With change being more and more a part of everyone’s organizational life, Erika speaks to facilitator, consultant and executive coach, Dennis Stratton, to harvest key insights into what leaders need to focus on and in order to navigate the most difficult change situations successfully.

00:00-01:10 - Introduction

01:46- 06:41 - Complicated Transitions, & What Makes Them More Difficult Than Normal Changes

06:42-11:14 - The Biggest Mistakes that Leaders Tend to Make

11:15-15:43 - What to Focus on in order to Make Complicated Changes Successful

15:44-16:40 - Closing

Intro: 00:01 You're listening to the Proteus Leader Show with Erika Andersen, where you'll get practical tools and insights for leading, managing and staying ready for the future. Erika is the founding partner of Proteus, a firm that focuses uniquely on leader readiness. A nationally known executive coach and bestselling author, you may already know her as one of the most popular leadership bloggers on Forbes.com. Ready for something you can use today? Here's Erika.

Erika: 00:31 Hello everyone and welcome back to the Proteus Leader Show. My guest today is Dennis Stratton. Dennis is a facilitator, a consultant and an executive coach who challenges his clients ways of thinking, behaving and leading, and supports them to design their organizations for success. As president of strategy consulting, Dennis has built a unique perspective on change management technologies and their applications in large systems. He works with individuals, teams, and organizations struggling with complexity and searching for new ways to respond. So Dennis, thank you for being here with me on the show.

Dennis: 01:09 Glad to be here. Thanks for the invitation, Erika.

Erika: 01:11 Oh, you're so welcome. I'm really looking forward to this conversation. You know, you and I recently connected through a friend and I really liked what you had to say about helping organizations navigate change and especially when the change is complicated - that was part of our conversation. And I suspect that many of our listeners have been or will be in a situation like that. So I thought it could be really helpful to them to hear your perspective about this, especially since you've got a lot of experience in this area. Okay. so let's start with just, you know, what makes the change complicated in your mind and why is that more difficult than, kind of, normal change?

Dennis: 01:46 So first of all, in my mind, let me sort of describe what normal change might look like. In my experience, normal change is one that's a bit more predictable. Not that it's insignificant, not that it doesn't have an impact on any individual or an organization and how it tries to navigate through a quote/unquote predictable change. But it's predictive in terms of just what are the right things any leader ought to do to make sure they work through that change effectively and that the people in the organization and in the case, you know, are able to embrace the change. So a typical change might be a classic acquisition or a merger, or a new CEO - or perhaps a change in strategy. In my experience where this becomes a complicated change is when there are multiple forces at work. Some of them are from the viewpoint of any employee or, of the leadership might be obvious and some may not be so obvious.

Dennis: 02:55 So for example, when I think about multiple forces, so one of course is: what if the organization is changing fundamentally its strategic intent and at the same time, what if at their legal entity or, or their identity itself is changing at the same time? And when I mean identity-changing, for example, in a merger or an acquisition, I go from, you know, I was once a member of Chemical Bank and now I'm who I am as JP Morgan Chase, right? The identity. And then at the same time with that change, there's a requirement for the culture to change, you know, how it operates and so forth. And then of course add on more: there's restructuring and perhaps there's a new management team or certainly a new CEO that might be driving the changes themselves, so you have multiple forces playing a part in, you know, at the end of the day, impact the organization.

Erika: 03:58 I got you: change that's pretty straight forward, that doesn't have lots of component parts that you can respond with the kind of normal approaches to change and you're talking about where there are multiple changes happening simultaneously. That's where it's complicated.

