by Lee G Bolman
Other former GE executives, such as Robert Nardelli, who was credited with undermining employee morale and customer service at Home Depot (his story was told in Chapter One), had similar experiences. Importing an innovation from one organization to another is risky business. It’s akin to bringing a plant from one ecosystem to another. It might succeed, but the import may die quickly (like palm trees in Siberia) or become a destructive pest (like kudzu in the United States and elsewhere). Leaders as imposers of change are often headed for trouble because their initiative is seen as something alien that needs to be snuffed out.
More promising are change efforts that are rooted in an organization’s history, culture, and people and built on a shared understanding of the current challenges. We have seen examples in earlier chapters, including Anne Mulcahy at Xerox, Howard Schultz at Starbucks, and Lou Gerstner at IBM.
In 2007, Microsoft took a similar path in an effort to solve a problem that perplexed CEO Steve Ballmer. Microsoft’s stock was slipping, products were delayed, and observers inside and outside perceived the company as “flabby, middle-aged and un-hip”—especially in contrast to Google.6 Ballmer could have brought in a fix-it expert, such as a new human resource chief, to implement a company-driven antidote to the malaise. Instead, Ballmer reached down into the ranks and promoted a maverick to rekindle the company’s spirit. He elevated Lisa Brummel, a product manager beloved for her unconventional ways and dress, to the role of chief people officer.
One of Brummel’s first initiatives might seem strange to structural thinkers: she brought back the towels that had been a feature of employee locker rooms until removed earlier to cut costs. The lost towels had become a heated subject in internal blogs, primarily as symbols of how little the company cared. Beyond helping with Seattle’s chronic drizzle, the towels were a small but treasured perk of working at Microsoft. Brummel also replaced the self-service “industrial sludge” coffeemakers with Starbucks machines that fit better with Seattle’s barista ethos.
The next target for Brummel’s magic wand was Microsoft’s dreaded performance review procedure. Devised by Ballmer himself, the ranking system was a zero-sum game in which employees competed for their individual shares of a limited purse. Managers could give only so many A’s, even if several employees had performed exceptionally well. It was a touchy issue pitting Brummel against Ballmer, but she won and implemented a system that gave managers more discretion and tied raises and bonuses to a combination of pay grade and annual performance.
Brummel opened up communication by moving the internal “underground” blog into the public spotlight. She changed the company’s office décor from institutional drab to modern chic and created a mobile medicine service to dispatch company physicians to employees’ homes for emergencies. Brummel’s initiatives raised morale, cut attrition, and, in many instances, one-upped Google. Brummel developed initiatives from the ground up as internal catalysts for change, rather than relying on programs imported from somewhere else. Instead of taking things away or imposing things no one wanted, she gave people innovations they welcomed. Among the outcomes of these efforts was recognition at the top of a ranking of best multinational workplaces for 2011.7
The point is not that practices never transfer well from one organization to another. Six Sigma, for example, has worked well in many different companies. But if leaders hope to bring an idea or process from one organization to another, they need to think carefully and comprehensively about similarities and differences in the structure, people, politics, and culture of the two organizations. They also need to ask if an organic, home-grown innovation might have a much better chance of success than one imported from somewhere else.
THE FRAMES AND CHANGE
You’re better off seeing quicksand before you’re mired in it. Likewise, your chances of success are enhanced when you use the frames to help you see pitfalls and roadblocks in the road ahead. It rarely works to retrain people without revising roles or to revamp roles without retraining. Planning without broad-based participation that gives voice to political opposition is likely to provoke stiff resistance. Change alters power relationships and undermines existing agreements and pacts. Even more profoundly, it intrudes on deeply rooted symbolic forms, traditional ways, and rituals.
Whenever you or your organization contemplates significant revisions of the status quo, Exhibit 12.1 can serve as a helpful guide to what lies ahead. From a human resource perspective, the leader’s role is to serve as a coach. Changes in routine and protocol undermine people’s ability to perform with confidence and success. They feel puzzled, anxious, and insecure and need support and training to cope with new ways. Otherwise they may perform badly because they lack the understanding or skill they need to implement the new approach. They may resist or even sabotage the process because the changes don’t make sense to them. Or, worse, they may comply superficially while covertly dragging their feet. Good coaches know the benefits of involvement, training, and support in building a winning team.
Exhibit 12.1. Change: Barriers, Leader Roles, and Strategy
Frame Barrier Leader’s Role Strategy
Human
Resource Anxiety,
incompetence Coach Training, support
Structural Confusion, loss
of direction Architect Redesign,
restructure
Political Conflict, opposing
coalitions Politician,
peacemaker Create arenas,
manage conflict
Symbolic Loss of meaning,
clinging to past Healer,
storyteller Ceremonies and
rituals for letting go
The chart also suggests that support and training alone will not ensure success unless existing roles and relationships are realigned or reengineered to fit the new initiative. When things start to shift, people become unsure of what their duties are, how to relate to others, and who is in charge of what. Clarity, predictability, and rationality give way to confusion, loss of control, and a widespread sense that politics trumps policy. To minimize such difficulties, the leader as architect or engineer needs to redesign the social architecture of existing roles and relationships among people.
