Opportunites In A Crisis

I’m sure I’ve said it before: change will not happen unless you can convince others that the status quo is unacceptable. Those who are trying to lead change will encounter a natural inertia that dominates most organizations. Unfortunately it often requires a crisis to help people understand that the old ways of doing things can’t work anymore.

When I was in business school I heard a story about an owner of a small manufacturing firm in the US. By all accounts the firm was doing well, but the owner decided they had become complacent. He wanted to shake things up, and he created a crisis by taking on a significant new debt issue. To pay off this obligation the company was forced to take a hard look at their existing processes to reduce costs and improve efficiency, something the owner had been unable to inspire previously. It was an extreme approach, but apparently it got everyone’s attention and focus.

In the late 1990s I attended a meeting led by a high-level executive at Hewlett-Packard’s inkjet printer division. The product line was wildly successful with rapid worldwide growth that exceeded all expectations, but this executive surprised his audience by declaring that the business was in serious trouble. He knew the good times wouldn’t last forever, and he tried to motivate the team to begin preparing for a future of mature markets and reduced demand. It didn’t work. The division stayed fat, dumb and happy for another ten years, and while the product line continues to be a cash cow for HP, there were many lost opportunities to improve processes and spawn new businesses. Things were too good and there was no sense of crisis.

I’m not saying it’s a good idea to create a crisis like the owner of the manufacturing firm, but when a crisis does occur – as it sometimes does – it’s an opportunity to focus attention on needed changes. Even the most change-adverse parts of the organization will have to admit that they don’t want to go through that again, leaving them open to new ideas. That’s when the change manager must be ready to make the case, introduce new processes, and consolidate around a new equilibrium.