The Levers of Change
I’d like to introduce you to the first management consultant, who appeared a couple of millennia ago, and who had the greatest tool. His name was Archimedes and he had a lever.
I used that lever with some client executives who, with the strength of their position, were able to accomplish change ten times greater than others whose efforts were noble, but never seemed to pay off.
What are the levers of change and how can you apply them to your company and your finance team?
A TALE OF TWO COMPANIES
Last year two clients with the same objectives achieved completely different results. The first company – we’ll call them Company A – got results quickly: they cut their inventory in half, boosted warehouse productivity, and set innovative practices in motion with their suppliers. They did it all in only seven months.
The other company, Company B, while moving forward in their efforts, is far behind and months will pass before they enjoy the fruits of their labor. What’s the difference between these two companies?
They have very different levers.
The leaders of Company A are engaged, they have already established a culture of change in their organization, they let innovative ideas drive breakthrough thinking, and most importantly, they have a middle management team driving the change efforts. By contrast, Company B’s leadership, while very interested in topics like change management, culture, and innovation, have yet to move from the “talking about it” phase to actually doing it. Their middle management team suffers under the tyranny of the urgent, failing to get past their day-to-day duties to lead the change efforts.
When you consider that Company A has the levers of engaged leadership, the right culture for their vision, innovative middle managers and a welcoming attitude toward change, it’s no surprise that they are reaping dramatic benefits, while the company with weak, ineffective levers is spinning in circles, falling short of the outcomes they desire.
Be honest with yourself, is your company or finance team more like Company B or Company A? The following concepts will help you move toward Company A if you aren’t there yet and toward Company A+ if you are.
IT TAKES MORE THAN TALK
Many companies claim to be interested in leadership, culture, change management, innovation, the list goes on. But if being interested were enough, a lot more companies would achieve breakthrough results. Along the same lines, these same companies dabble in Lean, Six Sigma, TOC (Theory of Constraints), Just In Time inventory, the virtual close, finance transformation and more, but without the ability to execute, they typically fail to get results.
Success requires much more than being interested.
THE LEVERS OF CHANGE
Let’s take a closer look at what sets Company A apart: they are able to execute change quickly and effectively. Execution is the force that can transform a company that is spinning in circles into one that moves mountains.
Effective change execution has four main ingredients:
- Engaged leaders
- Culture that supports and encourages change
- People who drive the change efforts
- Innovative ideas
In an organization, engaged leadership means
- Setting a clear vision for change
- Communicating with the managers who drive change
- Deploying resources
- Holding people accountable for results
A common leadership mistake in companies that are underachieving is to launch the change initiative and then disappear, either moving on to other priorities, or simply not staying in touch with those who drive the change. Frequent travel is not an excuse; successful companies can by led by someone in another state or another country.
Successful change leaders, regardless of what time zone they’re in, communicate clearly and consistently, set metrics that drive accountability, and deploy resources wisely. They are focused on results, not just activities. As my mentor Alan Weiss says, “Leaders aren’t paid for action, they are paid for results.”
Here is an example how finance leaders can be agents for change in the supply chain.
The second element for successful implementation of change is a culture that reinforces change. This means encouraging people to work on initiatives that are not part of their day-to-day jobs. Acknowledging that mistakes can lead to improvements and allowing people to experiment creates a culture that is agile and open to change. Recognizing and rewarding not only success but also innovation – even if it doesn’t lead to immediate results – also sets the stage for change and growth. A culture accepting of change is closely linked to a culture of innovation.
PEOPLE WHO DRIVE CHANGE
The managers on the front line need the initiative and zeal to drive real change. In companies with a good change culture, the managers are almost like kids in a candy store, proudly reporting on new initiatives, their successes, and yes, their failures. The results can be astounding, and they are not driven by people who follow the rules and focus on day-to-day tasks, but by managers who are excited to experiment. Companies need to hire for that attitude.
It is very difficult for companies to drive innovation using only internal resources. While incremental improvement can be driven internally, new, innovative ideas typically require change agents from outside of the company to provide the seeds of breakthrough ideas. Setting the future state/vision of innovation is what thought leaders do, and those thought leaders are rarely inside the organization. Innovating Your CFO Activities
PICK UP A LEVER AND GET IT DONE
To drive change quickly, leaders need the levers of change. Those levers are engagement, culture, people who drive change, and innovative ideas. Archimedes believed he would move the world with his lever, and you can too.
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