Roberta Fusaro (3:52)

You've developed a useful framework for helping leaders transition effectively in this way. Can you outline it for us?

Michael Watkins (3:59)

Sure. So one observation I had fairly early was that the business situation into which the leader is going matters a lot. As a simple example, you can imagine there's a big difference between going into a kind of crisis situation, a turnaround situation, where everything is a disaster in progress, money is being lost, sirens are going off, as opposed to a situation where problems are beginning to develop, but maybe haven't fully become evident to everybody yet. The critical mass of support for doing things isn't necessarily there yet. And so I sort of built off that observation that those two situations, for example, are very different to build a bit of a broader framework for thinking about the kinds of business situations into which leaders transition. And this led to what's known as the STARS framework. Startup turnaround, accelerated growth, realignment, sustaining success, startups obviously taking something from scratch, building it, taking it off the ground, turnarounds. We've already talked about the crisis in progress, accelerated growth are situations where you've got a business that's hitting that crucial point where it's really taking off, and all of a sudden you need to put in place more struct systems to make it grow. Realignments are what I think of as these proactive change challenges where there's emerging problems and you've really got to deal with them. And then sustaining success is that rare situation where you've got a very successful business and you need to really do things to keep sustaining it. Although even there it's not simple and it's not simply about playing good defense. It's about how do you make growth happen in a more mature market. How do you really sustain something that has a long history and legacy associated with it?

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Roberta Fusaro (6:04)

Now, why is it so important for a leader to figure out which of these five business situations he or she is entering?

Michael Watkins (6:10)

Well, because if you sort of misassess the kind of situation you're going into, the kinds of early actions you take can really have very negative consequences. And let me give you an example. Suppose you're someone that loves to come in guns blazing and take dramatic action and thrives on crisis, and thrives on that sort of action orientation. That could work great in a turnaround situation where people are aware there's a crisis, there's a sense of urgency built into it, people are hungry for solutions, they're hungry for answers. You could be very well matched to that situation. On the other hand, if you're in this more proactive change challenge kind of situation, you can easily have people that are really in denial about the need for change or not really acknowledging at some basic level the magnitude of the change that's required. You come in guns blazing and it's obvious to you that there's these problems and you start doing things. What's going to happen? Well, you're going to provoke what I think of as an organizational immune system reaction. That is, people will mobilize, killer T cells will clump around you, you will be either digested or expelled by the organization. And so you have to do some calibration of the kind of situation you're in, because it really affects the way you do a variety of important things. How do you go about learning about a new role and a new organization? And what do you focus on? What kind of team do you need to put in place? And how much change are you going to make on the team? What are you going to do to secure early wins? So the basic principles of transition really hold up very well, but the way you operationalize them really varies dramatically from business situation to business situation.

Roberta Fusaro (7:52)

So once you understand the business situation, what can you do to make the transition work for the organization that you're starting to lead?

Michael Watkins (8:01)

Well, this is a really crucial point, and I think that one very simple thing you can do is make sure that people really do see the situation the way you do and that the whole organization is grounded in reality about what the real challenges are. I mean, this is another reason why I recommend people use this particular framework, is it can be a very productive way of having a conversation with Your boss, Is this a turnaround or a realignment or a startup or accelerated growth? What is it that I'm here to do? What's my mandate? We sometimes run versions of this kind of framework in group strategy exercises involving the new team. So suppose you're my team and you and I have to do something with this business. We'd want to be on the same page about what we're really grappling with here. And so you can use the framework as a basis for having that sort of consensus conversation about what situation are we in? What are the key priorities here?

Roberta Fusaro (8:57)

That's obviously a lot of tough work. What changes does the leader have to make in managing himself then to make sure that these organizational changes can be achieved?

Michael Watkins (9:07)

Well, this goes back to sort of what your leadership reflexes are and what you've tended to gravitate towards over time. I believe that every serious general manager has to be able to handle the full range of star situations, because virtually any business that you're going to take over is going to have different pieces in different states. There's going to be stuff that's being started up and stuff that's being realigned and stuff you need to sustain the success of. So I don't think companies can afford to build specialists, you know, turnaround specialists or realignment specialists. I think you really need to build people that have a broad range of capability. That said, you're going to have certain preferences and certain reflexes, right? You may be reflexively a turnaround person, and so you're going to tend to gravitate towards turnarounds. You're going to tend to gravitate towards the part of your responsibilities that looks like a turnaround. At the risk of potentially neglecting some of that, you're likely to have what I think of as a heroic leadership style. You're going to sort of love to run charging into breaches and walls, sword in hand, screaming loudly, you know, which if you're in a turnaround situation is terrific, right? If you're in a realignment situation, it's really not what's required. What's required, typically, is a quieter and more diplomatic leadership, a kind of almost educational approach. Because the first job in a realignment scenario is really to begin to raise the consciousness of everybody about what's required and what the problems are. And the heroic kind of impulse is not necessarily that productive. I have a joke about this, by the way, which is I know people that can turn anything into a turnaround, and if it isn't, when they start. It sure is.

Roberta Fusaro (10:44)

By the time they're done, it's very much an integrated approach, it seems. Shape the organization, but shape yourself so that you find the right match, so to speak.

HBR Host (11:01)

That was Michael Watkins in conversation with Roberta Fusaro on HBR IdeaCast. Watkins is a professor of Leadership and Organizational Change at IMD Business School. He's also the co founder of Genesis Advisors, an executive coaching and leadership team development firm. We'll be back next Wednesday with another handpicked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you're there, be sure to leave us a review. And when you're ready for more podcasts, articles, case studies, books and videos with the world's top business and management experts, find it all@hbr.org this episode was produced by Ann Sani and me, Hannah Bates. Ian Fox is our editor. Special thanks to Maureen Hoke, Audie Ignatius, Karen Player, Ramsey Gabaz, Nicole Smith, Anne Bartholomew and you, our listener. See you next week.