#35: Navigating Complicated Transitions

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Hello everyone and welcome back to the Proteus Leader Show. My guest today is Dennis Stratton. Dennis is a facilitator, a consultant, and an executive coach who challenges his clients' ways of thinking, behaving, and leading and supports them to design their organizations for success. As president of Stratton Consulting, Dennis has built a unique perspective on change management technologies and their applications in large systems. He works with individuals, teams, and organizations struggling with complexity and searching for new ways to respond. So Dennis, thank you for being here with me on the show.

I'm glad to be here. Thanks for the invitation, Erika.

Oh, you're so welcome. I'm really looking forward to this conversation. You know, you and I connected recently through a friend, and I really liked what you had to say about helping organizations navigate change. And especially when the change is complicated. That was part of our conversation. And I suspect that many of our listeners have been or will be in a situation like that. So I thought it could be really helpful to them to hear your perspective about this, since you've got a lot of experience in this area. Okay, so let's start with just, you know, what makes a change complicated in your mind? And why is that more difficult than kind of normal change?

So I think First of all, let me— in my mind, let me describe what normal change might look like. In my experience, normal change is one that's a bit more predictable. Not that it's insignificant, not that it doesn't have an impact on any individual or an organization and how it tries to navigate through a quote-unquote predictable change. But it's predictive in terms of just what are the right things any leader ought to do to make sure they work through that change effectively, and that the people in the organization, in that case, you know, are able to, you know, embrace the change. So a typical change might be a classic acquisition or merger, or a new CEO, or perhaps a change in strategy. In my experience, where this becomes a complicated change is when there are are multiple forces at work. And some of them are, you know, from the viewpoint of any employee or the leadership, might be obvious, and some may not be so obvious. So, for example, when I think about multiple forces, so one, of course, is what if the organization is changing fundamentally its strategic intent?

Ah.

And at the same time, What if their legal entity or their identity itself is changing at the same time? When I mean identity changing, for example, in a merger or an acquisition, I go from, you know, I was once a member of Chemical Bank and now I'm who I am as JPMorgan Chase, right? The identity change. And then at the same time with that change, there's a requirement for the culture to change, you know, how it operates and so forth. And then of course, add on more, there's restructuring and perhaps there's a new management team or certainly a new CEO that might be driving the changes themselves. So you have multiple forces playing a part in, you know, at the end of the day impacting organizations.

I got you. Change that's pretty straightforward, that doesn't have lots of component parts and that you can respond with a kind of normal approaches to change. And you're talking about where there are multiple changes happening simultaneously.

Yeah.

That's where it gets complicated. Yeah, okay.

So I'll give you an example if it's helpful. So recently I was working with a pretty large med device organization, and the changes that they were facing were significant. It was one— the change was being— what do you call it— the catalyst for it was certainly the environment. Healthcare regulations were changing, Obamacare was having an impact, and at the end of the day, the organization needed to change their strategic intent. And so what in their case what that meant was get out from a game of trying to win on cost, being the lowest cost provider of sutures and staples and other medical devices and equipment, to becoming— trying to win on innovation. be the first to market with breakthrough technology and so forth. So you had a change in the intent, you had an environment that was changing itself, healthcare overall was under enormous stress.

Yeah.

You had a new CEO, you clearly needed a change in culture and behavior, and typically in that case it was you had, you know, R&D spend in the historical company might have been maybe 1% of revenue, and now they're saying 6%. And so huge change in just how people are ultimately, you know, assigned, you know, allocated budgets and the capabilities required to be innovative as opposed to, you know, the classic structure in the past, which was centralized. Everything comes to, you know, centralized decision. Now you want it to be more decentralized, you want to put more power in the R&D organization in terms of their ability to fail fast. Anyway, I could go on and on and on, but you can imagine there's multiple levels to that, multiple layers to that, and it gets pretty complicated.

And you already kind of referenced this with culture, but just that core mindset shift of going from let's do everything as inexpensively as possible to Let's be as creative and innovative as possible. That's just like 180 degrees.

Yeah, no doubt, no doubt. And everything that comes along, and then think about the processes, you know, the governance, the discipline to make decisions in that environment. It's very different than one that was very centralized.

Yeah, wow, that's a great example. So then let's keep— I love this example, so let's keep using it. What are some of the biggest mistakes that leaders tend to make in these kinds of complicated situations?

I think it comes down to a couple of things. And unfortunately, I've seen the movie a few times and have watched leaders, CEOs in particular, stumble on it. I think the first big one is just a lack of understanding or recognition of all these forces at play. And so for me, when I coach a CEO or a senior executive, it's let's chunk this down in terms of what this change may mean. To your organization, and we look at it from an attitudinal, behavioral, cultural point of view, a political point of view, a structural point of view, you know, a process point of view, governance, what's going to change there, customers and what's going to change there, and the capabilities required to perhaps meet changing customer needs. So just walking any senior leadership through the layers that they're going to need to address it one way or another and being clear that they're all important. And yes, you may, in terms of how you address them, prioritize how you do it, but being cognizant that you're going to need to address all of them very actively if you're going to be successful in moving your organization through what will be a complicated transition. So I think that's number one.

Is that because they tend to either Try and make it simpler than it actually is, or don't— aren't aware of some of the complexities?

Great question. I actually think my experience is that they love to tackle what they feel most comfortable tackling. And so, for example, what I was going to say, the other mistake that I've seen folks make is they move on structure too fast.

