We have already discussed some of the emotional, social, and psychological issues that leaders need to address in all steps of the change process. So it should come as no surprise that people issues underlie all points of the Bermuda Quadrangle. Just as some of the dangers in the Bermuda Triangle stem from the shallow shoals that lie beneath the surface, the issues that compose the Bermuda Quadrangle—resistance, skills, processes, and company culture—are not always clearly marked or identified. But they exist, to varying degrees. Further, the danger represented by each point of the quadrangle can shift, becoming stronger and more significant without warning. You need to be aware and on the lookout for these issues as you plan and then execute the changes you propose.

People Resist Change

What will people resist? What will they embrace? What can you do to allay their fears about the change? The brevity of these questions is deceiving. They are difficult questions that must be addressed early and with an open mind. As one who is drawn to change, I've learned (with many reminders) how important it is to recognize that change looks different depending on where one stands. What seems like a promising path to the future from one perspective can look like an overwhelmingly dangerous leap from another. It's the leader's job to prepare people for the journey ahead. That's no small task, and to get it right demands the empathy and patience to see others' concerns and points of view.

Steve Ellis, CEO of Asurion, a technology protection service company, shared with me his theory about resistance to change and about people problems: “You'll deal with three different groups of people and they are not evenly distributed. Often, we have 5 percent who are going to embrace the change and 15 percent who never will. Then we've got 80 percent who are in the middle, who can make the change, but need some help to do so.

“The people who are going to embrace change are the ones you've got to put in the leadership roles to drive the process.” As Steve said, the best breakthrough change processes he has seen “have very quickly gotten that group of the 5 percent focused on creating the Proof of Concept pilot. In time, the way is led by—and infused with—that 5 percent's energy, vision, and passion.”

As for those “who are going to resist change no matter what, you have to identify them quickly.” Steve acknowledges how challenging this can be: “All too often, companies take way too long to face this reality because those in leadership positions want to make room for long-tenured staff in the future of the company. Often, the more tenured people just can't make the changes you need them to make and will have to be replaced. This is the difficult job the organization is counting on you to do.”

But there is a payoff to this hard work: “If you ignite and empower the 5 percent while eliminating the drag of the 15 percent, you can move the 80 percent with astonishing speed.”

We both understood just how important it is to get everyone on board. Without that 80 percent working with you, you simply can't get a realistic assessment of what it's going to take to get the change propagated across the organization—and you certainly can't get there with any speed.

Skills Are Missing

You have to be sure you have the people you need in order to implement the changes—and that they have (or can readily acquire) the new skills and new perspective the change demands. Recognize that a great attitude is required but is not sufficient. Part of your advance planning, therefore, must be a careful assessment of what skills will be needed, how they can be developed in-house, and where you can find them outside. A few thoughts to consider:

What array of skills will this project demand?
Do we currently have people with the specific, targeted skills and experiences that we need to successfully complete this project?
Do we have enough people with these skills and experiences to implement the changes?
If the answer to either of the two previous questions is no, how much time do we have before we need to be fully staffed?
Will the organization tolerate the time required to train current employees or recruit new people?
If the necessary skills don't currently exist in the organization, how soon can we find people with the necessary skills and experience to bring believability to the idea that the project can succeed?
How and where can we find the necessary support people?
If the company has previously hired for a totally different skill set, what other strategies can we use?

You'll have to find ways to get people to adapt, or else actively recruit new people. Most likely you'll do both. The most difficult piece of this equation is making a realistic assessment of whether the people you have either possess or can learn the skills you need in order to get where you need to go. If the answer is no—and it often is—then you'll likely have the wrenching task of cutting staff who have been with you for a long while to make room for the new people.

As you'll see in later chapters, one of the more unfortunate realities of leading breakthrough change is that not everyone can follow you.

Processes Are Rigid

Next is the problem of overly rigid processes and procedures. If you are proposing a change to established processes and procedures, you may be up against years of institutional habits and mind-sets. You'll need to determine where the company is set in its ways and decide what it will take to change those procedures and mind-sets. Don't underestimate the challenge this presents. You must make sure that those above you, either your boss or maybe the board, understand and support the change you are proposing.

Bear in mind that organizations are built and structured for reliability, consistency, predictability, and control. A company's processes and procedures have been designed to deliver these results. Many employees' self-image and perception of their personal worth are rooted in their knowledge of these processes and reinforced by their own heartfelt belief in the processes' critical importance to the company.

