Organizations must constantly evolve to meet a variety of challenges—from technological advances and emerging competition to changes in laws, regulations, and economic conditions. Failure to adapt can lead to stagnation or, worse, business collapse.
According to Gartner, only 32 percent of leaders reported achieving healthy employee adoption during their most recent change initiative. This highlights why knowing how to plan, coordinate, and implement change is a valuable skill for managers and business leaders alike.
As explained in the online course Leading Change and Organizational Renewal, taught by Harvard Business School Professor Michael Tushman and Stanford Graduate School of Business Professor Charles O’Reilly, “Organizations need to exploit what they do well to maintain their current business.” At the same time, they must explore new opportunities and prepare for evolving customer, market, and industry demands.
Whether you've been asked to manage a significant change initiative or want to demonstrate your ability to lead one in the future, understanding the change management process is vital.
This guide explores what change management is, the key steps in the process, and actions you can take to develop your managerial skills and become a more impactful leader.
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What Is Change Management?
Organizational change refers broadly to the actions a business takes to modify or adjust a significant aspect of its organization. These changes may include company culture, internal processes, underlying technology and infrastructure, corporate hierarchy, or another critical area.
According to the online course Management Essentials, led by HBS Professor Joseph Fuller, organizational change can be adaptive or transformational.
Adaptive Change
Adaptive changes are small, gradual, and iterative. Organizations use them to improve products, processes, workflows, and strategies over time.
Examples include:
Hiring a new team member to address increased demand
Implementing a new work-from-home policy to attract more qualified job applicants
Transformational Change
Transformational changes are larger in scale and scope. They often represent a dramatic and, occasionally sudden, departure from the status quo.
Examples include:
Launching a new product or business division
Expanding into international markets
Change management is the process of guiding organizational change from its initial conception and preparation through implementation and, finally, to resolution.
For leaders, understanding the change management process is essential to helping an organization navigate transitions smoothly. Effective change management enables leaders to assess the potential impact of a proposed change, prepare employees for what lies ahead, and coordinate the organization’s response.
When employees understand the purpose of a change and their role in it, leaders can build alignment, address resistance, and help move the organization toward a shared goal.
Every change process begins with a set of starting conditions, or point A, and a functional endpoint, or point B. The transition between the two is dynamic and typically unfolds in stages.
Here’s a summary of five key steps in the change management process.
5 Steps in the Change Management Process
1. Identify Your Performance or Opportunity Gaps
To successfully pursue and implement change, leaders must first identify where improvement is needed. Before delving into logistics, assess the challenges your organization is facing and determine which should be addressed first.
These issues typically fall into two categories:
Performance gaps: A measurable shortfall between your organization's current performance and its goals or strategic objectives, such as falling short of sales or profit targets
Opportunity gaps: A potential area for growth or innovation that requires your organization to adapt its strategy, such as entering a new market or adopting an emerging technology
“Part of the reason organizations fail is because they don’t address these performance and opportunity gaps," O’Reilly says in Leading Change and Organizational Renewal.
Once you've identified the issue, draft a gap statement that clearly describes a specific, actionable opportunity or performance gap. According to Leading Change and Organizational Renewal, a successful gap statement includes four key criteria:
Ownership: You or your team must have the authority and responsibility to address the issue.
Timing and scope: Your challenge should have a clearly defined timeline and scope.
Impact: Resolving the gap should provide a meaningful benefit to the organization.
Measurable: The opportunity or desired outcome should have clear success measures.
After drafting your gap statement, share it with your team and invite their feedback. As Leading Change and Organizational Renewal explains, “By combining your work with others’ insights, you can better identify the issue and come up with a viable solution.”
Finally, ensure that your gap statement aligns with your organization's broader goals and that you have—or can obtain—the resources and skills necessary to tackle it.
2. Diagnose the Root Causes and Strategic Misalignment
Once the need for change has been identified, the next step is to diagnose its root causes. This may involve examining strategic misalignment, cultural barriers, ineffective processes, or gaps between organizational goals and actual performance. Identifying these underlying issues can help prevent the same problems from resurfacing.
A real-world example from Lululemon, discussed in Leading Change and Organizational Renewal, illustrates this step's importance. When former CEO Christine Day joined the company, she examined its team dynamics, store operations, and financial performance to understand the disconnect between the athletic apparel brand's aspirations and the customer experience in its stores.
Day discovered that many of Lululemon's community-focused practices, including its ambassador program, existed in only a handful of locations and hadn't been consistently implemented across the organization. The company had a distinctive brand strategy, but its systems and practices weren't reliably delivering it to customers.
This revealed that Lululemon's performance gap wasn't simply a problem with sales or store expansion—the deeper issue was inconsistent execution. By diagnosing the root cause, its leadership could focus on systematizing successful practices, strengthening accountability, and encouraging employee ownership, rather than simply layering on additional initiatives.
