Trustworthy leaders. No lasting, productive change within an organization ever happens without a modicum of trust between its members. As a consequence, the first essential dimension for OCC is the extent to which an organization is perceived to be led by trustworthy leaders. A trustworthy leader is someone who is not only perceived to be competent in leading the organization but also perceived as someone who has the best interests of the organization as their priority. This is why Jim Collins found that organizations that were changing for the better tended to be led by senior executives who were perceived to be humble servants of the organization, but were also passionate about ensuring a bright future for the organization. 1Organizational change is risky. In order for employees to change their perceptions and behaviors, they have to trust their leaders. As such, a proven record of trustworthiness on the part of the leaders is essential to bring about experimentation with a new order of things.
Trusting followers. Leaders are only half of the equation when it comes to organizational change; the other half is the followers. I once worked with an executive at Alcoa who was perhaps one of the most trustworthy executives I ever met. He was honest to a fault, a first-rate engineer, who worked his way up through the executive ranks to a prominent leadership position. He had a deep and sound understanding as to where his business unit needed to change, but he had a problem—his plant was highly unionized and it had a long history of management missteps and labor union outrage. Interestingly, the union leaders did trust this particular plant manager, but they didn’t expect him to stay there long and they did expect corporate headquarters to replace him with someone who was not trustworthy. As a result, this business unit had a leader who was perceived to be trustworthy, but the ubiquitous lack of trust on the part of the rest of the organization prevented any major change initiative from progressing.
Psychologists tell us that all individuals have a “disposition to trust” others. 2This disposition is influenced by such things as a person’s genetic background, family norms, and work-related experiences. When an organization is filled with a critical mass of individuals who are hopeful, optimistic, and trusting, it will be well positioned to experiment with new ways of operating. When an organization is dominated with a critical mass of individuals who are cynical, pessimistic, and not trusting, it will not be well positioned to engage with organizational change initiatives. In sum, a second key dimension of organizational capacity for change is the overall level of trust held by the employees of the organization.
Capable champions. Individuals, and hence organizations, tend to be inertial. In other words, change takes extra energy and it is much easier to keep doing things the way in which we are accustomed to. Consequently, organizations must identify, develop, and retain a cadre of capable change champions in order to lead the change initiative(s). Within small organizations, these champions are often the same as the head of the organization. Within medium and larger organizations, these champions are often drawn from the ranks of middle management.
Rosabeth Moss Kanter first identified this new breed of managers and she called them “change masters.” She defined change masters as “those people…adept at the art of anticipating the need for, and of leading, productive change.” 3Professor Kanter’s central thesis is that if an organization is to change and innovate, power needs to be focused on or delegated to certain talented and energetic individuals, or both.
These “corporate entrepreneurs” are experts in building formal and informal coalitions to makes changes and get things done within an established organization. They know how to directly and indirectly handle political opposition. They often lead a group of “mavericks” and “bend the rules” in order to bypass bureaucratic obstacles. They are often very goal directed and know how to deliver on their promises. In sum, these change champions are often “sponsored” by top management to spearhead change initiatives. If an organization does not have capable champions, change initiatives often stall.
Involved middle management. Middle managers are those who link top executives to frontline workers. Department heads are classic examples of middle managers, but there are many other types of linkages. While it is undeniable that today’s organizations are flatter hierarchies with fewer middle managers than in the past, their role in helping to bring about change is still important. While change champions often come from the middle management ranks, middle managers can passively or actively block change initiatives due to their unique position within an organization.
Steven Floyd and Bill Wooldridge were among the first scholars to note the importance of middle managers when focusing on strategy formation and organization change. As they point out,
The capability-based model of competition puts managerial knowledge at the forefront of competitive advantage. The knowledge of middle managers may become crucial in recognizing an organization’s shortcomings and in broadening its capacity for change [italics added]. Perhaps even more important, the middle manager’s centrality in the information network creates the potential for them to become a driving force in organizational learning. Realizing this potential, however, demands a new set of management expectations. 4
Whenever any new organizational change initiative is announced, one of the first things that employees consider is “how will this affect me?” While every organization is going to have doubters and naysayers, one of the keys to enhancing organizational change capacity is to get a critical mass of the organization excited about the potential change. Middle managers are pivotal figures in shaping the organization’s response to potential change initiatives, so their involvement is crucial to organizational capacity for change.
