fault is it? You can probably surmise that it is not the executive team’s fault until the board loses patience and fires the CEO. 

In place of large change initiatives, many companies are finding “success” in driving efficiencies by making cuts. “Success” is in quotations because it doesn’t address the root cause of the issue with why change initiatives fail. The way these cuts work is a company, in an effort to reduce expenses while maintaining output, decides to let go of a certain percentage of the workforce and then ask the remaining team to accomplish the same amount of work they did with a larger staff.

This technically achieves the outcome the company identified because:

The unintended consequences are:

To successfully implement change, everyone in the company needs to be aligned on the problem to be solved. To get alignment, executives need to be vulnerable, honest, and open-minded.

Below is an example of what this looks like in a practical sense:

Memo from the CEO to the entire company:

“Hello team, I have met with our board and leadership team and we have identified a challenge as our business transitions into the future. Our competitors are currently offering a similar service for 30% less than we are currently offering our services. Obviously, we believe we have better service and overall outcomes than our competitors and our clients are locked into annual agreements, but we believe that there is a chance that our competitor might challenge our market share. We can take a wait-and-see approach to this issue, but if we do, we run the risk of losing significant business and being put in “catch-up” mode versus proactively reinforcing to our customers why they should continue working with us. We believe it would be prudent for us as a business to proactively identify additional value we can provide to our clients and/or cost savings that we can implement and pass along to the client. We are currently putting this plan in place and would like to involve everyone in the company to share their thoughts and ideas on how we might be able to add value and reduce costs. We likely won’t be able to implement every idea but by taking pieces of all of these ideas, we can create a solution that sets us up to thrive into the future. Therefore, over the span of the next 2 weeks, if you could please share with our colleague Jane Doe your ideas for how we can improve the business, she will compile them and we might follow up if we have future questions or need clarification.”

This message is powerful because it is honest, collaborative, and aligns everyone on the problem to be solved. As opposed to mysteriously letting go of 10% of the workforce and asking the rest to make up for the work or asking the team to implement a large change initiative without explaining why implementing this change initiative is important, this method creates understanding, receptivity, and collaboration.

And once there is alignment on the problem to be solved across the company, and a change initiative is implemented, showcasing the early wins is critical to building support of the cause. 

Similar to Paul Revere sharing word of good news across the American Revolutionary War, your team wants to know any and all good news supporting the cause of change - because by inviting their collaboration, they now want to see its success. 

If you are a leader and want to join this conversation or surround yourself with others discussing these issues, consider joining an executive mastermind group.

 

The philosopher Heraclitus once wrote, “The only constant in life is change.”

From a business standpoint, change may seem stressful, hard, and uncomfortable, but all of these things ultimately lead to growth.

As business owners, leaders, and executives, the question we have to ask ourselves is “How can we drive change in a way that reduces the most damage done from a team performance and outcome perspective?” Similar to an F1 racing car trying to minimize drag when making turns or speeding down a long stretch, as executives, we must mitigate residual issues from our team when implementing a change, because change is constant.

Our business model might have been crushing it for the past 5 years. Well, with new regulations, a new competitor, dwindling supply/demand, a workforce that is demanding higher salaries, or any other factor, change will eventually occur.

If our goal is to maximize team capacity, help the team feel stability, and innovate, how we handle change can mean the difference between continuing our growth or grinding our progress to a halt. 

Driving effective change starts with transparency. Non-transparent change is similar to a horror movie. Transparent change is similar to a drama. If change is inevitable, our goal is to be in a drama, not a horror film. The reason non-transparent change is similar to a horror movie is because of the element of the unknown. The unknown drives suspense, anxiety, and insecurity - great for a horror film, horrible for a work environment. Transparent change is like a drama because although there was discomfort and hard decisions were made, and difficult times had to be gone through, there is at least clarity as to what the resolution is and where the next steps of the business/story are going.

Examples of poor transparency when implementing change and asking the team to innovate:

The goal of all of these changes is well-intentioned, and the need for innovation seems clear…if you know all of the facts. But if the team isn’t aware of all of the details that went into the change and why they are being made, the team will likely be very slow to adopt the new change and behave out of fear, not out of growth.

