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8:00pm EDT September 25, 2009

Terry Horne had a why. He just needed a how.

He knew newspapers had to change because of the trends he’d watched during his 30-plus years in the industry. He saw Internet competition creep up, combating newspapers’ recruitment advertising revenue with free job listing sites like Monster.com and CareerBuilder.com.

So when Horne stepped in as president of Orange County Register Communications Inc. in September 2007, he’d already been touting his case for several years. He called his presentation The Perfect Storm. At industry gatherings, he repeated the message that newspapers must diversify because of Internet innovation and changing readership patterns.

In his new position, which included the role of publisher for the Orange County Register newspaper, he introduced himself with that presentation. He adapted it to the Register with local data that showed classified revenue and audience levels spiraling downward while advertising prices scaled up.

He shared his vision of the Register — like any newspaper that would be successful in the future — becoming a multimedia corporation, stretching its Internet base as it diversified advertisers.

“When you’re expecting an organization to change, you have to create a vision of what it looks like when the change is complete,” Horne says. “You’ve got to create a vision of what happens if the change doesn’t happen.”

He was blunt about the alternative, using the worst-case scenario to motivate employees.

“You have to say there will be [companies] that go out of business,” he says. “My commitment is that this change is definitely going to happen because it has to happen. You have to express confidence that you know what needs to be done in big, broad brushstrokes — maybe not specifically —because they’re in a better position to know that.”

So Horne’s missing piece was his base of about 1,300 employees. He knew the industry had to make changes, but he turned to them for the details, like how the company would fulfill that broad vision and what changes would take it there.

“Most people that make big changes in businesses that are effective are not coming in [saying], ‘I’ve got answers. You guys go do them,’” says Horne, whose company saw estimated 2008 revenue of $245 million. “They’re saying, ‘We need answers. You help me find the answers,’ and then you help make them reality.”

Bring employees up to speed

Horne spent his early days at the Register explaining the problems they faced and, very broadly, what the solution might look like. He says that debriefing must be transparent. You can’t steer away from bad news; it can remind employees why change is so crucial.

“It’s a little easier to create change when people are clearly aware that a lot of bad things are going on,” Horne says. “It’s harder to do change when a business is pretty successful and you’re anticipating difficult times so you’re trying to pre-empt it. It takes really strong communication and transparency to create urgency in people, because change happens from urgency.”

For example, when Robinsons-May department stores merged with Macy’s, Horne explained to employees that meant a $3 million advertising loss for the Register.

When you deliver bad news, articulate which factors are out of your control. Then turn your message to the things you can control, encouraging employees to tackle those instead.

Horne used the Macy’s merger to illustrate why the company couldn’t depend solely on large customers. He took the chance to remind employees that one of their goals was diversifying by broadening their advertiser base.

You can keep these sessions from becoming overwhelmingly negative by motivating employees. For Horne, that meant giving them the power to find and implement solutions.

“Rather than an executive team sitting in a room handing down edicts, we decided to communicate with people and help them understand why change was necessary and that, in fact, they were going to have to help lead the change,” Horne says. “They were going to have to help determine what the change was specifically, and they were going to have to implement it.”

By telling employees that they will be responsible for the change, you stir passion that you’d lose if you forced them to follow your mandate. Involving them in the creation of the plan gives them a stake in the company’s success.

“You should make sure your associates know what’s going on with the core business and why we are making changes,” says Horne, who sees failure to do so as the root of most job dissatisfaction. “The best way to do that is to have a continuing dialogue and involve them in solving the business problems.”

That approach also eliminates the step of securing buy-in from everyone. When employees create the plan, they’re already committed to it.

“When it’s time to implement, you have a bunch of willing followers — in fact, you have a whole lot of leaders — within the organization forcing the change, as opposed to a handful of managers trying to force the change,” he says.

Charge teams with change

Horne created eight “transformation teams” to take responsibility for the change. He looked for peer-respected opinion leaders from every area of the business — sales, marketing, finance, etc. First, he considered candidates who had contributed to changes and special projects in the past. It’s also good to include several managers who visibly lead decision-making, although they won’t necessarily head these groups.

Above all else, attitude is a key factor in identifying change leaders. You shouldn’t have to convince people; just go after the ones who express willingness to participate in the organization’s success.

Even though you’ve worked to bring everyone into the same change-driven mindset, these cross-functional teams require additional training. These “boot camps,” as Horne calls them, should reiterate the urgency and teach the groups what to change and how.

Horne brought about 50 or 60 people into each of three two-day boot camps. Although this is the third time he’s been brought into a company to lead a change like this, he still relies on a hired consultant for this training.

Open the camp with a definition of how you’ll view the coming change to get everyone on the same page.