Systems thinking. Organizational change capacity involves more than just the “getting the right people on the bus and the wrong people off the bus,” however. It also depends on a proper organization infrastructure. One of the key infrastructure issues that influence or retard an organizational change initiative is what is called “systems thinking.” These are the rules, structural arrangements, and budgetary procedures that facilitate or hinder an organization-wide—as opposed to a “segmentalist”—approach to organizational change. While segmentalism works quite well for routine procedures, it is anathema to the study of nonroutine events such as strategic decision making, organizational change, or both. 5
Peter Senge is a seminal author in this area. In his classic 1990 text, titled The Fifth Discipline, Senge wrote about how systems thinking can enhance an organization’s ability to experiment, adapt, and learn new ways of operating. 6 Systems thinking, according to Senge, focuses on how the individual being studied interacts with the other constituents of the system. Rather than focusing on the individual’s or organizational units within an organization, it prefers to look at a larger number of interactions within the organization and in between organizations as a whole. In sum, an organizational infrastructure that promotes systems thinking is another key dimension of organizational change capacity.
Communication systems. A second infrastructure dimension, and one that complements the systems thinking dimension, is what is called “communication systems.” This dimension involves such things as e-mail networks, face-to-face meetings, telephone calls, and corporate announcements all being focused on the conveyance of the value for and the means for implementing a proposed organizational change. Organizational change requires reflection and action. Too often, there is a gap between thinking and doing. 7 Consequently, many observers of failed and successful organizational change initiatives emphasize the importance of communication in order to convert knowledge into action.
For example, John Kotter argues that almost every change leader fails to accurately estimate the frequency, range, and amount of communication required to bring about change. 8 Malcolm Gladwell argues that in order for organizations to “tip” in a new direction, convincing and persuasive communication is essential. 9And Ed Lawler and Chris Worley argue that effective formal and informal communication systems are essential to the creation of organizations that are “built for change.” 10 In sum, effectively designed and delivered two-way information about the change initiative is essential to building organizational capacity for change.
Accountable culture. A fourth and final infrastructure dimension is the degree to which an organization holds its members accountable for results. In my observation, most organizations generally excel on this dimension. However, when the organizational culture gets focused on innovation, accountability often gets ignored. While individuals need autonomy in today’s organizations to pursue innovative new ideas, they also need to be held accountable for delivering results on time and within budget. At the very least, they need to explain the failure to honor deadlines, resource constraints, or both.
Another term for an “accountable” culture is a “results-based” culture. 11Accountable cultures do not focus on how the work is done, but they do help to carefully monitor the outcomes of results produced. As a result, accountable cultures track whether a deadline was reached or whether the activities were executed under budget or not, and seek to discern what teams and individuals hindered or facilitated successful change. Of course, change is inherently unpredictable so there must be some executive judgment involved with the evaluation of results. However, fostering innovation and change does not mean that innovators and change agents are given a blank check with no deadlines. In sum, organizational capacity for change is also dependent on effective reward and control systems.
Innovative culture. Tom Peters and Bob Waterman wrote powerfully as to the importance of an organizational culture “in search of excellence” in their classic text on America’s best-run companies. 12 Similarly, John Kotter and Jim Heskett demonstrated a powerful correlation between corporate culture changes and subsequent firm performance improvements over 4 to 10 years of time. 13 And Clayton Christensen showed how corporate cultures often work to thwart innovation and change, particularly when the organization is a market leader. 14
The culture of an organization defines appropriate behavior, and motivates individuals and offers solutions where there is ambiguity. It governs the way a company processes information, its internal relations, and its values. 15 Some organizational cultures value innovation and change, while many others value stability and equilibrium. In sum, an organizational culture that emphasizes the importance of organizational change and innovation is a third infrastructure dimension that is critical to organizational change capacity.