Communicate A Vision To Shift Strategy, Shape Networks To Change Behavior

Former Intel CEO, Andy Grove, described the decision to switch the company’s focus from memory chips to microprocessors as a “strategic inflection point” that arose from a single conversation between he and CEO Gordon Moore. Armed with that vision they transformed the company in three years.

Yet when Lou Gerstner set out to transform IBM eight years later, he took a very different approach, declaring that, “the last thing IBM needs right now is a vision.” What he meant was that the firm’s culture was broken and behaviors needed to change. Until he could achieve that, the strategy wouldn’t matter.

Strategic transformations and behavioral transformations require vastly different approaches. Leaders, like Grove and Moore, can make unilateral decisions about strategy, but they can’t impose behaviors in the same way. You can communicate a vision and create alignment about a strategy, but to change behavior you need to shape networks.

How Change Has Changed

To effectively tackle transformation today, we need to understand that the change environment has shifted significantly since the 1980s and 90s, when the traditional change management frameworks were first being formed. Just like you wouldn’t use early languages like FORTRAN or COBOL to design software today, we can’t merely port change ideas from the same period and expect them to be effective in today’s organizations.

In 1975, more than 80% of US corporate assets were tangible assets, things like factories, equipment and real estate. When leaders made decisions about change, they tended to involve tangible, strategic assets, such as building a new factory, entering a new market or launching a new line of products. That was very much the case with Grove and Moore when they decided to switch Intel’s focus to microprocessors.

So when the modern practice of change management arose in the 1980s, that’s what it was designed to address. Managers needed to communicate changes to the rank-and-file, so that they could better understand it, align and contribute to its success. An entire cottage industry of consultants arose to fill that need.

But now that situation has flipped and more than 80% of corporate assets are intangible. When we talk about change today we are usually talking about changes in people themselves, in how they think and how they act. Clearly, that’s a very different type of thing and we need to approach it differently.

Communicating Strategic Change

In a strategic transformation like the one at Intel in the 80s, leadership has full power to push the transformation forward. They can approve investments, negotiate with partners and implement decisions. Therefore, it is important for management to communicate clearly from the start, informing the organizations what decisions are being made and why.

For example, as Bain & Company’s Michael Mankins and Patrick Litre explain in a Harvard Business Review article about strategic transformations, when Michael Dell embarked on a strategy to transform the company he founded from primarily a maker of PCs to a global leader in technology infrastructure, he rooted the effort in leadership meetings designed to implement the “Dell Agenda.”

They also point to Alan Mulally’s implementation of a rigorous business plan review (BPR) process in his transformation of Ford Motor Company from 2006 to 2014. These involved weekly meetings with the entire senior leadership team and helped align managers around the “One Ford” strategy he sought to implement, which divested in brands like Aston Martin, Jaguar, Land Rover, and Volvo and streamlined its vehicle platforms.

“Everyone knew the plan, the status against that plan, and all the areas that needed special attention. Everyone was working together to change the reds to yellows and greens,” Mullay remembered. His leadership turned around the struggling automaker from a $12.7 billion loss to a $6.3 billion pretax profit. During the financial crisis, when other US automakers needed a government bailout, Ford was financially stable.

Strategic transformations are leader-led and consensus driven. Clear, early and frequent communication is crucial to help everyone understand the change and participate in its success.

Changing How People Think And Act

While strategic transformations are important, they are also very rare. Michael Dell has only attempted one in his firm’s 40 year history. Ford has attempted only a handful in over a century. Yet today, with more than 80% of corporate assets intangible, organizations constantly need to be adapting skills and behaviors to improve processes.

Unlike in a strategic transformation, leaders can’t dictate what people think and do the same way they can make decisions about investments and partnerships. Behavior transformations are also guaranteed to incur resistance. That’s why leaders need to pursue behavioral transformation as something more akin to a social movement than to a strategy session. Rather than working to lead a consensus, you need to form a coalition and shape networks.

For example, when Experian CIO Barry Libenson set out to shift the data giant’s infrastructure to the cloud, he knew that it wasn’t just a technology decision, but would affect the company’s business model and data security. It would also require product managers to shift from waterfall development to agile development methods. He knew that these issues would be sources of fierce resistance in some quarters.

So rather than starting with a big launch and a robust communication program, Libenson started quietly, recruiting a handful of product managers who were excited to develop cloud products. He made sure they got the training they needed to start and established an “API center of excellence” to offer further advice and support.

“Our first projects were low risk and quickly generated real business results,” Debbie Chamkasem, who helped lead the project, told me. “That helped us build word of mouth and got others excited to work with us.” Those early successes helped accelerate progress and the entire transformation was completed in three years.

Transformational Triage

The 18th century French enlightenment writer Voltaire once said, “If you wish to converse with me, define your terms,” and we need to approach transformation with a similar mindset. Some transformations require changes in investments, while others require changes in behaviors and these have very different challenges.

Until fairly recently, our economy was based on atoms and transformations were usually focused on strategic decisions such as building a new factory, entering a new market or launching a new product line. These types of decisions fall squarely within the authority of senior managers and rarely inspire much internal resistance. It is to communicate clearly at every stage so that the rest of the organization can effectively align.

However, when a transformation is focused on changing behaviors, leaders should expect significant resistance. With these types of transformational programs, early alignment is not possible and leaders need to form a coalition. It’s important to start slowly, identify people who are enthusiastic about the change, want it to succeed and focus on an early keystone change to gain traction, before the project can accelerate.

What leaders need to recognize is that the vast majority of transformations today are not strategic and consensus-driven, but focused on shifting behaviors and coalition-driven. Over-communicating can provoke early resistance and will likely undermine what you’re trying to achieve. Decades of research shows that people adopt behaviors that they see working for people around them, not those they just hear about or that are dictated to them from above.

So the first thing you need to ask before undertaking any transformational effort is whether the goal is to change a strategic asset or to shift behaviors. The answer will determine how you need to move forward.

Greg Satell is Co-Founder of ChangeOS, a transformation & change advisory, an international keynote speaker, host of the Changemaker Mindset podcast, bestselling author of Cascades: How to Create a Movement that Drives Transformational Change and Mapping Innovation, as well as over 50 articles in Harvard Business Review. You can learn more about Greg on his website, GregSatell.com, follow him on Twitter @DigitalTonto, his YouTube Channel and connect on LinkedIn.

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