If you're thinking about making a major change, stop thinking and start changing. That's the message of Bain & Co. consultant Stan Pace, who says most company change programs are too slow. Cautiously changing step-by-step flattens revenues, eats profits and can lead to business failure, says Pace, likening fast change to "ripping the Band-Aid off quickly."
Pace, who directs Bain's Dallas office, performed a study of 21 mostly midsized companies that have seen big gains from major transformations-increases in company values averaged 250 percent per year after the changes. Speedy change was one trait they shared. Pace says, it's what separates them from less successful cases such as Polaroid Corp., which is in Chapter 11, and Xerox Corp., which lost market share, sold assets and laid off employees as it struggled with technological and market changes. Sweeping overhauls have stretched on for several years in both these household names.
Slow change's destructive effects aren't limited to big companies. When Brent Morehouse decided to give up software development at his 15-person Addison, Texas, company and restrict himself to being president, he thought the changeover would take no time. Eighteen months later, he knew different.
"We had a product release that was delayed more than a year, and we lost a major customer because of it," says Morehouse, 36, who founded his company, manufacturing software provider Activity Software in 1988. Had Morehouse completed the change in three to six months as planned, he believes they would have kept the update schedule. And, he says, "we wouldn't have lost that account."
Pace's study found specific traits would-be quick-change artists should try to develop. For example, you should exhibit the attitude that even massive change must happen rapidly and simultaneously. Also, specify and require results, but leave execution details to those doing the executing. If results aren't forthcoming, wield the ax. At almost all the companies in the Bain study, senior managers up to-and sometimes including-CEOs were replaced.
Change compensation as well. Pace found employees at the fast-changers were motivated by performance-related bonuses. Finally, let everyone know what you're doing. Put together an intense communication campaign, including everything from company newsletters to management speeches, to hammer home a few key points of the initiatives.
The specifics of how fast you should try to change depend on the scope of the change and the size and nimbleness of your organization. In general, Pace recommends larger companies cap their change efforts at a year. As for entrepreneurs, "Deal with the changes in 30 days," he says, "rather than 30 months."
Pierre Mourier, president of New York City management consulting company Stractics Group and co-author of Conquering Organizational Change (CEP Press), suggests breaking changes down into smaller pieces that can provide quick results. "You need a number of quick wins for momentum," he says.
There are risks, of course. Rapid, large-scale change is hard for employees to deal with while doing their regular jobs, Mourier says. The distraction could cause salespeople to stop selling, for instance. So be careful not to go too fast on too many things, he warns.
One thing is clear: After years working to cut the time required to process orders, manufacture products and design follow-ups, change is yet another task to be performed more quickly. "The cost is a function of time," Pace explains. "And the longer the disruption goes on, the greater the cost."