 |
| (C) Used with permission. |
"The sinkhole of change is communication and motivation. It's where change projects go to die."
--Nancy Rothbard, Ph.D.
Bayer, the German conglomerate that invented aspirin in its earliest days, is trying to reinvent itself.
CEO Bill Anderson is one year into restructuring the company's pharma commercial team in response to a crushing €34.5 billion debt, the litigation-intensive $63 billion acquisition of Monsanto, the parent company of the Roundup weed killer, and the upcoming loss of exclusivity for the blood-clot medication Xarelto.
Bayer, also home to Flinstone vitamins and Alka-Seltzer, eliminated managers and annual budgets, which Anderson calls the "belly of the beast of bureaucracy," and asked staff to organize themselves into 90-day "sprints" in self-directed teams.
"Dynamic Shared Ownership" (DSO) proposes reducing bureaucracy, accelerating decision-making, bringing employees and customers closer together, improving overall operational performance, and radically realigning Bayer's internal culture.
"The beauty of this system is we're not perfecting it before we start," says Christine Roth, head of global commercialization at Bayer's pharmaceutical division. "We're getting to a good place where we can start to experiment and go. And we will learn to adjust as we go," Roth emphasized.
The DSO plan works and becomes a Harvard Case Study on transformation or falls into the heavily populated category of failed corporate change, where nearly 70 percent end up. Or something in between.
Under Bayer's circumstances, doing nothing is not an option.
The role of culture
Dr. James O'Toole, author of Leading Change and former program director at The Aspen Institute, defines culture as a system of beliefs and actions that characterizes a particular group. He includes shared ideas, customs, assumptions, expectations, philosophy, traditions, mores, and values in that definition.
Historically, grasping corporate culture resulted from in-person socialization, close observations of behavior, and conversations with peers and supervisors. Informal mentoring played a big role in the assimilation process.
Can what was once learned on-site be interpreted virtually?
The Iceberg graphic shows that the more heavily promoted values at the top, such as vision, strategy, and goals, may have less influence than originally thought. Stories, unwritten rules, and traditions at the bottom may impact culture more. Will the approximately 90 percent unseen volume of the iceberg retain its influence in hybrid work cultures?
Change is hard but possible
What have we learned in a half-century of studying organizational dynamics? The critical importance of everyday relationships. That's a quality you can't do without. Credibility doesn't show up at the last minute when change needs to happen, or a crisis occurs. It's there, or it's not.
There's a huge difference between nurtured and neglected bureaucracies. The former are healthy and adaptive, while the latter struggle to achieve common goals.
What drives sweeping change?
An existential threat, such as debt at Bayer or catastrophic accidents involving Boeing planes in 2018 and 2019, killing 346 passengers and crew that grounded the 737 Max jets.
"Top management teams that are diverse in time orientation, tenure, and experience increase the probability of strategic change," says Success with Change author Patricia McLagan.
Anticipating something new
There are three pre-conditions for effective change:
The first is trust.
Dr O'Toole writes: "Trust is created by leaders' manifest respect for their followers."
"People have to believe in you and what you are trying to do," says Paul Brown with FTI Consulting.
Therefore, mutual trust is necessary.
Secondly, leadership has to gauge the capacity to change. Restructurings or turnarounds can't happen without building on existing capacity. You bring change by working with the system; you can't pretend the system doesn't exist.
Finally, anticipate people's concerns. They are not only predictable but also addressable. Sometimes, resistance identifies alternative options and produces better results. Associates don't actually resist change; they simply resist being controlled.
Improving the chances of success
Make a case for change: Explain your motivations to employees repeatedly and in detail. Take the time to build a compelling case. Allow for questions and feedback. Announcing change isn't the same as implementing it. Show everyone where the enterprise is, where it should go next, and how to get there by working collaboratively. A realistic timeline helps.
Involve associates from the beginning. Credit them for being smart and include them in every stage. People don't want to be sold on change. They want to understand it and participate in making it happen. Deliberately engage their hearts and minds. Let them influence its nature and direction. Those directly affected by these decisions need time to make the required transitions. Implementation happens here.
Maintain integrity throughout the process. Proposals and the leaders who sponsor them aren't perfect. Acknowledging this upfront is an act of humility, not weakness. If leadership communicates probabilities instead of certainty, much can be said. Updating formal and informal channels with the latest information is better than rumor-filled vacuums. Progress, more than success, is the measuring stick of change.
Remember that cultural icebergs are mainly below the surface.
Sources: Controlling the Perils of Change, Mary Lee Olson, T + D Magazine, 2008; The Irrational Side of Management, McKinsey Quarterly, 2013; Partners In Change, Paul B. Brown, Inc., 2001; Leading Change, James O'Toole; Jossey-Bass, 1995, Cracking the Code of Change, Nitin Nohria and Michael Beer, Harvard Business Review, 2000; Success with Change, Patricia McLagan, T +D Magazine, 2002-2003; The Change Monster, Jeanie Daniel Duck, Crown, 2002; Communicating Change, TJ Larkin and Sandra Larkin, McGraw-Hill 1994.
© Bredholt & Co.
