PDF Summary:Leading Change, by John P. Kotter

In Leading Change, John P. Kotter argues that in a fully globalized and ever-evolving economic environment, successful firms are those that can implement successful long-term change. Successful organizational change, Kotter argues, depends on the quality of leadership―people who can articulate a vision, inspire belief and confidence in it, and empower mid-level and junior managers to implement it on a tactical level. He outlines a set of strategies and techniques to help change leaders shape and direct organizational transformation, including establishing a sense of urgency, articulating a clear vision, setting measurable benchmarks to gauge success, and changing the culture to ensure that the new way of doing things lasts.

In this guide, we’ll explore these strategies, and we’ll examine how they compare to advice from other management experts who weigh in on similar ideas.

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Strike the Right Balance With Your Vision Statement

Kotter argues that a good vision is realistic but ambitious, and strikes the right balance between being expansive and overly specific.

It can’t be so vague as to be meaningless—it must be specific enough to provide focus and make it actionable. For example, if the vision statement for a content-streaming company was, “Our vision is to make customers happy,” that wouldn’t offer any meaningful guidance on how its employees should behave on a day-to-day basis, nor would it make any concrete promise or guarantee of value to customers.

On the other hand, the vision can’t be so specific that it limits individual freedom of action by employees, stifles initiative, or is unresponsive to changing circumstances. For example, if that content-streaming company’s mission statement was, “Our vision is to provide streaming content, primarily for urban-dwelling, upper-middle-class audiences, offering a 60/40% ratio of licensed to original content—for $8.99 per month for standard definition, $13.99 for high definition, and $17.99 for HD and 4K Ultra HD,” this would be far too narrow. It locks the company into its current way of doing business and provides no wiggle room for innovation.

The ideal mission statement for such a company would instead be something like, “We strive to be the world’s premier destination for streaming, ad-free digital content, offering our users an unmatched and diverse selection of feature films, television shows, and documentaries from content creators all over the world.”

Your Vision Statement Doesn’t Guarantee Success

It’s important, however, to not make the mistake of crafting a great vision statement and then just assuming that things will fall into place by themselves. In Built to Last, Jim Collins and Jerry Porras warn that while having a vision statement can be useful, it’s only the first step. A vision statement, they write, doesn’t guarantee greatness. The real work is in bringing the vision to life. According to Collins and Porras, visionary companies try to bring the vision to life by incorporating their core values into everything they do.

For example, one of a retail chain’s values might be, “We strive to provide excellent service and an unmatched buying environment for all our customers.” This will then inform how employees in every department and at every phase of the sales cycle will do their jobs—from sourcing the best suppliers to the layout and decor of physical stores to the demeanor and presentation of frontline staff.

4. Sell the Vision

According to Kotter, once you’ve developed a sense of urgency, assembled a credible and empowered coalition to lead the change effort, and articulated a clear vision that can anchor every decision and action taken within the organization, you’re ready to sell the change project to the broader organization.

But often, the sheer complexity and scale of change baffles people and makes them fearful to engage or buy into the effort. Kotter argues that some of this can be attributed to people’s natural resistance to change—they worry that change offers no benefit to them, or that they will be made worse off.

(Shortform note: This ingrained resistance to change is closely related to the cognitive bias known as loss aversion. Loss aversion causes people to prioritize avoiding potential losses more than achieving potential gains, even if those losses and gains are equal. For example, if you receive a windfall of $500, it will probably bring you a certain measure of happiness. But if you then lost that $500, loss aversion would cause you to experience unhappiness far greater than the happiness you felt upon receiving the money. This cognitive bias creates a strong propensity toward conservatism in decision-making and a desire to keep things as they already are.)

Avoid Jargon

Kotter advises that to sell their vision, change leaders avoid using overly technical or industry-specific jargon, even when they’re communicating internally. Not only is jargon hard to understand, but it can alienate people who aren’t familiar with it, leading them to feel shut out and ignored.

Instead, leaders should strive to be clear and concise in their language, articulating the vision plainly, clearly explaining why it’s important, and outlining the changes that are going to be made in order to bring it to fruition.

(Shortform note: The tendency to use jargon is not just something seen in the business world—it’s also a significant problem for the scientific community as it struggles to convey its ideas to the general public. According to one study, the use of overly technical language in scientific reports and articles undermined participants’ confidence in science, made them feel locked out of the discussion, convinced them that they were “bad” at science, and made them less likely to read scientific materials in the future. In fact, to help researchers make their publications more accessible, one Israeli researcher created an online tool called the De-Jargonizer that rates and assesses the accessibility of scientific texts.)

