How we used Kotter`s 8 step change model for the corporate turnaround of Lindorff Accounting Group

In the period of 2008 - 2011 I oversaw the Program Management Office, PMO for Operational turnaround of the Lindorff Accounting Group. At that time, it was a large Nordic Business Process Outsourcing, BPO supplier. The company was a subsidiary of the Lindorff Group, one of Europe’s largest companies within debt collections owned by the Investor AB, the Wallenberg families investment company. In this turnaround case we decided to use the Kotter’s eight step model for change. The BPO supplier had for several years had declining business result and had six figures red EBITDEA results.

Therefore, a PMO for Operational Turnaround was established with the responsible for running the whole corporate turnaround process. The PMO had three major projects:

Operational turnaround:

-         Close down production site in Norway

-         Transfer part of the production site in Sweden to offshore.

-         Build up new production site offshore on two locations.

Redesign and standardising of new business and work process:

-         Continuous improvement and lean management

Implementing new ERP system:

-         Upgrade the too Microsoft Axapta 2009

 New initiatives, project-based working, technology improvements, staying ahead of the competition – these things were done through the four years’ period to drive ongoing changes to the way the company needed to develop. Whether one considering a small change to one or two business processes, or a system wide change as in this case, it is common to feel uneasy and intimidated by the scale of the challenge. Everyone knew that the change had to happen, if not the company would end up in bankruptcy, but one did not knew how deliver it. In this case we used the PMO office to coordinate all changes. There are many theories about how to “do” change. Many originate with leadership and change management guru, John Kotter. A professor at Harvard Business School, Kotter introduced his eight-step change process in his 1995 that we used.

I have used Kotter’s. eight-step change model with major success in several corporate turnaround cases I have overseen. But this is how we used this model for the turnaround case of the Lindorff Accounting Group, a leading Nordic BPO supplier.

 Step 1: We Created Urgency

-         For change to happen, it helps if the whole company really wants it. Develop a sense of urgency around the need for change. This may help you spark the initial motivation to get things moving.

 -         In the mentioned case the group management held meetings where all employees were presented with the company’s situation and that it was critical. It was end of no return, the company had to be able to implement these changes and gain black financial figures, if not the company would go bankrupt. All meetings were held at all locations where the company was represented in the Nordic countries.

 -         This is not simply a matter of showing the employees the poor sales statistics or talking about increased competition. It was an open an honest, convincing dialogue about what is happening in the marketplace and within the BPO, and how the company needed to change to survive in the competition. If many people start talking about the change you propose, the urgency can build and feed on itself.

In the mentioned business case, we:

-         Identify potential threats within the BPO market, with national competitors and international competitors who was entering the Norwegian markets. We developed a scenario showing what we expected the future to look, and what was needed to be done to be part of this future.

 -         We examine the opportunities within the BPO market and why the company had to build up an offshore site.

 -         We started honest discussions with the trade union and employees and gave dynamic and convincing reasons for everyone to start talking and thinking.

 -         The group management started to have meeting with the company’s customer, and requested support from customers, outside stakeholders and industry people to strengthen the company’s argument.

  -        Kotter suggests that for change to be successful, 75 percent of a company’s management needs to “buy into” the change. In other words, you must work hard on Step 1, and spend significant time and energy building urgency, before moving onto the next steps. Do not panic and jump in too fast because you do not want to risk further short-term losses – if you act without proper preparation, you could be in for a very bumpy ride.

 Step 2: We formed a Powerful Coalition.

-         We were in need to convince the employees that the changes were necessary. This often takes strong leadership and visible support from key people within your organization. The whole Management Group need to buy in, if there is some one that don, you need to replace this executive fast, if not they can crash the whole change process. Managing change is not enough – you must lead it.

 -         You can find effective change leaders throughout your organization – they do not necessarily follow the traditional company hierarchy. To lead change, you need to bring together a coalition, or team, of influential people whose power comes from a variety of sources, including job title, status, expertise, and political importance. Once formed, your “change coalition” needs to work as a team, continuing to build urgency and momentum around the need for change. In this case we coordinated all program a change through the PMO.

 What we did:

-         We identified the true leaders in the organization, as well as the companies your key stakeholders.

-         We asked for an emotional commitment from these key people.

-         We worked on team building within the change coalition.

-         We check the PMOs for weak areas and ensure that one have a good mix of people from different departments and different levels within organizations.

Step 3: We Create a Vision for Change

-         We hired professional external communications people to help us to create a vision for change. When you first start thinking about change, there will probably be many great ideas and solutions floating around. Link these concepts to an overall vision that people can grasp easily and remember.

 -         A clear vision was developed by the external communication agency that helped everyone understand why we were asking them to do something. When people see for themselves what we were trying to achieve, the directives given made more sense.

 What we did:

-         The external communication agency helped the organization to determine the organizations values that were central to the change.

 -         There was develop a short summary (elevator pitch) that captures what one “saw” as the future of the organization.

 -         There was created a strategy on how to execute that vision.

 -         The PMP ensure that the change coalition could describe the vision in few words (elevator pitch)

 -         We practice the company “vision speech” often.

