It is catalyzed by a number of forces that trigger first awareness and then action.
These signals for change usually originate in the organization’s environment or marketplace. Such signals can include bold moves by competitors, new technol- ogy, or shifts in government regulations. Failures in the performance of a leader’s own organization can also signal the need for change. Whatever their source, these events require the organization to respond.
Too often signals for change occur without leaders noticing. Or leaders may receive a signal for change and act on it without fully understanding its implica- tions, or worse, without appreciating what change in the organization the signal is requiring. These shortcomings limit leaders’ ability to define the change needed and the outcomes for it. How do leaders explore these signals and accurately inter- pret their meaning? How can they be more certain that they are asking their orga- nizations to change in the ways that are really needed?
It is our experience that leaders are becoming much more attuned to reading the trends in their changing environments and, from this, creating new business 15
The Drivers of Change
1
strategies to respond more appropriately to them. They are making great strides in changing how their organizations are structured and run to fulfill these new busi- ness strategies. However, it is also our experience that most leaders are not carry- ing their required changes far enough. They lack understanding of the scope of change that is required to get the business outcomes they need.
It is critical for leaders to understand what drives change. It is essential that leaders comprehend the entire breadth of today’s drivers for change and be able to respond to each of them appropriately, not just for today, but for the organization’s future success.
The Drivers of Change
The Drivers of Change Model (see Figure 1.1) clarifies what drives the need for change, especially transformational change. The model portrays a sequence to these triggers, with one trigger calling forth change in the next, and the next, and so on.
A demand-and-response relationship exists between these various catalysts, although many of the forces are in fact iterative and can have reciprocal influence.
The linear sequence shown in the figure, however, is critical to understanding the complexity of change that leaders face today.
The model describes seven drivers, four that leaders are most familiar with and three that are relatively new to their leadership screens. It shows that the drivers move from what is external and impersonal (environment, marketplace, organiza- tions) to what is internal and personal (culture and people).
The Drivers of Change Model illustrates that changes in the larger external domains, such as shifts in the environment or marketplace, demand a response (change) in the more specific domains of business strategy and organizational design, which, in turn, require change in the human domains of culture and peo- ple’s behaviors and ways of thinking. The external domains are clearly more famil- iar to leaders—environment, marketplace, business, and organization—while the internal ones—culture, behavior, and mindset—are new to most, yet equally essen- tial. If leaders do not attend to the internal domains and adapt them to the forces of change exerted by the external domains, then their change efforts fail.
Many of the current struggles with transformation are a result of leaders not attending to the cultural, behavioral, and mindset components of transformation or not attending to them in ways that make a real impact. We will provide guidelines for leaders in how to address the more person-focused drivers of change while simul- taneously meeting the needs of the external drivers. Of course, it is equally true that attending only to the internal drivers and neglecting the external ones will also cause
transformation to fail. The point is that both the external and the internal drivers must be included in the scope of the change. Let’s define the terms in the Drivers of Change Model and then explore the message the model delivers.
Environment. The dynamics of the larger context within which organizations and people operate. These forces include:
• Social,
• Business and economic,
• Political,
• Governmental,
• Technological,
• Demographic,
• Legal, and
• Natural environment.
Environment
Marketplace Requirements
for Success
Business Imperatives
Organizational Imperatives
Cultural Imperatives
Leader and Employee Behavior
Leader and Employee Mindset Figure 1.1. The Drivers of Change Model
Marketplace Requirements for Success. The aggregate set of customer require- ments that determine what it takes for a business to succeed in its marketplace and meet its customers’ needs. This includes not only actual product or service needs, but also requirements such as speed of delivery, customization capability, level of quality, need for innovation, level of customer service, and so forth. Changes in marketplace requirements are the result of changes in environmental forces. For instance, as the environment is becoming infused with technology that makes speed and innovation commonplace, customers are demanding higher quality, cus- tomized products and services and expecting them faster.
Business Imperatives. Business imperatives outline what the company must do strategically to be successful, given its customers’ changing requirements. These can require systematic rethinking and change to the company’s mission, strategy, goals, business model, products, services, pricing, or branding. Essentially, business imperatives pertain to the organization’s strategy for successfully meeting its cus- tomer requirements.
Organizational Imperatives. Organizational imperatives specify what must change in the organization’s structure, systems, processes, technology, resources, skill base, or staffing to implement and achieve its strategic business imperatives successfully.
Cultural Imperatives. Cultural imperatives denote how the norms, or collective way of being, working, and relating in the company, must change to support and drive the organization’s new design, operations, and strategy. For instance, a cul- ture of teamwork may be required to support reengineering business processes (organizational imperatives) to drive the strategy (business imperative) of faster cycle time and increased customer responsiveness.
Leader and Employee Behavior. Collective behavior creates and expresses an orga- nization’s culture. Behavior speaks to more than just overt actions: It describes the style, tone, or character that permeates what people do. It speaks to how people’s way of being must change to establish a new culture. Therefore, leader and employee behavior denotes the ways in which leaders and employees must behave differently to re-create the organization’s culture to implement and sustain the new organizational design successfully.
Leader and Employee Mindset. Mindset encompasses the worldview, assumptions, beliefs, or mental models that cause people to behave and act as they do. Becom- ing aware that each of us has a mindset, and that it directly impacts our behavior, decisions, actions, and results, is often the critical first step in building a person’s
and an organization’s capacity to transform. Marilyn Ferguson, in The Aquarian Conspiracy (1987), states, “If you continue to think as you have always thought, you will continue to get what you have always gotten.” Transforming mindset is a pre- requisite to sustained change in behavior and culture. A shift of mindset is often required for organizational leaders to recognize changes in the environmental forces and marketplace requirements, thereby being able to determine the best new strate- gic business direction, structure, or operation for the organization. A change in employee mindset is often required for them to understand the rationale for the changes being asked of them. And almost always, leaders and employees must change their mindset to implement and function in the organization’s new design and strategy successfully.
When the scope of change in the environment and marketplace is minimal, con- tent change usually suffices. When change is required only to business and orga- nizational imperatives (content) and not to culture, behavior, or mindset (people), the type of change is developmental or transitional. (The different types of change will be described in detail in the next chapter.) However, when the magnitude of environmental or marketplace change is large, then it triggers the need for radical content change, which drives the need for change in culture and people. This type of change, which includes all these drivers, is transformational. By definition, trans- formational change requires that leaders attend to content (external, impersonal) as well as people (internal, personal).