Does your family business have a true sense of urgency? Harvard Business School's professor of leadership John P Kotter believes creating a high enough sense of urgency among a large enough group of people is needed in almost every organisation in the world given the current fast-moving and turbulent business climate.
Kotter's new book, A Sense of Urgency, aims to show business leaders how to successfully effect change within their organisation by getting people to create a culture where complacency is frowned upon. And this applies particularly to family businesses.
"Without a senior management who know much about large change, a family enterprise becomes bogged down, doesn't even try much to make big moves, and non-family competition passes them," says Kotter.
"The biggest change family businesses face is moving to the next generation. Going from generation two to generation three can be a more difficult change than if Shell Oil were trying to put in SAP software globally, a task which, if you know SAP software, is monumentally difficult."
Extract: The consequences of little true urgency in an era of change
(chapter 1, page 11)
We live in an age when change is accelerating. This observation, hardly even news, cannot be overemphasised. The argument that change is always with us, or that change is cyclical, misses the point entirely. Both may be true over a millennium. But for now, and for the next five or ten years, the rate of change will continue to go up and up, with huge consequences for nearly everyone.
New technologies alone can affect all organisations, even firms in older and mature industries. Globalisation can open markets that, to be exploited, demand new offices, factories, employees, and more. International political turbulence can upset the most carefully crafted plans. A merger can produce a gigantic competitor overnight.
Countless statistics demonstrate these trends. Two of my favourites: patents filed in the US have gone from 132,000 in 1986 to 211,000 in 1996 and on to 452,000 in 2006, showing both huge increases and an accelerating rate of growth.
Total merger and acquisition activity in the US has gone from $173 billion in 1986 to $469 billion in 1996 to $1,484 billion in 2006, again huge jumps and increasing rate of increase.
External change must be seen to be acted upon. With an insufficient sense of urgency, people don't tend to look hard enough or can't seem to find the time to look hard enough. Or they look and do not believe their eyes, or do not wish to believe their eyes. Even if seen correctly, and in time, external change demands internal change. More processes need to be made more efficient. New work methods and products must be created. Organisations need to be reorganised to focus more on customers or growth.
With complacency or false urgency, none of these changes happens fast enough, smart enough, or efficiently enough. From years of study, I estimate today more than 70% of needed change either fails to be launched, even though some people clearly see the need, fails to be completed, even though some people exhaust themselves trying, or finishes over budget, late, and with initial aspirations unmet.
A 70% failure rate is an enormous drag on a company, a government, an economy, or a society. Investors are obviously hurt, but the pain goes in all directions: to employees, customers, our families.
We know it does not have to be this way. I have documented many cases where people have handled the challenges of a changing world remarkably well. In virtually all these cases, people use a basic formula, a pattern with eight steps that I have described at length in three of my books: Leading Change, The Heart of Change, and Our Iceberg is Melting. Used correctly, this method can produce inspiring results. The first step in that formula involves creating and sustaining a sense of urgency that is as high as possible, among as many people as possible.
Most organisations handle step one poorly. Many fail elsewhere too. Smart people put the wrong group in charge of a new initiative. They don't get the change vision entirely right. They greatly undercommunicate to people who need to buy in. They don't eliminate enough obstacles for those trying to execute a change. They don't achieve enough short-term wins to give them credibility and momentum. They let up before the job is done. They don't make the right moves to make a change stick.
But the very best available evidence, everything I have seen in my work over the years, suggests that the number-one problem they have is all about creating a sense of urgency—and that's the first step in a series of actions needed for success in a changing world.
Reprinted by permission of Harvard Business Press. Excerpt from A Sense of Urgency. Copyright 2008 John Kotter. All rights reserved.