People don’t fear change nearly as much as they fear uncertainty.

When a change initiative leaves the team with the feeling that their role isn’t safe, they will quickly become disengaged and not nearly as productive as they could be. They will ask themselves questions like:

When these insecure behaviors begin to emerge, that is a clear sign that the team is not feeling stable. As the CEO, we might think, “Who cares whose idea it is? Let’s just go with the best idea!” But for those who fear that their jobs are at risk and their families’ livelihoods are at risk, they will do whatever they can to ensure that they aren’t on the chopping block. 

This then naturally progresses to team capacity. As executives, our goal is to maximize our team’s capacity without overdoing it. In a perfectly transparent work environment, this shouldn’t be an issue. When an employee thinks they can elevate to a new level, they will let their boss know, and vice versa. When they are overloaded, they will also let their boss know.

Unfortunately, in a lot of work environments, this is not the way work operates. In many companies, employees are measured based on performance, hitting benchmarks and quotas, and their subsequent compensation is tied to that. In these work environments, employees are directly incentivized to set lower goals because hitting a lower goal likely results in a greater bonus and a firmer standing in the company, while not hitting a higher goal likely doesn’t result in a greater bonus and puts scrutiny on that person’s performance. 

On the other hand, objectivity diminishes as one ascends in any organizational hierarchy. With most people’s desire to be a team player, they will likely not push back when their boss adds another task to their plate when they are already drowning. Eventually, a ball will drop.

To solve these challenges when implementing change, transparency paired with vulnerability is critical. 

To drive change without burnout, transparency paired with vulnerability is critical to minimizing drag in the change process.

Growing pains are a great problem to have. However, they are one of the biggest challenges for a company to achieve success. Success at scale means transitioning from a scrappy entrepreneurial mindset to one that follows processes and procedures meant to ensure consistent, measurable, and reliable results.

There are a few reasons this transition is so difficult. One is simply the change in atmosphere necessary for this transitional growth. This seat-of-your-pants entrepreneurial hustle mindset is simply incompatible with success in the scaling and process-driven phase. 

In an up-and-coming organization, the best team members thrive by working with all hands on deck. When a problem arises, these team members don’t wait for permission to solve the problem, they just jump in and help. This builds cohesion and shared buy-in, but it isn’t sustainable long term. When processes don’t exist, these types of employees and leaders thrive on the freedom. Their can-do attitude and ability to be a self-starter is critical to success. The wait-and-see employees who need permission before they can act are likely managed out of this business or are not nearly as acknowledged as their counterparts who are jumping into the fire ready to firefight.

But as an organization grows, especially if it has taken on investment like private equity or venture capital, operating in this entrepreneurial all-hands-on-deck style is untenable. You need to find ways to delegate responsibilities. 

Should the CFO be handling a customer complaint ticket because they were the first to notice the ping and the other customer success employees were busy with another task?

Should the new hire, who has been shadowing and learning from one employee, receive a completely different set of instructions to accomplish the same task from a different employee the week the original trainer was out on vacation?

Should the account executive who is one of the biggest revenue earners for the company be able to skip updating the CRM because “he doesn’t feel like it” and points to his track record as to why he is going to be able to hit his numbers for this quarter?

In a scrappy, entrepreneurially minded organization, these types of situations slide through. They happen because action is rewarded over process. 

But they are very inefficient, and every one of these behaviors causes workload debt to build up in the company. The CFO missed an hour they could have spent preparing for the next quarter. The senior team members are forced to redo the newbie’s work half the time because nobody finished training. And the best client just got a second call this week from a different account executive and just called the CEO to see what was going on. Hours and days of lost time will drag the company down. 

And in an organization that wants to grow and drive consistent profitability, something needs to change to ensure people are being held accountable and that there is consistency across the organization.

And the ironic thing about this change is that oftentimes, the person who created the original process for how things are done is excited to update it. They will readily admit that they just threw something together using whatever resources were at their disposal and they are optimistic that the new system could be better. However, this won’t be the case for every team member.