But breakthrough change isn't reliable, consistent, or predictable. The new control procedures put in place to deal with the new reality may be immature and not yet up to the task. And that is only the beginning. The changes themselves will often challenge the fundamental necessity or even the relevance of these long-trusted and tenured processes, which are typically rather inflexible. In our new age of high technology, mobile connectedness, and global competition, every long-standing process will undergo scrutiny and will change to some degree. Examples include how you deliver customer service, measure advertising, develop and test technology, schedule and administer meetings, design employee benefits, and measure morale.

Company Culture Is Unyielding

The decision that your boss or board makes is heavily influenced by the final category of risk marking the Bermuda Quadrangle: corporate culture. You need to think about the breakthrough changes you're proposing in the context of the entire enterprise. Does this change fit in with the values of the existing corporate culture? If it does, how can you best make that connection clear?

In the decision to add what I referred to as “customer relationship development” to the branch employee job description at Schwab, I was seen as violating the corporate cultural value that “sales was not in the cultural DNA of Schwab.” People often asked me, “Does Chuck know you are pushing this idea?” As a result, this change was an incredible uphill battle and took much longer than it should have.

In contrast, an equally bold initiative involved moving some of our inbound calls from the branches to a call center. This was a huge investment for us at the time and was very disruptive to our employees. But since we framed and “sold” it as a major improvement in our ability to handle peak-period call volumes, employees perceived it as congruent with our cultural value of “improved customer service” and they readily accepted the change.

Sometimes the difference lies in the questions you ask. Consider the difference between asking, “Does the initiative fit or not fit our culture and our values?” versus framing the question as, “Can we find a way to connect this initiative to our culture and values such that it is a new expression of those values rather than something that's in conflict with them?”

If the change is so dramatic that it cannot be made to fit within the existing corporate cultural values, then you must prepare for a long uphill battle. Those employees who are most threatened by the project will use this conflict with values and traditions as a lever to undermine your leadership and drive a stake into the project's legitimate fit in the company. You can overcome this, but doing so will take a lot of effort and will be a huge distraction. Better to find a way to avoid this problem, a way to make the project fit the culture and its values; by avoiding the problem, you can create more momentum for the initiative.

Compounding the Dangers

As if navigating the Bermuda Quadrangle weren't already difficult enough, the problems represented in the four points of the quadrangle are rarely so distinct. Often they can't be compartmentalized into one of these four barriers. For example, a people problem can also be a skill problem as well as a corporate culture problem; a processes problem can also be a culture problem.

The difficulties that eBay's CEO John Donahoe encountered in presenting the urgency of the need for change (described in Chapter 1) stemmed in large part from resistance and an entrenched company culture. That combination rendered even smart, capable operators surprisingly ineffective. As a result, John explained, he “ended up replacing eighty of my top hundred people—really, really good people—at eBay in the beginning.” John had quickly realized that people's tendencies to compare the changes being made to where the company had been a year ago or two years ago were not constructive. When people inside the company would say, “eBay has gotten 25 percent better,” John had to remind them that in the same time frame Amazon had gotten 50 percent better, putting eBay only halfway to where it needed to be. As John explained, eventually he “had to bring in people from the outside that had no history with the company. These were people who walked in and said, ‘Oh, we're 50 percent behind!’ They were able to grab on to change far more aggressively, with far less personal baggage. It's all about finding the change agents that exist inside the culture. And then identifying people who block change as well. Unfortunately, some of the people that block change are often some of the most talented people.”

The resistance and entrenched company culture that John described were akin to the issues we had faced at Schwab in instituting the changes to the branch network. When we began to transition to customer development (sales), we had not yet developed and nurtured the skills that employees would need for the additional calls and interactions with customers that they would be undertaking as part of this change. This skill gap was quickly uncovered as soon as employees were asked to change the way they viewed their roles. Ultimately, over the course of five years, approximately 80 percent of the branch employees were unable to make the transition to our new model of service. This change hurled us through all points of the Bermuda Quadrangle in what felt like slow motion; it was our own perfect storm. We all learned from it—and it underscored the importance of advance planning and anticipating barriers.

