Leading a Midsize Business Through Change

Leading a Midsize Business Through Change

By Matt Dallisson, 15/05/2023

One of the sacred principles of change management is “stakeholder involvement,” i.e. engaging and including people who will be affected by the change in the process of making it happen. GE’s well known “change acceleration model,” or CAP, refers to it as “mobilizing commitment.” Kotter’s eight-step framework for change emphasizes doing this through “building a coalition” and “enlisting a volunteer army.” McKinsey has even done research to quantify the number of people who should be involved and concluded that at least 7% of employees need to own aspects of a major transformation.

But what if the process of engaging so many people in change actually slows things down instead of speeds them up? In my consulting experience, this is an ever-present danger in mid-sized companies, particularly those that place a premium on keeping employees fully informed about the business and foster a culture of “belonging.” When everyone feels that they have a stake in the company (which is great), they also feel that they should have a say in what gets changed. And since there’s no way to drive changes that satisfy everyone, the process of involvement either takes a very long time or creates decision paralysis.

Here’s a quick example: A tech company with around 1,800 people around the world was experiencing a slowdown in its growth. Based on input from strategy consultants, the senior team agreed that there was a need to increase the firm’s focus on selling a particular class of software to enterprise clients. As part of the culture of keeping everyone appraised of new developments in the business, the CEO discussed this strategic objective at an all-hands meeting, along with a general description of what this change might mean. In the weeks that followed, lots of people participated on teams — in Product, Operations, Sales, and Marketing — to develop more specific plans for increasing this type of enterprise sale. Since all the team members had a vested interest in protecting their jobs, budgets, and organizations, however, none of the plans included any ideas about what would be stopped or delayed so that resources could be shifted to the new focus. So, while everyone in the company knew that these enterprise sales were important, there was little actual movement in that direction.

Unfortunately, this is not an isolated example. A few months ago, I was talking with a business leader whose company needed to stop doing customer transactions in a certain country due to political and regulatory pressures. She said that they had assembled a large task force that was charged with creating a process for identifying customers who would be affected, the financial implications for the firm, and the technology support needed to “turn off” product access. However, the task force was struggling to reach consensus about what to do and how to do it. Sales was pushing to migrate larger customers so that their business would be booked outside the affected country, and they could retain the revenue, but Operations was concerned that this would require extensive workarounds, each one of which would need to be approved by the regulatory team. Product didn’t know if they could reconfigure all of their offerings in this way and wanted time to do an analysis. Meanwhile, Finance was trying to figure out the financial model which would determine the cutoff point of which customers should be migrated and which should not. In other words, they were stuck.

It would be easy to walk away from these examples thinking that high levels of employee involvement can be detrimental to managing change. Maybe it’s easier for one senior executive, such as the CEO, to just tell everyone what to do rather than have too many cooks in the kitchen. The real issue, however, is not whether to get large numbers of people involved or not — but rather how to get them involved, and what role senior leaders continue to play.

In the cases described here, senior leaders engaged many people in the early stages of shaping and planning change — a time when there is usually a need to make tough decisions. But the more people who are involved in making such decisions — each of whom will have different opinions and be affected differently — the more difficult it becomes to actually reach a conclusion. No matter how much of a “big hat” people will put on, it’s human nature to view decisions through the lens of whether they will be good or bad for you and your team.

To some extent this also is an issue of expectations. Getting lots of opinions and views early on is incredibly valuable. It enriches the discussion and opens up new possibilities. But there’s a difference between offering a view and being a decision-maker; and that’s where mid-sized companies with a culture of engagement can struggle. Asking many people to weigh in, provide data, and engage in discussion is not the same as having everyone be part of the decision. That needs to be done by a smaller team, usually the CEO and his or her executives. Then, once the decision is made, the larger group can proceed to figure out how to make it happen most effectively. Even then however, a senior person or team — either the CEO or an executive owner — needs to direct the execution since there will be lots of small choice points that also affect people differently. This was an issue in both cases. Everyone knew what had to be done in general — but figuring out how to make it happen required lots of decisions to be made about stopping current activities or making tradeoffs.

Principles to Keep in Mind If You’re on the Verge of a Major Change in Your Company

If you are contemplating major change in your mid-sized company — and you have a culture of widespread engagement — here are a couple of principles to keep in mind:

First, be very clear about whether you are engaging people for the purpose of providing input or for making a decision.

If you are intending to get to a decision, clarify ahead of time that the executive sponsor or senior leader will have the final vote, particularly if the broader team can’t reach a consensus. This is what eventually happened in the tech company that wanted to refocus on enterprise sales. When not much change occurred through the broad-based approach, the CEO worked with a few other senior executives and staff people to identify shifts in priorities for key groups and assigned them goals that supported those shifts. They also did some minor restructuring that put resources where they were most needed. While not everyone was happy with these changes, they accepted them as needed. In fact, several people said that these decisions should have been done much earlier.

Second, be sure that a leader or sponsor will continue to be deeply engaged throughout the change process.

This is what happened, somewhat dramatically, with the task force that was shutting down business in a certain country. Several weeks after hearing that the task force was stuck, I learned that they had disbanded the task force, set a date to stop doing business in the country, sent letters to their customers, and turned off the requisite systems. Done. No more debates. When I asked how this had come about, I was told that a senior executive had met with the task force and realized that the path they were going down would require thousands of hours in staff time, delay the “stop” date, infuriate regulators, and probably cost more than any possible revenue savings. So, she told them to just set a date in the next two weeks and get it done. Once everyone looked at it that way, it was a no-brainer.

Getting large numbers of people involved in change efforts is a critical element in change management. It widens the aperture of perspectives, generates a broader array of solutions, and increases the commitment that people have to doing things differently. Expecting a broad group of stakeholders to all put aside their personal and functional agendas for the greater good, however, may be unrealistic. So as a senior leader, don’t expect this kind of group to make tough decisions on their own. You’ll still need to do that, not just at the beginning, but throughout the process of change.

This content was originally published here.