Why American Eagle's CEO Failed to Lead His Company through Cultural Change

Evolving a company's culture is one of the great tests of leadership, especially when some members are resistant to the new direction. This is exactly what American Eagle ex-CEO Robert Hanson recently went through: after he helped raise annual sales to a record $3.5 billion in his first year, his gung-ho ambitions of improving mobile operations and moving their satellite office to San Francisco got him fired before his two-year contract even ended. Hanson’s story reminds us that leading change isn’t just about knowing the right thing to do, but also the right way to do it.

Leading a Company through Cultural Change

  1. Develop a vision. Your vision is the difference you create in your customers’ lives and/or in the world. For example, Tesla’s vision is, “We will accelerate the advent of sustainable transport”. Your vision should be co-created so key leaders have a sense of ownership over it. Repeat your vision until everyone gets on board.
  2. Set a realistic time span. Change takes time. Even Steve Jobs needed three years after returning to Apple to make an impact on their stock price. Lasting change can take as long as five to seven years. Don’t set yourself up to fail by saying you’ll make changes overnight.
  3. Scale the opportunities that succeed. Resist the temptation to scale everything at once. Instead, find opportunities to innovate and scale the opportunities that succeed (like how Taco Bell’s innovation team organized an Inaugural Demo Day).
  4. Gradually gain supporters. Before the change implementation, build a group of supporters. As you make more wins, gain more supporters. The more you make it a habit to gain support, the more momentum will propel your change.
  5. Praise wins publicly. Triumphantly announce small wins so that as many people are aware of the change’s progress as possible. (This also helps with #4.)
  6. Be gritty. Grit is your passion and motivation to achieve a long-term goal. There will always be critics of change, but in the end, the changemakers are those with the most grit.

Takeaway: Remember that lasting change requires a true team effort. Work to win people over to your side, and be ready for the long haul.

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