Foster Open Dialogue

Kotter encourages the leaders of the change coalition to foster an open dialogue regarding the vision and strategy for the organization’s future, even from people who may disagree with that vision and strategy. Leaders should create an environment where feedback and input from all employees is welcome.

This empowers people in the organization and gives them a sense of ownership in the mission. This will encourage buy-in and foster commitment because it makes people feel that they are helping to guide and shape what’s happening with the organization, rather than simply being dictated to. Once people feel they’ve been heard and listened to, they’re far more willing to commit to a course of action, even if they have disagreements—in fact, most people don’t expect full agreement with their ideas, they only want the respect of having their perspective considered.

(Shortform note: Not fostering open and inclusive dialogue can lead to a dysfunctional team. In The Five Dysfunctions of a Team, Patrick Lencioni writes that dysfunctional teams—ones that fail to achieve commitment and lumber from one non-decision to the next—often develop when team members fear the kind of conflict and disagreement that Kotter encourages. When teammates haven’t had the opportunity to hash out disagreements through productive, ideological debate, they feel that their ideas haven’t been given proper consideration. It’s also harder to make any decision when you haven’t considered alternative points of view. If people feel that better alternatives haven’t been explored, they’ll be reluctant to move forward with a decision. The result is a lack of commitment—ambiguity about goals and confusion regarding individual responsibilities.)

5. Remove Roadblocks

Kotter writes that when you’re spearheading an organizational change effort, you’re inevitably going to face obstacles and roadblocks on your way to transforming your organization. As a leader, you’ll need to navigate these carefully, because roadblocks to change can be deeply disempowering and discouraging for those who are trying to guide the organization along a new path.

He notes that barriers to reform often come from a few common sources:

• Bosses and managers standing in the way
• Lack of proper training
• Poor organizational structure

Overcome Resistance From Managers

Kotter writes that junior and middle managers often feel that they will be the “losers” in a reorganizing process. Complicating matters, these managers are often people who have been with the company for a long time and have advantages of seniority, institutional knowledge, popularity, and power that can make them effective at standing in the way of needed change.

For example, a top-performing sales manager who sees herself personally benefiting from the existing way of doing things in her company may be highly resistant to changing it (even if that way of doing things is bad for the company as a whole). And because she brings in a lot of revenue, she’s likely to have a lot of clout within the organization and to be effective at convincing or pressuring others to stand in the way of change.

Kotter advises that for change leaders, there’s only one option: Confront these holdouts early in the process. Tell them what’s expected of them for the good of the organization. If they’re unwilling to get on board and keep throwing up roadblocks, then they’ll need to be replaced.

(Shortform note: Other commentators note that there may be additional reasons, other than self-interest, that make people resist change, and that it’s important to address these root causes. Often, the resistance is rooted in a poor understanding of why the change needs to happen, cynicism based on past failed change efforts, or fear of job loss. Once change leaders have a better understanding of these root causes of resistance and dissatisfaction, they can draft a better communication and response strategy to mitigate them.)

Strengthen Your Team With Training

Kotter writes that proper and regular training is essential for any organizational transformation to succeed. When you haven’t trained employees properly, you’re going to suffer from a lack of skilled people on hand to actually implement the change.

Moreover, if an organization has been doing the same thing for a long time, it’s likely that it’s learned and internalized some bad habits over the years. Those entrenched bad habits need to be unlearned and replaced with good habits—and regular training is one of the best ways to do that.

(Shortform note: In The Ultimate Sales Machine, Chet Holmes writes that training needs to be consistent, regular, interactive, and fun. Real skill-building comes when employees are engaged in the training and participating in shaping their experiences as they’re learning. Role-playing exercises can be great for this, helping your team direct their own education while working through real-life scenarios.)

6. Set Short-Term Benchmarks

Kotter writes that every multiyear change effort needs to build in short-term or intermediate benchmarks and goals—and that those goals need to be publicly celebrated when they’re met.

He warns that people become disillusioned if they don’t see tangible progress toward long-term goals being acknowledged and celebrated. Tangible progress also helps to blunt the criticism and resistance of change opponents. The foot-draggers will have a harder time making their case and winning others over to their cause if the organization can point to real, measurable progress being made.

(Shortform note: You can break the intermediate goals down further into actionable steps so that employees can see that even these goals are being accomplished piece by piece. Thus, if one of your short-term goals is to add five new people to the sales staff by the end of the quarter, actionable business objectives might include posting the jobs to Indeed, screening candidates, and scheduling interviews by the end of the month. Each of these steps is a visible measure of progress toward the company’s goal.)

Track Progress

Kotter writes that organizing and tracking wins is more often than not the job of managers who deal with the actual day-to-day implementation of the change strategy. In order to meaningfully measure progress, however, managers need good data systems to track and identify midterm benchmarks. You can’t acknowledge and celebrate what you don’t measure.

