Organizational Transformation

How to Achieve It, One Person at a Time

Bruce J. Avolio

• Publisher: Stanford Business Books
• Year: 2018
• Print ISBN: 9780804797931
• eBook ISBN: 9781503605848
• Edition: 1
• Topic: Business
• Subtopic: Organisational Behaviour
• Index: Business

It is estimated that approximately seventy percent of organizations fail in their attempts to implement transformative change. This book will help lessen that rate. Using real-world examples, Bruce J. Avolio maps four states of change that any organization must go through: identifying and recognizing, initiating, emerging and impending, and institutionalizing new ways of operating. Each state is described in detail, as are the leadership qualities necessary to solidify and transition from one to the next. These "in-between moments" are an often-overlooked key to organizational transformation. So too is the fact that organizational change happens one individual at a time. For transformation to take root, each person must shift his or her sense of self at work and the role that he or she plays in the transforming organization.

Intended as a road map, rather than a "how-to" manual with fixed procedures, Organizational Transformation will help leaders to locate their organization's position on a continuum of progress and confidently navigate planned, whole-systems change, overcoming the challenges of growing from and adjusting to watershed moments.

1

BUILDING THE NARRATIVE

I believe in the value of this change.

Oftentimes, we find that many people at the start, during, and even toward the end of a campaign for change in their organization will not say they believe in the changes being promoted by their leaders. The quote above came from an employee who was part of an organization that had successfully institutionalized a transformation in the way her organization did business. I will explore in this and subsequent chapters how such statements can be obtained from one’s workforce and how important they are to sustain major changes and transformation that can benefit the future viability of an organization.

We encourage you to stop and consider what fundamentally changes when an organization transforms from one way of existing to something different or a more extreme transformation. Stop. Because we are only a few sentences into the first chapter of this book, let’s consider if that is the right starting point for examining organizational transformation. Let’s try another way of thinking about sustainable organizational transformation. First, assume that if an organization could speak, it might say to its founders, customers, or competitors, “I am not the organization you knew in the past; how I think, act, and perform is all fundamentally different and by different I mean___________” (now you can fill in the blank).

According to a 2008 survey¹ of 3,199 executives from a wide range of industries and regions worldwide, the objectives of transformational change attempts they’d witnessed and that could be reflected in the preceding fill-in-the-blank could include the following radical shifts (and analogs to personal transformations we experience in terms of our human existence):

• I now produce consistently great performance (36 percent) . . . like a person making the varsity team, graduating cum laude, or getting a well-deserved promotion.

• I’m no longer spending like crazy and have reduced costs (15 percent) . . . like a person trimming down after being overweight or figuring out how to be thrifty to afford her or his dream home.

• I have turned around a crisis situation; I’m a survivor (12 percent) . . . like a person coming back stronger or wiser after a severe illness or other personal tragedy.

• I have finished my merger and have integrated entities (12 percent) . . . like a person reporting a happy marriage long after the honeymoon is over.

Other transformation attempts in the survey might be reported by a personified organization as:

• I have expanded geographically; I’m global! (9 percent)

• I’ve been divested and am living successfully as a spin-off. Or I have divested a part of myself and am moving on with a more focused portfolio of personal human assets. (4 percent)

• I’m now privately owned. Or I’ve gone public! (2 percent)

Seven percent of the 2008 survey respondents were in an “other” category where we can imagine the need to adapt to radical shifts to an organization’s existence—like implementation of large-scale technology or equipment changes, moving headquarters, or rapid growth.

An organization could speak in a first-person voice, similar to what we have portrayed in the preceding list, when it has only one employee. Where it gets difficult or decidedly more complex to personify the perspective of the organization is where there are two, or 20, or 200,000 employees, each of whom may think differently about what has or has not changed in terms of a narrative and how he or she might describe that change first to him- or herself and then to others. Rarely do we find even a few voices within the same organization saying the same thing about how an organization is transforming or has transformed in the early states of change, especially in unsuccessful change efforts. This is frequently the case when the organization is just entering into, is in the midst of, and even is years into the unfolding change process.

Examining the individual experiences to explain how successful change happens in complex organizational transformations is our focus and unique contribution to your change tool kit. As suggested in the preamble, you need to decide and then examine the unit of analysis to go beyond conventional change management methods and models. For example, in macroeconomics the unit of analysis is the nation’s economy. The unit of analysis in business and financial markets is typically the firm. The unit of analysis in sociology is the group. In psychology, the starting point for the unit of analysis is oftentimes the individual. We are suggesting that leaders who achieve successful transformational organizational change will need to be flexible when examining initially and over the course of change the different units of analysis needed to foster and sustain a transformation. We recommend, as a starting point, that you zoom in and use the individual unit of analysis to address large-scale transformational change in your organization, in that such change is a function of individual-scale personal transformation in each organizational member.

