A new leaf: if you want to make changes to help your business soar, you've got to win people over first

Entrepreneur, Nov, 2004 by Mark Henricks

IN AN EPISODE OF THE ANIMATED TV SHOW Teen Titans, two teen superheroes wonder how they can change the TV channel without the remote, until one of their fellow titans shouts: "Simple. You just get up and change the channel."

Change in business is rarely so easy. And to an entrepreneur whose plans are blocked by employees who won't modify their mind-sets, it can seem almost impossible. But changing people's attitudes and values is frequently required for sweeping organizational change, such as switching a company's business model or moving from a "seat of the pants" enterprise to one run by more formal systems.

Fortunately, many entrepreneurs have been there before, so the process of accomplishing change by changing people's minds is now well-understood. A four-step process outlined in a study by consulting firm McKinsey & Co. will get you through the change challenge.

1. CONVINCE PEOPLE OF THE NEED FOR CHANGE. Assume you'll face obstacles, and find out what's behind the resistance, advises Donna Kelley, assistant professor of entrepreneurship at Babson College in Wellesley, Massachusetts. "Are they averse to risk? Do they feel their jobs will be threatened? Are they just unconvinced there's a need for change?" she asks.

Objective data can soothe fears, Kelley says. When she was helping a computer data-storage company change the way it handled inventory to reduce out-of-stock problems, she faced resistance until she paired a powerful story with numbers. The company's data-storage devices cost $2,000, far more than newer products. "When we have $200 units coming into the market, we can't compete," she argued. Employees saw the logic and became willing to try new procedures.

2. RECOGNIZE AND REWARD THE BEHAVIOR YOu WANT. On the flip side, punish--or at least don't reward--undesirable behavior. There are many ways to do this, from changing bonus structures to instituting new employee awards tailored to your new goals. Don't assume money is the only--or best--motivator. "Financial rewards can be seen as buying cooperation," Kelley says. "Nonfinancial rewards can be more effective."

3. PROVIDE ROLE MODELS FOR CHANGE. That way, employees can see someone they admire engaging in the desired behavior. Don't expect your people to follow someone else, advises Al Vicere, a management consultant and professor at The Pennsylvania State University, University Park. "The leaders of the change effort should not be external consultants but [rather] the senior leaders in the organization," Vicere says. "They should be the ones out front, teaching, leading and facilitating."

4. MAKE SURE YOUR PEOPLE HAVE THE NECESSARY SKILLS TO IMPLEMENT CHANGE. Learning the new skills required for major organizational change is likely to be different from the ordinary training project, according to Vicere. "You have to get people to unlearn their old behavior and then learn new behavior," he says.

Reluctant students can block learning as well, of course. You can increase their willingness by modifying the environment in which they learn, but don't just spruce up the company classroom. Instead, apply the polish to your products, services and overall company image-especially as viewed by your employees. When workers see change in these important elements, they realize that they will have to change, too, and they'll be more agreeable to acquiring new skills. "It sends a message that we're really going to be different," Vicere says.

While you're changing people's mindsets, don't neglect your own. Business change is hardly ever as easy as surfing to a new TV channel, and it's always hard right after you've gone through change, says Vicere. "The bad news is, you might be successful," he says. "That's when you get into trouble, because the biggest task is maintaining momentum. Change isn't an event; it's a process."

MARK HENRICKS writes on business and technology for leading publications and is author of Not Just a Living.