Almost every CEO has a moment where he points down at something in his company and asks, “why is that task there so damned difficult?” The answer to that “why” is almost always that he and his predecessors allowed it to happen.

But knowing something isn’t right is not enough to change it. Many of us have been part of failed technology implementations, watched change agents enthusiastically enter and then unceremoniously depart, and experienced consulting firms make a ton of noise while operational managers roll their eyes and do things the same old way.

Why is change so hard? Well, it is important to understand how dysfunction permeates in the first place. When a company is small, people just do things and everyone is cool. As companies grow, inefficient ad hoc systems develop around tasks that may allow them to be completed, but without design, consistency, or concern for efficiency. As a result, getting a ball from point A to point B in one department can be harder or just different in another department.  So, employees rely on something inherently human – interpersonal relationships. We engage our coworkers by seeking and doing favors. We build and spend personal capital. Work flows easily between friends and finds friction with everyone else. This naturally leads to cliques and departmentalism. This is a natural dynamic for people in groups and can work in a company as long as the place is stable.

But, oi, does it become a problem when a company is in growth or evolution mode. When new employees come in and want to make an impact, when the competition is taking advantage of a just out-of-reach opportunity, when clients are asking to have that week-long process reduced to an hour, the clamor for change can be distracting.

I think we all understand that enterprise solutions require effort from many disparate parts of the company (duh, it’s in the name), and that these changes often incur costs in one area that pay benefits in another.  Fixing things will likely require implementation of technology and automation, layoffs or hiring, new training, a focus on strict procedures when once there were none or conversely new authority for lower-level employees who previously had none, reduction of margins or product offerings. And even the firing of some clients. These things hurt, can cause disruption, and can send the wheels right off the train – if the foundation for change is not in place.

So, when is a company ready for change? Well, after 20 years of transformation management, dozens of successful transformations, and a few fails, I have devised a quick test to determine if a company is ready.  Simply put, successful change requires two of three criteria for foundational change. What are they? Ready? Here we go!

ONE – A solid transformational manager

This person will agnostically look at the problem, determine the possible solutions, and then be able to pick the one that will bring the most value to the Company. Of course, I am simplifying the design process, but that’s not the point of today’s post. This person will also work across the departments to make sure that everyone who is being asked to change their behavior understands and appreciates the changes before they are required. Again, I am simplifying the project management process, but this individual or team must be good at communicating shared common goals, and be willing to work, sleeves rolled up, with everyone in the company as a peer. I know l lot about this role, because this is what I do for a living.

TWO – Onboard VPs

The VP level department team is not dysfunctional. They respect and support the other managers at their level, they understand that things aren’t as good as they could be, they wish for improvement, they expect to be held accountable, and they accept that company-wide changes only work when managed independent of the associated departments. They also understand that increasing efficiency has a time and discomfort cost that each department – their department – will pay up front in return for benefits down the road. Ideally, these folks will not be territorial, but a little departmental pride is fine and unavoidable. What is important is that each one understands that the changes their group is making will benefit the whole company. It’s not the size of the slice; it’s the size of the pie that matters. A bigger pie means that ultimately everyone has more pizza. I really love that metaphor.

THREE – Executive Leadership

A CEO that is aligned and really wants to see his/her company run more efficiently. Transformation is disruptive. That is going to put strain on the executive. He/she will have to deal with interdepartmental friction, face tough revenue and expense choices, write unwanted checks, and get involved with project management in ways that he/she hasn’t been at their level. This is an important point. The transformation team may involve people from IT, accounting, and operations, but the project ownership must be independent of each department, else departmental loyalties will skew the outcome and ultimately derail the success of the project. Transformational projects must belong above the departments – and generally that means they belong to the CEO and C-Suite.

As I said, you need two of the above three. If you have a great transformation manager and an executive that wants this done, the CEO can force the middle managers to play ball and replace them if necessary. If the CEO and the VPs all agree that it needs to be done, they can make up for a poor transformation manager by assisting with design and buy in. And if the CEO hates change (multigenerational family-owned businesses), but the department heads know that something has to change, they can act as a buffer between the executive and the necessary disruption.

So, if your company is thinking about fixing all that is wrong, ask yourself if you have a CEO willing to lead the project, a team of departmental heads willing to share the friction even when the benefits are not even, and a transformation manager that will design the right solutions and work to ensure that everyone being asked to change believes they own that change.

As I have pointed out a few times above, this is a wild simplification, but the framework holds. If you have all three criteria, you are in great shape. If you have two, you stand a good chance of success, but if you only have one, you are better off spending that money on pizza.

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