Step 4: We Communicate the Vision

-         The external communication agency helped the organization to communicate the vision. What you do with your vision after you create it will determine your success. Your message will probably have strong competition from other day-to-day communications within the company, so you need to communicate it frequently and powerfully, and embed it within everything that you do.

 -         Do not just call special meetings to communicate your vision. Instead, talk about it every chance you get. Use the vision daily to make decisions and solve problems. When you keep it fresh on everyone’s minds, they will remember it and respond to it.

 -         It is also important to “walk the talk.” What you do is far more important – and believable – than what you say. Demonstrate the kind of behaviour that you want from others.

 What we did:

-         We talk often about the companies change vision.

 -         We were address peoples’ concerns and anxieties, openly and honestly.

 -         We apply the company vision to all aspects of operations – from training to performance reviews. Tie everything back to the vision.

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 Step 5: We Remove Obstacles

-         What many top executives experience is challenges within the group management, if this happened one need to change out these members in the group management fast, it not they will destroy the changes and can contribute to the company’s bankruptcy. Research shows that middle managers play a huge role if the changes are successful or not. (https://www.dr-glennhole.org/turnaround-the-corporate-culture-business-operations-performance-management/

 -         If you follow these steps and reach this point in the change process, you have been talking about the company vision and building buy-in from all levels of the organization. Hopefully, your staff wants to get busy and achieve the benefits that you have been promoting.

 -         But is anyone resisting the change? And are there processes or structures that are getting in its way?

 -         Put in place the structure for change, and continually check for barriers to it. Removing obstacles can empower the people you need to execute your vision, and it can help the change move forward.

What we did in this case:

-         We identify change leaders whose main roles are to deliver the change.

 -         We look at the organizational structure, job descriptions, and performance and compensation systems to ensure they are in line with company vision.

 -         We recognize and reward people for making change happen.

 -         We identified people who were resisting the change and help them see what is needed.

 -         We acted to quickly remove barriers (human or otherwise).

Step 6: We Create Short-Term Wins

-         In all change process it is important to create and show short-term wins. Nothing motivates more than success. It`s important to give the organization a taste of victory early in the change process. Within a short time, frame (this could be a month or a year, depending on the type of change), you will want to have some “quick wins” that your organizations can see. Without this, critics and negative thinkers might hurt your progress.

 -         Create short-term targets – not just one long-term goal. You want each smaller target to be achievable, with little room for failure. Your change team may have to work extremely hard to come up with these targets, but each “win” that you produce can further motivate the entire staff.

 What we did in this case:

-         Within the three major projects there was several small, subordinated projects that we implemented without help from any of the strong critics of the change process.

 -         We did not choose early targets that were expensive. You want to be able to justify the investment in each project.

 -         Thoroughly analyse the potential pros and cons of your targets. If you fail with an early goal, it can hurt your entire change initiative.

 -         We Rewarded the people who help the organizations to meet the targets.

Step 7: We Build on the Change

-         It is important that you manged to build a steps and process for change within the organizations. Kotter argues that many change projects fail because victory is declared too early. Real change runs deep. Quick wins are only the beginning of what needs to be done to achieve long-term change.

 -         Launching one new product using a new system is great. But if you can launch 10 products, that means the new system is working. To reach that 10th success, you need to keep looking for continuous improvements (https://www.dr-glennhole.org/how-can-an-organization-build-a-culture-of-continues-improvement ).

         Each success provides an opportunity to build on what went right and identify what you can improve inside the organization.

 What we did in this case:

 -         After every win, we analysed what went right, and what needed to be improved.

 -         We set goals to continue building on the momentum we achieved.

 -         We worked with continuous improvement inside the organization.

 -         We kept ideas fresh by bringing in new change agents and leaders for the PMO change coalition.

Step 8: We Anchor the Changes in the Corporate Culture

-         To build everlasting change within the organization one need to make any change stick, it should become part of the core of your organization. Your corporate culture often determines what gets done, so the values behind your vision must show in day-to-day work.

 -         Make continuous improvements efforts to ensure that the change is seen in every aspect of your organization. This will help give that change a solid place in your organization’s culture.

 -         It is also important that your company’s leaders continue to support the change. This includes existing staff and new leaders who are brought in. If you lose the support of these people, you might end up back where you started.

 What we did in this case:

-         We talked about progress every chance we got. Success stories was told about the change process in each of the main project and the subordinated projects.

 -         We include the change ideals and values when we were hiring and training new staff in offshore sites.

 -         We officially recognize key members of the PMO change coalition, and make sure the rest of the staff – new and old – remembers about their contributions.

 -         We create plans to replace key leaders of change as they move on and out of the company. This helped to ensure that their legacy was not lost or forgotten.

 -         One must work hard to change an organization successfully. When one plan carefully and build the proper foundation, implementing change can be much easier, and one can improve the chances of success. If you are too impatient, and if you expect too many results too soon, your plans for change are more likely to fail.

 -         It is important to create a sense of urgency, recruit powerful change leaders, build a vision, and effectively communicate it, remove obstacles, create quick wins, and build on your momentum. If you do these things, you can help make the change part of your organizational culture. That is when you can declare a true victory. then sit back and enjoy the change that you envisioned so long ago.

 Good luck with your change process!