Dorothy Aaron experienced a cultural change failure a few years ago when the research firm where she was working was acquired by an American company. In this article, she discusses how the new management, in trying to transform the culture of its Canadian subsidiary, committed most of the errors John Kotter notes in his article "Leading Change: Why Transformations Fail" (Harvard Business Review, March-April, 1995).

"Alpha" Research (all names are pseudonyms to maintain confidentiality) was an association of senior consultants accustomed to working flexibly and independently on a billable-hours basis. Communication and consultative decision making were important aspects of our corporate culture. We were assured by "Ray," president of Gamma U.S. that nothing would change with the takeover, and in fact nothing did for about a year, until Simone became the new Canadian president.

Soon after Simone's arrival, she and Ray presented structural changes that entailed teamwork and heavy reliance on junior researchers in order to "improve productivity and volume." Many of us were skeptical, failing to see the need for greater productivity and volume when we were already working hard and doing well. We weren't happy about working in teams as we knew that this would require more time spent on communication and administration.

They also mandated a complicated change in our method of compensation. Ray and Simone assured us that we would come out ahead in the long run because we'd produce more under the team structure with the aid of additional junior researchers, new technology, and closer ties with the parent company. Some of us, however, did enough analysis to realize that we would make considerably less under the new system.

In Kotter's terms, Simone and Ray committed error #1: they failed to create an adequate sense of urgency of the need for cultural change. They presented no information about Alpha's competitive situation or financial performance. The only argument made for greater productivity was that Alpha would not be profitable again until the debt incurred in purchasing the company was paid off. None of us saw this as a good enough reason for the changes.

At this point, the two senior consultants who were the original president's first associates decided to leave. They did not like the fact they were not consulted and likely felt their power and status were being eroded. Their departure indicated that Ray and Simone committed Kotter's error #2: they failed to create a powerful guiding coalition for change. They did not recognize the importance of involving the two long-time associates to shift allegiance from the

former president and her corporate culture to the new regime. Indeed, they failed to involve any stakeholders in the decision-making process, and presented changes only in downward communication, giving no opportunity for feedback before the changes were instituted.

Simone and Ray also failed to anchor changes in the corporation's culture (Kotter's error #8). They did not take into account the fact that Alpha was basically an association of independent consultants not used to working in teams, and accustomed to compensation in direct proportion to hours worked. They also ignored the earlier participatory nature of decision-making at Alpha.

The team structure turned out to have no effect whatsoever on the way work was conducted, nor on productivity. Most of the senior consultants continued to work independently in a parallel manner, responsible for their own individual projects and aided in basic tasks by the Research Assistants, as before. There were some attempts at training the assistants to take on more research tasks, but these were abandoned when we discovered it took less time to do it ourselves. We got none of the assistance we had been promised to help make us more productive. Furthermore, the new compensation system reinforced individual effort, not teamwork. The return to previous work methods indicated Simone and Ray's commission of Kotter's error #5: failure to remove obstacles to the new "vision" for cultural change.

In a belated attempt to involve staff in change, Simone eventually announced the creation of four Task Teams to address important issues facing Gamma Canada. The Teams met regularly for a number of months, and presented their recommendations at staff meetings. Simone endorsed the few things that required minimal resources, while anything that required a substantial budget was inevitably shelved. When the Marketing Team presented its detailed plan for new marketing materials, we found out that Simone and Ray had developed a brochure without consulting us!

Simone demonstrated Kotter's sixth transformational error by not systematically planning for and creating short-term wins. In fact, she did just the opposite by not recognizing and rewarding employees attempting improvements.

Not surprisingly, neither productivity nor volume improved, and Gamma Canada performed more poorly in the year after the changes than the year before. Within 2