When the voice on the other line is a recruiter, chances are there is a mess to be cleaned up. When things are going badly and a company decides it needs someone to change the situation, there is usually a mess, and they are looking for someone to clean it up. They are looking for a leader who can bring change.
I led major change in each of the areas I was assigned to (Bethlehem, PA, St. Louis, and Ontario) and each change had the same three steps. This month I will take a look at the first of three stages in any turnaround: clean up the mess. The second stage is to lay a foundation for growth, and the third stage is to build on that foundation, and I will look at those in the next couple of newsletters.
We typically think that changes have a beginning, a middle and an end, and that we should start with the beginning, but that is really not true. When you clean up a mess you need to begin with the end. You begin by putting an end to the old problems that created the mess. Then you have a middle – a time of establishing the foundation for how things will be different – and then the beginning of the new thing.
When I arrived in Bethlehem for my first assignment I found a pretty sad state of affairs. At the first meeting there were twelve kids and thirteen leaders. The leaders were using electric guitars and a huge sound system (including microphones) for the twelve kids. It took less than a minute for me to realize we had a mess and the first step was to put an end to it. We cancelled that meeting for the rest of the year. I ended it. The next issue I had to deal with was the volunteer leaders. I assembled them and gave some guidelines for leaders and began to cast the new vision. More than half of those leaders quit. The third issue was to assemble some of the kids who had been at that first meeting. Most of them quit too. The mess wasn’t even close to being cleaned up, but to paraphrase Winston Churchill, it was the beginning of the beginning of cleaning up the mess.
Two things are true when you clean up a mess. First, most of the mess involves people and money, and second, while the three stages of cleaning up a mess must be done in sequence the thinking behind them must be done simultaneously.
The People: When we think about the core issues of a turnaround situation we are really talking about changing the way the people in the organization think and behave regarding the organization. The most important factor in changing an organization is changing the way the people think about their jobs, the organization, their customers – and sometimes themselves. We need to change the way they perceive themselves and their place in the organization before we can change their behavior.
In other words, we need to change both the endemic and systemic realities of the people in the organization. The leaders in Bethlehem that quit weren’t bad people – in fact they weren’t any better or worse than the people who stayed – they simple could not change the way they thought about what we were doing. It wasn’t a question of their ability or their hearts, it was a question of their minds – the way they thought about what we were doing.
The most desirable scenario is not to have a wholesale departure of people, but rather to be able to change the people who are already established in the organization. They bring experience, knowledge, loyalty and wisdom to the turnaround and it is best if they can re-imagine the organization and get on board with the changes. But sometimes you just have to find new blood. The old saying, “it’s easier to make babies than it is to raise people from the dead,” is true. It is always easier to find fresh minds who can grasp the new vision than it is to try to “teach the old dogs new tricks.” There is, however, a cost to finding new people, and what is easy is not always what is best.
The best-case scenario is to spend as much time as you can afford to help the old guard adopt the new vision, while recognizing that at some point you are probably going to also have to bring in new people. That mixture of grey hair and fresh minds is the right combination for going forward.
The Money: You can tell a lot about an organization by understanding its financials. One of my first jobs at a bank in Baltimore was to do a financial comparison of the annual reports of the five major banks in the Baltimore market. By understanding the financials of our competitors, we understood how we fit into that particular marketplace. My advice to people who are leading a change-effort is to begin by mastering the financials of the organization. When you understand how the money flows you understand how and where profit is generated, and your strategy will then be informed by the economic realities of the business; the litmus test of a company’s true value.
The Process: While you must see the process in it’s three component parts (clean up the mess, lay a foundation, build on that foundation) you must also recognize that all three parts of the process must be thought about simultaneously. In other words, you must be thinking about what kind of foundation you are laying, and how you will build upon it at the same time you are thinking about cleaning up the mess. You can’t lay the foundation before you clean up the mess, but you must think about the kind of foundation you are laying while you are cleaning up the mess. Each stage in the process has significant bearing on the other stages.
For example, when I was thinking about cleaning up the mess in Bethlehem I was also thinking about what kinds of precedents I was setting that would establish a foundation for the way we treated people in the organization. The way we treated the people leaving was going to be a building block for laying the foundation of the new thing.
In a more current example there is no question that GM needs to change and a significant turnaround is necessary. It’s a mess and it needs to be cleaned up. I don’t know about you, but I am very uncomfortable with this building block for change within GM being established by the government. It is a foundation that will inevitably undermine the ability of GM to attract and hire the best people from the private sector to run the company. This government intervention will also erode shareholder confidence and employee morale (have you ridden Amtrak lately?). By “cleaning up the mess” with this heavy handed involvement, GM – and others – will struggle to build a more successful organization because the way the government “cleaned up the mess” will result in a shaky foundation. The Obama administration is laying a foundation that will allow politicians to oust CEO’s from private corporations. It seems to me the process of cleaning up the mess was done without simultaneously thinking about the foundation they are laying in the process.
Cleaning up a mess is never easy. It is painful to deal with the transitions of people, and it is mentally exhausting to think about the process and all of its layers of complexity. The more work you put into this first stage of a turn-a-round the better the subsequent stages and the end product will be.