Planning for the Unexpected

When you are navigating the Bermuda Quadrangle, you need an advance plan, and you also need to stay flexible, accepting that you will come upon barriers and issues unexpectedly. A good plan is all about anticipation. You have to look not just at current issues but at ones that may crop up only after the change goes into effect.

The way to prepare for the unexpected is to explicitly talk it out, and not just inside your head. You can't do it alone. Gather executives, responsible business partners, and any other people whose involvement is critical to the change you propose and ask them all to think seriously about how the change might be received within the organization, outside of the organization, and what could go wrong. In developing the ideas for your breakthrough change, as you think about ways of broadening your reach and expanding your net, be sure to get more perspectives as early as possible to better appreciate what the initial reactions might be.

Once you are excited about the vision and are completely convinced that it's worthy of time, energy, and passion, it can be hard to take a step back to fully appreciate how others might see it from a wholly different point of view. By bringing others into the process of discovery and imagination, together you can be more realistic about how people will view the change and how you can best present the ideas.

Examine Potential Resistance

Leaders must anticipate resistance and even look for specific issues of resistance in advance. Experience has taught me that among the first tasks of the leadership team should be making comprehensive lists of the ways employees are going to push back; determining the time, assets, and staff you'll need to make the plan work; and carefully considering the ways the change will—or might seem to—conflict with the corporate culture as it stands.

Take the time to explore and think about the risks and the uncertainties ahead and do so in detail so that you can eventually manage them proactively and create comprehensive ways to defuse these issues. While it's tempting to lump risks and uncertainties together (and perhaps underestimate both as a consequence), be careful to tease out the differences. Risks are measurable: while you may not be able to predict with certainty exactly what will happen, you can make a reasonable estimate of the odds of success versus the odds of the project going wrong. In contrast, uncertainties are both unknown and unknowable: these appear on the horizon with no warning and require that you adapt and adjust in the moment.

When we were preparing to implement the Internet pricing change at Schwab, we were committed to identifying all the risks and potential issues we possibly could. So we held a meeting with our top two layers of management. We broke the group up into teams of 10 or so and asked them to imagine that they were having a meeting with the next layer of executives. Where did they expect to see pushback and resistance to the projects? What could they identify as roadblocks? What questions might they be asked? What other information might that next layer of executives need?

In addition to having them anticipate that next level of rollout, we were hoping to learn what objections and fears they themselves held, fears they might not fully or frankly voice on their own behalf. To be an effective change leader, you must truly come to the conversation curious, meaning you arrive ready to listen and learn, not just to sell, persuade, and convince. If you are completely wedded to your approach, then you cannot listen and learn with a completely open mind.

Coming to the conversation curious is far removed from just going through the motions. It requires a level of openness and engagement that may be new for some leaders. It can be very hard to hear responses and questions that make you uncomfortable or that seem to undermine the approach you've taken. But those critiques, those questions, and those issues are out there and are part of the workplace. Refusing to acknowledge them doesn't make them disappear; in fact, avoiding them undermines your credibility as a leader.

This process of anticipating people's specific resistance requires you to put yourself in the shoes of others. Problems surprise us because we are coming at situations from our own perspective without taking into account the perspectives that others may have. What might seem a minor shift to you may well be a huge issue that someone else will lose sleep over. Getting your top people together and creating an open forum is a great way to get inside their heads in a nonthreatening atmosphere. Individuals may not have been comfortable raising these kinds of issues one-on-one for fear of being alone in their fears or objections. Ask for theoretical objections. When we did this at Schwab, the objections came quickly:

Our share price will plummet.
Call centers will lose calls and become less important.
Our stock options will be wiped out.
Our bonuses will be gone.
Branches will close.
There will have to be massive layoffs.
Our fundamental business model and profitability will be threatened. We will permanently lower our profit margin, and therefore the value of our company.

Some objections came in the form of questions:

Will our image be damaged if we lower prices to compete with upstart online brokers?
Are we giving credibility to upstart brokers who are operating in lower tiers?
Will this be seen as admitting that the upstart brokers who were underpricing us were a competitive threat that we needed to respond to?

These concerns, and many others that surfaced at the same time, helped provide a broader and also more in-depth understanding of people's perspectives. All of these were real concerns and once having actually put them on the table, we could begin to resolve them.

