Sunday, October 2, 2016
Why Leadership Training Fails And What To Do About It - Part 4
Developing the Organization Unit by Unit
Part of creating a favorable context for learning is making
sure that every area of the business provides fertile ground. Soil conditions
will inevitably vary within an organization, because each region, function, and
operating group has its own needs and challenges. In our studies of corporate
transformations and our work with clients, unit leaders have told us that their
companies’ education programs were not wrong in substance but failed to align
with their local priorities and stage of business and organizational
development. In other words, their groups were not ready for the training they
got.
So companies should invest in capability development unit by
unit. The corporate-level unit links everyone at the top—the CEO, her senior
team, and key business unit, regional, and functional leaders and their key
people. Individual units must consider their needs and capabilities in the
context of their own strategy and goals.
Each unit’s leadership team should periodically go through
the six steps we’ve described to discover the silent killers that undermine
real change, and each team should have a hand in setting its own change agenda
(within the context of corporate strategy and values). Those who follow this
approach will avoid the low return on investment that results from top-down
programs. Common capability-development needs that emerge from unit-by-unit
change can, of course, be addressed through a companywide program.
Cardo, a Swedish industrial company composed of two major
independent divisions, provides a powerful example of why a unit-by-unit change
strategy is important. To support its corporate transformation into an
integrated global group, Cardo’s CEO and his leadership team commissioned an
education program to teach the top 80 managers how to lead change.
The program,
which integrated individual education and organizational development, featured
four modules of classroom training. Between modules, participating managers
were charged with implementing changeand improving performance in their
respective departments. They received consultation and coaching from program
faculty members and peers and were invited to speak to the CEO during each
module about organizational barriers to effectiveness and performance.
Evaluation of the
program revealed significant behavioral changes in one of the divisions.
Alignment between strategy and execution improved, as did teamwork across
functions and borders, and management became more participative. The CEO
estimated a tenfold return on the cost of the program by looking at the
financial effect of the learning-intensive projects that managers led in their
own departments and, when appropriate, in collaboration with peers in other
parts of the division.
However, the other division did not experience comparable
improvements. Its leaders, in contrast to those of the first group, failed to
see the program’s value—perhaps because they were not under the same pressure
to change. Their short-term performance was good, after all. The CEO and his
senior team had not assessed each division’s receptiveness to the new vision
and readiness to carry it out, nor had they made clear the type of
organizational transformation they expected. As a result, the two divisions
responded quite differently to the same program.
Contrast Cardo’s experience with how ASDA, a grocery chain
in the UK, approached its transformation in the 1990s. (One of us wrote a case
study about the chain; it’s an example worth revisiting here.) Archie Norman,
the CEO at the time, led a turnaround of the company and its 200 stores by
avoiding the fallacy of programmatic change—that is, the common impulse to roll
out sweeping, companywide initiatives without gauging local readiness. ASDA
began by creating a few model stores that demonstrated the leadership and
organizational capabilities needed to build a more employee- and
customer-centric culture.
The company then devised a “driving test” to assess
the remaining stores’ capacity to implement what came to be known as the ASDA
Way of Working. A store would receive corporate funds to invest in needed
physical changes only if it passed the driving test. Stores that did not pass
received consulting support from a corporate transformation team and then
retook the test. If a store failed the test again, its manager was replaced.
At the time, ASDA’s transformation was widely hailed as the
most successful in the UK. In about a decade the company improved its market
capitalization tenfold, thanks largely to its disciplined, unit-by-unit
approach to change and development.
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