Role of Leadership in Change Programmes

Avanthi V.S.
PGDBM 2003-2005
Dhruva College of Management

"It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change"
-    Charles Darwin

Until the mid 1980's, the pace of change was relatively slow, incremental but continuous. Competition was limited and predictable. Customer expectations were low. But since then, rapid advances in technology and the ever increasing globalisation of the market place have been driving dynamic shifts in the social, cultural, political and economic environment around the world. As a result, the slow, incremental change has suddenly become rapid, discontinuous change. The change has spared nothing, not the market growth, customer demand, product life cycles the nature of neither competition nor the business environment in general. Thus, the future promises not only to be turbulent but also unpredictable. It is expected to give rise to rapid obsolescence.

Alvin Toffler says that people who fail to learn, unlearn and relearn will be termed as illiterate in this new millennium. The same applies to organisation also. In attempting to respond to this very different technology economy and geopolitical environment, organisations are sought to become more flexible, more result-focused and more fast facing. They face the challenge of performing well, constantly changing and quickly adapting.

Change involves people, and can call up emotions, uncertainties and inconsistencies. Therefore, simply managing change is insufficient. Successful change requires leadership. The old saying, "You can lead a horse to water, but you can't make it drink" provides good advice, though slightly off the mark. It might be better stated, "You can manage a horse to water, but you must lead it to drink." Getting the horse to the water is a control issue that can be managed. Getting the horse to drink is a behaviour issue that demands leadership.

Business change is a complex, multi-faceted undertaking. There is a growing realisation that many business changes cannot be accomplished easily. They need structured, planned logical activities, which are rightly timed and a clear vision and strategy of the organisation. But, for all these things to happen, there must be a guiding and a leading force. That is a strong leadership.

The difference between a great company and an ordinary one is the quality of its leaders. Almost without exception, every company that has achieved success in the last century has had great leaders. The reverse is also true.

A leader is interpreted as someone who sets direction in an effort and influences people to follow that direction. Leadership is all about inspiring ordinary people to do extraordinary things. Gandhiji was a great leader. He could get millions of illiterate oppressed Indians to do extraordinary feats of resistance to British rule.

This is a leadership paradox: Enterprises must become flexible and adaptive and this requires deep cultural changes and strong leadership, however, powerful bosses may impede the creativity, risk-taking and innovation required to become more flexible and adaptive. He is the one who steps ahead, with the courage, capability and credibility to inspire change and to create new solutions.

"Leaders do not make plans, they do not solve problems, and they do not even organise people. What leaders really do is prepare organisation for change and helps them cope as they struggle through it." 
John P. Kotter

He monitors the change process, anticipates barriers, determines possibilities of success and develops strategies for making the change succeed with efficient use of time, people and resources. Leaders face the challenge not only of recognising when change is coming, but also of knowing how to manage it and keeps managing it, after the desired state is reached.

If we go into history and see why leaders have succeeded in change, we can know that, its because they have been able to identify a goal that appears almost impossible. They have been able to get their followers to accept that the seemingly impossible goal is achievable; they have been able to give them the confidence to achieve this goal. That is the inspirational role of leadership. Leaders have succeeded when they set themselves up as examples and got people to replicate what they have done as role models.

Narayana Murthy, Chairman and CEO of Infosys once said that he admires the longevity of Hindustan lever, compassion of TATA's, patriotism of the Bajaj's, quality standards of TVS, dynamism of Ambani's, and customer friendliness of HDFC. In other words, according to Murthy, leadership in the new millennium is made up of these critical attributes.

The most important task for leaders in the face of adaptive challenges is mobilizing people throughout their organisations to do adaptive work. Leadership is crucial in times of change and it was James McGregor Burns who first coined the term 'transformational leadership' in his 1978 Pulitzer Prize winning book titled Leadership. Transformational leaders are people who fundamentally alter the institutions they lead, as opposed to transactional leaders who merely maintain or manage what they are given.

A leader can change an organisation in terms of its strategy, technology, structure and people. Depending on the environment the leader decides the type of change, whether it must be first order change or second order change, where according to Burke Lewin model, first order change is transactional i.e., about structure and systems where as second order change is transformational i.e., about the culture, mission and strategy of the organisation.