Dennis: 04:15 So I'll give you an example if it's helpful. So recently I was working with a large med device organization and the changes that they were facing were significant. It was: 1) the change was being - the catalyst for it was certainly the environment; health regulations were changing; Obamacare was having an impact, and at the end of the day the organization needed to change their strategic intent. And so in their case, what that meant was get out from a game of trying to win on cost being the lowest cost provider of sutures and staples and other medical devices and equipment to trying to win on innovation. Being the first to market with breakthrough technology and so forth. So you had a change in the intent. You had an environment that was changing itself. Healthcare overall was under enormous stress. You had a new CEO. You clearly needed a change in culture and behavior. And typically in that case it was you had, R&D spin in the historical company might have been maybe one percent of revenue and now they're saying six percent. And so huge change in just how people are ultimately, allocated budgets and the capabilities required to be innovative at work as opposed to, you know, the classic structure in the past which was centralized. Everything maybe comes to, you know, centralized decision now you want it to be more decentralized. You want to put power in the R&D organization, in terms of their ability to [inaudible] fast and anyway, I can go on and on, but you can imagine there's multiple levels to that, multiple layers to that. Ad it gets pretty complicated.

Erika: 06:11 And you already referenced this with culture, but just that core mindset shift of going from "let's do everything as inexpensively as possible" to "let's be as creative and innovative as possible." That's just like 180 degrees.

Dennis: 06:28 Yeah, no doubt, no doubt. Everything that comes - and then, think about the processes, you know, the governance, the discipline to make decisions in that environment - very different than one that was very centralized.

Erika: 06:42 Yeah, wow, that's a great example. So, so then let's keep using - I love this example - so let's keep using, what are, what are some of the biggest mistakes that leaders tend to make in these kinds of complicated situations?

Dennis: 06:54 I think it comes down to a couple of things and unfortunately I've seen the movie a few times and I've watched these CEOs in particular stumble on it. I think the first big one is just a lack of understanding or recognition of all these forces at play. And so for me, when I coach a CEO or senior executive, it's, let's chunk this down in terms of what this change may mean to your organization. And we look at it from an attitudinal, behavioral, cultural point of view, a political point of view, a structural point of view. You know, a process point of view, governance, what's going to change there; customers and what's going to change there, and the capabilities required perhaps to meet changing customer needs. And so just, walking any senior leadership through the layers that they're going to need to address one way or another and being clear that they're all important and yes, you may in terms of how you address them, prioritize how you do it. But, being cognizant that you're going to need to address all of them very actively if you're going to be successful in moving your organization through what will be a complicated transition. So I think that's number one.

Erika: 08:09 Is that because they tend to either try and make it simpler than it actually is, or aren't aware of some of the complexities?

Dennis: 08:19 A great question. I actually think - my experience is that they love to tackle what they feel most comfortable tackling. So for example, when I was going to say, the, the other mistake that I've seen folks make is they move on structure too fast.

Erika: 08:35 Right, right.

Dennis: 08:40 And it's arguably easy, you know, when it's all said and done, it's black and white. It's new boxes. It's moving some boxes around and, and some might argue that it's hard if people lose jobs or their positions change. And, that's true, but the act restructuring is actually pretty straightforward and sometimes, creates, you know, red herrings in terms of the - you already have enough tension in the organization around the real changes that you need to make. And if you lead with restructuring, sometimes it gets people off - of focus on the fundamental things that have to change.

Erika: 09:19 It introduces unnecessary or wrong change. Because sometimes I feel like if - an you're welcome to disagree with me - sometimes because people are more comfortable with sort of names in boxes, they start moving things around and kind of have to think, well, to what end? You guys don't actually know what you're moving toward yet and you're changing the organization to move towards some undefined end. So sometimes they are actually incorrect.

Dennis: 09:49 Exactly right, and I couldn't agree with you more. To me it's, you know, I always kind of said environment dictates strategy, strategy dictates structure. And so oftentimes if the strategy is fully developed before there's an understanding then what's going to enable us to execute it most effectively, then that's when you start to address structure. But there's so few layers when you have a kind of complicated change I described earlier with the med device company, you know, it can take a while to really clarify the strategy. And then the other big mistake that I see them make is, then getting very clear about what the near-term strategic priorities are. And in the process of doing that, one could get much more clear anyway around what's this transitioning going to look like. You know, the other thing that, if he add another mistake, it's that leaders tend to and they're pretty good at it, but create a vision for what this desired statement might look like. And probably pretty good at creating why we need to change now. But so often there is a lack of definition or expectation or clarification around what is this transition going to literally look like? What can we expect in month one in six months, in nine months and 12 months? How do we, how do we know we're on the right track? And oftentimes catch up to that. But it isn't very well-defined early.

