P A R T F I V EP A R T F I V EMOBILIZING CHANGE THROUGH EXECUTIVE LEADERSHIP
IMPLEMENTING NEW STRATEGIES REQUIRES LARGE-SCALE CHANGE. The term transformation has emerged to differentiate the scale of change required by business strategy from the continuous improvement that organizations routinely perform. The leaders of our Strategy-Focused Organizations clearly led transformations, not small-scale changes.
John Kotter carefully distinguishes between the words management and leadership when describing transformation: “Management is a set of processes that can keep a complicated system of people and technology running smoothly…. Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances…. Successful transformation is 70 to 90 percent leadership and only 10 to 30 percent management.”1
The leadership process, as practiced by the executives in the successful organizations, can be seen throughout the previous sections of this book. In Part One, we saw how they created inspirational visions for new strategies. The Balanced Scorecard provided a framework to articulate and communicate the new vision and strategy. In Part Two, the leaders created new organization focus on the strategy. The Balanced Scorecard defined the linkages between business units, shared service groups, and external partners that were necessary to make the strategy work. In Part Three, the leaders decentralized power and responsibility to the lowest levels of the organization, using the power of the shared vision to align and reinforce local initiatives. In Part Four, the leaders used budget, feedback, and reporting systems to create a new culture and governance process. In Part Five, we focus on the way in which these leaders integrated these many activities to mobilize their organizations and to maintain momentum for strategic change.
Getting transformation started is often the biggest challenge. In Chapter 13, we study the different approaches used by the leaders. Several of the case studies were failing organizations; the leaders were able to use this “burning platform” to motivate change. In other cases, the companies were currently successful; the leaders created stretch targets to eliminate complacency and drive creative efforts. We also see that successful Balanced Scorecard programs don’t always start in the CEO’s office. Many effective programs started at lower levels, even in functional departments.
But getting started only planted the seeds for change. The change initiatives then had to be cultivated and sustained. Organizations used different approaches to build and sustain momentum. Each organization, however, used its measurement system, linked to the governance process, to sustain the change.
While the Balanced Scorecard has created benefits in many organizations, failures have also occurred. Several organizations failed to achieve benefits from their Balanced Scorecard programs. We can learn from failure. In Chapter 14, we will discuss the pitfalls that led to these missed opportunities. They serve as a counterpoint to the principles practiced by the leaders of our Strategy-Focused Organizations.
1. John P. Kotter, Leading Change (Boston: Harvard Business School Press, 1996), 25-26.