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Forbes - John Kotter's Change Leadership

Kotter International
October 27, 2014

While TV viewers turn the channel to the World Series and Sunday Night Football, companies seeking large-scale transformation could learn something by taking a look back at the outstanding success of the World Cup 2014 champions, the German Football Association.

As highlighted by Gavin Newsham in his article “How Germany Reinvented Football,” the team achieved a laundry list of outcomes that organizations in transformation would love to see:

  • Accessibility to customers with the lowest ticket prices of any of Europe’s major leagues
  • Strong stakeholder support with the highest average attendance in the league
  • Financial stability and great results with reported record profits in 2013
  • Development and investment of an internal talent pipeline with youth academies providing an internal talent pipeline and reducing reliance on scarce (and more expensive) imported talent
  • Market leadership as winners of the FIFA Football World Cup in 2014. Enough said.

Most companies we work with are about to start, or are in the middle of undertaking, a large-scale transformation with ramifications and implications across their global operations, business units and employees. And unequivocally they all want to get the same results that the German Bundesliga have achieved and be THE player in their chosen industry.

The key to all of this is in the “50% + 1″ rule

Taking guidance from the principles of large-scale transformation, the German Football Association in 2001 introduced the “50% + 1″ rule – which essentially means that all of the football teams in Germany have the same majority owner – their supporters and their fans – who collectively own 50 per cent of the shares plus one.

What the rule means, in practice, is that the supporters own the team and – while they don’t have to agree with every decision that management makes – they support the organization’s decisions and management. They don’t have to endure a foreign owner who cares more about her or his ego than the team. Supporter/owners want to show up to back their team – rain, snow or ice. They want to win. They believe they can win.

It’s not just football. Organizations can do this too.
But instead, here’s the process we all-too-often see:

  1. A management team calls in some smart people (internal and/or external) to develop a business strategy/plan (more on that here) to deal with a business challenge.
  2. The team works, gathers data, and builds a strategy/plan to address the issue.
  3. The team presents it to management/leadership/the board and then “roll it out” to everyone – sometimes with emails, perhaps a few ‘engaging’ videos and possibly also with some “fresh modern” posters.
  4. Then a team gets to work making changes and the project-plan-execution, gantt chart, PMO, budget-sucking, time-consuming morass of a transformation is birthed. (“Are we excited people?”)
  5. And ultimately change isn’t done on time, the results don’t show and after some period of time (6-12-18 months) the strategy/plan is rejigged, a new theme emerges and a new team is pulled into place. Some people might even have been fired or “reassigned.” Start step 1 again.

Instead of this, how about building a “50% + 1″ approach to your business transformation? Start not with the details of the minutiae and the changes, but by getting employees to the point where they want to support whatever is needed to make it work, where they want to win, where they believe that they can win. With all due respect, and apologies, to the PowerPoint-donning “strategy roll-out” experts in the world, we don’t need a deck (I doubt the Bundesliga built their massive fan support with PowerPoints). The urgency and excitement needed to transform is built by authentically talking about the vision of the future – one where you can own the market, and where your people believe it is possible to win.

Building urgency around this vision for change is the differentiator between success and abject failure. Unless you solve the challenge and reach all of your objectives, you have failed. The research of Dr. John Kotter, the world’s foremost authority on leadership and change, highlights that urgency is the first key step to achieving any major transformation.

So what’s the bottom line?
You can operate like everyone else, or you can operate like the World Champions. Take the time, and make sure that you can create massive buy-in and support from the majority of your organization before you start your big hairy transformation (or even your smaller change), and then get cracking, confident in the knowledge that you have the support of more than half of your company behind you.

It’s a lot easier to lead change when the majority of your company understands why you want/need to change, and when they want to support you, than it is when you’re whipping out your fancy PowerPoint (that no one really cares about anyway) and trying to cajole people into thinking you have something smart to say.

Oh, and skip the fancy colorful posters too – they don’t lead change either.

Kotter International
October 7, 2014

Earlier today JP Nicols (a friend and colleague) posted a tweet that caught my eye – it was a post honoring Apple co-founder Steve Jobs, on the 3rd anniversary of his passing and directed me to a brief video of Jobs. I took a few minutes to check out the video. You should too.

The video shows an internal company meeting at Apple in 1997. Steve Jobs had recently returned to the company after Apple’s acquisition of NeXT. Wearing shorts and his infamous black turtleneck, he appears casually on stage and starts talking about his vision for the company, about connecting with people in a way that most companies don’t (except the best companies in the world) and he talks about the reboot at Apple.


Specifically, he highlights a number of key principles that have (in hindsight) propelled Apple forward:

  • Getting back to basics – great products, great marketing and great distribution
  • An acknowledgement that Apple has in some cases drifted from doing the basics really well
  • A realization that Apple (in 1997) was trying to do too much – with too little focus.

The realization that they were doing too much led Apple to eliminate 70 percent of the product roadmap. 70 percent! By any standards that is a huge number. The contention was that a simpler product line would be a better product line.