Tempting as it may be to skip this step or rush through it en route to the change you're driving, if you miss this opportunity or fail to present it in a way that makes it real and allows for honest feedback, the gap in understanding could have dire consequences for the overall success of your breakthrough change initiative. And even if you do gather and incorporate feedback into the overall plan, consider that there may still be issues that haven't been uncovered. People may simply be too enmeshed in the history or the culture to have the perspective they really need. In some circumstances, you may need an entirely new perspective, from outside.

Outside Experts Can Sharpen the Focus

Using outsiders can help you better anticipate the barriers you will face or even see the opportunities that are already in front of you. From 2000 to 2004, we faced several downsizings at Schwab as our revenues continued to contract in the face of huge stock market headwinds. We conducted these layoffs without outside help and we stumbled because layoffs were a very difficult fit with our culture.

After almost four years of mediocre efforts at downsizing, we finally made the decision to bring in outside consultants. They immediately saw hundreds of millions of dollars of potential cost savings that we had missed. Similarly, when Intel faced the need to downsize from 2005 to 2007, what needed to be done was also a difficult cultural fit. Intel's CEO and CFO ultimately brought in the same outside consultants Schwab had used, and the company managed to save billions. Intel's CFO later credited the success of this effort to the perspective we gained from our consulting team, and these consultants ended up working with us for almost a decade on a broad host of assignments. In a company very entrenched in operating its own way, we learned we could benefit greatly from advisors who had exceptional experiences that were outside of our own. To name a few examples, these included embedding a philosophy of continuous rightsizing of corporate functions, improved processes around acquisition analytics and post-deal assessments, new ways of thinking about capital structure, and the rational deployment of debt.

In my experiences and those of my interviewees, outside consultants play a huge role in the success of breakthrough change. They are valuable repositories of new experiences, new wisdom, and challenging perspectives—including the critical perspective that can debunk corporate mythologies.

Step Four addresses significant issues you may face in developing and implementing plans for a breakthrough change. Keeping the dangers represented in the Bermuda Quadrangle in mind, ask yourself, “What resistance, gaps in skill sets, problems in processes, and cultural issues are likely to arise if we install the new, breakthrough change we decided on in Step Three?”

When you are leading breakthrough change, you'll discover that human nature, market conditions, and inertia have already stacked the deck against you. The best way to restack the deck in your favor is to take the time, in advance, to think through what problems are likely to arise. If you look down the road, you can develop a plan that either prevents those issues from becoming true problems or responds to them so effectively that they won't fester into something worse or gather momentum across the organization. That part of the planning process is the focus of Chapter 5.

STEP FOUR ACTION ITEMS PLANNING AHEAD FOR KNOWN AND UNKNOWN BARRIERS

There is always resistance to change. Where do you and your leadership team believe it will it come from in this case? Outside stakeholders (customers, vendors, analysts)? Inside stakeholders (finance, HR)? Others?
For each group, what is the logical source and emotional source of their resistance?
What is the case-by-case plan to deal with this resistance to either neutralize it or turn it completely around?
As you and the leadership team dealt with each group to work on their resistance, what did you learn that you didn't know before? What can be useful?
Share all the results from items 1–4 with your leadership team. Prepare a plan to use what you have learned to overcome resistance. Work in Steps Six and Seven will also be helpful.
What skills that are needed for the initiative are missing or in short supply in the organization today?
Start developing a plan to recruit the talent and skills you need (see Step Eight).
Outline the existing processes and procedures that could inhibit or slow down the change effort (for example, number and level of approvers needed to approve funding or even the basics of the bonus program that will apply to project team members).
What can you do to mitigate the processes that most inhibit the progress?
Does the current culture of the organization generally embrace breakthrough change? What evidence do you have for this point of view?
Will cultural beliefs about organizational values and or traditional business practices make this specific change more difficult? If so, specifically identify these beliefs.
Are there stories or experiences in the organization's history that defy the current perceived values and culture and support the proposed change? How can you employ this in your communications plan to overcome the cultural resistance?
Assemble your leadership team and conduct a brainstorming session about what other barriers this change effort is likely to encounter. List those barriers and then develop plans for how to mitigate them.
In what ways might you and the team modify the change effort to make it more readily accepted?

Chapter 4
Step Four: Planning Ahead for Known and Unknown Barriers

Mapping the Bermuda Quadrangle