Tuesday, November 11, 2008

Positive or Negative: The Perils and Opportunities of Change

My friend Lisa bought a new car last week. When pressed for details she simply added, "I get 34 miles per gallon," and this got me thinking: had this conversation taken place a few years ago, she might have gone on about the car's color, its roomy interior, or that coveted new car smell.

But things have changed.

Ok, so the line lacks the shock value I had hoped for, but I've stated the obvious -- that change happens -- because it seems we underestimate its implications. Everyone knows that change is inevitable and necessary, but those of us who view change as something that either happens or doesn't happen seem to be particularly vulnerable to its effects.

Take Ford Motor Co. for example. Last quarter it reported the largest loss in the company's history -- $8.7 billion -- and in the same breath outlined a plan to shift its North American operations to ramp up production of small cars. According to CFO Don LeClair, Ford is being hit hard by declining vehicle sales and a sudden consumer shift to small cars.

If pressed to guess, I'd say that the factor affecting Ford is probably the same one that prompted Lisa to buy that new car, and I'd be quick to add that I doubt it happened so suddenly -- Southwest Airlines was able to anticipate it. Because of a calculated risk that the airline took in previous years -- essentially betting correctly that fuel prices would escalate -- Southwest remains the only profitable airline in the market. Last quarter was its 69th profitable posted.

Whether the events are perceived as positive or negative, reacting to and implementing change initiatives is only half the story. Paying attention to how change affects each of us on a personal level can help us, as business leaders, better anticipate further organizational and environmental repercussions. The effectiveness of the change depends not only on the outcome, but also on the degree of influence we believe we exert in the situation.