Employees resist change because of the surprise and fear of the unknown, fear of failure of insecurity, climate of mistrust and his predisposition towards change. It is extremely difficult to make employees overcome what James o' Toole calls, 'the ideology of comfort and the tyranny of custom'. Change brings uncertainties that a large section of average people is afraid to face. On the other hand, leaders see the context as on opportunity. The leader needs to communicate confidence and have deep understanding of fears as well as opportunities associated with change.

Leaders can overcome resistance to change using different approaches like education + communication, participation + involvement, facilitation + support, negotiation + agreement, manipulation + co-optation, explicit + implicit coercion.

A real life example comes from British airways. Having observed the revolutionary changes in the airline industry during the 80's, the chief executive of British airways, Collin Marshall clearly recognized the need of the organization to transform. The transformation that of a airline nicknamed 'Bloody awful' by its own passengers, into an exemplar of customer service. At British airways the shift from internal focus to a customer focus took place over 4 to 5 years. Employees at all levels learned to identify what and how they needed to change. Marshall overcame the resistance to change and leaded change successfully.

"If one desires a change one must be that change before that change can take place." Says Gitta bellin. People tend to blame the environment for the improper timings of the change. Peter Drucker questions these people and asks them, "what is the environment ready for? One has to seek change at the right time."

Leaders don't wait for change to happen, they plan and make change happen for the success of the organisation. They anticipate change and plan for it before hand. This is another most important attribute that distinguishes leaders from others.

In this competitive environment, which witnesses rapid changes, visionary leadership is the need of the day. Luckily, for us, corporate sector continues to produce visionary leaders who are inspiring their organizations to greater heights all the time. Be it Jack Welch or Bill gates at Microsoft, the corporate leaders of today have successfully have been able to disseminate their vision to the rank and file so that concepts like decentralized authority and empowerment cease to remain buzzwords.

In Indian business arena, till 1990's we knew only TATA's and Birla's (as leaders in business) but in late 1990's we've observed, a new generation of world-class leaders in Indian business. For instance, Ambani (Reliance), Kharsanbahi Patel (Nirma), Narayana Murthy (Infosys), Azim Premji (Wipro) etc. are effective leaders.

Today's leaders must take initiative to create leaders at all levels of the organisation, to improve their responsiveness to change. They must empower their employees to react to the situation immediately.

CEO of CISCO systems, John Chambers, had a vision of creating leaders at all levels in his organization. Let us consider an incident, which shows us that he was successful in his vision. When the Sep 11th disaster struck, he was out of town. When he called his office, he asked for the creation of a crisis communication centre and was told that a manager "already got that going". He wanted to locate all employees and their families; he was informed that another manager was "already leading that effort". His employees stepped up to lead the company when he could not do so himself. The capacity of people to exercise upward leadership is an acquired ability. It requires both mentoring from above and self-starting from below.

Let us take a concrete example of an outstanding business leader –Jack Welch.
"If leadership is an art, then surely Welch has proved himself a master painter."
Business week, May 28, 1998

Jack Welch was well known as the CEO of General Electric for transforming it into a highly productive and effective company. Experts describe him as the most influential and important business leaders of the 20th century. His leadership qualities could be mainly attributed to four key qualities: he was an intuitive strategist, he was willing to change the rules if necessary, he was highly competitive, and he was a great communicator. 

During the period, he made GE the most valuable company in the world. Analyst felt that, with his innovation, breakthrough leadership style as CEO, Jack Welch transformed GE into a highly productive and effective company.

Jack Welch was infact described as 'the most important and influential business leaders of 20th Century by some Wall Street analysts. During the first five year as CEO, Jack Welch emphasized that GE should be No.1 or No.2 in all businesses or get out of them. He disposed off the businesses with low growth prospects, like TVs and toaster ovens. At the same time, he shed more than 100,000 jobs - a forth of GE's work force – through mass layoffs. More than half of his time was devoted to "people issues". Most importantly, he had created something unique at a big company – informality. The hierarchy that Jack Welch inherited with 29 layers of management was completely changed during his tenure.

Analyst felt that Jack Welch was focused and analytical. He restructured GE's portfolio from 350 businesses during 1980s down to two-dozen core activities by late 1990. During his initial years as CEO, he either expanded internally or made acquisitions, to position all GE's businesses either number one or number two in their fields.

GE under Jack Welch transformed six sigma, which was originally intended to serve as a quality control for manufacturing, to focus on all service-related transactions.

