Tuesday, October 20, 2009

"We are Successful, but Slow"

The title of this blog entry is a quote from a CEO interviewed for the 2009 IBM CEO study.  This landmark study of CEOs from around the globe found that the first success factor for the enterprise of the future is that they will be hungry for change.  The study found a serious gap between the expectation of significant change (83% of respondents) and having a track record for changing successfully (61%).  So what is causing this growing gap?  It isn't the presence of constant change; that has been a factor since the industrial revolution.  Rather it is the growing pace of change that is creating a gap between expectation and success.

The days of having a narrowly focused priority list is past (I'm sure this doesn't come as a surprise to anyone!).  Leaders now have to focus on a plethora of organizational concerns, from changing customer preferences to people issues to technology that is changing the world at a blinding pace.  In fact, CEOs in the study identified these as the top three external factors that have them most concerned:
1. Market Factors
2. People Skills
3. Technology
On closer examination, all of these factors relate to the ability of people within organizations to embrace and succeed in a changing environment.  In fact, CEOs rated insufficient talent as the top barrier to global integration, higher than government regulation and bureaucracy.  Now you know you have a serious problem if it rates higher than the incompetence and resistance of government bureaucracy!

A final interesting note I will touch on is the difference between underperforming and outperforming organizations.  Both of these classifications expect a high level of change in the future (83% and 85% respectively), and both acknowledge managing change as a key to the successful enterprise of the future.  The major difference lies in their track record of changing successfully in the past-the "change gap."  Underperforming organizations only demonstrated successful change 54% of the time, where overperforming organizations were successful 66% of the time.  This simply boils down to having a track record that gives the organization confidence in the face of constant, accelerating change.

So what does all this mean for a change agent striving to help an organization be successful integrators of change?  First it means that denial must be driven out of an organization.  The sooner an organization and its leaders recognize that change is inevitable and accelerating in pace the better.  What made you and your organization successful in the past may not be what makes it successful in the future!  How common it is to talk with members of an organization that is in its waning moments and hear stories of "the good old days" when business was booming or their services were in demand.  An organization's history is important, but it's future is even more important!

Secondly, change is not something that can be managed in an ad-hoc manner.  The successful enterprise of the future will have robust change management programs and processes that anticipate change and focuses on desired outcomes in an environment of accelerating change.  I believe this is what it means when an organization is "hungry for change."  It isn't just a matter of attitude, but also a matter of preparedness and process.  This can take many forms for the various challenges organizations face, but it will be a robust process.  Possibly it is a bi-annual strategy session where the organization gathers to assess progress and changing conditions.  Possibly it takes the form of a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) that is updated and acted upon regularly.  Possibly it is the hiring of a board of directors that is optimally placed to anticipate changes and give great advice and guidance.  Or it may mean treating an organization's resources as venture capital to invest in new and innovative solutions.  Whatever form it takes, it will be systematic, comprehensive, and fast!

Is your organization successful, but slow?  Recognize today that the two simply don't go together when it comes to organizational effectiveness.  My problem with that quote isn't really an issue with its content, just it's tense.  Past tense makes more sense: "We were successful, but slow..."

Tuesday, October 6, 2009

Global CEO Survey Puts Change Leadership at the Forefront

I recently attended the annual convention for the Ohio Partnership for Excellence, the organization that assesses the Baldrige criteria for the state of Ohio.  It was a fantastic convention with many Baldrige award winners in attendance from around the country and from the manufacturing, health care, and public sectors.  One of the best presentations was by Harry Hertz, Director of the Baldrige National Quality Program.  During his key note address, he made reference to an IBM study that was just released in 2009 of 1,130 CEOs from around the globe.  This insightful survey produced what the study calls "the enterprise of the future," and the findings put change leadership at the forefront of enterprise strategy.  [A copy of this report can be found on the "Links and Files" page of the changefreak.com web site]  You might say some of the most successful CEOs in North America, Europe, and Asia are change freaks at heart (or at least recognize their need to become so)!

IBM leaders conducted 95% of the interviews face to face, which included almost equal numbers from Japan/Asia, Europe, and North/South America.  The study also sought to distinguish differences between financial performers and underperformers.  They analyzed the data carefully to identify key differences between these top tier performers and their lower performing counterparts.  The executive summary of the report is as follows:

Organizations are bombarded by change, and many are struggling to keep up. Eight out of ten CEO s see significant change ahead, and yet the gap between expected change and the ability to manage it has almost tripled since our last Global CEO Study in 2006.

CEO s view more demanding customers not as a threat, but as an opportunity to differentiate. CEO s are spending more to attract and retain increasingly prosperous, informed and socially aware customers.

Nearly all CEO s are adapting their business models — two-thirds are implementing extensive innovations. More than 40 percent are changing their enterprise models to be more collaborative. “ The rate of change has increased dramatically. Customers are demanding radical change in product innovation.

CEO s are moving aggressively toward global business designs, deeply changing capabilities and partnering more extensively.  CEO s have moved beyond the cliché of globalization, and organizations of all sizes are reconfiguring to take advantage of global integration opportunities.

Financial outperformers are making bolder plays. These companies anticipate more change, and manage it better. They are also more global in their business designs, partner more extensively and choose more disruptive forms of business model innovation.

Based on these observations, the study goes on to introduce the "Enterprise of the Future."  This successful enterprise is:
1. Hungry for Change
2. Innovative Beyond Customer Imagination
3. Globally Integrated
4. Disruptive by Nature
5. Genuine, Not Just Generous

It's not hard to identify the importance of effective change leadership in each of these elements.  Effective change management and innovation forms the core of the successful enterprise of the future!  In upcoming changefreak blog posts I will deal with each of these characteristics, and elaborate on the role of the change agent in each.