--By Sujit Mundul

 

It is increasingly common to hear people say that we are facing a crisis of leadership. The ways in which organizations are moving forward can no longer be comprehended through the same models, language and logical analysis that had served leaders in the past. The rational leader has got business where it is – they will not be able to take it where it needs to go. The leaders of tomorrow will need to be ordinary human beings with extra ordinary talents. 

 

The new leader will be both inspired and inspiring. They will be able to find and hold a vision while enthusing others to share that vision. They will be able to manage change and complexity while instilling enough stability to ensure smooth daily operations. They will be able to change direction at the drop of a hat (or market) from one imagined future to another without losing the support of associates, staff, customers, suppliers and other stakeholders. And they will be able to manage creatively the emotional impact of constant change. 

 

Michael Porter has said “The challenge of developing or re-establishing a clear strategy is often primarily an organizational one and depends on leadership …… strong leaders willing to make choices are essential.”

 

According to John Kotter “Change” involves numerous phases that, together, usually take a long time. Skipping step creates only an illusion of speed and never produces a satisfying result. A second lesson is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating previous gains.

 

Most successful change efforts begin when some individuals or some groups start to look at a company’s completive situation, market position, technological trends and financial performance. They focus on the potential revenue drop when an important patent expires; the five year trend in declining margins in a core business or an emerging market that everyone seems to be ignoring. They then find ways to communicate this information broadly and dramatically, especially with respect to crisis, potential crisis or great opportunities that are very timely. This first step is essential because just getting a transformation program started requires the active co-operation of many individuals. Without motivation, people want help and the effort goes nowhere.

 

During his research Kotter observed that, well over 50% of the companies failed in this first phase. What are the reasons for that failure? Sometimes executives underestimate how hard it can be to drive people out of their comfort zones. Many a times they grossly overestimate how successful they have already been in increasing urgency. Sometimes evidence of patience is observed: “Enough with the preliminaries, let’s get on with it.” In many cases, executives become paralyzed by the downside possibilities. They worry that employees with seniority will become defensive, that morale will drop, that events will spin out of control, that short-term business result will be jeopardized, that stock will sink and finally, that they will be blamed for creating crisis.

 

An important observation is made by Kotter that a paralyzed senior management often comes from having too many managers and not enough leaders. Managements are required to minimize risk and to keep the current system operating. Change, by definition, requires creating a new system, which in turn always demands leadership of a different dimension. Transformations often begin, when an organization has a new head who is a good leader and who can visualize the need for a major change.

 

It is interesting to note that bad business results are both a blessing and a curse in the first phase. On the positive side, losing money does catch people’s attention. But it also gives less maneuvering space. With good business results, the opposite is true: convincing people of the need for change is much harder, but you have more resources to help make changes. 

 

It is often said that major change is impossible unless the head of the organization is an active supporter. In successful transformation, the chairman or president plus 5 or 15 people, come together and develop a shared commitment to excellent performances through renewal. Kotter mentioned that, “In my experience this group never includes all of the company’s most senior executives because some people just won’t buy in, at least not at first.” In the most successful cases, the group is always pretty powerful – in terms of tittles, information and expertise, reputations and relationships.

 

It would be germane to note that in every successful transformation effort, the guiding coalition is able to develop a picture of the future that is relatively easy to communicate and appeal to all stakeholders. A vision always goes beyond the numbers that typically feature in five year plans. A vision says something that helps clarify the direction in which an organization needs to move. Without a sensible vision, a transformation effort can easily dissolve into a list of confusing and incompatible projects that can take the organization in the wrong direction or nowhere at all.

 

In failed transformations, one often finds plenty of plans and directives, but no vision nor conviction of the leader. Although note books may be filled with many statements describing the change effort, but nowhere one would be able to come across with a clear and compelling statement of where all this was leading. Most of the employees of the organization would either get confused or alienated.

 

Once again, communication is very important in ushering a transformation or change. Transformation is impossible unless hundreds of people are willing to help, often to the point of making short-term sacrifice. Employees will not make sacrifices, even if they are unhappy with the status quo, unless they believe that useful change is possible under the current leadership. Without credible communication, the hearts and minds of the troops are never captured. A leader has a huge role to play – and act as a role model leading from the front and refrain from giving only lip-service – the person has to be credible and command respect by setting personal examples.   

 

(Sujit Mundal is former CEO of Standard Chartered Bank Nepal where he currently serves as a member of the Board of Directors.)