John Kotter's Urgent Message for Entrepreneurs

Harvard Business School professor John Kotter, author of Leading Change, talks about how to lead during a recession
By Inc Staff | Sep 1, 2009

John Kotter got an enviable -- if unintentional -- endorsement when then-candidate Barack Obama began inserting the phrase a sense of urgency into his comments about the economy. A Sense of Urgency (Harvard Business Press, 2008) is the title of Kotter's latest book on fostering change in organizations -- a subject the Harvard Business School professor has owned since publishing the seminal Leading Change, in 1996.

Kotter believes there are two kinds of urgency -- and, like cholesterol, one is good and one is bad. The good kind is characterized by constant scrutiny of external promise and peril. It involves relentless focus on doing only those things that move the business forward in the marketplace and on doing them right now, if not sooner. The bad kind -- to which many companies have recently succumbed -- is panic driven and characterized by breathless activity that winds up producing nothing demonstrably new.

Kotter advises leaders to stamp out the bad urgency, which demoralizes and drains people, and use the -- dare we say it? -- opportunity of the economic crisis to remake their organizations with a lean and hungry look. And he encourages them to sustain that newfound urgency even when flush times return. Editor-at-large Leigh Buchanan spoke with Kotter about his urgent call to urgency.

Samuel Johnson said nothing focuses the mind like a hanging. Has that happened with the recession? Has it focused the minds of company leaders and created the sense of urgency you advocate?

I wish that it had. Many companies probably think they're responding with urgency, and there are certainly a lot of people running around trying to come up with solutions. But most of that activity is going to be ineffectual, because it is driven by a fear of losing. It's not that gut-level determination to win and to make absolutely sure that they do something every single day to keep pushing that goal forward. That's true urgency.

How can you distinguish good urgency from bad urgency?

There are lots of signs of false urgency. Frenetic activity. Everyone is exhausted, working 14-hour days. One red flag is how difficult it is to schedule a meeting. With true urgency, people leave lots of white space on their calendars, because they recognize that the important stuff -- the stuff they need to deal with immediately -- is going to happen. If you're overbooked, you can't manage pressing problems or even recognize they're pressing until too late.

People think that in urgent situations, they're expected to take on more and more. They're worried about keeping their jobs, so they try to demonstrate their value by being incredibly busy. But the leader should be telling them to do just the opposite. He should say, "I want everyone to look at your calendars. What's on there that doesn't clearly move us forward? Get rid of it!"

True urgency is the most important precursor of real change. Seventy percent of change efforts fail or never launch at all, and one reason is that company leaders don't create a sense of urgency around what they're doing. They go straight to solving the problem. So, with true urgency, you would expect to see change. Something new should be happening. How many companies are going to come out of this doing things in a new way? Not just diminished but actually changed?

One of the best -- or worst -- examples of this is Washington, D.C. Are the two parties interacting with each other in a new way to reflect the new situation in the economy? Are the special-interest groups behaving in a new way? Is the administration staffing itself in a fundamentally new way? No. But they're all extremely busy.

If the economy and job loss don't jump-start change there, what will?

It's hard to imagine that these days anyone could feel complacent, but the fact is, Washington is crammed with complacency. Because the country has done pretty well over the last 250 or 300 years. Congress is full of people who get reelected and reelected. How can you have urgency when there are all of those safe seats? Obama started using the phrase a sense of urgency during his campaign. That's a good sign.

But then he waited two months to get change started, because "there's only one President at a time."

Funny you should say that. I wrote an op-ed piece that I never sent to anybody, in which I talked about what I would do if I had been elected President. On November 5, the day after the election, I would have made a 15-minute speech on TV. I would have said that our economic problems are significant, and they're going to stop me from fulfilling all my promises. And I would have made it very clear that, though I'm not President now, I pledge to you that starting tomorrow morning -- on November 6th, 7th, 8th, 9th, 10th -- I am going to make damn sure that the people around me and I are making headway on this. And I want you to help me, because I think that collectively, we can turn something horrible into something that might even energize us in some way.

There's something similar going on right now at an 80-year-old manufacturing company I studied. It's in the middle of a corporate succession. The new guy is taking over in October. And he's trying very hard not to be disrespectful and start pretending he's running the place before the CEO is gone. That's a mistake. He should get in front of the crowd and make his urgency speech. With a real sense of urgency, you're not held back by protocols or concern about hurting someone's feelings.

This month, we're publishing the Inc. 500, our list of the fastest-growing private companies in the United States. As you say, it's hard to imagine anyone feeling complacent these days. But I wonder whether companies are most vulnerable to complacency after a big success.