The chart also tells us that attempting an alteration to the status quo is a thorny political undertaking. As changes emerge, camps of supporters, opponents, and fence-sitters form quickly. Conflict, often avoided or smoothed over, explodes in divisive battles. Political infighting frequently undercuts authority and rationality. Leaders help by bringing submerged conflict to the surface and engaging it in open public arenas. Arenas are places or events that bring parties together to air issues and forge shared agreements. Through bargaining, compromises can be hammered out between outmoded ways and innovative ideals. The leader’s role as politician and peacemaker is essential in dealing with the political turbulence and conflict that accompany significant change.
Finally, change produces feelings of loss because it severs ties to symbols that create meaning. When a relative or close friend dies, we suffer a gnawing sense of loss. We harbor similar feelings when a computer replaces old procedures, a logo changes after a merger, or a new leader replaces an old one. When these transitions take place in the workplace rather than in a family, feelings of loss are often denied, submerged, or attributed to other causes. Change typically triggers two conflicting symbolic responses. The first is to keep things as they were, to replay the past. The second is to ignore the loss and plunge into the future. Individuals or groups can get stuck in either form of denial, or they can bog down vacillating between the two.
In our personal lives, the pathway from loss to healing is culturally prescribed. Every culture outlines a bereavement process. In many societies, the sequence of ritual steps involves a wake, a funeral, a period of mourning, and some form of commemoration or celebration at the end. From a symbolic perspective, ritual is an essential companion to significant change. The leader helps by serving as a historian, storyteller, a
nd healer.
We can see all these change dynamics at play in a case that depicts how a new leader used all four leadership lenses to transform an ailing company.
RESURRECTION AT FORD MOTOR
As Ford Motor Company was chalking up a $13 billion loss in 2006, chairman William Ford III reluctantly concluded that, hard as he had tried, he was failing in his efforts to save the company his great-grandfather had founded. He went in search of a seasoned leader smart enough to figure out where Ford needed to go, and tough enough to take on the infighting and entrenched mind-sets among executives and divisions that had defeated Bill Ford’s best efforts. Eventually, he set his sights on Alan Mulally, the number-two executive at Boeing. Mulally, raised in Kansas and trained as an engineer, had earned a reputation during his long career in aviation as a strong leader who could put a troubled business on the right track. He loved Boeing and hated to leave, but Boeing’s board had passed him over when it chose to bring in an outsider (James McNerney, who had received mixed reviews during his tenure as CEO at 3M) as CEO. Ford was eager to give him what Boeing wouldn’t, and Mulally finally accepted an offer too good to refuse.
Before taking the job, Mulally did his homework and realized that he faced an almost impossible mission. To save the company, he needed to invest billions of dollars to improve Ford’s lackluster product line. But Ford was burning cash and expected to lose $17 billion in the next year, so the path forward had to include layoffs, borrowing money, and cutting a new deal with the union. He faced daunting challenges from the view of all four frames, but surprised skeptics by hitting a high percentage of the pitches thrown his way.
To begin with, formidable political dynamics required immediate attention. Mulally recognized the need to get off on the right foot with the many constituencies that could make or break the needed changes. First up was the media, who would give the public its first impression of the new Ford chief. Step one in the media strategy was deliberate “leaks” of memos from Bill Ford in which he bemoaned the lack of honesty at the top of the company and called for fundamental change. Then Mulally and Ford’s media relations staff cultivated key media contacts in advance and carefully staged the public announcement to ensure that the show opened to mostly rave reviews.
A second key constituency was the tens of thousands of Ford employees. On his second day at work, Mulally and Bill Ford led a joint town hall meeting in Detroit that was broadcast to workers around the world. After Ford introduced him, Mulally said he was honored to be asked to lead such a storied organization, then opened the floor to questions and gave upbeat but honest answers. Would he bring in a new executive team? No, he said, his team was right there. When the head of a strategic planning group asked if her unit would have a bigger role, he told her what she didn’t want to hear: that strategy is a job for “our team,” not a staff group.
Two weeks later, Mulally sent an email message to everyone at Ford that described his “first impressions.” He was up front about some bad news: Ford’s “gut-wrenching” circumstances meant that “some very good and loyal people are going to leave this company” in the months to come. But, he added, he was excited about the many people who were “bursting with ideas” and wanted to share them in emails, hallways, or the cafeteria. He ended on an upbeat note: “Everyone loves a comeback story. Let’s work together to write the best one ever.”8
Two more key constituencies were the board of directors and the Ford family. Mulally tested the same message with both groups: Ford needed to simplify its product line, produce cars that customers wanted, and develop a clear view of the future. Both groups responded enthusiastically, and many of Henry Ford’s descendants happily signed their names on a diagram of the family tree that Mulally had brought with him to their first meeting.