Consequently, if our unit of analysis is the individual, then let’s start by examining how an individual changes. Do you know anyone who has fundamentally changed or transformed his or her life—a friend, a family member, a co-worker, a famous figure, or perhaps yourself?² The person I have in mind is a leader whom I knew in my client network. Bill was an engineer who focused on numbers and technical systems as his basic principles for leading his organization. He was also a total workaholic, a hard-driving authoritarian leader who did not broker dissent. On one pivotal day, he had a massive heart attack at work and was rushed to the hospital. He survived and returned to work months later—a different and, in his words, “transformed” man.

Reflecting back on this pivotal time in his career years later, Bill described himself as being completely changed. How? You might imagine that Bill cut back on salt in his diet or exercised more—and you might be right. But Bill also thought very differently about his work relationships. He now really valued and listened to other points of view, encouraging not challenging or fearing dissenting views. He respected different opinions in a new and deeper way. He endorsed more of a work–life balance. He discovered that he enjoyed the people he worked with and would often say he really loved his employees and, in turn, how they loved him, rather than being fearful. We might then ask, did Bill fundamentally change, and was he a different man? Bill might fill in the blank as follows: “I am not the man you knew in the past; how I think, act, and perform is all fundamentally different, and by different I mean . . . What is important to me has changed, how I view myself has changed, how I interact with others and value them has changed, how they view themselves has changed, and what they want to accomplish has changed.” Notice how this change in the leader’s narrative cascades to other individual’s narratives, In the case of sustainable and planned organizational change, we see this sort of cascading of self-to-other change in every employee’s narrative and self-concept. It is also worth noting in terms of what you can expect from this book; I am focusing on planned organizational change, meaning a choice the organizational leaders have made to do something different.

We see in Bill’s example a person whose core self-concept changed, as this can be seen as an exemplar for organizational transformation. The self-concept is the vessel that contains the narrative we all create to describe ourselves, to “tell us” who we are to ourselves and to others. We might refer to this type of transformation as “breaking good” versus “breaking bad,”³ in the sense that this leader went from someone who cared little about others who work for and with him to someone who was completely focused on the goodwill of his employees, while still striving to be a top performer.⁴ Bill learned he didn’t need to beat people down to be successful, but rather he could build people up instead. Moving to this new narrative, Bill created sustainable performance improvements in his organization over a period of years. It is this personal narrative in each individual within the organization that must change for an organization to create a sustainable transformation. Transformation sticks from the inside out—one person at a time.

Recall that my goal for this book is to demonstrate to you that the key unit of analysis for fully understanding organizational transformation is represented by how each individual in the organization organizes and adapts his or her self-concept in alignment with the organizational objectives for transformation. Prescriptive changes associated with an organizational transformation must align with a revision in the individual self-concepts and, by extension, the collective self-concepts of all employees in the organization.⁵ You might be wondering why everyone’s self-concept has to change to successfully transform an organization. Why is the self-concept the critical unit of analysis?

In our experience and research, it is not uncommon for organizational leaders to work very hard to get their employees to view the organization to which they belong as part of how they define themselves, who they are, or their self-concept and identity.⁶ In combination, these perceptions ultimately influence how they choose to perform in that people who have a stronger sense of identity that is aligned with their organization will generally work harder for that organization to succeed and will be committed to staying the course.⁷

The same is true for every profession in that a profession is represented in an individual member’s self-concept in terms of the way he or she defines being “a professional.” For example, what does it mean to be a professional physician or nurse? What does it mean to be a marine, a minister, a lawyer, an accountant, or a teacher? Professions are defined by their mission, guiding principles, their boundaries of knowledge and practice, usually their core values, how you are selected in or out of the profession, and what you must do to maintain your professional status. In turn, a professional’s self-concept is aligned with the beliefs of the profession. In combination, all of these facets become part of the individual’s narrative script that he or she develops to become a professional, again from the inside out adhering to agreed-upon values, principles, and standards. We might then ask, what has to happen if a person’s profession undergoes a fundamental shift? Must there be a corresponding fundamental shift in the self-concept of members of that profession? The answer is decidedly a yes.

