John P. Kotter, a world-renowned expert in leadership and change, synthesized his research in the book “Leading Change” (1996). He outlines an 8-step model for achieving lasting change within an organization. This method is highly useful for both comprehensive organizational transformation and targeted, specific changes.
A Timeless Model Rooted in Simplicity and Common Sense.
Despite being a pioneer in its time, Kotter’s model remains simple to understand and full of common sense. Let’s delve into the eight steps of Kotter’s change model:
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Kotter’s 8-Step Change Model
- Step 1: Establish a Sense of Urgency
Urgency is evident if the company is facing clear difficulties, such as Nissan’s 1,400 billion yen debt at the end of 1999, or if the company has just merged or been privatized.
However, we are familiar with the phenomenon of unforeseen avalanches. How can a leader or a visionary team mobilize the organization in the face of a risk that only they perceive at the moment?
The basic solution is simple: bring those who are destined to change into direct contact with the source of the risk, usually external, for example by investigating with customers, conducting a benchmark of different comparable organizations, meeting other essential actors in the environment…;
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Of course, this implies providing everyone affected by the change with the necessary method both to conduct the diagnosis and to build new proposals, and therefore, as we will see later, to increase their potential skills.
For example, in a large specialized European university center, training in the strategic approach (strategic logic, methods of analysis and diagnosis) of a core group of about twenty professors of mathematics and exact sciences was a prerequisite. This first made them aware of the urgency of change by leading them to collect and process external data themselves, then to consolidate and broaden the “coalition” (see 2nd step) and to define new priorities to be implemented.
- Step 2: Create the Guiding Coalition
How do you create and organize the team that will support the process in the long term? Ideally, it should have sufficient status to help overcome obstacles, the competence to provide the necessary input at the right time and understand the social phenomena at work, and finally, the commitment to convince and “go the distance”, as many change projects gradually get bogged down before they succeed.
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More specifically, it is the entire governance of the project that needs to be structured: the different roles (leaders, change champions, consultant-catalysts…), the dynamics of meetings (orientations, design, steering, feedback…), the monitoring systems.
The process should allow the initial coalition to be rapidly expanded and consolidated, as in the example above. But the main difficulty is to leave the door open to experiments at the same time, or better still, to stimulate them in order to explore the field of possibilities as widely as possible, and not to lock the organization into a predefined vision and strategy too quickly.
- Step 3: Develop a Vision and Strategy
The development of a shared vision and the strategies to be followed at the different levels can only be done in a very participatory and open way, in order to maximize the richness of the ideas brought in and to open up the range of possibilities as widely as possible.
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But while it is important to reach a minimum consensus on the main axes of change, it would be disastrous to define a formalized action program that would be felt as a straitjacket and would kill all future initiatives.
Teams should work on alternative scenarios and not on plans or budgets as many managers in place expect.
The difficulty in formalization is that a vision must be bold enough to mobilize the organization on a challenge, and at the same time realistic enough to remain credible: how many magnificent visions, for example all imbued with ecology or ethics, do not resist five minutes to a reality test.
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But the vision can sometimes lead to considering a two-speed organization, where some perfect an existing one that is still vital for the company, while others develop new “possibles” that break with the present.
As an illustration, we can consider a classic two-day program with a team of managers (e.g. the members of the coalition defined above) who, after having sketched out three or four possible scenarios in a first stage, will then deepen each scenario in parallel groups, then discuss it collectively, to arrive at the elaboration in a final stage of a “strategic vision” which will be submitted to the adaptation and approval of the general management of the company.
- Step 4: Communicate the Change Vision
Communicating is of course neither just informing nor, on the contrary, giving orders. Attention to feedback and the way it is handled are key to the success of change.
How many managers have thought they could solve this problem by calling in a communication company and applying the recipes of “endo-marketing”! It is important to use a wide range of communication means, and especially new means launched for the occasion in order to underline the fact that we are facing a new problem. But above all, it is necessary to communicate in both directions and to go beyond simple communication.
Thus Percy Barnevik could quite rightly boast of having personally met in three years (1989-1992), after the merger of Asea with Brown Bowery, the two hundred thousand employees of the new company ABB scattered all over the world. “We are an overhead company”, he joked, alluding to his intensive use of the overhead projector.
And he added that he also had twelve “apostles” behind him – his management team – who multiplied his action in the same way. Far from a traditional promotional campaign, all of Barnevik’s and his team’s efforts were as much about listening and exchange as they were about information and persuasion.
