Organizational transformation is more about transforming people than organizations. Successful transformations are a result of desired change in people’s habits, not the other way around. It’s the people, stupid!—to borrow a slogan from Bill Clinton’s first presidential campaign.
Changing people’s habits, attitudes, and behaviors in today’s globalized, multi-cultural, diverse workforce warrants a mammoth effort that can only be achieved through exemplary leadership.
In part 2 of this series, I reveal and discuss secret Number 2 to the success of organizational transformation: LEADERSHIP. Among the six secrets I’ve envisioned for this series, leadership is arguably the most important, because it encompasses all the others.
Be authentic
Authenticity lies at the core of leadership. It is characterized by many facets of human behavior including genuineness, integrity, empathy, humility, and compassion. It creates a sense of purpose, builds trust, and inspires your team towards the change you want to achieve.
Truly authentic leaders are few and far between. World leaders including Mahatma Gandhi, Martin Luther King, Jr., and Nelson Mandela are perhaps the greatest examples.
In the business world, Bill Hewlett and David Packard, cofounders of the first real Silicon Valley tech company, HP, were true authentic leaders. Their legendary management style, epitomized as The HP Way, is an ideology that, according to Hewlett, “includes a deep respect for the individual, a dedication to affordable quality and reliability, a commitment to community responsibility, and a view that the company exists to make technical contributions for the advancement and welfare of humanity.”
Focus on the whole rather than the parts
Organizations are becoming increasingly complex. Transformation initiatives add many moving parts to the complexity. Managing the numerous diverse and disparate parts of especially global organizations at their microcosmic level is virtually impossible. The key is to build a strong leadership team so you can focus on the whole while delegating the parts. Tim Cook, CEO at Apple, is an excellent example of such leadership style.
Focusing on the whole requires strategic thinking. It involves defining—and refining as necessary—the mission, vision, and strategy of your transformation project. Technology leaders that are considered strategic thinkers and visionaries include Jeff Bezos, Steve Jobs, Elon Musk, and Sheryl Sandberg.
Visionary leaders think in tons, not in pounds. They see miles ahead, not just inches.
One of the most successful transformations in the automobile industry took place in the early 1980s. Chrysler, a “Big-Three” company, was at the brink of collapse. Enter Lee Iacocca, a small-town Pennsylvanian! Already successful at Ford with his bold introduction of the Mustang and Pinto, he was hired by Chrysler to turn the company around.
His bold innovative strategic thinking helped him identify what consumers wanted: An extremely spacious minivan with room for the entire family. The biggest brainchild of Iacocca, it became a global phenomenon and revived Chrysler. And Iacocca went on to become one of the greatest automobile luminaries.
Cultivate the right culture
Every leader is invariably faced with the daunting challenge of cultivating a culture that everybody in the organization can easily understand, relate to, feels comfortable with, and embraces. Culture is everything. It’s about your habits as an organization. It speaks about your organization’s personality. What are your values, how do you treat each other, what do you respect, what’s most important for you, how do you hire talent, how do you execute strategy, what’s acceptable and what’s not acceptable in your conversations?
When Steve Ballmer was at the helm of Microsoft, the culture was rigid, inflexible, competitive, and cut-throat. When Satya Nadella replaced him, he transformed the culture. His culture is focused on learning, growth, collaboration, diversity, and inclusivity.
The faltering Microsoft under Ballmer is now thriving under Nadella reaching more than a two trillion-dollar valuation. The cultural transformation became a pillar to support the organizational transformation. It was suggested that today at Microsoft the C in CEO stands for Culture.
(Microsoft is now faced with a new challenge of cultural transformation through the planned acquisition of Activision Blizzard, a video game maker that is notorious for its toxic work environment involving harassment, discrimination, and other offensive behaviors. Nadella and his lieutenants are well prepared for the task.)
Execute ruthlessly
You may be a leadership expert in theory, but when you’re in charge of transforming an organization, it’s the execution that matters the most. You may have an MBA from an elite institution. You may have read all the best-selling leadership books. You’re an authentic leader, you’re a strategic thinker, you understand culture, and so on and so forth. All that may be necessary but not sufficient. Executing your strategy and delivering the results is what matters at the end.
Louis Gerstner, Jr. took the helm at IBM in April 1993. His predecessor was displaced because of his poor performance. When Gerstner arrived at the office on day 1, there was a board-approved, publicly announced plan sitting on his desk. It called for splitting the company into five different smaller ones. The first thing the new CEO did was dump the plan into the trash can. So everybody wanted to know what his vision for the company was. He declared, “The last thing IBM needs right now is a vision.” They are since engraved as the most famous 10 words in business history!
Gerstner took several months to clean the house. Shattered the bureaucracy. Broke down the organizational silos. Opened channels for communication. Built a new mindset and a new culture. And much more! Then he came up with his grand vision. The company cannot afford to stay just in hardware anymore, he professed, the world needs software and IT solutions.
Long story short, his prescient vison and ruthless execution paid off. The company was not broken into pieces. It just became leaner and stronger. And it thrived. In a way he rebuilt the company from the ground up. Like an entrepreneur.
In his memoir titled, Who Says Elephants Can’t Dance?, Gerstner chronicled the transformation he led at IBM—a must-read for anyone interested in organizational transformation.
Act like an entrepreneur
Traditional entrepreneurship is about building and leading an organization from scratch to success with speed. Rapid business transformation is not much different. It’s about building and leading a team that will successfully implement strategic change. Whether you’re building a new organization starting from scratch or transforming an existing one, entrepreneurial skills are paramount.
Entrepreneurial action is characterized by visionary thinking, learning fast through experimentation, taking calculated risks, evaluating priorities constantly, adapting swiftly to a changing environment, pivoting when necessary, building resiliency to face unexpected calamities, focusing on the final outcomes, and so on.
Entrepreneurial leadership is exemplified recently in the response to the pandemic by Brian Cheszky, cofounder and CEO of Airbnb. An online marketplace for vacation rentals, the company was in financial dire straits towards the end of spring 2020 due to the pandemic.
Chesky swiftly pivoted his strategy, fully knowing the risks, to focus on local stays rather than big cities and distant places that had shaped their core business. By early summer, the teams redesigned the website and app. They changed the algorithms to show rentals ranging from small cabins to lavish beach houses near where prospective customers lived. By mid-summer things started to turn around. The third quarter resulted in profit leading to a gangbuster IPO in December.
Whereas success secret Number 2 for organizational transformation is leadership, the next secret has to do with a key characteristic of teams engaged in transformation. Stay tuned!
Bill Yates says
Prasad, you’ve nailed it. This post is right on point. Leadership trumps all other aspects of organizational transformation, and I could not agree more with the 5 subtopics you’ve written about here. For most of us humans, we can read these descriptions, think we’re doing ok in some areas, and be challenged to grow in others! Well done – thanks for this post.