There comes a time in each organization’s life when new leaders and a new direction are required to stave off decline and eventual death.
Leaders at this stage are change agents. They have the unique ability and vision to set into place a new order that will cause the rebirth of the organization. Modern examples of this new leader are Gerstner at IBM and Immelt at GE. Jim Collins’ book How the Mighty Fall speaks of a number of organizations that, having achieved some measure of greatness, fall. Organizations entering this phase have some or all of the characteristics described below.
The climate has become stale and toxic. Company management and leadership have developed a sense of entitlement (think U.S. automakers). Indeed, the leadership of the company is like an aristocracy or a monarchy grown distant from its subjects. Organic growth is a thing of the past. The inward focus that began in the “Conductor” phase has grown to the extent that the organization has created its own ecosystem. Top-line growth is failing because the company has lost touch with its customer base and market. Self-preservation is at the top of the leaders’ agendas; the needs of the organization are playing second fiddle to those of a few individuals. Leadership style turns away from an inclusive, more democratic approach toward autocracy. Big initiatives designed to “fix” are introduced to the organization with increasing frequency, but often resulting in failure and leadership churn. The organization is spiralling in on itself.
Glory days are recounted with longing. The greatest focus is on reliving the past, not on building the future. Employees “turtle.” Communication is formal. Excessive resource layering and delayering initiatives abound. A strong underground swell of rebellion starts to grow. Cost imperatives become the focus, with a declining marginal return. More and more resources are needed to generate fewer and fewer cost savings. The end is nigh.
The Renovator could just as easily be called the Phoenix, creating growth from the ashes of the former company. Creative destruction is required to get the company back on its feet. The “old” needs to be rooted out and the cancer fully removed. New blood needs to be found. The rank and file need to become believers after sometimes years of enduring “the next new initiative.” Innovation must be rekindled, most often starting with slow, steady “small ball” gains rather than whole-sale rejuvenation programs. Old processes and beliefs must be destroyed and replaced with hope. Customer connections must be rebuilt and new customers found.
Leaders must make the reconstruction visible and meaningful. They must start remaking and repurposing the company from the outside in.