Track Goals With the OKR System

In Measure What Matters, John Doerr argues that the key to developing useful metrics is to identify your company’s objectives and key results—OKRs.

Your objective is your ultimate goal, what you and your team exist to achieve. All objectives must be measurable, concrete, and action-oriented.

Your key results are the rungs on the ladder leading to your objective. These are the sub-goals that facilitate the achievement of your ultimate objective. To implement the OKR system, Doerr advises that you need to start by identifying the most important tasks your company needs to accomplish within a set timeframe. Once you’ve identified your company’s objectives, you then direct departments, teams, and individuals to identify their own objectives. Every objective, regardless of whether it’s an individual or department objective, should align with the company’s top objectives.

Keep Your Foot on the Gas

While Kotter stresses the importance of celebrating short-term wins, he warns that this can easily lead to a slide back toward complacency if people aren’t careful.

Remember, saboteurs will always be on the lookout for any opening to derail the process. All too often, the achievement of these intermediate goals provides them with just the opportunity they’re looking for. It’s all too easy for them to point to these partial victories and say, “See, we fixed the problem. There’s no need to press any further. We can pat ourselves on the back and get back to our regular routine now.”

As a change leader, it’s crucial that you don’t let these attitudes pervade your organization. Until the change is ingrained, woven into the organizational culture, and self-sustaining, it remains vulnerable to sabotage and complacency.

(Shortform note: The complacency that sets in with short-term success can be seen in the world of professional sports. One study analyzed all NBA basketball games from 1993 to 2009 and found that teams up by a point at halftime were actually more likely to lose the game than teams down by a point at halftime. This could be an indication of increased motivation and triggered loss aversion by the trailing team, but it could also point to complacency on the part of the leading team.)

7. Change the Culture

Kotter writes that culture is the set of norms, behaviors, priorities, and shared values that persist within a group or institution over long periods of time and are passed on from generation to generation.

It’s important to understand how cultures are formed and sustained, he argues, because any organizational changes will likely be illusory unless there is a transformation of the broader culture because policy, practice, and process are all ultimately downstream from culture.

If the culture isn’t remade, as soon as the change-leading CEO or coalition leaves the organization, people will naturally revert to the old ways of doing things. Of course, culture is difficult to reshape because it can’t be created solely by managers in a top-down process. It has to develop organically over time by hundreds or thousands of people. In the course of change, this often means that aspects of the old culture need to be eliminated if the vision is to be fulfilled.

For example, if your company has a goal of launching a business-facing product line to complement its consumer products, that might require developing a more formal, traditional corporate culture to present a more staid and conservative appearance to potential clients. This might mean changing some elements of your early, casual startup culture and doing things like instituting formal dress codes and eliminating perks like Summer Fridays or take-your-pet-to-work day.

(Shortform note: Commentators note that affecting culture change is one of the hardest things to do as part of a change effort. Although Kotter argues that culture change cannot be imposed top-down, some argue that leadership does, in fact, play a significant role in reshaping the values, practices, and assumptions that comprise an organization’s culture. One approach is for leadership to use a vision to tell a story about the organization’s future. Once the vision is in place, leaders hand the reins to managers, who implement new procedures, define new roles, and reorganize budgetary resources to begin actively changing the culture. If these first two methods still don’t produce culture change, as a final measure, coercion and punishment can become necessary—including firing those whose attitudes and values no longer align with the culture.)

Hire Based on Culture Fit

Kotter recommends that change leaders prioritize changing the organization’s culture and ensuring that those changes stick. Part of this is through having current employees participate in regular training sessions to instill in them the new ways of thinking and behaving, as we’ve explored.

But, Kotter also says that you should also take cultural fit into consideration in your hiring decisions when evaluating prospective employees. Indeed, candidates should be evaluated not just on the basis of their skills and experience, but also on how well their personalities and values harmonize with your organizational culture.

Personality vs. Experience: Top Entrepreneurs Weigh In

The subject of whether to hire based primarily on experience or personality is a controversial one—some of the world’s top entrepreneurs are split on the question.

Virgin Group founder Richard Branson favors hiring based on personality, emotional intelligence, and cultural fit with the company. Branson argues that, while job-specific knowledge can always be taught, the emotional or temperamental attributes that make someone a good or bad fit for a company are innate. For Branson, if someone has the wrong personality, no amount of training can overcome that.

On the other hand, Robert Herjavec, founder and CEO of the Herjavec Group (and one of the judges on Shark Tank) says that a candidate’s skill set and level of focus are the most important attributes when it comes to hiring decisions. Herjavec says that an interview needs to be structured to help the interviewer distinguish between good performers and those who are merely good at presenting themselves in interviews.