Similar to professions, organizations are also defined by their missions, values, guiding principles, selection of members, and what is required when it is necessary to change or transform the organization. In health care today, organizations are being asked to extend their mandate and mission from focusing on healing to promoting healthy communities to avoid illnesses. Reflecting on this shift, and working with many health care practitioners, one knows that it represents a significant and transformative shift from dealing with health issues after the fact to the prevention of issues before they become a heartbreaking and expensive problem.⁸ At the core of this narrative, this is a transformative shift in helping people who are sick to helping people stay healthy. Consider how this shift changes the physician’s guiding ethos, “First do no harm to my patient.” It seems to set the bar higher, especially in terms of focusing on prevention. What does that mean for the self-concept of all health care providers? We argue that to successfully transform health care organizations, for them to thrive and survive in their current and future reality, will require a significant change in the self-concept of organizational members and the profession that represent those members.⁹

Consider that one day your organizational leaders may realize the need to dramatically change and transform your organization. Will you be able to shift your own self-concept? Will you be able to address this at the level of the employee self-concept? What would that look like? At Microsoft, the current CEO, Satya Nadella, is trying to do just that. He is attempting to motivate his employees to consider a fundamentally different Microsoft by focusing on each employee’s growth mindset and to create a more collaborative culture.¹⁰ Individuals who possess a growth mind-set (or learning orientation) believe their talents can be developed through hard work, trial and error, feedback from others, and other learning strategies at their disposal. These individuals are more likely to openly admit their talents are a work in progress and then to try something at which they might not initially succeed to experiment with and change. They are also more likely to engage with others to learn from them and collaborate.

In contrast, individuals who possess a fixed mind-set (or performance orientation) believe their talents are innate gifts that are set for life. These individuals are more likely to conceal gaps among their talents, experiences, and challenges, focusing on proving to others their competence by working only in their existing comfort zones. An organizational culture that nurtures a growth mind-set in employees will be notably different from one that fosters a fixed mind-set. A growth mind-set culture in each individual will exhibit a higher willingness in those individuals to explore and fail, whereas in a fixed mind-set culture taking such risks is not wired into the individual or collective self-concept.

Nadella’s ability to successfully transform Microsoft is fundamentally tied to how each employee views him- or herself and how each has to personally change—from the inside out. What if everyone in Microsoft did have a growth mind-set—either through employee selection or development? If that were achieved, then the collective self-concept would transform Microsoft into a very different organization, one that is characterized by audacious experimentation, insatiable curiosity, and a culture driving toward relentless levels of innovation and collaboration, rather than one that has been known in the past for its stack-ranked performance system and “infamous for its toxic corporate culture, where individuals use politics to advance and groups are always fighting one another.”¹¹

Contrast Microsoft with another organizational icon of the Pacific Northwest—Alaska Airlines. Soon after the turn of the new millennium, Alaska Airlines was in deep financial trouble and on the brink of going bankrupt. All of the U.S. airlines and the travel industry writ large were suffering in the wake of September 11, 2001. Labor costs and fuel costs were adding to the roller-coaster ride being experienced by these airlines. During this time, the senior leadership realized that, although Alaska employees were unfailingly nice, they were not by any stretch efficient, and the reliability of its operations was in serious trouble.

Founded in 1932, Alaska had enjoyed a long history marked by unflappable passenger loyalty. By 2005, however, their formerly most loyal customers were opting to fly with other competitor airlines. Although they would still say, “We love you, Alaska,” in regards to staff and their memories of the past, they were fed up with delays at the gate and their luggage not appearing at baggage claim. Certainly, being nice was ingrained in the self-concepts of the Alaska Airlines employees. Being efficient, reliable, cost effective, and lean were not even hinted at in their narratives back in 2005.

By 2008, Alaska Airlines had risen to be ranked highest in airline cus...

Table of contents

• Cover
• Copyright
• Title Page
• Dedication
• Contents
• Acknowledgments
• Preamble
• 1. Building the Narrative
• 2. First Principle: Changing the Self-Concept
• 3. The Four-State Model
• 4. The Identifying State: The Signal for Change
• 5. The Initiating State: Beginning the Launch
• 6. The Impending State: Breaking Better
• 7. The Institutionalizing State: Defining “My Organization”
• 8. A Tale of Two Transformations
• 9. Becoming the Change and Sustaining It
• 10. Developing as a Transformative Leader
• Notes
• Index