Leading Change without transformational failure – A perspective on IDC
Strategy

For some time now, we have followed publications in numerous online and print media about efforts that are being made by Zambian companies to enhance their businesses. Many have cited harsh macro-economic conditions that have lead some into an almost death spiral. On the list of those companies that we have keenly been interested in are the State Owned Enterprises (SOE). At the moment, many of the SOEs are at cross roads, trying to rediscover how to re-create sustainable competitive advantage.

At the helm of their transformation is the IDC. When you speak to many natives, their mandate is often misunderstood. We have published a number of articles that bring the table what we believe and understand is their mandate based on their official position through their website and various press releases. However, when one reflects deeply about this mandate of theirs, one realises that in order for them to achieve that ambitious and audacious mandate of creating a million jobs, they will have to transform many of the SOEs that are in their portfolio.

Many of the SOEs, are fraught with legacy concerns that have seen some grapple with dogmatic business setups that have failed to take on the new disruptive approaches to business. We at FIZ like to call these the “new economy”. For those on the outside, it is easy to presume that most of them are not doing anything about their current position. Some might even go so far as to believe that they are stuck in their ways. However, what many don’t realise is that change is not an event, but a process.

In John Kotter’s paper, “Leading Change – Why transformation fails” for Harvard Business Review, he identifies some of the reasons why  most major change initiatives – whether intended to boost quality improve culture, or reverse a corporate death spiral fail or at best produce what he terms as luke warm results. He believes that managers of these firms needs to start looking at change as a process.

Now this may sound too academic considering Kotter’s proposals may not take into consideration some of the geopolitical situations that are omnipresent in many of the SOEs that have to deal with agency issues in terms of their relationship with the principal. However, when one delves much deeper into why agency issues are contentious, it is clear that actors are bounded rational and information asymmetry exists. Hence why there are cases of failed attempts to change that are as a result of pressure from principal to accelerate the process leading managers to skip stages.

Kotter is very clear that shortcuts do not work. Furthermore, another critical mistake he identifies is managers declaring victory too soon which has the inadvertent consequence of deflating momentum and reversing hard won gains. These could be devastating to the entire transformation process hence the need to understand the stages of change and the pitfalls that are unique to each stage.

The framework that Kotter proposes to help in transforming organizations includes the following stages: 1. Establishing a sense of urgency. 2. Forming a powerful guiding coalition. 3. Creating a vision. 4. Communicating the vision. 5. Empowering others to act on the vision. 6. Planning for and creating short-term wins. 7. Consolidating improvements and producing still more change. 8. Institutionalizing new approaches.

It is important to note that each of these stages requires that the process is fully unpacked and understood. The hardest part for IDC, if it is to bring the change and be the change agent, is translating these efforts over a portfolio that has companies in several different industries. It is hardly a “one hat fits all” but it is certainly a starting point to consider. Furthermore, some of the outcomes of this process may require IDC to make some serious choices because certain change may demand a pound of flesh before the desired result can be achieved. This is where the conflict between change being an event and being a process will rear its ugly head.

 

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