As an entrepreneur, chances are good that you are somewhat comfortable with change. It’s frankly difficult to succeed in business otherwise, given that words like “nimble” and “agile” are frequently associated with successful businesses these days. Thanks to technology, the pace of change is ever accelerating, and in many industries is not merely changing how business gets done but actually determining what business models will survive.
Consider the changes that just a decade can bring. In 1999, Viacom mounted an IPO for Blockbuster Video that valued the company at $4.8 billion. Meanwhile, the year before, Reed Hastings had founded a little company called Netflix, inspired at least in part by a $40 late fee incurred at a Blockbuster store. By 2003, Netflix posted its first profit ($6.5 million on revenues of $272 million) while Blockbuster posted a $1.6 billion loss for fiscal 2002. By 2010, Blockbuster had filed for Chapter 11 protection, leading the video rental store concept down the path to extinction, while the passage of another decade saw Netflix earning FY19 revenue of $18.876 billion.
While you as a leader may be comfortable with change, however, not every member of your team is likely to be so optimistic or positive. One of your crucial functions as a leader is to manage change within the organization, from the standpoints of both guiding the process and preparing your people. Let’s examine how to execute those tasks effectively.
It’s All About Attitude
Although most of us rationally recognize that change is necessary for growth and progress, our brains aren’t wired accordingly. The limbic system, a deep brain structure that has primary responsibility for emotion (as well as managing our “fight or flight” response), instinctively reacts to uncertainty with fear. Understanding that — in yourself and others — is an important step toward managing that response. Educate your people that fear of change is normal, and you will empower them to recognize and overcome their natural reaction.
Beyond that, there are two essential perspectives on change: Contemplating all the things that could go badly, or welcoming the potential for improvements and other positive impacts. Our default mode as humans is to enumerate as many negative outcomes as our imaginations can conjure up. Taking the optimist’s approach takes a conscious effort.
Don’t just encourage your people to “look at the bright side,” though — they can get useless platitudes from a poster or a coffee mug. Another of your key leadership functions is vision, and you need to paint a vivid and convincing picture of what change can do for the organization. To return to our earlier example, Netflix started as a better way to rent DVDs but very quickly recognized the potential for streaming even though household broadband was still in its infancy. Today it is a content creator, expected to spend over $14 billion on original content in 2019 — a radical shift for a company that started out distributing other companies’ movies by mail.
Be a Realist, Not a Pollyanna
Change doesn’t have to be negative and doesn’t have to be feared. That said, it still tends to be difficult, and it has the potential to cause dislocation. Telling your people that they have nothing to worry about is the wrong answer. Yes, the ultimate outcome will be positive. The journey, however, can be trying. Sugarcoating or avoiding entirely those difficulties will damage your credibility and risks leaving at least some of your people unprepared for what’s to come.
Because change in business comes in so many forms, there is no single checklist to prepare for it. You’ll have to engage your people to contemplate what a given change is likely to represent for your organization. Brainstorm how best to engineer the change and what will be needed in terms of processes, people, or skills. To the extent that it’s appropriate, your existing team should be the ones to develop those processes, and you should provide opportunities for them to learn or develop the new skills that will be needed.
The opportunity to dissect a coming change in detail, to understand what will be involved, and then to be part of preparing for that change will be a substantial boost to morale. Much of the fear of change is rooted in nagging questions like “What will this mean for me?” or, more to the point, “Will there still be a place for me?” Leading your team to tackle change head-on provides exactly the reassurance that people need in the face of uncertainty. Keep in mind that some of the people that got you to where you are today, won’t be the right people to take your firm to where you ultimately want to go.
If your business is confronting a change, start with your people. Present the issues openly, share your vision of the end state, and ask for their questions and concerns and ideas. Once you have their honest perceptions of what change will mean for them, you’ll be better prepared to lead them through change management—with buy-in and engagement from every member of your team.
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