Document 230267

Why Most Large Change Efforts Fail
– And How to Break the Pattern
EXECSUM7 - Tuesday, October 12, 2004 5:00 PM - 5:30 PM
J. Scott Hyde
j.scott.h[email protected]
Mobile: 206-321-1409
Contents
The Challenge of Transformational Change
Ten Principles for Successful Change
Case Studies
Appendix
ƒ Selected research sources
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The continuous changes hitting our industry put
enormous pressure on organizations and individuals
…REQUIRES
ORGANIZATIONAL
CHANGE…
EXTERNAL CHANGE…
ƒ Technology: IP; WiFi; 3G
ƒ Economy: telecom bubble;
retrenchment
ƒ Regulatory: WNP; UNE;
Sarbanes
ƒ Society: privacy; security;
mobility
ƒ Customer/competitors
ƒ
ƒ
ƒ
ƒ
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Strategies
Structures/de-layering
Practices
Processes
Products
…REQUIRES
PERSONAL CHANGE
ƒ
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ƒ
ƒ
ƒ
Roles
Responsibilities
Habits
Thinking
Values
Behaviours
Today we’re focusing on the link between organizational and personal
change: where today’s industry players must improve to adapt to
transformational pressures
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Many organizations ignore the individual change process,
leading to failure or delay in transitioning to new models
The Emotional Cycle of Change
Satisfaction
Certainty
Confidence
Optimism
Hope
Time
Pessimism
Doubt
‘Valley
Of
Despair’
Different people will be in different places at different times – yet the depth of
the valley, and the time spent there depend upon the change tactics
employed
Source: Daryl Conner, adapted from Kubler-Ross’s Emotional Cycle of Loss: see “On Death and Dying”.
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These ten principles help organizations accelerate the time between
intent and results – by addressing the individual
Map Your Route to
Success with a ‘Big
Picture’ of all Change
Articulate the Need for
Change and Support it
With Rewards and
Recognition
Establish a Strategic
Action Plan with
Measures
Develop Uncompromising
Change Leadership Skills
Ensure Buy-In At All
Levels of the
Organization
Manage the Emotional
Process of Change
Define Performance
Criteria for Re-skilling
affected people
Define the New Roles and
Culture
Leverage Key People
(‘influencers’)
Follow a Strategic
Communications Process
For sources of quantitative, validated research and evidence supporting these concepts, please see the appendix
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What’s So Different About This Approach?
ƒ It addresses multiple perspectives: rational, political and emotional
ƒ Emphasizes leadership responsibility, but not exclusively: recognizes that individuals at
all levels must help define the change details
ƒ Relies not just on communication, but recognizes the need to uncover dissent,
understand resistance and encourage deep personal involvement
ƒ Relies on central coordination, measures and targets, yet allows those directly affected to
design and perform pilots and implementation activities locally
Experience has shown that its not enough to merely follow the standard
‘change management’ checklist: motivate; communicate; involve;
measure…The key is how you go about accomplishing these steps.
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Building the Case For Change: Answering the ‘Why?’
