As a leader, how do you respond to change - embrace or adapt?

Sudhakar Reddy Gade
I
9
min read
As a leader, how do you respond to change - embrace or adapt?
"Is is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change." - Charles Darwin

Change is the one constant in everyone's lives. Even though we know this fact, most of us struggle with it - when change crosses our path, we resist it, fight it or try to deflect it - like those are real options. And when we are pinned against the wall, we begrudgingly embrace change and go along with it.

You could fall anywhere on the spectrum from 'I am completely resisting change' to 'I am proactively preparing for change.'

Like with everything else, different leaders and organizations have other methods to deal with change. And you could fall anywhere on the spectrum from 'I am completely resisting change' to 'I am proactively preparing for change.' Depending on how you position yourself on that spectrum, your strategies to challenges in dealing with the change - well, change!

We have seen many companies go through drastic changes with time and deal with it in different manners. Owing to resistance to change, some of them have failed so abysmally that they have become classic case studies.

Let us look at a couple of examples:

Kodak

When you think of companies that have failed to adapt to change, Kodak is the first one that comes to mind. Kodak, founded in the late 1880s, established itself as a market leader in photography by the 1970s and filed for bankruptcy in 2012. For more than a hundred years, Kodak was at the forefront of creating memories and making it accessible and affordable for the general public. They democratized photography with their slogan 'You press the button, we do the rest'.

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How it worked:

People bought a Kodak camera, purchased a Kodak film, and clicked pictures. They later brought it to a Kodak photo studio where the film was developed, and photos were printed. The primary revenue product was their film and printing business and not the sales of cameras.

The first hit that Kodak got was when photography went the digital route. When digital came in, the sales of films went out. Though Kodak reinvented the camera to make it a digital one, it was a late adopter to this trend. Yet their focus remained on the sales of prints and printers.

The second hit was when photography became social. Once the smartphones hit the market, the digital cameras saw sales quickly spiraling downward. What is surprising is that, long before Facebook was born, Kodak made a business move to invest in an online photo-sharing platform called 'Ofoto'. Instead of becoming the first Instagram of the world, they went down the path of getting people to print more digital images.

In 2012, while Kodak was filing bankruptcy, Facebook was buying Instagram for $1 billion. It could have been Kodak that was closing that deal!

Why did Kodak fail?

1. They failed to reinvent themselves

Kodak reacted to the disruptive change that was affecting their industry and even diverted sufficient resources to participate with the emerging changes and demands of the market. But they failed to understand and embrace change that the disruption offered indeed. Even though they created digital cameras and understood early on that photos would be shared online, they failed to realize that photo sharing was the new business - not printing digital photographs.

2. Complacency

The organization's leaders and the organization did not drive this change with a sense of urgency. They needed to rally the need for change around this vast opportunity, that completely bypassed them and resulted in their bankruptcy.

3. Lack of organizational agility

Kodak looked for solutions with a rigid mindset and lost out on the clear understanding and pivoting to the digital age and social sharing of photography. They avoided risky decisions and stayed with the status quo without rethinking their entire business model based on the photography market's disruptive changes.

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Nokia

In less than a decade, the Finnish mobile company, Nokia became the mobile phone revolution star. It quickly grew and became one of the most recognizable brands in the world. At its peak, Nokia enjoyed a scrumptious 40% market share. But it also declined as rapidly as it grew - ending with Microsoft acquiring the business in 2013.

With a young leadership team at the top with a healthy risk appetite and great vision and bold management choices, they could scale up quickly and take over the market. When they had issues with the supply chain management unable to support their rapid growth, they put some systems and processes in place, which further enabled them to scale up much faster than their competitors.

Nokia was a world leader in the phone market for a long time before the Apple iPhone started to take over their market share. In 1998, Nokia was the best-selling brand for mobile phones - in the world. Within four years, their operating profit quadrupled. When Apple introduced the iPhone in 2007, it had only a 5% share of the global market - while half of the world's smartphones were from Nokia. Though Nokia strategized and created a new model to compete with the iPhone directly, they failed to match it. Slowly, the quality of Nokia's phones declined, and their market share declined sharply - within just six years, their market value fell by 90%.