In launching the actual commercial and the principles behind the “Think different” approach to marketing, Jobs talks about the need for the company to “think differently” about the products, and the impact that they will have in a very busy, very noisy world. If you listen carefully, you’ll see how he is emphasizing the need to think differently even before he unveils the “Think different” messaging.

One last highlight – instead of differentiating Apple from the competition on the basis of technical performance or hardware attributes, Jobs encourages the company to talk about the impact they will have on the world.

Ultimately we all know how this story unfolds… if stock price in an indicator of success, the results have been pretty impressive … Check out the trajectory of Apple’s stock since 1997.

Steve Jobs is almost universally regarded as a leader. His focus and vision were key elements of his character as a leader. So the challenge to us all is this:

  1. Are we clear about our vision - not in a lofty, nice-sounding-themes-and-words kind of way, but in an “our company will have this impact on the world” way?
  2. And are we focused - enough? Or do we need to cut X percent of the busy effort that we (and our teams) are doing and FOCUS on what is important?


Kotter International
October 3, 2014

Whether you’re a die-hard iPhone fan or a lifelong Android user, there’s no denying that Apple made waves earlier this month when the company announced not only a new iPhone lineup and its first foray into wearable technology with the iWatch, but also a strong push into payments technology with the launch of Apple Pay. As far as innovation goes, Apple has long been a shining example of corporate innovation – the launch of the iPod in 2001 revolutionized the music industry; 2007’s iPhone debut similarly turned the mobile phone market on its head; and the introduction of the iPad in 2010 created a whole new product category that continues to cannibalize the PC market.

And yet just last year, investors felt Apple had lost its innovative edge and wondered whether it could get it back again. Though revenue was still growing in mid-2011, doubt about the company’s ability to innovate dropped stock value to its lowest level since 2011.

Despite Apple’s success in proving its innovative chops once again, innovation remains a cryptic term for executives across all industries, who consistently wrestle with the question:  “What is innovation, and how can we encourage it within our company?”

Kathy Gersh’s Professor Pop-Tart School of Innovation tells a cautionary tale, warning companies not to be so fixated on ensuring they’re “innovating” but rather suggesting a more practical approach that keeps the focus on advancing overall goals to grow the business.  Critics argued that Kellogg’s peanut-butter Pop-Tart was merely a product line expansion, not true innovation. But the development not only met consumer demand, but also carved out new shelf space and increased revenue, showing that, whether others consider it innovation or not, the true mark of success comes from wins that advance overall business goals. In other words, adapting to stay ahead of the competition and remain relevant to customers’ needs is innovation and is ultimately essential to surviving and thriving in today’s fast-paced marketplace.

When it comes to innovation, it’s not the idea, it’s what you do with it. As noted with Apple, when groundbreaking innovation drives company valuation, the growing business value hinges on the organization’s ability to deliver big innovations consistently. So how can companies stay focused on turning great ideas into market-leading products and services? Giving existing employees dedicated time, forums and physical space to make connections with people from across the organization is a good first step. Encouragement inspires confidence, and people throughout the organization will dedicate their time, energy and creativity if they believe in what they are doing and that their ideas will come to fruition. Though not all ideas will produce tangible results for the company, creating a test-fast, fail-fast mentality will allow for more innovations across silos.

Knowing the answers to four key questions can tell you all you need to know about your team’s culture and your company’s potential innovation killers: “What are some examples of big wins for the team?” “What are some examples of big failures for the team?” “How did the team celebrate the win?” “What happened to the people involved in the failure?”  Ken Perlman warns that rules can get in the way of goals. If someone messes up and costs the company money, should they automatically be fired? If your immediate answer is “yes” it may be time to take a closer look at your organization’s culture for innovation and think about ways to create a more open, less stifled atmosphere for creativity and risk-taking.

Ultimately, good leader or bad, you can’t force innovation. The key, rather, is to shape your corporate environment so that innovation is possible and, by doing so, build innovation into your company DNA. While some companies are wildly successful with their innovation attempts, we also know that at least 70% of change efforts fail. But what are these unsuccessful CEOs and their people doing wrong with their strategic investment in innovation? To help you breed a culture that contains innovation at its core, your company must invite people to bring forth their new ideas, take ownership of them and then implement them. If efforts fail, valuing the lessons taken from failure as much as your successes is important, especially when it comes to applying those lessons toward each new attempt. Finally, resist the desire to project manage your way to innovation. It cannot be generated by focusing solely on budgets, resources and timelines. By boxing innovation in, the investment of time and resources will be wasted.

To conclude, let’s think backwards. Here are five things you will not hear at the most innovative organizations. Be on alert for them. These are clear indicators that your company is losing its innovation “mojo.” The first is, “Can we do that?” Permission seekers are the mark of unclear company vision. “We can’t do that,” should also raise red flags. If your people see others try, fail and then get punished, you can guarantee that people will remain in the safe spot. “We have to go through the proper channels” is a statement that signals how employees are not well-networked and failing to cross silo walls. Though one person may come up with the idea, nobody creates a great innovation solely on their own. “That’s good enough” and “that’s not my job” at the final two dangerous phrases signaling that people are not focused on the future of the company. Stay on alert for these dangerous phrases — a great brand name will not protect you from losing your edge.