Change is hard, and those who become accustomed to a routine or way of operating are incredibly difficult to change. 

If you have ever upgraded your ERP or CRM systems you likely have felt this pain and are acutely aware of how hard it is to get people to change. 

Here are 4 steps to driving strategic change in an organization:

1. Having a change plan is critical to successfully driving strategic change in an organization. The key changes need to be laid out, prioritized, and planned so as to avoid too many changes happening all at once. Everyone feels more comfortable following a well-laid plan. Too often organizations try to cram too many changes in at the same time - leading to confusion, change fatigue, and loss of confidence in the executives driving the change.

For strategic change to occur, trust must exist between the executive team driving the change and the employees implementing the change.

2. Too often change efforts are described using words that emphasise what’s in it for the company and not the individual. “With this change, we expect to improve our EBITDA by 67%”. Unless employees have equity in the company, they don’t really care about how the books will change because of this extra work. What they really care about is what is in it for them.

Therefore, every message needs to be crafted for each employee. What drives one person might not drive another. Some people are motivated by work/life balance, and they’ll appreciate how the new processes will reduce emergency all-hands-on-deck situations. Some are driven by professional growth, and they’ll be excited for the new opportunities that come with scale. And others are driven by their passion and their personal and professional mission alignment, and growth can help them make their mark on the world. The Work Orientation of an individual should help the company understand how to portray the change to each individual.

3. Middle management is at the core of where a change initiative succeeds or fails. If middle managers buy into the change, they are much more likely to hold others accountable when they aren’t behaving in alignment with the change. Therefore, they need to be able to communicate the change in their own words and they need to have the space with the executive team to have their questions answered and concerns assuaged. 

For example, let’s say you are changing CRM (customer relationship management) systems. There was a separate system for managing support tickets and another for managing potential new deals. The new system brings it all together so when support answers a customer inquiry, they can quickly touch base with the accompanying account executive to help make sure that the client is successfully onboarded and can cover the concerns the customer has shared without having the customer repeat herself. If a customer support representative accidentally inputs notes about a customer in the wrong spot in the new CRM system because he couldn’t figure out where to put the notes, it is on the customer success manager to educate the representative on why this was wrong and educate them on how to do it properly. If the customer success manager doesn’t fully understand why the change to the new CRM system was implemented in the first place, they may intentionally or unintentionally not correct the bad behavior. If the bad behavior isn’t corrected, bad habits form and it will likely lead to a follow-on change to a system that didn’t get fixed in the first place. 

4. Getting quick wins and celebrating (even if it feels over the top) is vital to getting the team to buy in to change. Let’s say a technical team is implementing a kanban board to identify where their weekly sprints are and their upcoming product roadmap and the Director of Product Management is wanting to get the sales team involved with adding issues/product development opportunities to the kanban board. It is critical that the Director of Product Management publicly and privately celebrate anytime anyone from the sales team puts something on the board. It may seem like a small task to the sales team but the Director of Product Management knows that if she wants the sales team to engage in the kanban board and the development of their product, they need to be effectively communicating with each other and she needs to provide dopamine to the sales team for following along with what she wants them to be doing.

These are the 4 steps to driving strategic change in an organization. For resources on how to learn how others are handling this transition, consider joining an executive mastermind group to connect with other executives going through similar challenges as you.

There seems to be one constant in business: change is inevitable.

Whether we are implementing something new with AI, restructuring processes, pursuing a new direction, or any combination of things that would necessitate change - one thing is certain: no industry is safe and most organizations will need to make changes to keep up or risk being left behind.

The question I am pondering is: How can people be at the center of this change?

Peter Drucker once said “Culture eats strategy for breakfast” and I would tend to agree with him.

No matter what promises we made to our board, how rosy a picture could look if we just made this one change, or how dire our situation is, if the people being asked to implement the change are not onboard with the change, it is never going to happen.

Does this mean that we should only change if our people approve of the change? Not necessarily. But it does mean that if we are going to make a change, our people must know what is in it for them and that result must be substantially better than what they currently have.