Why did Nokia fail?

1. Technology

Nokia's technology (and design) was inferior compared to Apple's. The top leaders lacked technical knowledge, which resulted in short-sighted and myopic decision-making on the technological fronts in terms of goal setting and understanding technological limitations. On the other hand, the senior management at Apple were all engineers, which further helped their cause.

2. Attitudinal issues of the top-level management

Nokia went through a phase of having fearful and temperamental leaders at the top versus the dynamic young and risk-taking ones who preceded them. This fear percolated through the system and showed up in various formats at every level.

3. Lack of vision

They were unable to envision their industry's future and how they could be prepared for it.

What can we learn from these examples? How can you, as a leader, embrace change and be ready?

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After taking over General Electric as their CEO Jack Welch helped build 14 distinct businesses - including aircraft engines, medical systems, engineering plastics, significant appliances, NBC television, and financial services. Welch took aggressive strategic redirections to make this possible.

Welch focused his company's energy on its operations, calling it the "strategic circles"—the core manufacturing units. And he envisioned that all these independent verticals would become the leaders of their markets. And he achieved it - GE achieved world market-share in almost all of its 14 businesses.

How did Welch do this?

1.  He starts an organization-wide drive to recognize and remove unproductive work to enhance the potential of their employees. As a result, they eliminate or reduce paperwork, increase speed in decision cycles, move information faster through the organization, provide quicker and more effective feedback, and reward behaviors that support this change- like openness, honesty, and self-confidence.

2.  He embarked on a journey to transform attitudes in the organization by encouraging people at all levels to take ownership and create a sense of self-worth. He wanted to break away from the hierarchical and bureaucratic constraints and focus on personal power. For example, Welch told his employees at the factory level, "Make decisions yourself. If you're confident that you are right about something, don't just sit back and give in. You can change things, and urge change upon your boss".


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Similarly, when Henrik Poulsen took over Denmark's biggest energy company, Danish Oil and Natural Gas, in 2012, they were going through a financial crisis as the price of natural gas was plunging by 90%. Instead of going into crisis -management mode, he chose to pivot and make radical changes to build 'a new company.' He even changed the name of the firm to Ørsted to mark the fresh start

They were one of the few businesses that made radical changes to build new core businesses to find new sustainable growth areas.

"We looked at the shift to combat climate change, and we became one of the few companies to wholeheartedly make this profound decision, to be one of the first to go from black to green energy." - Henrik Poulsen

But change is never easy, especially on that scale. When Ørsted rid its oil and natural gas businesses, they lost business earnings in huge numbers. They had invested in offshore wind power to fill in that financial gap, but it proved to be too expensive, more than double the onshore wind's price.

Poulsen undertook like an impossible task - he created a plan to reduce offshore wind's price by increasing the demand and scale for it. As a result of this decision, the company cut the cost of building three new ocean-based wind farms by 60% and increased its net profits by $3 billion. Currently, Ørsted is the world's largest offshore wind company.

Sometimes change is what you need to survive, to stay afloat, and to grow. As a leader, you must be able to kill what's not working, burn it to the ground, if the need is, and rebuild.

How can you, as a leader, practice embracing change?

1.  Look for opportunities when everything is comfortable

2. Identify what you might need to change

3. When you decide to make changes - share a purpose with your team

4.  Promote a culture of experimentation and risk-taking in your organization?

5.  And lead by example - Do, don't tell

The verdict is in - in changing times, especially these unprecedented times. An organization's survival depends not on its size, performance, or current market position - but on its ability to embrace change. And as leaders, it is our imperative to lead in this direction.

We hope you got some great insights from this blog. Its now time to apply it. Get started with peopleHum for free today. No credit card needed.

Tags
change management
positive change
changing workplace
leadership strategies
leadership development
leadership styles
organizational culture

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