“We view it as a gateway to innovation and something with phenomenal upside potential, rather than focusing on the potential downsides and simply sticking to what we know,” Horne says.

Although optimism is key, you have to be honest about the problems. Keep reminding the groups why change is necessary, providing data as proof.

“Part of our shift is about understanding the realities,” Horne says. “Delivering news and information is a business just as much as it is a community service. And as a business, we have to make money. If we don’t, we have to rethink any cost-draining processes or products.”

Empower employees to change

By including employees from all departments on each team, you already have eyes looking at each issue from all sides. But you need to equip them to ask the right questions to identify breakdowns and improve efficiency.

“Every decision we make is about providing more value to our customers,” Horne says. “If weȁ 9;re not producing products that are cheaper, better and faster than anyone else, we will not remain relevant. Our associates have to ask themselves one simple question in everything they do: Is it growing audience or revenue? And if not, it’s time to stop doing it. It’s that simple.”

If employees uncover a process that meets those criteria, Horne trains them to ask whether it can be done cheaper, better or faster by partnering or outsourcing.

Give the teams additional frameworks for each issue you charge them to examine. Put their task in context of what you expect the outcome to look like and what types of solutions are acceptable.

“I tell them what I want from an outcome, either from audience or revenue or expense, and then I tell them what they can and can’t do,” Horne says. “For example, if I’m telling a revenue group to grow revenue any way you can, [I’d say], ‘Come up with $1 million a month in new revenue next year.’ I might say, ‘But you can’t open a Starbucks drive-through. You can’t go out and do something that’s totally outside of our core competencies. But you can invest money in a product that serves our customer base better.’”

Then step back and let the teams do what you trained them to do.

When teams present their proposed solutions to Horne, they have to verify that it meets each facet of the framework he gave them — for example, the team would include research that shows how its plan would bring $1 million in revenue every month. The team should also figure the cost of implementation.

There may be some back and forth as you ask for additional details or rethinking. But once you give approval, send the plan back to the team for implementation.

“That’s why I don’t allow them to be called committees — committees talk about it and recommend, and somebody else implements,” Horne says. “These are teams that solve the issue and implement the issue.”

Communicate progress

Your effort to involve certain employees in change teams can multiply across the rest of the organization. Group members can serve as missionaries, passing their passion to other employees. But for that to take root, you have to communicate transparently.

“We can reiterate a sense of urgency to meet financial goals, but it requires more than that to achieve a change-driven mindset across the organization,” Horne says. “In the face of adversity, we’ve improved interactions with one another to help reach a collective goal.”

Horne holds five town-hall meetings every month or two to keep the company updated on the progress of the transformation teams. Encourage the teams to do their own presentations so employees can hear success stories straight from their peers. You can also use those settings as a stage to reward players who have been pivotal to the plan’s success.

Solidify their testimonies with hard facts, sharing financial information to show effects objectively. For example, one change the teams instigated was a redesign of the Register’s Web site that lets readers customize their content. While print readership stayed flat this year with the previous year, the number of unique online users increased 92 percent.

In 2008, the teams helped Orange County Register Communications Inc. reduce expenses by $22 million, and the company is tracking to meet its goal of eliminating another $40 million this year. The company achieved operating profit margin every month for the first half of 2009, exceeding their six-month profit goal by 25 percent.

As other employees hear accounts of change transpiring, more of them will buy in.

“When actual change happens, people see they’re empowered because they see they’re doing it, not me,” Horne says. “People begin to believe that real change is happening when it’s coming from within the organization as opposed to coming from the CEO.”

To totally drive the change, you should also take the message outside to customers. Regardless of the audience, Horne says he’s trying to send the same message about why the company does what it does and why it is changing what it does.

For each group, you should focus on how the changes affect that group specifically, rather than bogging all groups down with unnecessary details. Show employees how the company will be more effective and poised for growth, and provide evidence of that along the way. For the end users, explain the changes they’ll see in products and why those are occurring.

“Talking directly to customers is still the most effective way to communicate, and I’m very comfortable doing that,” says Horne, who holds open houses for advertisers and readers to explain changes and answer questions. “If you’re doing things to customers that you don’t feel comfortable enough to stand in front of them and talk about, you might be doing the wrong things.”

Just like your cross-functional teams can be ambassadors to other employees, educated customers can carry your message further than you alone could. But for the message to take hold, you must consistently provide proof of your success.

“[Change] doesn’t happen with the flip of a switch,” Horne says. “It’s definitely not a matter of just talking differently. It’s a matter of walking the talk, doing business differently.”

How to reach: Orange County Register Communications Inc., (877) 469-7344 or www.ocregister.com