The purpose of change is typically for one of two reasons. Either:

It is typically easier to create a compelling why to the team in the first reason: if we don’t make this change, we all could be out of a job and if we like our lifestyle and the life our jobs currently afford us, then we should all be bought in to make this change. This requires a level of vulnerability from the executive team but is typically pretty compelling. This message does lose its luster if repeated too often as our people will go to a state of emergency with us but they will not live there (e.g. the lifestyle their work affords them won’t be worth it if they are constantly feeling like if they don’t make immediate changes that the company will go under).

For the latter (making a change that has the potential of improving the business substantially), most organizations struggle to create a clear and compelling WIIFM (What’s In It For Me) for everyone. If a CEO says that making this change will increase EBITDA which will help position the company for an exit - if the employees of this company don’t have equity, they don’t care about achieving an exit because there is no upside for them.

The company must create a compelling WIIFM for everyone involved. This takes a lot of time and effort. But it needs to happen for change to occur. Otherwise, the company will have to hire a consulting company who will charge an obscene amount of money to do the exact same thing and then leave once they gave the company the blueprint of everything they need to do to right the ship.

To align purpose when implementing change, everyone must be accounted for with a WIIFM to get the buy-in necessary for the change to be successfully implemented (and the WIIFM should be catered to people on a person by person basis, not a departmental one because what motivates one person could be different from another person, even if they are in the exact same role).

One final note on purpose, especially if it is for a brighter future instead of avoiding business failure, even if an organization successfully implements a change one time, they need to be mindful of stacking changes. Every change creates a cracking of trust that needs time to repair. The more frequent changes you ask of your people, the less receptive they will be to subsequent changes.

When it comes to aligning leadership during change, it is critical that everyone is on the same page. One of the most common hurdles companies have to overcome is misalignment of organizational goals and priorities. 

The goal: the CEO sets a direction and everyone follows suit. 

The reality: the CEO sets a direction, 25% of the team immediately follows suit, 50% of the team follows the old direction because the new direction wasn’t effectively communicated to them, and 25% are still following the previous direction that hasn’t been the direction for years but because of poor communication and a belief that the new changes will be backtracked and an overall lack of people holding others accountable, they are still following the old and outdated direction.

To align leadership during change, there must be a mechanism for holding people accountable and helping the executive team quickly and effectively understand when there might be a misalignment of priorities.

For example, if the CEO, with the guidance of her board and executive team, decides that the company is going to change the way they operate and transition to a new system that should be more efficient, cheaper, and minimize mistakes - there must be a way for her to know that the rest of the organization is picking up the change. If her VP of Operations says that he understands and to her face shares that he is onboard, and even sets goals in alignment with the new change, but if his team is setting goals not in alignment with the VP of Operations, the team will be working really hard to make very little progress. In this scenario, the VP of Operations thought he did a good enough job communicating the need for change to his team, but obviously he didn’t do that good of a job or else their goals would be in alignment with this new direction. 

The VP of Operations reports back to the CEO that he has done an *effective* job of communicating this change and she takes him for his word. The issue with this is that most people, especially middle managers in an organization, believe that their communication skills are far more effective than they actually are. She takes her VP of Operations for his word and then 6-12 months later, some major balls drop, people quit or get fired, the VP of Operations is blaming his people saying they are incompetent and that he needs his CEO’s support to increase headcount for his team and the CEO is left wondering “where did I go wrong?”

At Ambition In Motion, we created a tool called AIM Insights that evaluates the goals of cascading levels of leadership in an organization and reports throughout the layers of leadership, in a one page format, which teams’ goals are in alignment, which are high/medium/low impact, and which are accomplished, and ultimately provide guidance for what each level of leadership in the organization can do to improve the impact, alignment, and achievement of their reporting structures goals.

Whatever tool is used, it must be easy to digest, updated regularly, and those using it must be receptive to the feedback and willing to make adjustments when they discover their are opportunities for improvement. 

Ultimately, profit will be achieved when the purpose of change is clear and has accounted for what is in it for me for every person in the organization and leadership has a system for understanding and better holding the team accountable for the goals/expectations being set, their prioritization of those activities, and their willingness to change their leadership style when they discover that their are opportunities for improvement.