Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
Understanding Kotter’s 8-step change model
The model was developed by Harvard Business School professor Dr. John Kotter, a notable thought-leader on organizational change.
Kotter recognized that change was difficult for some businesses, especially for those that had been in operation for some time. But he also knew that change was an important factor in a business remaining viable, no matter how much success they had enjoyed in the past.
Big change in an organization is usually the result of bold and courageous leadership, which we will discuss in the next section.
The eight steps of Kotter’s change model
Kotter created his model after witnessing how leaders led their organizations during periods of transformation.
These are the eight steps that will help a business navigate this transformation:
1 – Create urgency
The most significant changes occur because of urgency. For example, urgency might result from a string of negative reviews or the emergence of a powerful competitor. Whatever the scenario, it is important to present change as the solution to a problem.
To feel compelled to act, management must be notified of a problem in advance with convincing evidence or support from key stakeholders.
2 – Form a powerful coalition
This can be achieved by identifying the key playmakers in an organization. Who are the individuals that hold the power in decision making?
In the search to form a coalition, representatives should seek out influential people with a broad range of experience or skillsets.
3 – Develop a vision and strategy
Key decision-makers will only get behind an initiative for change if they can understand the reasons for doing so. Therefore, the vision for change must be clear, concise, and well presented.
It should also:
Reflect the core values of the business or identify new core values.
Presenters should not be afraid to sell the vision to decision-makers if required to do so. They must present their vision with confidence and conviction. In other words, they must truly believe that their strategy will be successful.
Wherever appropriate, relate the strategy for change to pre-existing company values. Address any concerns from the audience publicly in a calm and empathic manner.
5 – Remove the obstacles
Individuals are often the greatest obstacles to change. Identify those most resistant to change and work collaboratively to address any concerns. Then, reward or recognize those who were open to change from the very beginning.
6 – Create short-term wins
Early in the change process, short-term wins are crucial to building momentum and confidence. This is particularly true of large changes with long timelines because people can become disheartened at the prospect of the job ahead of them.
Again, incentivization is useful for those who meet and continue to achieve short-term wins.
7 – Consolidate gains
Consolidation means building on quick wins through expansion and repetition. Each win should be analyzed to determine areas for possible improvement.
Subsequent goal-setting should also strike a balance. Each goal must be slightly more ambitious than the last without causing employee disenfranchisement.
8 – Make it stick
Making a change stick means that it becomes part of company culture. This process can take years and usually involves mistakes or employee turnover along the way.
To ensure that management cannot revert to the status quo, change success stories should be regularly highlighted. Employee contributions should also continue to be celebrated and rewarded where appropriate.
It is also essential that a business knows what it stands for before recruiting. This allows HR managers to instill core values into new employees from day one.
Kotter’s 8-step change model examples
We’ll now conclude this article with some real-world examples of companies that have successfully implemented the Kotter 8-step model.
Coty Inc.
Coty Inc. is an American multinational beauty company that was founded in 1904.
After a period of rapid expansion and in preparation for an IPO, Coty realized that it needed to improve the efficiency of its supply chain.
Several “low-hanging” initiatives had resulted in minor improvements, but progress made by the company’s Supply Chain Leadership Team had plateaued.
To reach a level of supply chain excellence, Coty worked with Kotter International to develop a change initiative with the following pillars:
Organization-wide participation.
Mobilization of every level and function of the business to take on the role of change agent. This involved asking questions and taking action on directives from leadership.
Finding non-traditional ways to identify new revenue streams, increase productivity, improve quality, drive sustainability, and manage costs.
The results of the initiative were impressive, with employees permitted to take risks and become drivers of change.
NetApp is a California-based enterprise storage and data management company that implemented Kotter’s model after noting a shift in customer purchasing patterns.
Essentially, customers were buying from third parties who offered storage solutions packaged with other hardware and software.
They were not, as they once did, buying data management solutions direct from vendors such as NetApp.
Unable to leverage its high-cost, direct sales strategy, the company was at risk of being taken over as profitability and its share price tumbled.
To reverse this trajectory, senior leaders at NetApp worked with Kotter to help them achieve three strategic goals:
Increase market share.
Drive organizational efficiencies, and
Implement global partnerships.
To drive change across the company, a level of urgency was created whereby employees were asked to buy into a vision where NetApp was the leader in the emerging cloud computing market.
With this vision serving as the company’s north star, 63% of all worldwide employees volunteered their services in a coordinated and creative way.
Ultimately, NetApp was able to jump three market share positions by adopting the mindset that the essence of change was urgency.
Fortune 500 semiconductor manufacturer
An unnamed Fortune 500 semiconductor manufacturer also worked with Kotter after noting that its approach to innovation had stagnated and inefficiencies were leaving significant amounts of money on the table.
It was also noted that engineers had fallen into a predictable pattern of product development, lacking the passion required for such a cut-throat industry and not considering their individual roles in the context of a broader value chain.
To accelerate product development, drive enhanced value realization, and shift employee mindsets, the semiconductor manufacturer developed the following change initiatives:
Increase collaboration across the full development cycle to identify efficiencies that could reduce the cycle time by months or even years.
Remedy chronic quality challenges while increasing yields by 10-20%.
Institute a new way of working that could be scaled to increase operational efficiency across the business, and
Deliver demonstratable, unambiguous results within a few weeks to justify continued investment in the change initiative.
In less than a month, there was a demonstrable shift in development cycle time, with smaller teams of 10-20 people driving exponential value in the business after five months.
Kotter’s model helped the manufacturer think differently about the full system and reconsider the power of people within it.
Diverse perspectives were incorporated in the early stages of development, which better equipped the teams to solve cycle time problems and persistent yield issues.
These actions were underpinned by a distinct change in employee mindset. Instead of believing themselves to be cogs in a vast, incomprehensible machine, individuals started to take ownership of their innovations and understand their contributions to the system as a whole.
Key takeaways
Kotter’s 8-step change model helps decision-makers adapt to transformational change.
Kotter’s 8-step change model was developed by leading management consult Dr. John Kotter. By observing organizations undergoing transformation, he identified that leadership ultimately determined the likelihood of change.
Kotter’s 8-step change model advocates urgency, stakeholder engagement, and a clear vision as important preliminary change driving ingredients. Change must then be communicated to leadership convincingly so that a plan rewarding short and long-term wins can be implemented.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