Mulally also understood that Ford needed help from the United Automobile Workers (UAW). Both company and union were in a tough spot. Ford’s survival depended on negotiating a lower cost structure in its UAW contracts. The autoworkers’ leadership knew that Ford was in deep trouble and feared a disaster for its members if the company failed. Top leadership from both company and union held many meetings, at which Mulally promoted his mantra of “profitable growth for all.” His case centered around the fact that Ford was losing money on every car it made in North America. He argued that Ford had only three options: keep losing money and go out of business, move production offshore, or get a union contract that would let them build cars in the United States. The union reluctantly bought the argument, and after many rounds of bargaining and some last-minute high drama, company and union agreed on a deal that enabled Ford to build more cars in America.
Still another critical challenge was getting the support of Ford’s senior executives, including some who had hoped to become CEO. The proud, intensely competitive group of longtime Ford veterans was initially unimpressed with the new chief. To some, Mulally seemed like a smiling, overgrown Boy Scout who lacked the smarts, toughness, and gravitas to run Ford. He apparently didn’t even know how to dress, showing up in a dark-suit culture wearing a sport coat and olive pants. Many in the room felt that the auto industry was too tough for Mulally to understand, and Ford’s chief technical officer put it to him directly: “We appreciate you coming here from a company like Boeing, but you’ve got to realize that this is a very, very capital-intensive business with long product development lead times. The average car is made up of thousands of different parts, and they all have to work together flawlessly.”
“That’s really interesting,” Mulally replied, with his usual genial smile and unflappable aura. “The typical passenger jet has four million parts, and if just one of them fails, the whole thing can fall out of the sky. So I feel pretty comfortable with this.”9 That quieted the naysayers for the moment, but Mulally knew that much of his team still wondered if he could do the job. Instead of trying to convince them directly, he turned to structural changes to bring clarity and focus to the top team as well as Ford’s global operations.
Mulally quickly concluded that Ford needed a major overhaul of a “convoluted management structure riddled with overlapping responsibilities and tangled chains of command.”10 He implemented what had worked for him at Boeing, a matrix structure that crisscrossed the strong regional organizations with upgraded global functional units. So, for example, the head of engineering or quality in Ford Europe would report to both the regional president in Europe and to a global vice president back at headquarters. Mulally wanted strong executives at the head of these global functions, and he wanted them on the top team reporting directly to him. In his view, this was critical because fractionation across units was preventing Ford from leveraging the advantages of its global scale.
Mulally knew that the structure would work only if the top executives came together as a team. He pulled out another structural device he had developed at Boeing: the Business Plan Review (BPR). He replaced dozens of high-level gatherings with one key meeting—same time, same place, every week. Attendance was required, in person or via video hookup, for everyone who reported to him. In the old days, no one wanted to admit that anything was going wrong, so executives ritualistically came to meetings with thick binders and a bevy of assistants to help them hide problems under a blizzard of details.
Mulally changed the rules. Executives now had to make their own five-minute reports, using a standard format, on progress against plan. Mulally asked lots of questions, but told them it was OK if someone didn’t know an answer, “Because we’ll all be here again next week, and I know you’ll know it then.”11 Every item in each report had to be color-coded: green for on track, yellow for needs attention, and red for anything that was off plan or behind schedule. “This is the only way I know to operate,” he told them. “We need to have everybody involved. We need to have a plan. And we need to know where we are on the plan.”12
The head of Ford’s international operations, Mark Schultz, had hoped to be CEO himself and didn’t like the new guy’s rules. He dug in
his heels. At the first BPR meeting, he said he wanted his chief financial officer to report for him. When Mulally told him he had to do it himself, he did his best, but was obviously unprepared. After a few minutes, Mulally had heard enough and tried to cut him off, but it took four tries before Schultz got the hint. After the meeting, an angry Schultz told Mulally that he would not be able to attend all the BPR meetings because he had important work to do in Asia. With his usual smile, Mulally told him he didn’t have to come to the meetings—but couldn’t stay on the team if he didn’t. Schultz figured he could play by his own rules because his longtime fishing buddy, Bill Ford, would protect him. That was a misjudgment. When Mulally eliminated his job and offered him a smaller one, Schultz decided to retire rather than accept a demotion.
Other executives got the message: Mulally was in charge, and Bill Ford was solidly behind him. As executives began to fall into line, Mulally was able to turn his attention to two pressing human resource issues: talent at the top and morale throughout the company. He respected the overall capabilities of Ford’s executives and felt that the company needed continuity rather than massive turnover in the senior leadership. He asked his HR chief to develop retention plans for all the key executives. If he heard that one of them was thinking about leaving, he would drop by his or her office to ask directly, “Are you going to stay?” Usually the executive did. Mulally also needed strong players to lead the newly upgraded global functional units, and he scoured the company to find them.