Guiding Coalition

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Creating the Guiding Coalition
Major transformations are often associated with one highly visible individual. Consider Chrysler's come back from near bankruptcy in the early 1980s, and we think of Lee Iacocca. Mention Wal-Mart's ascension from small-fry to in­dustry leader and Sam Walton comes to mind. Read about IBM's efforts to renew itself, and the story centers around Lou Gerstner. After a while, one might easily conclude that the kind of leadership that is so critical to any change can come only from a single larger than life person. This is a very dangerous belief.

Because major change is so difficult to accomplish, a powerful force is required to sustain the process. No one individual, even a monarch-like CEO, is ever able to develop the right vision, communicate it to large numbers of people, eliminate all the key obstacles, generate short-term wins, lead and manage dozens of change projects, and anchor new approaches deep in the organization's culture. Weak committees are even worse. A strong guiding coalition is always needed-one with the right composition, level of trust, and shared objective. Building such a team is always an essential part of the early stages of any effort to restructure, reengineer, or retool a set of strategies.

1. Going It Alone: The Isolated CEO
The food company in this case had an economic track record between 1975 and 1990 that was extraordinary. Then the industry changed, and the firm stumbled badly. The CEO was a remarkable individual. Being 20 percent leader, 40 percent manager, and the rest financial genius, he had guided his company successfully by making shrewd acquisitions and running a tight ship. When his industry changed in the late 1980s, he tried to transform the firm to cope with the new conditions. And he did so with the same style he had been using for fifteen years that of a monarch, with advisors. "King" Henry had an executive committee, but it was an information-gathering/dispensing group, not a decision-making body. The real work was done outside the meetings. Henry would think about an issue alone in his office. He would then share an idea with Charlotte and listen to her comments. He would have lunch with Frank and ask him a few questions. He would play golf with Ari and note his reaction to an idea. Eventually, the CEO would make a decision by himself. Then, depending on the nature of the decision, he would announce it at an executive committee meeting or, if the matter was somehow sensitive, tell his staff one at a time in his office. They in turn would pass the information on to others as needed.

This process worked remarkably well between 1975 and 1990 for at least four reasons: (1) the pace of change in Henry's markets was not very fast, (2) he knew the industry well; (3) his company had such a strong position that being late or wrong on anyone decision was not that risky, and (4) Henry was one smart fellow.

And then the industry changed.

For four years, until his retirement in 1994, Henry tried to lead a transformation effort using the same process that had served him so well for so long. But this time the approach did not work because both the number and the nature of the decisions being made were different in some important ways.

Prior to 1990, the issues were on average smaller, less complex, less emotionally charged, and less numerous. A smart person, using the one-on-one discussion format, could make good decisions and have them implemented. With the industry in flux and the need for major change inside the firm, the issues suddenly came faster and bigger. One person, even an exceptionally capable individual, could no longer handle this decision stream well. Choices were made and communicated too slowly. Choices were made without a full understanding of the issues. Employees were asked to make sacrifices without a clear sense of why they should do so.

After two years, objective evidence suggested that Henry's approach wasn't...
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