Jack Welch's vision of 'the boundary less corporation' was to make GE into a company without bureaucracy, where people were curious, open, co-operative and always breaking down barriers. Many executives who had worked under Jack Welch went on to head more than a dozen US companies. Hundreds more held senior management positions across the globe.

Thus, Jack Welch serves as a classic example of leadership. He is the one who is responsible for successful changes in GE.  

Carly Fiorina, CEO of Hewlett Packard is a good example of a change leader in terms of organisational culture. The toughest challenge Fiorina faced was in changing the HP culture. The challenge was to keep the edge in engineering and innovation while making the employees more adoptable and responsible. Fiorina immediately introduced several changes to set things right at HP. She demanded regular updates on key units. She also injected the much-needed discipline into HP's computer sales force, which had reportedly developed habit of lowering sales targets at the end of each quarter. Sales compensation was tied to performance and the bonus period was changed from once a year to every six months.

In 2000, the increasing competition and shut down in the technology sector had affected HP's financial performance. This forced Fiorina to change the compensation structure and initiate several cost cutting measures.

She linked compensation to improvements in customer approval ratings. To develop better leadership skills, she instituted the 360 degree feed back concept. This meant that the pay for the company's managers would be based on input from employee surveys.

Fiorina tried to change HP's organisational culture in terms of its structure, people and strategy, in which she was successful. This shows Fiorina's ability to execute her plans and pull out the company from its biggest ever slump. 

Vision is one of the most important things that decide an organisation's success or failure. The vision must be in such a way that in the long run, the organisation aligns itself with the changing environment. Leader is the one who works for the success of the organisation by making it fulfil its vision.

Dhirubhai Ambani is another great leader with vision and aspiration. Dhirubhai Ambani was an exceptional human being and an outstanding leader. A man far ahead of his times, he epitomised the dauntless entrepreneurial spirit. He dared to dream on a scale unimaginable before in Indian industry. His life and achievements prove that backed by confidence, courage and conviction, man can achieve the impossible.

Under Dhirubhai Ambani's visionary leadership, the Reliance Group emerged as the largest business conglomerate in India, and carved out a distinct place for itself in the global pantheon of corporate giants. The Group's track record of consistent growth is unparalleled in Indian industry and perhaps internationally too. Today, the Group's turnover represents nearly 3 percent of India's GDP.

His unique vision redefined the potential of the Indian corporate sector as he challenged conventional wisdom in several areas. When he entered into telecommunications, his vision was that telephoning should be cheaper than a post card. He finally fulfilled his vision, as one-minute phone call costs less than a post card.

For him, his people were his most important asset. He scouted around for the best and most talented professionals, nurtured them and continuously propelled them to aim for still higher goals. These highly motivated people comprise the core of what he named: "The Reliance Family".

The Bhagavad-Gita states, "The actions of a great man are an inspiration for others. Whatever he does, becomes a standard for others to follow." This certainly applies to Dhirubhai Ambani.

Here's another example of a change leader-Azim Premji, CEO of Wipro.

On the sudden demise of his father in 1966, Premji took on the mantle of leadership of Wipro at the age of 21. At that time, Premji had only one vision - that was to build an organization on a foundation of values

Premji seems focused on just one goal: even more success. Wipro has grown from a small producer of cooking oil founded by his father in 1945 to a colossus by Indian standards: 23,000 employees, $902 million in revenues, and $170 million in profits for the fiscal year ended in March. Sales have increased by an average of 25% a year and earnings by 52% annually over the past four years.

Today Wipro is an IT Services company ranked among the top 100 technology companies globally (by Business Week). In the past two years Wipro has also become the largest BPO services company in India. Wipro's growth continues be driven by its core values.

Premji firmly believes that ordinary people are capable of extraordinary things. The key to this is creating highly charged teams. He takes a personal interest in developing teams and leaders. He invests significant time as a faculty in Wipro's leadership development programs.

Premji has a fanatical belief in delivering value to the customer through world-class quality processes. It is this that has driven Wipro's pioneering efforts on quality. Wipro was the first Indian company to embrace Six Sigma; the first software services company in the world to achieve SEI CMM Level 5 and recently it became the world's first organization to achieve PCMM Level 5 (People Capability Maturity Model). Premji equates quality with integrity - both being non-negotiable.