If you've been successful long enough, complacency doesn't disappear easily. And it's fine to celebrate success: You have a sales appreciation meeting and give out a bunch of awards to your employees. They deserve it. They helped you to grow 30 percent this year. But that's history. So you ask them, "What do you have on your calendar for tomorrow that's going to help us grow 30 percent next year?"

In my recent book, I wrote about a manager I met at a company in India -- it's an outsourcing business, and he's in charge of three or four offices. This man is a walking urgency machine. And what he always says is that historical success guarantees nothing. Nothing. Nothing. Nothing. He's not a negative guy. But he's relentlessly realistic.

You say something pretty provocative in the book: that sometimes, in the face of complacency, it's actually OK to manufacture a crisis.

Obviously, you need to be careful with this. If people think the boss is manipulating them to get them to work harder, it backfires. It works best if the crisis is real but no one has been paying attention. Decay in a company or an industry happens gradually, microscopically, one day at a time. Sometimes, you have to make the point: This thing is weaker than you think.

I wrote a while ago about the CEO of a health care firm who took his company through a turnaround. But then they got so far ahead, everyone settled back into a deep complacency. So he changed the context. He started asking, "Whom should we be comparing ourselves to? Yes, we're beating everybody in the marketplace. But what if the relevant question was, 'Are we beating them in the financial marketplace?'? Investors don't make choices just among companies in the same industry. Companies in different sectors are competing with us for funding. And when you run those numbers, we don't look as good." That woke people up.

It's a great question: "Whom should we be comparing ourselves to?" Detroit didn't ask it soon enough. The broadcast networks didn't ask it soon enough. Don't just look for new customers but also for new competitors. Broaden your definition of competition. You go from "Here we are, the dominant player" to "Here we are, this dinky business in a much larger pool."

One exercise I've seen leaders do is come up with a company that doesn't exist. Then they'll bring people together and say, "You are the management of that company. Your job is to kill our company." They do that in the morning. Then, in the afternoon, when their thinking is a little different, they talk about how to kill the new competitor.

Are open-book companies better at creating and sustaining urgency, because everyone is always aware of exactly where the business stands?

Not necessarily. A lot of people create heavy-duty measurement systems to track the progress of their companies, but that's not how leaders with the greatest sense of urgency do it. They pay attention to their internal numbers, but they're much more interested in what's going on outside. They want to have as many metrics about their competitors as they do about themselves.

Metrics are very useful, but they have to change like everything else. If you always measure the same things, you may always get the same answers. We think numbers keep us alert. But maybe they're putting us to sleep.

How much attention should you direct to the outside world versus internal matters?

There should be no meetings that are only about internal matters, without any connection to the outside world. In some way, the outside world always provides the "why" we are doing something. That Indian manager I mentioned is great at this. His meetings are never about internal chatter. They're always about what technology is being developed in the United States or which competitors might enter the company's market. It doesn't have to be strictly competitive. For example, if you're putting in a new software system, you should be saying, "What other companies do we know that have done this? What problems did they solve, and how did they solve them? Wouldn't that be useful information? Let's get it."

How do you get people to think like that?

You model it. You talk about the big dangers and the big opportunities. You talk in specifics: "We're a company that helps set up trade fairs. Alibaba, which does Internet trade fairs, grew 90 percent last year." You're not trying to get people to panic. You're trying to get them to think. And you always say what you are going to do first. Not just what you are going to do someday: what you are going to do tomorrow. And then you ask everyone else what they are going to do tomorrow. And if it doesn't advance the ball, they shouldn't be doing it.

One of my executive students gave me a two-page letter that his CEO had sent out in November. Part One said, "We're in a mess. Denial doesn't help. Here are some statistics to show it." Part Two said, "It is useful to look at history. Thirty years ago, this company was in a worse mess. Look at us now. We're 10 times bigger. The U.S. economy had deeper recessions every 20 years in the 19th century. And here we are -- the most powerful nation on earth." Part Three said, "We've got to link arms and address this thing, and it's going to start with me. I'm going to try my damnedest to figure out 1. how this doesn't hurt us and 2. how we can find opportunities in this. Because there are opportunities." The last part was, "Here's what I'm going to do, and here's what I need your help with." The final note was hopeful but not naive. That's great urgent leadership.

You say that urgent leadership is emotional. After a period like this, when organizational life is more than usually fraught, should you give people a break?

No. True urgent leadership doesn't drain people. It does the opposite. It energizes them. It makes them feel excited. And the idea isn't so much that the leader is always showing emotion as that he's trying to produce the right emotions in the people he leads. But again, he has to model it. You can get people to respond rationally to a problem, but if you haven't stirred their hearts and minds, once the immediate crisis has passed, you lose them. The sense of urgency dissipates.

So if the Klingons were attacking, you'd want Kirk running things, not Spock?

I don't care what the situation is. I always want Kirk running things.

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