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Editor’s Note: Guiding change may be the ultimate test of a leader – no business survives over the long term if it can’t reinvent itself. But, human nature being what it is, fundamental change is often resisted mightily by the people it most affects: those in the trenches of the business. Thus, leading change is both absolutely essential and incredibly difﬁcult. Perhaps nobody understands the anatomy of organizational change better than retired Harvard Business School professor John P Kotter. This article, . originally published in the spring of 1995, previewed Kotter’s 1996 book Leading Change. It outlines eight critical success factors – from establishing a sense of extraordinary urgency, to creating short-term wins, to changing the culture (“the way we do things around here”). It will feel familiar when you read it, in part because Kotter’s vocabulary has entered the lexicon and in part because it contains the kind of home truths that we recognize, immediately, as if we’d always known them. A decade later, his work on leading change remains deﬁnitive.
Leading Change Why Transformation Efforts Fail
Leaders who successfully transform businesses do eight things right (and they do them in the right order).
by John P. Kotter
I have watched more than 100 companies try to remake themselves into signiﬁcantly better competitors. They have included large organizations (Ford) and small ones (Landmark Communications), companies based in the United States (General Motors) and elsewhere (British Airways), corporations that were on their knees (Eastern Airlines), and companies that were earning good money (Bristol-Myers Squibb). These efforts have gone under many banners: total quality management, reengineering, rightsizing, restructuring, cultural change, and turnaround. But, in almost every case, the basic goal has been the same: to make fundamental changes in how business is conducted in order to help cope with a new, more challenging market environment. A few of these corporate change efforts have been very successful. A few have been utter failures. Most fall somewhere in between, with a distinct tilt toward the lower end of the scale. The lessons that can be drawn are interesting and will probably be relevant to even more organizations in the increasingly competitive VER THE PAST DECADE,
96 Harvard Business Review
business environment of the coming decade. The most general lesson to be learned from the more successful cases is that the change process goes through a series of phases that, in total, usually require a considerable length of time. Skipping steps creates only the illusion of speed and never produces a satisfying result. A second very general lesson is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating hardwon gains. Perhaps because we have relatively little experience in renewing organizations, even very capable people often make at least one big error.
Error 1: Not Establishing a Great Enough Sense of Urgency
Most successful change efforts begin when some individuals or some groups start to look hard at a company’s competitive situation, market position, technological trends, and ﬁnancial performance. They focus on the potential revenue drop when an important pat-
ent expires, the ﬁve-year trend in declining margins in a core business, or an emerging market that everyone seems to be ignoring. They then ﬁnd ways to communicate this information broadly and dramatically, especially with respect to crises, potential crises, or great opportunities that are very timely. This ﬁrst step is essential because just getting a transformation program started requires the aggressive cooperation of many individuals. Without motivation, people won’t help, and the effort goes nowhere. Compared with other steps in the change process, phase one can sound easy....