Erika: 11:15 I could not agree with you more. They just sort of miss out on the journey. Here's what we have to move away from. Here's where we're going. Really? What's going to happen on the way? How are we going to get there? And what's that gonna look like? If we wanted to give some really practical advice, what would you - you know, our listeners may be listening to this and going, wow, I'm right in the middle of the complicated change. What, would you encourage them to especially focus on in order to help make that change more successful?

Dennis: 11:42 You know, I think it comes down to three things. I think there's first, there's this, again, really understanding how complicated that the changes. So step one would be take your time and prepare the organization well for the expected changes and an understanding of the changes. So that's everything from the, what I said earlier, kind of being very clear about what is the driving force behind these changes. What in particular are we talking about changing? What are we talking about not changing, and actively communicating that setting context. I think too often there's a rush to getting to the work of the [inaudible], like we said earlier, about structuring and restructuring and those things tend to happen, unfortunately in a vacuum. People don't have a context for those. And so what did they do? They go to the darkest side. They go to where their fear is most when they see a restructuring or they see jobs changing or they go to, well, that must mean I'm not going to have a job, or it must mean they really are downsizing or they'll go and make things up in their mind because there's no context. I think step number one is leaders need to really be smart and detailed around the why and and actively communicating context. So in my mind is preparing the organization. I think the second most important thing is how they are choosing to engage the organization. So what I mean by that, especially in these complicated transitions, what it's going to mean, the implications of it could be very different whether I'm sitting in R&D or whether I'm sitting in the northwest sales region, whether I'm sitting in operations functionally and regionally, it could very practically mean different things to different people. So leaders need to play an active role in stepping down in engaging people in clarifying not only the why of the change in where we're going, but asking people, so what is that going to - how is that going to impact you? And in the process of doing that, you do two things. You help clarify it further, and two, you get people to more or less embrace it because now they're feeling like, oh, so what can we do about this transition? How can you help us? And so there's a sense of deeper ownership. And by the way, in that process, in my mind, it's also about driving ownership for this change down into the, what I call the frozen middle. It's that part of the organization where you have team leaders, senior managers, managers who, at the end of the day, are going to decide to navigate this change well or not. As wonderful as CEOs think they have all the power in the world. They don't when it comes to this, it all resides there in my mind, in the middle. And so if you could spend some real quality time with the middle of your organization, clarifying the big why and helping them help you define the "what" functionally, operationally, etc. The likelihood of success goes significantly higher in my experience. And then the third thing is just reinforcing the change: what are all those things that sends signals to people in the organization that we're not serious about this change? Systems are classic examples; how people are paid; performance management. You know, processes for how decisions get made, governance, all those things, if they don't align to or reflect people's understanding of where we're trying to go, they use those - it's classic where we hold it up as the excuse for see, we're not really serious. And so, I don't think those things happen all at once. I think you prepare first, you engage second, and then you ensure in the longer run that you're reinforcing it through all the systems and processes and structures, etc. around the organization.

Erika: 15:44 Wow. So, with change, I think whatever insight we can get into it is really helpful. So Dennis, thank you for being here with me on the show.

Dennis: 15:50 Great. I'm glad that worked out.

Erika: 15:52 And if you'd like to find out more about how Proteus approaches has changed, just go to ProteusLeader.com and click on the Leading Change topic. So thank you for being with us today and until next time, here's to creating the life you truly want.

Outro: 16:22 We hope you're feeling better equipped to create the career, the business and the life you want. For more insights and tools for leadership and management, join us ProteusLeader.com. Have an excellent day and thanks for listening.