Culture Change Comes Last

Crucially, Kotter writes, culture change must be the final step in your transformation effort. It is only when behaviors and attitudes are changed and the holdouts leave (either voluntarily or through termination) that a new culture and set of norms can flourish.

Once the culture begins to turn, the changes you’ve instituted will start to become self-perpetuating. They’re no longer new and don’t require constant feedback and correction; instead, they just become the way things are done.

(Shortform note: Some commentators argue that cultural change can only happen when small victories change an organization’s collective understanding of what’s possible. This inspires confidence among people that they can do more. Thus, it’s usually a mistake to start the change process with big, complex planning steps. Instead start by addressing the most pressing performance challenges. Once these immediate challenges are successfully overcome, more strategic concerns can be tackled. As the organization demonstrates greater capacity to achieve, change leaders can begin to set more ambitious strategic goals.)

Managing Change in a Complex World

In addition to outlining specific techniques you can use to effectively bring about change, Kotter also examines change from a broader perspective, looking at how and why it’s so important. He notes that because companies are so interdependent on each other and on the wider economy, their ability to evolve is crucial. He notes that this interdependence leads to challenges but also to opportunities, allowing leaders to arise from a wide variety of areas.

Managing Interdependency

Kotter writes that leading change in a complex world is a team sport. It depends more on building effective coalitions, systems, and cultures than it does on any one individual’s talent or experience.

The reason for this is that organizations have become extraordinarily interdependent. Kotter argues that whether your organization is a small business, global corporation, or nonprofit, it is deeply affected by events happening around the world entirely beyond your control.

For example, if you’re a medium-size U.S.-based manufacturer of nails and screws selling primarily to neighborhood hardware stores, your business depends a great deal on the availability of cheap imported steel from China. Things that disrupt the global supply chain—like tariffs or the Covid-19 pandemic—can have a major impact on your business.

And, as Kotter points out, these interdependencies don’t just apply to things happening outside your organization. Indeed, your organization is highly internally interdependent. Everything you do to change one process or department affects every other process and department. All of this makes change much harder to manage. What starts as one isolated project becomes an organization-wide effort. This is one major reason why change efforts require large, representative, and collaborative coalitions to pull off successfully.

The Three Types of Interdependence

There are different ways in which your organization can be interdependent, and the distinctions between them can affect how you approach change. Sociologist James D. Thompson identifies three types of organizational interdependencies:

• Pooled interdependence, in which each department or unit operates (for the most part) independently of the others, but they collectively contribute to the same outcome. Managing this type of interdependence usually means creating a standard set of rules and operating procedures.

• Sequential interdependence, in which one department cannot produce its output until another department has completed its output—the most well-known example of this structure being the assembly line. Managing this type of interdependency is typically a matter of implementing clear timetables and schedules for outputs and inputs.

• Reciprocal interdependence, in which the inputs and outputs of all departments are related on a cyclical, never-ending basis—most medium- to large-sized businesses operate on this model, where if one part of the cycle falters, the entire model collapses. The way to manage this type of interdependence is through close communication and shared access to information.

Developing a New Generation of Leaders

This close interdependence inside modern organizations gives people from anywhere within the organization the opportunity to become leaders. Because there are so many more collaborative projects, a far greater number of people gain hands-on experience in solving organization-wide problems and forging important relationships with stakeholders from different departments and different levels.

According to Kotter, this democratization of the leadership pipeline is important, because leadership is not some “innate” quality that someone either has or doesn't have. With the right experiences and guidance, many people have the potential to become leaders.

New leaders rise from the bottom up. The key is continuous learning, adapting, and being willing to put in the work. Crucially, Kotter writes, successful leaders are humble people who display a willingness to learn, listen to others, and admit their own shortcomings.

Your personal talent and intelligence will only get you so far. It’s your willingness to work hard, lead by example, and rally others to your vision that will enable you to become a true change leader.

The Talent Myth

In Peak, Anders Ericsson explores in greater detail the value of hard work that Kotter discusses. Ericsson writes that there exists a highly deterministic idea that your abilities are limited by your genetic characteristics. This comes back to the idea of “natural” talent: Some people simply have it, and others don’t. But, he argues, this isn’t true—except for people who suffer from severe physical or mental limitations, with the right practice, just about anyone can improve in any area they choose.

Ericsson warns that the belief in “innate” talent can even become self-fulfilling prophecies—people who develop the idea that they’re “bad” at something never practice, and, therefore, never get good at it. Meanwhile, children who show early promise tend to be lavished with attention and praise from teachers and parents and receive more training and resources to help them develop their skills than children who struggle. The “gifted” students don’t possess some innate ability that others don’t, they’re just given more of an opportunity to develop.