5 Actions to Lead Highly Profitable Organizational Change

Leadership Skills & Styles
By Michael Mercer, Ph.D.
Jul 25, 2006, 15:54

As I consult to executives and managers at many companies, I discovered highly profitable organizational change requires three key ingredients:

Successfully
1. Leading the organizational change
2. Handling employee problems during change
3. Managing yourself as you lead organizational change

If any ingredient is handled poorly, then the change inevitably fails to achieve the profitable results.

Some of America’s best-run companies used my 3-ingredient model to produce hugely profitable organizational change. These organizations include IBM, Intuit, Egghead.com, Harley-Davidson, City of Indianapolis, Robert Mondavi Corporation, Outback Steakhouse, Ritz-Carlton, VF Corporation, and Washington Mutual. This is described in my book, Absolutely Fabulous Organizational Change.

Let’s delve into the first ingredient. Successfully leading profitable organizational change requires five actions.

Action 1: Make Sure Your Organizational Change Fits into Your Corporate Culture

The only organizational changes that succeed are those that fit into the company’s culture! Brilliant plans that do not fit into your organizational culture will not achieve bottom line results!!

What is an organization’s culture? It is the actions and values the organization cherishes.

How do you uncover your organization’s culture? I devised a quick method to pinpoint any company’s culture: The culture is conveyed by the story every employee knows, tells, and retells. Usually, the story involves the company’s founder.

An example using my story = culture works was told to me by Brooks Fisher, the executive who started Intuit’s flourishing Internet business. This “Follow Me Home” story conveys Intuit’s corporate culture:

Scott Cook, founder of Intuit, was so focused on understanding and fulfilling the customers’ needs that he invented “Follow Me Home.” He would go to a store where Intuit’s software was being sold. Then, while a customer was buying Intuit software, he would ask if he could follow the customer home. At the home, he would watch how the customer installed and used the software.

Fisher says the story expresses Intuit’s culture of “The customer always is first.” Importantly, Intuit’s Internet business fosters an ultimate “Follow Me Home” link between Intuit and its customers. Why? At Intuit’s site, the company sees which financial products and services each customer examines and buys.

Action 2: Creating A Big, Exciting Vision

A company’s vision is not its puffy, cliché-filled “mission statement.” Instead, its vision is a huge, super-compelling goal the organization aims to accomplish.

Examples:
Ritz-Carlton Hotel Company’s vision:
Our key goal is to be the premier worldwide provider of luxury travel and hospitality products and services.

Robert Mondavi Corporation’s vision:
Our key goal is to be the world’s preeminent fine wine producer.
Those are fantastic visions. They enthusiastically divulge what the company’s executives and employees work toward every day. That helps explain why these companies produced incredibly profitable organizational change.

Action 3: Goal-Setting

Goal-setting provides steps to build the staircase leading to profitable organizational change. Productive employees require measurable targets with deadline dates. As Henry David Thoreau wisely remarked, “In the long run, people hit only what they aim at. Therefore, they had better aim at something high.”

How do executives leading organizational change get employees to use teamwork plus interdepartmental collaboration? Here is an example.

At Egghead.com, president and COO Jeffrey Sheahan and CEO Jerry Kaplan cleverly package four weekly activities to assure teamwork and goal achievement.

Tuesday, Lunch Meeting of Egghead’s Top 5 Executives. This meeting focuses on strategy.

Tuesday - Weekly Key Data Pack. Each manager submits a “5 - 15 Report.” This report takes a manager 15 minutes to write, and it takes Sheahan 5 minutes to read. Each “5 - 15 Report” details how the manager is progressing on measurable goals.

Friday morning - Senior Staff Meeting. Participants are all middle managers who report to Egghead’s top five executives. Each one announces how he or she is doing at achieving the measurable goals.

Friday - 3:30 - 3:50 p.m. - “Social”. All employees meet for a 20-minute stand-up meeting. People publicly praise employees who accomplished wonderful things.

Action 5: Lots of Celebrations

In all organizations, team members emotionally “bond” and feel thrilled to collaborate when they celebrate big successes.
For example, IBM’s Accounts Payable organization carried out a gigantic organizational change that saved $1-billion in three years. Each key success during the change immediately was followed by a celebration of everyone involved. Each celebration added fuel to the team’s enthusiasm to create hugely profitable enhancements.

Celebrations included:
1. giving project member a high-quality e-business shirt at a party

2. at another party -- with disk jockey and karaoke -- cartoon caricaturists drew each employee’s face onto a mock-up cover of Electronic Commerce magazine --
which employees proudly hung in their offices

Celebrations, special clothing and custom items give team members visible symbols proving they belong to a special group of high-achievers.

Your Call to Action

This article revealed five actions used by leaders of highly profitable organizational change. This is not all! These outstanding leaders also used the other two ingredients of my 3-ingredient method: (a) managing employees who resist --or undermine -- organizational change and (b) being a superb role-model for their employees.
Now, you have “inside information” on one key ingredient to help you lead absolutely fabulous organizational change™.

Copyright 2006 Michael Mercer, Ph.D.

Michael Mercer, Ph.D., is a nationally-renowned speaker, author, and pre-employment testing expert. This article is based on part of his 5th book, Absolutely Fabulous Organizational Change™: Strategies for Success in America’s Best-Run Companies. Another book Dr. Mercer authored is Hire the Best -- & Avoid the Rest™. Pre-employment tests he created are used by companies to help them hire profitable, productive employees. His 50 speeches each year combine readily useful management techniques with an entertaining speaking style. You can contact Dr. Mercer at phone = 847-382-0690 or get a free subscription to his Management Newsletter at http://www.DrMercer.com