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This article was published 18-11-2019

20 years’ worth of lessons on change management

When Schouten & Nelissen CEO Camiel Gielkens recently met with AutoGravity CEO Alexandre Mallmann, their discussion of change management quickly turned into a catch-up session between two old friends. Here’s what the two CEOs had to say about the role people play in the success or failure of a new strategy.

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A 5-minute read

Alex, it’s been a while since we worked together in China. And now you’ve moved to California to head AutoGravity. Let’s talk about change, which is something you have certainly never shied away from, have you?

“No, not exactly! Looking back on my career, in every company where I have served as CEO, I initiated a change process. But always for different reasons. Sometimes I needed to turn around a downward trajectory. Other times, like in China, I needed to get the company ready for growth.

Now at AutoGravity, it’s a different game altogether. When I came here, it felt like a start-up. AutoGravity already had market-leading technology. It was my challenge to formulate a clear business model and strategy.”

I know you have a lot of experience in financial business models and you are a real innovator. But to go into a company and challenge the entire business model, that’s a big change. What a tough job.

“Talking about change! I can tell you, it has been difficult at times. We began with 160 people in the company, and now we have fewer than 60. The company needed to be downsized in order to stay in business. I saw we were not going in the right direction. I said, ‘Guys, this is where this company is going; I need to know who is in, and who is out. If you are not in, we respect that, but we have to move forward.’”

Bold moves! I know you always have very high standards. That can be very demanding, but I also admire you for your care for people. How do you get the best out of your people in a situation like that?

“If you are driving major change at any organization, you are probably stepping into a situation that needs fixing. Until you acknowledge the challenges employees have experienced in the past, they are not going to believe in any proposed changes for the future. So, it’s very important to be honest about things that have gone wrong. Provide a diagnosis and a vision for what success looks like going forward. Once you have done those things, ask for people’s commitment to right the ship. A company’s most important resource is its people. If they don’t believe, the company has no chance.”

I sense there is a great lesson to learn here. You must have a clear view of what the key steps are in such a process. How do you lead a change process?

“Overall, I see 5 steps to any change process. These have applied in every change project I have been a part of. I start by doing an assessment to understand what phase a company is in. I talk to the executive team and other stakeholders. Next, I hold ‘skip-level meetings’ in which I talk with the team one level below my direct reports. Then I have what I call ‘heartbeat meetings’ in which I invite employees, regardless of their level in the organization, to meet with me for informal conversations. In these meetings, we can ask each other any question. This is so valuable.”

This is a great concept, ‘heartbeat meetings’. I want to know more. How do you create a readiness for change in people?

“Well, the fact that you invite people to talk is a great motivator. People appreciate the time you take for them. I show people that I depend on their views. I don’t know all the details. They do! It is so important to really listen to the people in your organization and demonstrate how their input led to tangible outcomes for the company. Show your appreciation. That is how people become more open to change.”

What is the second step after organization assessment?

“Direction. What I have seen at many places is a lack of clear direction for the company. Where are we going? I get the executive team together and we define what I call ‘the North Star’. What is the vision for the company that the leadership team agrees upon?”

How important is alignment, and how do you move from a direction to real actions?

“Alignment is key. I sometimes jokingly say, only after the executive team ‘signs the vision in blood’, it’s time to move to strategy. That’s the third step. Where are we today and then where do we want to be? Which strategic initiatives will it take to get there? I usually gather the top 100 people and involve them in strategy creation.”

What really makes people engaged in a change process? I believe passionate people make a company successful, don’t you?

“Yes! After the strategy has been set, and everybody knows the vision, the next step is to reinforce the values and behaviors that you want the entire organization to follow. Unless everybody has the same attitude, you will not be able to execute any strategy.

I have always been very keen on behaviors. I like people to respectfully challenge each other. And be frank. You have to be ready for some honest feedback and even some conflict at times. But this is how you improve and move forward. If the organization is not ready to accept this, the business is not going to grow.”

Company values help define desirable attitudes and behaviors. Let’s talk about how this relates to company culture.

“I believe it is extremely important for a company to create the right culture for putting a strategy into practice. In order for people to adopt new behaviors and have a positive attitude, you need to communicate. Make clear to everybody what the objectives are, and why you have set them. Really engage them, be clear and transparent. It doesn’t matter if you have 50 or 1,000 people in your organization. Everybody needs to know the clear direction the company is working toward.”

I remember you often spoke about existing patterns that can stand in the way of success. How do you help people break through those kinds of behaviors?

“People need to understand why change is necessary. In that process, I generally group people’s reactions into 3 categories:

  • Glad to get some fresh air. Their attitude is, ‘Let’s make it happen.’ These people don’t need to be convinced.
  • Apprehensive, but willing to try. Their attitude is, ‘I will go which way the wind blows.’ These people need to be coached and engaged more. This means, celebrate successes and show them the benefits. Usually this helps them to be positive about the changes.
  • Opposing change. Their attitude is, ‘I know better than you’. It is important to be fair and help them understand. Provide training where possible, but if behaviors don’t change, it jeopardizes the entire organization. Unless they change, they can’t be part of the team going forward.”

That’s a clear analysis. It makes me think. This is the way to engage people in the beginning of a change process. How do you keep people on track in the long term?

“That’s where the value of the company’s vision becomes so important. The vision should not be a static thing, because business is not static. So, a company’s vision needs to be in line with how its business evolves over time. Most importantly, it has to be communicated to employees in a way that makes sense both in the short and long term. You know, a vision statement like ‘becoming number 1’ is not clear and compelling enough. What does that mean, really? It needs to be something that excites employees and makes them feel proud to contribute. I have seen how energized and committed people get when their company supports social and sustainable causes. Keeping your people on track really comes down to your organization’s purpose. Purpose is the primary reason people choose to work for a company these days. It’s more important to employees than money or location, especially for younger people joining the workforce today.”

This hits close to home for me. You’re talking about people – planet – profit. Connecting company values to individual values. You mentioned that purpose is important to young people. That brings me to a final question: what tips can you give to young leaders?

“First, I recommend learning about empathy. It’s important to understand where others are coming from. Be kind and respectful, be humble. Give praise to your team. Make the other person shine! Success should not be so much about you.

In addition, communicate clearly and transparently. You know, sometimes people become leaders because they have strong technical skills. But they are not trained in communicating and motivating others. As a leader, you need to help your team understand why a specific decision has been made, and give people regular feedback.

At the end of the day, you need to look after the larger organization. Give compliments where they are due. And at the same time, be honest with people who underperform. Because it’s not fair to the rest of the team if you don’t ask people to step up when needed. This type of approach benefits the entire organization.”

 

Alexandre Mallmann (48) has more than twenty years of experience in the automotive industry. He served as CEO of Mercedes-Benz Financial Services in Portugal and Spain and later of Mercedes-Benz Auto Finance China. Since 2018, he is CEO of AutoGravity, a leading digital car-shopping and financing platform based in California, USA.

Camiel Gielkens (45) is CEO of Schouten & Nelissen. He was general manager and executive coach for Schouten China from 2012 to 2018.

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