- Step 5: Empower Employees for Broad-Based Action
Can we really think that we can transform managers, even at the most modest levels, who are confident in their responsibilities and power, into true leaders of change? What interest do they have in changing, Michel Crozier tells us? Isn’t the Anglo-Saxon vision a little naive?
Every change project gives, at one time or another, the feeling of devaluing some people in relation to others, of creating injustices. The tasks may be richer, but they are often also more stressful; one feels more exposed, when one senses that the “cocoon” of the old organization is going to disappear.
The main weapon of change at this stage is the modification of evaluation and reward systems.
For example, IBM in the late 1980s planned to evolve from hardware to software and services; but sales engineers continued, in the years following the announcement of the major change plan, to be rewarded primarily for the amount of hardware sold, and therefore still considered services primarily as a marketing complement to sell more hardware.
The result is that IBM, a blue chip since its inception, found itself in the red in 1993, mainly, according to its own analysis, because it had remained far from the rebalancing target it had set itself five years earlier!
Changing performance measurement systems and reward systems is an absolutely necessary condition, although probably not sufficient, especially in an organization that has deeply rooted its culture throughout its history.
Indeed, beyond freedom of action and stimulation (empowerment in the traditional sense), it seems essential to us to give the skills to understand and know how to act effectively; key actors must be trained in methods of investigation, research and data analysis, strategic analysis, project management, change management…, so that they can exercise their new power, imagine and take charge of the changes to be made.
Finally, they must be given the necessary time and “transitional spaces” must be created, as Gilles Amado suggests, which will enable them to progress and experiment without excessive risk-taking that would block all creativity.
Motivation for change will only exist in a manager if he or she perceives that his or her skills and available means of action can significantly increase during and at the end of the change process.
- Step 6: Generate Short-Term Wins
Demonstrating successes, even if they are limited but real, as quickly as possible is essential to maintain mobilization.
Thus, in a major operation aimed at making an insurance company more innovative, the conquest of the first two customers on a completely new offer resulting from the work of a “creativity group” was disseminated and discussed throughout the company.
The first difficulty was to create indisputable results quickly, and one of the solutions was to first tackle the points likely to generate the fastest returns.
The second difficulty, particularly important in our case, was to leave the game open while setting an example for other sectors of activity: each “small victory” obtained shows that change is possible, that the effort has paid off, but it must not be understood as a unique recipe to be copied very strictly (which is often the most spontaneous reaction), success can always take different paths.
- Step 7: Consolidate Gains and Produce More Change
Statistics show that the risk of a change project getting bogged down is considerable. Successive small victories, well exploited, support the necessary energy, but cannot be seen as the culmination of the project.
Komatsu, in its race to encircle Caterpillar, launched a new theme of change every six months (quality, productivity, innovation… but in different forms and with different priorities) on which the entire company was mobilized. The company successfully maintained this strategy for more than 20 years.
But is it possible to keep an organization “under tension” in the long term, without generating either stress, the negative consequences of which could become uncontrollable, or weariness leading to a complete rejection of the project?
What needs to be valued at this stage is not so much the small victories as the big ones: are the financial results, the internal climate, customer satisfaction and the company’s image improving significantly? Once again, this must be shown and demonstrated, explained, widely debated…
The specialized teams that were set up at the start of a change operation with a view to rapid action must now take root in the organization, instead of letting the old system take over (which unfortunately happens too often!).
Thus, the cross-functional teams set up by Carlos Ghosn at the start of Nissan’s turnaround (“Cross-company teams” and “Cross-functional teams”) gradually became one of the essential elements of the company’s organizational system.
Similarly, in the insurance company mentioned above, the creativity groups, development groups and product launch groups have become part of the company’s daily life; they have thus been gradually “institutionalized”.
- Step 8: Anchor New Approaches in the Culture
Change will only be successful if the culture of the organization appropriates it, i.e. if it is rooted in shared values, personal behaviors, relationships between individuals, between teams and between units of the organization.
At this stage, it must therefore be framed by structures, systems and decision-making processes that are consistent with the objectives of the change and accepted by all as constitutive of the new reality of the organization.
Thus, the Brazilian steel company Usiminas launched a vast project (code name “the day after”!) at the beginning of 1992 to prepare its organization and personnel for the consequences of its privatization, which was scheduled to take place within approximately one year.
The project provided for an ambitious transformation of the existing economic model, structures, measurement and reward systems, and ultimately the culture in place.
