The Hindu Business Line : Birth of the butterfly: The inevitable pain of change

(This article is based on the author's book, The Case of the Bonsai Manager, published by Penguin Portfolio this month. The second of a three-part series.)

The word metamorphosis from biology refers to the insect's life cycle, which sees a complete change of body form and appearance. This process is controlled by a balance of hormones. Companies too have `hormones' which control the change processes in the organization.

Life for the butterfly starts as a tiny egg; the adult female lays eggs among leaves that are rich in the nutrients required by the insect. The egg hatches and there emerges a caterpillar, which marks the second stage.

The caterpillar begins to feed and grow. The joints between its body segments distend and this activates hormones. The caterpillar huffs and puffs as its skin splits and the worm-like insect steps out of its skin. It begins eating again, non-stop and without pause until the process is repeated, in all, five times. The animal puts on an enormous amount of weight during these `feasting' sessions. During this time, the insect gains 3,000 times its original hatching weight— the equivalent of a four kg baby becoming 12,000 kg among humans!

In the third stage, it becomes a pupa. To a bird or a lizard, pupae are a convenience food--nicely packaged, immobile, and full of nutrients, like the original energy bar!

Inside the pupa, a remarkable transformation happens during which the caterpillar's cells and tissues rearrange themselves to form the adult butterfly. The wing disks grow the antennae needed to suck up nectar. The simple eye dissolves and in its place a new and complex eye develops. Legs lengthen and add segments.

In stage four, it is almost ready to emerge. Soon this beauty emerges with its delicate and gorgeously covered wings. It is a story of transformation, pain and beauty, all rolled into one `case study.'

If a caterpillar had the brain of a human, would it sign up for the stress of such a painful transformation?

In organizations also, pain during change is inevitable; however, it need not be gut-wrenching, as some leaders seem to assume. In reality, more often than not, less pain means more change.

The truth is that knowing what is to be done does not lead to action. Preparedness for pain, courage and motivation to undertake the journeys are all essential before there can be positive action. This requires a social process. Transformation leaders have to face up to two issues.

First, the process they embark upon will be painful to themselves and to their entire organization. Second, the journey is inherently risky for their reputation. This latter point exacerbates the personal pain for the leader. The leader of change becomes the symbol of the change. He may be a hero or a zero, depending on the outcome.

It took some guts on Managing Director Dr Jamshed Irani's part to deliver a message to the highly respected and iconic chairman, JRD Tata, `Unless we modernize our plant, both you and I will stand at the gates of the company selling tickets for a steel museum.' As Dr Irani recounts, JRD Tata took the message seriously and encouraged his team to develop the modernization plan that changed Tata Steel. Was he sticking out his neck? Of course, he was. Jamshed Irani led Tata Steel's transformation from a sleepy, old-world steel producer into a lean and flexible organization through the 1990s.

Jamshed Irani recalled another incident. For long, Tata Steel had an agreement with trade unions that, by right, any employee could nominate one son or any dependent for employment when he retired. In 1995, when he was explaining to unions the urgency of sensibly trimming the workforce, one employee shouted that that all this is fine, but the company had taken away the jobs of their sons.

`I am not worried about your son's job, I am worried about your own job and mine,' responded Irani. It was a risky repartee in a large meeting with the union and employees, but it was essential. According to Irani, that incident was a defining moment for Tata Steel.

Another example is that of Tata Chemicals, which recruited Prasad Menon as the managing director in 2000. He joined the company amidst difficult circumstances. The company had all along been exceptionally successful as India's leading manufacturer of soda ash, and had been a darling of the stock markets. As the Indian economy opened up during the 1990s and import tariffs came down, the competitiveness of Tata Chemicals became a serious issue. It recorded a quarterly loss for the first time in 2000.

Prasad realized that he was an `outsider' in a very traditional company, which had been led by charismatic leaders for long. He did not have the luxury of settling in gradually and messaging his team in a languorous manner. He prepared a crisp communication, held open houses and answered the barrage of questions from a shocked management team in a transparent way. He took the big risk of telling the facts as they were; he earnestly sought managers' ideas on how to stem the losses and put the company back on its feet. After being viewed initially with some considerable suspicion and curiosity, Prasad survived the risks and got managers' hearts behind positive action. By the time he moved on to become the managing director of another Tata company in 2006, he emerged as a very respected and loved leader within Tata Chemicals. In a very intelligent way, he chose the `reduced pain' alternative to the `gut-wrenching' alternative of change management.

The lessons

There are three ways to reduce the pain of change, that is, understanding the code of change, rearranging the existing pieces, and slowing to reach quicker.

Understand the code of change

In 1994, I attended the Advanced Management Programme at Harvard Business School. Michael Beer, who taught Organizational Development, was a very passionate teacher, and his face would go all red as he virtually emoted the roles that were being discussed! I also got to know an upcoming Indian professor, Nitin Nohria, who has been associated with teaching an Advanced Management Programme for Tatas.

Michael Beer and Nitin Nohria write that in their rush to change their organizations, managers end up with a huge number of initiatives. Implementing all of this, in fact, confuses managers, and rather than lessen the pain, the change programme ends up in a muddle. They express the view that leaders need to crack the code of change.

Every company has its own code of change, a little like the number to open the combination lock, which protects that company from change. If a leader can crack the code of change for his company, then he can minimize the pain by rearranging resources, just as the caterpillar does to become a butterfly.

The key task of a leader is to watch, listen, analyse, reflect and in doing so, try and crack the unique code of change of the organisation he is trying to transform.

Rearrange the existing pieces

I live in a flat in a reasonably well maintained building which is over one hundred years old, a grade II heritage building. The facade is largely in line with the original because we are able to compare it with some old photographs. The interiors are mixed in the sense that modern devices coexist with the original wooden flooring.

The transformation over a century was achieved by keeping the nice parts of the past, adding new things from the contemporary and developing a character, which is distinctive to this building.

Like buildings, companies also change through constant upgradation and renewals. That is a less painful way to achieve transformation. The equivalent of furniture, flooring, windows and ceilings in a company situation are its people, their ways of working together, their values and how they are organised.

Just as a building can be transformed, companies can be renewed with less pain by using the existing resources in different and new ways. The leader must consider carefully how to use current parts of the organization, how to recombine them for a new use, and at what past elements he can redeploy and reuse.

This is a less disruptive way to change.

Slow down to reach quicker

How fast should change be? The real issue is not how fast change should be but matching the speed with the organization's code. It is not necessary to operate at that maximum level of pain all the time, as some might suggest.

Unilever had announced its Path to Growth in 1999, which was to last till 2004. This strategy and execution did not work well, as reported by the company. The targets were not met, the management was tired; finally, the top management and structure was reorganised once more in 2005. The event is too recent to view dispassionately, but it certainly bore all the signs of an initiative overload and organizational fatigue.

"It is when you are in a rush that you have to slow down," says a Korean proverb.

(The author is Executive Director, TataSons Ltd.)

(To be concluded)