3. Design and Execute the Change
After diagnosing the root causes, leaders can design an integrated intervention to address them. Effective change initiatives connect strategy, structure, capabilities, culture, and employee responsibilities, rather than relying on a single solution.
Leading Change and Organizational Renewal recommends breaking execution down into three stages:
Ideate: Generate and explore new possibilities.
Incubate: Test assumptions, validate customer needs, and determine whether an idea can become a viable asset.
Scale: Build the processes, capabilities, and resources needed to execute the new business idea.
One example is AGC, a global leader in glass manufacturing featured in Leading Change and Organizational Renewal. At AGC, new ventures were separated from the core business so they could explore emerging technologies and markets without being constrained by the processes of the established organization. Once those ventures showed potential, they received support and resources from the broader company to scale.
Change should be implemented in stages, with leaders monitoring results and adjusting the approach as needed. Providing employees with the necessary training, resources, authority, and support can increase the likelihood that the change will be executed successfully.
4. Address Cultural Readiness and Resistance
Large-scale organizational change can be challenging because employees may be uncertain about new expectations, processes, or responsibilities. To help employees become more receptive to change, leaders must establish a shared set of norms and behaviors that supports the desired direction.
As O’Reilly explains in Leading Change and Organizational Renewal, “As a leader you have the ability to shape the culture by managing the norms that you define and the behaviors that you need.”
To help employees move from resistance toward adoption, O’Reilly recommends the LEASH Model, a framework consisting of five levers leaders can use to shape organizational culture:
Leader actions: The managerial directives you set for employees that define goals, focus attention, and help them interpret events and information. The full leadership team, not just one leader, must consistently reinforce these signals.
Employee involvement: Everything from company-wide events to internal groups. People are more likely to feel accountable when they choose their level of involvement.
Aligned rewards: Status, recognition, approval, and promotions that encourage desired behaviors—separate from monetary incentives.
Signals, stories, and symbols: Slogans, logos, group titles, and employee or team spotlights.
HR system alignment: How your company recruits, onboards, and trains employees.
When all five levers reinforce the same behaviors, they can help unite employees around a shared mission, prepare the organization for potential roadblocks and resistance, and reminds employees why the change matters.
Embedding change within the organization's culture and everyday practices can also make it less likely that employees will revert to previous behaviors. New structures, controls, communication practices, and reward systems should be treated as tools for making change sustainable.
5. Communicate, Integrate, and Sustain the Change
Change is more likely to succeed when it's communicated clearly, integrated throughout the organization, and reinforced over time. Leaders should explain why the change is necessary, describe how it will affect employees, and provide opportunities for questions and feedback.
As implementation progresses, evaluate whether the change is producing the intended results. Ask yourself questions like: Were project goals met? If so, can this success be replicated elsewhere? If not, what went wrong?
AGC provides another example of how organizations can integrate and sustain change. Leading Change and Organizational Renewal explains that leaders of new ventures reported directly to the head of the division most relevant to their products. This structure reduced unnecessary barriers and ensured that new businesses received support from both senior leadership and the wider organization. The ventures also received access to corporate resources, including customers, capabilities, technology, and global networks.
Leaders should monitor whether new practices are being consistently implemented and address resistance or backsliding when it occurs. Viable change requires more than announcing a new strategy. It must become part of the organization’s everyday culture, systems, structure, and behaviors.
Preparing to Lead Organizational Change
While no two change initiatives are the same, understanding the process can help managers and business leaders prepare for the challenges ahead.
Before launching your next initiative, ask yourself:
Do you understand the forces making change necessary? Identifying the underlying causes can help you determine what needs to change and how to address it.
Do you have a plan? Without a detailed plan and defined strategy, it can be difficult to usher a change initiative through to completion.
How will you communicate? Successful change management requires effective communication with your team members and key stakeholders. Consider how you'll keep them informed and create opportunities for questions and feedback.
Have you identified potential roadblocks? While it’s impossible to predict everything that might potentially go wrong, anticipating potential barriers and developing mitigation strategies can help you prepare to address them.
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Build the Skills to Lead Change with HBS Online
Leading organizational change well starts with a strong foundation in management fundamentals—and grows into the ability to navigate transformation at scale.
Management Essentials is a good place to start if you want to strengthen the core skills effective managers rely on. The course covers managing people, processes, and performance, as well as decision-making and execution—skills that can provide a foundation for leading change.
Leading Change and Organizational Renewal is designed for leaders who want to guide transformation directly. It focuses on diagnosing performance and opportunity gaps, building an organization that can execute today while innovating for tomorrow, and using cultural levers to overcome resistance.
Together, these two courses offer a path from managerial fundamentals to change leadership.
Do you want to become a more effective change leader? Explore Management Essentials and Leading Change and Organizational Renewal—two of our online leadership and management courses—to develop the skills you need to plan, execute, and sustain organizational change. Not sure which course is the right fit? Download our free course flowchart.
This post was updated on October 1, 2026. It was originally published on March 19, 2020.