The Change Imperative: Organizational Survival is Optional

“Across almost all sectors and regions, [organizations] face unprecedented disruption.  The competitive advantages that once gave [organizations] a defensible position – their product lineup, scale, or legacy position – are no longer as secure as they once were.  In the face of this volatility and complexity, most [organizations] must transform, meaning a comprehensive change in strategy, operating model, organization, people, and processes.  More than ever before, transformation is an imperative.

“In fact, forward-thinking [organizations] are launching preemptive transformations while they still hold a dominant market position, retooling themselves to stay ahead.  The hard reality, however, is that many transformations fail.  Some 75% fall short of their targets – in terms of value generated, timing, or both”…

That is the opening statement of a paper issued late last year by the Boston Consulting Group (Transformation: The Imperative to Change, Faeste, Hemerling, Keenan, and Reeves; Nov 2014).  With everything I hear from PEN members, their hypothesis is correct: organizations are facing an extraordinary level – and accelerating pace – of change.  Welcome to the New Normal.  And organizations that do not systematically – and effectively – manage this change will find themselves at a competitive disadvantage to those that can.  As the saying goes, if you’re not improving, you’re getting worse.

Today, the need to change is absolutely everywhere.  Customers and markets are more demanding; competent (and available) workers are growing scarce; technology is accelerating; business models are transforming; and competition is intensifying in nearly all industries.  And it’s not just for businesses: the need to change is facing our hospitals, our schools, our nonprofits, our governmental agencies, and our communities.  Those that have the will – and the ability – to change, will survive.  Those that don’t (or can’t), won’t.  As Deming once said: “it is not necessary to change; survival is not mandatory.”  It’s really just that simple.

Fortunately, there are many proven models for change – Prosci’s ADKAR Model, Kotter’s 8-Step Change Model, McKinsey’s 7-S Model, and Lewin’s Change Management Model, to name a few.  None of these are perfect recipes for change, but all of them have some basic philosophies – some common best practices – that increase the chances of successful change.  Here are 10:

• Leaders must increase the urgency – and articulate the need – for change. Discussing the limitations of the current system, exploring environmental factors that require the change, and using data to build the case for action will all help articulate the need.
• Leaders should create a shared vision for change with their team.  Seek employees’ input on how and what to change.
• Communication should be early, consistent, and continuous throughout the change process.  Employees will resist change when it is sudden and they have little time to adjust. Release information as soon as possible, then roll out the change in incremental steps.
• Employees must be empowered to make the change.  They should be involved in designing and then implementing the change.  Making change TO employees is never as successful as facilitating change WITH employees.
• Systems must change to support the new model and vision.  In other words, change must be reflected in processes and policies so that employees aren’t constrained by the old systems.
• Leaders must be persistent to keep the organization moving toward its new vision.  There will be resistance; there will be delays; there will be challenges.  But leaders must have constancy of purpose to realize the vision.
• Change should happen in a holistic, systemic way, focusing on strategy, shared values, structure, systems (and processes), style, staff, and skills.  Really, this is the essence of the McKinsey 7-S Model.
• Change should be paced.  People go through change in phases – from a comfort zone, through a period of transition, to another place of stability.  The speed of change should be managed and deliberate. This is the essence of the Lewin Model, which has been foundational since the 1950s.
• Monitor change as it’s happening.  If something is not working, evaluate and adjust.
• Change should be reinforced and “hardwired” into the organization.  To make change “stick,” training, communication, reward systems, and other processes must reflect the new model and new behaviors desired.

Those 10 best practices will help a great deal in increasing the odds of successful change.  But to this list, I’ll add three more from the BCG article – three that I believe really capture the “secret sauce” behind successful change efforts:

• Change must be funded.  BCG calls this “funding the journey,” and it goes beyond just making the necessary investments for change in terms of technology, training, and so forth (which is also important, by the way).  Funding the journey “entails pulling short-term levers to establish momentum and create the fuel for new growth engines.”  Essentially, this means finding quick wins or the low hanging fruit (whichever phrase you prefer), which will serve to energize the organization, create buy-in from leadership and employees alike, and provide additional capital to reinvest in further change.  This creates somewhat of a flywheel effect and helps to accelerate future change.
• Organizations must win in the medium term.  Not only do organizations need quick wins to fund the journey and create momentum in the early stages, but BCG suggests organizations also need to “dramatically rethink the operating and business models to increase competitive advantage” in the medium term.  This really is all about changing the old systems – of rethinking how the organization designs and delivers products/services for customers, of how it can streamline processes to reduce waste and eliminate friction that adds no value to the customer, and/or how it can introduce innovative ways to go to market and create new value for customers.
• Finally, the organization needs to set up the right team, organization, and culture to sustain the change and set the organization up for high performance.  Consistent with many of the people-based change models I listed above, BCG suggests attention to five factors:
  • Ensure commitment that allows the leadership team to lead from the front.
  • Simplify the organization and develop the culture to support high performance.
  • Develop talent to fill the critical roles required to transform.
  • Install an HR team that can act as a transformation partner.
  • Deploy change management tools – like the ones I list above (ADKAR, Kotter, McKinsey, etc.) – to drive results.

If you’re interested in a copy of the BCG report, I’d be happy to email you a PDF (it’s about 35 pages).

And if you’re interested in learning from ~30 other organizations on how they are making successful change – using techniques consistent with Prosci, Kotter, McKinsey, BCG as well as others – then attend our fall conference November 10-11: “Thriving in Times of Change; Harnessing the Power of Culture.”  This will be a relevant, powerful event – full of best practices, tips, and applications to help organizations manage change and leverage culture. For more information (including a full schedule, abstracts, and bios), visit here.

As I mentioned before, in today’s environment, every organization is facing an increasing amount of change.  Only those that effectively navigate – and thoughtfully and systematically manage – the change will succeed.  Don’t forget the words of Deming: change is optional, and so is survival.

What comments do you have regarding how to successfully manage change?  Participate in a discussion on this topic: visit our LinkedIn group to post a comment.

Never stop improving!

Brian S. Lassiter

President, Performance Excellence Network

www.performanceexcellencenetwork.org

http://twitter.com/LassiterBrian

Catalyst for Success Since 1987!