The Challenges of Change

The featured article in the June 2021 edition of the Hardware + Building Supply (HBS) Dealer Magazine was "Lowe's at 100", with the subheading "the transformation continues." Reading the article brought back many memories of my 18+ years at Lowe’s (1992-2011).??It also prompted me to reflect on the challenges of implementing change at scale.??

The HBS Dealer article discussed, at a high level, Lowe's core strategic initiative, the "Total Home Strategy." Lowe's CEO Marvis Ellison described this initiative as a way for customers to go to Lowe's to "get anything they need for their home." Mr. Ellison went on to describe increasing "investments in an integrated omnichannel shopping experience" and "expanding our private brand penetration" as critical drivers for Lowe's success. Another segment of the article discussed changes in Lowe's Professional (Pro) business model, including "grab-and-go" items near the Pro entrance in stores, Pro trailer parking, phone charges at the pro desks, dedicated pro checkouts, and flexible credit options.??

With all due respect to the hard-working associates at Lowe's and the current executive leadership team, this all sounds?very?familiar. In 2004, Lowe's was already offering omnichannel experiences such as buy-online-pick-up-in-store (BOPIS), buy-online-return-in-store (BORIS), store-out-of-stock (SOS), and buy-online-ship-from-store. In fact, Lowe's was among the first retailers to offer these services.??

2004 was also the year that Lowe's filed a patent application for what was called the "Total Closed Loop" (TCL) selling model. Ultimately Lowe's was granted a US Patent (9990767) for an integrated selling process of services and products (a patent eventually abandoned by Lowe's). The TCL model had many provisions to expand services to the Pro customer (repair and remodelers), including a business portal and many in-store services.??Finally, Lowe's had embarked on increasing their private brand footprint, focusing on building out the Kobalt brand while establishing what would eventually become Allen+Roth.??

In 2005, with the help of my IT team, I authored a white paper that described the future for Lowe's stores to support the TCL model.??The paper described the core technology capabilities needed to support TCL. Among these capabilities were integrated selling solutions, flexible delivery (store and warehouse direct), a customer portal known as MyLowes, robust labor scheduling, mobile computing devices, customer touchpoint integration, and expansion of the technical architecture in the stores.?

By 2010, Lowe's had comprehensive master data management solutions for item (product) and customer. A state-of-the-art e-commerce solution was deployed and supported by a real-time centralized pricing and inventory system. A new customer relationship management (CRM) solution was in place to manage customer interactions across all channels. We significantly upgraded the store technology infrastructure and were preparing for a major upgrade to our network. In short, the majority of the “plumbing” was complete, and it was time to transform the customer experiences.??To support these experiences, we developed an “experience lab” that mimicked the customer journey for the most complex project at Lowe’s, the kitchen remodel.??The lab showcased candidate “art of the possible” technologies to create a seamless customer experience, entirely managed by Lowe’s.??

However, as history shows, Lowe's transformation efforts lagged.??The delay in delivering on the customer experience transformation illustrates an important point on change.??Simply, sometimes vision is not enough. Large-scale change does not come about easily, nor does it often come about quickly.?In essence, most of the critical initiatives Lowe's is currently pursuing can be traced back to 15 years earlier. So why do these types of large change efforts often struggle???

I believe the chief factors for the long delay at Lowe's ultimately had nothing to do with vision or technology. The fact that the current leadership team is still pursuing the vision from 2005 is a testament to that. The technology foundation was in place in 2010, as evidenced by the fact that the core elements of that foundation are still supporting a company nearly $40B larger in revenues.??

I believe?10 Reasons Change Efforts Fail, by Lee Colan (co-founder of the L Group), provides some answers for the prolonged change efforts at Lowe's. From my perception, several of the reasons identified by Mr. Colan hampered Lowe’s efforts to effect transformational change.??

The experience at Lowe's and other organizations has provided me with many valuable lessons on driving organizational change. The lessons that I consider most important include:

1. Mandates don't drive change.?
2. Focus on the critical few and eliminate noise.?
3. Build on success. While we all like home runs, sometimes a few base hits will do.??
4. People emulate their leaders. Actions will speak much louder than words.????
5. Be inclusive.??Change does not occur in siloes or a vacuum.?

Let’s cover each of these items briefly.??Leaders must buy in and embrace the change message before discussing it with their respective teams. If a leader can't do this, it will be impossible to convince others to change. Leaders must personalize their message and speak from the heart. A personalized message dramatically enhances the likelihood of connecting with others. Remember, change is personal. People only change when they feel motivated to do so.??

One of the most important elements of any change effort is identifying the outcomes you want to achieve. Prioritize outcomes to focus on the most critical (“non-negotiable”) ones first.??Be discerning and do not allow non-critical outcomes to detract from the non-negotiables.?

Equally important is how change efforts are structured.??Teams want to see progress.??Successes, even small ones, motivate teams to continue working towards the end goal.??Teams lose interest when they don’t see progress.??Structuring change efforts to drive some quick wins and build on success is essential.?

Closely related to the first item is “how” to lead.??Teams emulate the actions of their leaders.??Words, not backed by action, are simply words.??Leaders must bring energy to meetings, reinforce the good behaviors, and call out the bad behaviors.??

Finally, change must be inclusive.??Early and frequent communication, backed by facts and analysis, sets the stage for initiating change.???Teams should have input into decisions and feel a sense of ownership for driving change.??

All five of these items require attention from leaders.??There is a reason for that.??Change efforts most often fail due to leadership.??Remember, people will accept change that they believe is in their best interests.??Great vision is not enough.??Success requires leaders to get their hands dirty and build a compelling case for change.