The art of making change initiatives stick: the seeds of effective change must be planted by embedding procedural and behavioral changes in an organization long before the initiative is launched.

Publication: MIT Sloan Management Review

Publication Date: 22-JUN-05

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COPYRIGHT 2005 Sloan Management Review

Too many managers have experienced this scenario: The chief executive announces a bold new corporate initiative aimed at generating dramatic performance improvements. The initiative calls for sweeping changes in the company's processes, systems and culture. The launch proceeds with great fanfare and a substantial investment of the company's resources. Several years later, however, managers look back and wonder what went wrong.

In some cases, the initiative never produces positive economic benefits; in others, hard-working employees squeeze out some short-term improvements. Management heralds the results. Yet the organization soon slips back into its old ways of doing things. Performance regresses, process improvements do not stick and dysfunctional behaviors return. The initiative fails to produce sustainable changes in processes, behavior or performance. In short, it does not alter the essential nature of the organization. Employees dismiss it as just another "flavor of the month," and senior management loses credibility. Future initiatives are met with widespread skepticism.

That, in much-simplified and condensed form, is still what happens all too often despite decades of study of change-management disciplines, the writings of leading scholars and the legions of consultants and their change methodologies. Studies note that more than two-thirds of change initiatives fail. (1) It is no surprise, then, that change-management programs are decreasing in popularity. (2)

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Our research focused on understanding how managers can design and implement corporate initiatives in ways that produce lasting change in the architecture and fabric of the organization. (See "About the Research," p. 54.) We began this line of study by trying to apply models of programmatic change to our examination of those initiatives. The dominant view suggests that change processes unfold in three phases, typically described as "unfreeze-change-freeze." (3) First, leaders create a sense of urgency and seriously challenge existing ways of doing things. Then new processes and systems are introduced. Last, those changes are institutionalized. Our research findings generally conform to the conventional model of a programmatic change process, with one critical caveat: The seeds of effective institutionalization--the process of embedding procedural and behavioral changes in the organization's fabric--must be planted long before the rollout of the initiative gets under way.

Four Critical Processes

Four critical processes--chartering, learning, mobilizing and realigning--enable organizations to avoid the "flavor of the month" trap and lay the foundation for the successful institutionalization of a strategic change initiative. (See "Defining the Four Antecedent Processes," p. 56.) All four elements rely on understanding the associated mix of task-related, emotional and behavioral factors to a much greater extent than is fashionable in today's metrics-driven environment.

One point of definition: "Strategic initiatives" does not mean projects focused on one functional area or a set of loosely related activities across multiple units of the company. Nor does it mean projects launched and run locally by division managers or led largely by external consultants. Strategic initiatives are not analytical studies; they entail the broad implementation of new processes and systems. We define them as corporate programs aimed at creating new business processes or transforming existing ones to accomplish major goals, such as enhancing productivity or improving customer service. The efforts are meant to provide overarching, unifying themes that apply to many parts of the company, as seen in the four big initiatives that reshaped General Electric Co. during the 1990s. (4) They are driven and monitored by an individual or team at the head office and cut across multiple divisions, businesses and functional areas.

Apparelizm Corp. is the pseudonym for a Fortune 500 retailer with more than 1,000 store locations. It has the leading share in its segment, has grown sales and earnings per share by more than 20% per year over the past decade and continues to open more than 100 new stores a year. At the time of our research, the company had begun to undertake a sweeping organizational transformation effort involving several major strategic initiatives. We began to evaluate whether Apparelizm could make its changes stick and, if so, how. Although many of the specifics of the case are unique, its broad lessons are entirely relevant to many other organizations today.

A Case of Strategic Change

One particular strategic initiative at Apparelizm yielded an opportunity for a unique comparative analysis. The retailer had launched what it called its Customer Service Enhancement initiative, or CSE initiative, in the early 1990s. After some initial success, management found that the stores soon fell back into their old patterns. By the mid-1990s, few traces of the initiative remained beyond some physical changes in store layout.

A few years ago, Apparelizm relaunched the CSE program. In spite of its long-term growth track, the company was being outpaced. Its financial performance was sagging as competition in the retail sector intensified, while its chief rival's numbers were healthy. Apparelizm's same-store sales (known as "comps") had been falling steadily, and sales per square foot of retail space had fallen off over several successive quarters. Worse news was that several measures of customer service and satisfaction had begun to show significant declines. An independent market research report brought these issues into sharp relief when it exposed many of Apparelizm's anemic numbers. One of the two co-leaders of Apparelizm's new program had examined why the 1990s CSE effort had crumbled, and he was convinced that there were ways to avoid the problems that had doomed the earlier effort.

While the goals and objectives for the relaunch were similar to those set for the 1990s program, the results have been markedly different. There has been a fundamental change in the system by which Apparelizm's stores are operated and customers are served. The company has adopted new approaches to inbound logistics, inventory management, merchandise replenishment and customer service, as well as to the hiring, training and supervision of store associates. Employees now spend much more of their time interacting personally with customers during peak shopping hours rather than restocking the racks or performing other operational tasks. They also tailor their interactions to deal differently with different types of customers, such as...

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