Ten commandments for CEOs seeking organizational change - includes bibliography

Business Horizons, Jan-Feb, 1994 by James H. Reynierse

In our ever-changing, fast-paced world, competitive relationships Can shift quickly when companies respond too slowly to increased competition in their industry group. Succeeding in such a competitive and changing environment demands that CEOs reshape their organization to meet today's challenges and competitive realities.

But responding to change remains highly elusive because there is a natural resistance to change at all levels within the organization, including at the top. CEOs and other members of the executive suite need to take a hard look at their existing organization and culture, ask tough questions about its appropriateness for the current competitive environment, and take concrete, implemental steps to forge a preferred culture and drive it downward throughout the entire organization.

But therein lies the challenge, for few management teams both establish a comprehensive strategy for remaining competitive and take a hands-on approach to implement change internally. By not getting involved, they signal to employees that the change really isn't very important.

A key premise of this article is that cultural change or any organizational transformation is essentially a top-down activity. It cannot be delegated. If the CEO perceives the need for change, makes it a top priority, and gives it a great deal of time and attention, the organization will change. By the same token, if the CEO offers only limited lip service, needed changes just won't happen. This article outlines how the CEO can be an enthusiastic sponsor of change by paying enough attention to implementation to make the transformation take place. Reynierse and Leyden (1992) provide a case study incorporating these steps.

1. Strategy-Driven

The process I am advocating will be relatively ineffective without a strategic framework to provide competitive advantage. This process is not a substitute for such a strategy. Rather, the strategy is the starting point that establishes the context for all other steps. However, strategies will be relatively ineffective when management pays insufficient attention to their impact on the work force--for ultimately it is the work force who will implement the strategy and make it succeed or fail. The point is that unless such a strategic plan is implemented and executed effectively, it will not be fully realized in the competitive marketplace. An overview of this process is depicted in Figure 1.

A company's business strategies, plans, and goals are the starting point--not the end--of this exercise. They formalize the CEO's vision, setting the tone and establishing direction for the company in both the long and short terms. They provide a context for all other activities and decisions, establishing the limits for making many choices along the way. In addition, they determine the direction and boundaries for building the new organizational culture, including molding employee expectations.

Resources are scarce in every organization, and management must accept the fact that it can't do everything. Strategic choices reflect judgments about where companies think they have marketplace competitive advantage so that plans implemented here enable them to grow faster and earn more than their competitors in these market segments. Similarly, the resources dedicated to building the organization are determined by this strategic focus.

2. Top-Down Involvement

If something is important, a good rule of thumb is to have a top-down approach to getting it done. Ideally, then, the CEO must get involved. If the CEO attends to the organization, it will improve and gain competitive advantage. Conversely, if the CEO gives it scant time and attention, little organizational growth will occur. In short, the CEO who enthusiastically sponsors a broadly conceived program for building the company is more likely to succeed and reap the benefits down the road. A company-wide initiative needs an enthusiastic and supportive CEO who does not hesitate to play a continuing role during the change process.

But where is the top? And who is the CEO? Building organizations is often better served by dealing with chunk-sized bites rather than the whole company. Particularly for large companies, it often makes better sense to deal with natural strategic business units (SBUs) rather than the entire company. At one level, there are often unique problems or opportunities in a unit or company division. At another level, it is most meaningful for those involved to deal with issues that directly concern them and their business unit.

The approach I am advocating includes determining the firm's core values and mission. It is unlikely that every SBU or company division will share the same core values or mission. Individual business units often have unique customers, competitors, product maturity, strategies, and objectives. These units need the autonomy to develop their own focus. For such cases the division executive is functionally the CEO for that unit and can provide the vision, enthusiasm, and driving force for success.