The success was such that after the privatization in 1993, the management team was maintained by the new capitalist shareholders, and the main investment programs, designed and planned one or two years earlier, were implemented after the privatization. Most of the managers, from the CEO to the unit directors, were still in place several years later.
The CEO has just retired in 2004 after about a decade of public management, followed by another decade of management, this time private! All managers, from unit directors to operational department heads, had been closely involved in the change operation and had succeeded in engaging the vast majority of the staff.
One point deserves to be emphasized in this story: the support of a large part of the environment (regional government and local administration, customers, union leaders, and even the population) was essential to the success of the operation.
This example also showed us that anchoring change must not only be done in the internal culture, but beyond that, in the entire external context of the company.
There are thus in the world a certain number of privatizations or acquisitions that are strongly contested by actors in their environment, or even by a good part of the local population.
The consequence is that these companies do not manage to consolidate their internal changes, and most often sink into inefficiency… which makes the privatization or acquisition operation undertaken even more questionable, and the loop is closed! In contrast, Carlos Ghosn, in order to succeed in Nissan’s turnaround, benefited from significant support from the media and, beyond that, from a large part of the Japanese population.
In short, any change can only be successful in a sustainable way if it is absorbed and rooted in the internal culture, and if it creates or maintains at the same time a sufficient symbiosis with the environment of the organization.
Limitations of Kotter’s Model
While Kotter’s model offers valuable insights into leading change, it’s important to acknowledge its limitations:
Top-Down Approach:
The model primarily applies to top-down changes initiated by senior management, such as mergers/acquisitions or the implementation of new information systems. It assumes that top management and change leaders are fully committed “allies”, which may not always be the case. The potential challenges of mobilizing top management in driving change are not extensively addressed.
Linear Sequence of Steps:
The model prescribes a specific order for implementing the steps, even though they can be applied cyclically. However, the business environment has evolved significantly since the model’s publication in 1996, with faster information transfer and a proliferation of change projects. This necessitates an agile approach, where continuous change is integrated into the organization’s mode of operation.
This need for agility can sometimes conflict with the linear nature of Kotter’s model. For instance:
Simultaneous Implementation: Certain steps, like communicating urgency and the new vision, can be deployed concurrently for greater impact.
Iteration and Repetition: Resistance to change is an ongoing challenge throughout a transformation project. Therefore, efforts to address resistance may need to run parallel to other steps in the model.
A rigid, linear approach may not be suitable for every situation, given the unique context and challenges faced by different organizations.
- Generic Framework with Multiple Operational Variations:
The model’s strength – its generic nature and focus on upfront preparation – can also be a limitation. While the model is applicable to any organization, its operational implementation will vary based on the specific change and context. For example, communication channels and messages must be tailored to different target audiences.
Kotter outlines the key ingredients for successful change leadership but does not delve into the specifics of operational implementation, which are crucial for effective transformation.
Adapting Kotter’s Model for Modern Challenges
Despite its limitations, Kotter’s model remains a valuable reference for change management. However, it needs to be updated and optimized to address the evolving challenges faced by organizations, particularly the overlapping nature of changes that limit stabilization phases for anchoring new skills.
Here are some additional considerations for successful change management in today’s dynamic environment:
- Beyond Strategic Vision:
Strategic vision alone may not be sufficient to mobilize employees, as it can often be too abstract. To generate engagement, it’s increasingly necessary to leverage concrete opportunities that employees can grasp, such as new markets to conquer or innovations to develop.
- Engaging a Network of Volunteers:
Involve a network of volunteers beyond project teams, as they may struggle to stay connected to the reality of the organization due to limited resources, legitimacy, or representation of diverse functions and hierarchical levels.
- Focus on Operational Support:
Prioritize operational support for the change by conducting an impact assessment for different employee groups. This allows for tailored strategies and targeted communication. It’s crucial to actively engage with employees using diverse channels and concrete messages, both through traditional top-down communication and by fostering lateral communication through collaborative tools or internal challenges.
- Sustained Support for Anchoring Change:
Ensure the long-term embedding of changes in employees’ daily routines by providing ongoing support. Offer spaced-out training sessions and alternate between training phases and practical application on the job. This reinforcement helps to solidify new learning until it becomes second nature for employees.
Conclusion
Kotter’s 8-step change model provides a robust framework for leading successful transformation. Each step presents challenges and requires strong leadership skills. While the model has stood the test of time, it’s important to adapt and supplement it with additional strategies to address the complexities of the modern business environment.
By focusing on employee engagement, operational support, and long-term reinforcement, organizations can effectively navigate change and achieve lasting success.