Right, right.

And it's arguably easy. You know, when it's all said and done, it's black and white. It's new boxes. It's moving some boxes around. And some might argue that it's hard if people lose jobs or their positions change. And that's true. But the act of restructuring is actually pretty straightforward. And sometimes creates, you know, red herrings in terms of the— you already have enough tension in the organization around the real changes that you need to make. And if you lead with restructuring, sometimes it gets people off— they get out of focus on the fundamental things that have to change.

Yes, it introduces unnecessary or wrong change because sometimes I feel like— tell me if— you're welcome to disagree with me. Sometimes in change, I feel like because people are more comfortable with sort of names in boxes, they start moving things around and you kind of have to think, well, to what end? You guys don't actually know what you're moving towards. Yet, but you're changing the organization to move towards some undefined end. So sometimes those organizational moves are actually incorrect.

Exactly right, and I couldn't agree with you more. To me, it's, you know, I always kind of said environment dictates strategy, strategy dictates structure. And so oftentimes strategy isn't fully developed before there's an understanding then what's going to enable us to execute it most effectively. And that's when you start to address structure.

Yeah.

But there's so many layers when you have the kind of complicated change I described earlier with the med device company. You know, it could take a while to really clarify the strategy. And then the other big mistake that I see CEOs make is then getting very clear about what the near-term strategic priorities are. And in the process of doing that, one could get very much more clear anyway around What's this transition going to look like? You know, the other thing that, you know, if you had another mistake, it's leaders tend to, and they're pretty good at it, create a vision for what this desired state might look like, and probably pretty good at creating why we need to change now. But so often there is a lack of definition or expectation or clarification around what is this transition going to literally look like? What can we expect? What do we expect in month 1, in 6 months, in 9 months, in 12 months? How do we know we're on the right track? And oftentimes, we try to catch up to that, but it isn't very well defined early.

Oh man, I could not agree with you more. They just sort of miss out on the journey. Here's what we have to move away from. Here's where we're going. Really? What's going to happen on the way? How are we going to get there? What's that going to look like? If we wanted to give some really practical advice, what would you— you know, our listeners may be listening to this and going, wow, I'm right in the middle of a complicated change. What would you encourage them to especially focus on in order to help make that change more successful?

You know, I think it comes down to 3 things. I think there's a first, there's this under— again, really understanding how complicated the change is. Step 1 would be take your time and prepare the organization well for the expected changes and an understanding of the changes. And so that's everything from the— what I said earlier, kind of being very clear about what is the driving force behind these changes, what in particular are we talking about changing, what are we talking about not changing, and actively communicating that, setting context I think too often there's a rush to getting to the work of the change, like we said earlier about structuring and restructuring. And those things tend to happen, unfortunately, in a vacuum. People don't have a context for those changes.

Yeah.

And so what do they do? They go to the darkest side. They go to where their fear is most when they see a restructuring or they see jobs changing, or they go to, well, that must mean I'm not going to have a job, or it must mean they really are downsizing, or, you know, they'll go make things up in their mind. Because there's no context. I think step number one is leaders need to really be smart and detailed around the why and actively communicating context. So in my mind, it's preparing the organization. I think the second most important thing is how they're choosing to engage the organization. So what I mean by that, especially in these complicated transitions, what it's going to mean, the implications of it, could be very different whether I'm sitting in R&D or whether I'm sitting in the Northwest sales region, whether I'm sitting in operations. Functionally and regionally, it could very practically mean different things to different people.

Yeah.

So leaders need to play an active role in stepping down and engaging people in clarifying not only the why of the change and where we're going, but asking people, so what is that going to How is that going to impact your organization or your function? Yeah. And in the process of doing that, you do 2 things. You help clarify it further, and 2, you get people to more or less embrace it because now they're feeling like, oh, so what can we do about this transition? How can you help us? So there's a sense of deeper ownership. And by the way, in that process, in my mind, it's also about driving ownership for this change down into what I call the frozen middle. It's that part of the organization where you have team leaders, senior managers, managers who at the end of the day are going to decide to navigate this change well or not. As wonderful as CEOs think they have all the power in the world, they don't when it comes to this. It all resides there in my mind in the middle.

Yeah.

And so if you can spend some real quality time with the middle of your organization clarifying the big why and helping them help you define the what functionally, operationally, etc., the likelihood of success goes significantly higher in my experience. And then the third thing is just reinforcing the change. What are all those things that are— that send signals to people in the organization that we're not serious about this change? Systems are classic examples. how people are paid, performance management, you know, processes for how decisions get made, governance, all those things, if they don't align to or reflect what people's understanding of where we're trying to go, they use those or it's classic, we hold it up as the excuse for, see, we're not really serious. And so, and I don't think those things happen all at once. You prepare first, You engage second, and then you ensure in the longer run that you're reinforcing it through all the systems and processes and structures, etc., around the organization.

Oh, wow. So Dennis, thank you for being here with me on the show. Great.

I'm glad that worked out.

And listeners, if you'd like to find out more about how Proteus approaches change, just go to ProteusLeader.com and click on the Leading Change topic. So thank you for being with us today, and until next time, Here's to creating the life you truly want.

We hope you're feeling better equipped to create the career, the business, and the life you want. For more insights and tools for leadership and management, join us at ProteusLeader.com. Have an excellent day, and thanks for listening.