Brace Yourself! This Wave Is Going to Be Big

Sometimes we find the need to transform an organization — and sometimes the need finds us. I spent the better part of last year helping a major oil and gas company transform one of its business units. The business unit’s Vice President inherited a precarious situation the year before. Without a fundamental shift in strategy and a radical redesign of its operating model, the business unit would not survive for too much longer. Furthermore, the red skies and ominous clouds that metaphorically colored the early analyses foretold a dark and gut-wrenching story. It seemed inevitable that the organization would be forced to endure another rightsizing. This would be its third employee reduction in three years.

Our project team worked incessantly and assiduously for a year to overcome a plethora of formidable challenges and deploy the best operating model we could. When that day came, the workforce was absolutely invigorated. Early focus groups and surveys confirmed very high levels of optimism and trust — much higher than before the transformation began. And as I write this, nearly a year after we launched the new business unit, that high level of trust and optimism has been sustained.

How did this happen? How did we take such a dismal situation and turn it around into a resounding success? A few months ago, I sat down with the Vice President and the rest of the project management office that drove the transformation to reflect in this very direction. Let me share some key takeaways from that session.

Dedication to the Cause

Without a serious, focused effort on Organizational Change Management (OCM), you cannot succeed with this—or any—kind of transformation. A transformational effort is one that has a seismic impact on an organization’s fundamental design. Classically, organizational design (OD) involves five key areas of consideration: strategy, structure, processes and lateral capability, reward systems, and people practices. This is typically referred to as the Star Model (Galbraith, 1995). Considering that OCM addresses the people side of change management, it is easy to see how integral OCM is with OD shifts. What the Star Model shows us is that you cannot alter the structure (i.e. formal reporting relationships), processes and workflows, or even the fundamental strategy of an organization without affecting the way its people behave. It is all inextricably connected together. So, if the people side of a transformation is not managed properly you will invariably deploy a dysfunctional operating model. That’s not what you want, right?

Source: Galbraith, 1995

I know you would expect this view coming from a change expert, but I’m not stating an opinion — I’m stating the obvious. What the Vice President told me within 30 seconds of talking to him was that the culture of his organization was of vital importance and that the people of his organization must be taken care of as we navigate through this tough transition. Having dedicated experts, like our change team, tending to these details was critical for our success. If he tried to assign part-time, internal resources to handle this responsibility, there would have been a radically different result (and not in a good way). Those resources would have been far too busy (because of their day job) and distracted (because of the threat of losing their jobs) to adequately manage organizational emotions throughout the effort, let alone design an appropriate culture to fit the new operating model. Without a focused OCM effort we would never have arrived at the intended vision.

I Have a Dream

True to form, the Vice President was a visionary who had a clear vision for where we needed to go. I remember preparing for our first formal review. I joined in the early stages of the project and although they had a good start on our vision of success, it needed some work. It wasn’t compelling, especially from the employees’ point-of-view. So, I spent my first days on the project creating a compelling case for change, including a magnetic future state that would pull workers toward the end. Of course, this was all assembled into a set of slides for the VP to review and comment on. His feedback was very encouraging and indicative of the fact that the previously identified gaps were centered more around clarification than contemplation. There was one comment though that sailed through me in a visceral way. He asked, “Where is the slide on sustainability?” Sustainability? We just started the project and he’s worried about sustainability? But he was right. I will never make that mistake again.

The Vice President was so clear on where he wanted to go with the organization, that he needed to see evidence of a Sustainability Plan, even though we just started the project. In several decades of consulting with leaders like him, I never had anyone ask me this question so early in a transformation effort. I was inspired, and I went straight to work on the framework that would sustain the significant changes we would eventually deploy. Of course, I couldn’t articulate any details because we hadn’t even considered what an end design might look like. But I could put the basic bones in place, which is exactly what I did. As you may expect, the Sustainability Plan developed over time into the robust leadership guidance that lives today; however, its fundamental struts have not budged from their original construction. This was another key factor to our success as it forced us to think about the systems and culture that would support this change before the new structure and processes were even designed and it brought culture to the forefront of the new strategy. That’s vision.

And So, It Goes

Leaders are constantly faced with challenges: some small and some big. Once in a while a challenge shows up that warrants a transformation — a fundamental redesign of the organization. What many leaders underestimate, when facing a truly transformational challenge like a merger or a significant reorganization, is the interconnected nature of their culture with the more obvious targets like what the org chart looks like. It is not hard for leaders to understand that people will be impacted. However, it is not so obvious that you cannot pull one or two levers (like structure and processes) without actively managing the others (like people and culture). To do so will inescapably result in organizational behavior that is incongruous with your stated (and desired) values. That is not good.

Indeed, the tale I shared with you today has a happy ending. At the time of this writing the organization is thriving, despite a sizable reduction in force and a dramatic shift in trajectory. There are a lot of great lessons to be gleaned, far too many to detail here, but I will leave you with a few of the most significant. If you are contemplating a major transformation, be very clear in your mind on what success looks like, think intently about how the organization will sustain the change, and dedicate resources to manage the people side of your transformation. Start today by articulating your vision of success in great detail. Then, make sure your people are well-considered and well-treated throughout the transformation. You owe it to them. You owe it to yourself.