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.
Short-Changed
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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."
Changing Speeds
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.
Change Limits
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."
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