Today, Azim Premji proudly says, "The future will see significant changes in technology, economy and society. But what will remain unchanged is the need of the customer for an organization with a human face. We have built Wipro with the core human values in mind, along with integrity, innovative solutions and value for money, and we will use these values to grow into the future." Premji's track record suggests no one should doubt his ability to fulfill his strategic vision.

Thus Azim Premji proves that, the most important thing needed for an organizational success is, a vision accompanied by a good leadership

According to John Kotter, the key responsibilities of a leader in building an organisation that copes up with change are to

    * Create a sense of urgency
    * Create a guiding coalition
    * Develop a vision and strategy
    * Communicate the change vision
    * Empower broad based action
    * Generate short-term wins
    * Consolidate gains and produce more change
    * Anchor new approaches in the culture

Any leader who fails in any of these activities may not be successful. Leadership failure may be caused because of poor strategy decisions, inappropriate technology choices or failure in execution.

A leader must be committed to his work. He can be a role model for other employees, as he serves as a live example of commitment. A leader who is not passionately committed to the cause will not draw much commitment from others. The world will make way for someone who knows what he or she wants, because there is not much competition when it comes to passionate commitment. Nelson Mandela did not become a leader for black freedom because he was handsome or charismatic. He forged his influence across, sat in prison, refusing to compromise his commitment to freedom – because he believed it was not just an issue for himself, but not for all people.

One of the examples of an unsuccessful leader in change programs is Jacques Nasser of Ford Motors. His stewardship of Ford, which lasted for about 2 years and 10 months, was probably the most tumultuous one that the company had witnessed in the recent past.

Nasser's leader ship had come under scrutiny since the late 1999. By mid –2000 ford's market share profits, and share price began to fall. The diversification into service –related businesses also lead to conflicts with ford's dealer. In mid –2001 Nasser and bill ford began to share responsibilities in the day-to-day management of the company. However, this power sharing agreement between bill ford and Nasser did not work and Nasser was terminated in October 2001. Analysts felt that Nasser was avoiding being sandwiched between his critics from consumer and safety groups. Ford's sales dropped by 11% in 2000, more than twice the decline of the overall auto market in the U.S there. There were also problems on the employees' front. The grading system adopted from G.E had become unpopular.

Nasser wanted to transform Ford Motor Co., an automobile manufacturer, into an automotive consumer giant. To achieve this, Nasser brought in marketing professionals from other industries and diversified into service-related businesses. However, some analysts felt that Nasser, tough and tested by his years in Ford, was the automotive world's Jack Welch, a high-energy change agent who transformed the automaker from a 19th century metal bender into a consumer-focused corporation that developed long-lasting relationships with car buyers.

The Jacques Nasser example reflects the classic leadership dilemma posed by Warren Bennis about achieving a balance between transformational leadership and transactional leadership. Nasser was caught between the need to appear futuristic and the need to manage the day-to-day activities. While he presented an illumination vision, he proved to be a mediocre-if not-poor- manager of day-to-day affairs. While a motivating vision definitely boosts the morale of an organisation, the basic parameters of the organisation too must look up.


The true test of any organisation is not, whether it can win today but whether it can keep winning tomorrow and the day after. Amidst ongoing change, is a growing consciousness of a need to reshape the organisations in ways that ensure a better future. 

Today's business world is highly competitive. The way to survive is to reshape to the needs of a rapidly changing world. A leader needs to emphasize action to make the change as quickly and smoothly as possible

A leader should build the change so that others want to be part of it. When he gives them part of it, he should give them the authority and control to act upon it. He should share the power so that they do not feel powerless. Leader has to make the employees feel useful and enthusiastic. He should make them feel needed, that the change could not happen without them!

It is the leadership, which can turn decline into grown and occasionally, even turn disaster into triumph. Thus leaders play a vital role in the change process as, they need to do everything they can both visibly and behind the scenes, to support the change effort.



Magazines and journals
Vivek Gupta, 'HP at cultural cross roads', Case Folio, Nov 2002.
D.Sirisha, 'Jacques Nasser-An Untimely Exit', Case Folio, Sep 2002
John P.Kotter, 'What Leaders Really Do?', Harward Business Review, dec 2004
Rustom S.Davar, 'Creative Leadership', UBS Publishers.
Gita Piramal, 'Business Maharajas' 

Avanthi V.S.
PGDBM 2003-2005
Dhruva College of Management

Source : E-mail February 8, 2005



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