Articulate the need for change; support it with appropriate rewards and
recognition for specific, well-defined behaviors
Keys to Motivating People to change:
ƒ Identify a Crisis: the ‘deficit’ model creates a sense of urgency (Ford in the 80’s)
− OR
ƒ Create a Vision: the ‘aspirational’ model paints a picture of ‘what can be’
ƒ Either model can create a tangible motivation that people can identify with
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Set Direction with Clear Vision and Goals
Map Your Route to Success with a ‘Big Picture’ of all Change
Keys to Ensuring Clear Strategic
Direction:
ƒ Begin with values, vision and mission
ƒ Establish a business case with 3-6 major
indicators of success
ƒ Assign accountability to a sponsor or
team lead
ƒ Set ambitious targets with milestone dates
ƒ Identify the detailed activities to move
from the current state to the desired state
ƒ Create measurement tools to track human
and economic performance of the new
organization
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Aligning All Initiatives Creates a Single Route to Success
Keys to a successful initiatives integration map:
ƒ Clarify major objectives of each initiative
ƒ Tie each initiative to the objectives or goals of the overall change
ƒ Specify milestones and results to be delivered
ƒ Identify initiatives in conflict or support of the plan; halt or integrate selected projects
ƒ Identify key events for communications
ƒ State the sequence of the work
ƒ Focus on the integration points between each change activity
A rigorous assessment of initiatives often uncovers
opportunities to refocus, stop or integrate existing efforts to
support the change
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Major Change Requires New Behaviors from Leaders
Important Leadership Behaviors During Change Programs:
ƒ ‘Walk the Talk’ – good change leaders demonstrate what is expected of others and link
words to actions
ƒ Inspire, set direction, clarify vision, communicate values and expected behaviors
ƒ Bring the vision to life with stories and pictures that portray the beliefs and values of the
change effort and the organization
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Leaders Must Visibly ‘Take the Wheel’ During Change to
Demonstrate Commitment
Roles of Leadership during Change:
ƒ Enlist support and participation from all levels of the organization
ƒ Commit the required resources
ƒ Leave the details to those closest to the work
ƒ Nurture new formal and informal pathways for collaboration
ƒ Build recognition and rewards to encourage
bottoms-up commitment
ƒ Encourage candid, open challenge – but confront
and deal with those who subvert the change process
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Neither ‘Bottom’s-Up’ nor ‘Top Down’ Change Alone are
Sufficient to Ensure Success
Accelerate Buy-In with Bottoms-Up involvement and top-down commitment
Keys to Ensuring Buy-In
ƒ Have visible leadership involvement.
ƒ Communicate the vision relentlessly
ƒ Obtain personal commitment at all levels
ƒ Involve many in defining the direction and solutions
ƒ Provide support for shifts in resources
ƒ Ensure emotional support by including those who will be affected
by the change
ƒ Rely heavily on front-line employees having the customer
knowledge that can be leveraged throughout the organization
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Managing People through the Emotional Cycle of Change
Is As Important as the Rational and Political dimensions
Effectively managing the emotional cycle of change:
ƒ Limit fear and sense of loss, the strongest emotions that must be acknowledged.
ƒ Emotions connected with fear and loss are inevitable; William Bridges’ model*
incorporates a number of helpful principles:
− Identify and acknowledge losses and allow time for grieving and venting
− Honor the strengths and successes of the past
− Point out gains for individuals and the organization
− Identify what is not changing
− Encourage open dissent and dialogue;
provide safe, frequent forums for debate
and listening
Satisfaction
Certainty
Confidence
Optimism
− Help people see the big picture, not just
their loss
− Give people time and space to un-learn,
practice new ways of working, and make
mistakes
Hope
Time
Pessimism
Doubt
‘Valley
Of
Despair’
*Bridges, William. Managing Transitions. 1991 Reading, Massachusetts
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To Truly Drive Lasting Change, Employees Must Learn
New Skills and Processes
Define learning requirements and any new performance measures
Keys to re-skilling:
ƒ Stop un-needed old behaviors and replace with new skills
ƒ Remember systems don’t solve problems – people do
ƒ Trace the impact of each change to the work group or individual job to design new work processes
ƒ Follow this simple cycle: assess, define, train, coach, try, observe, measure and validate
ƒ Create a climate for learning with a lenient attitude toward early miss-steps
ƒ Remember, this is when the energy and enthusiasm can wane.
− Use recognition and small rewards for early successes
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Major Business Change Often Requires Fundamental
Changes to Culture and Behaviors
Define the new culture, behavior, roles and responsibilities
Keys to culture change:
ƒ Analyze the written and unwritten rules of ‘how we do things around here”
ƒ Establish a common purpose by aligning organization values, vision, beliefs, attitudes
and rules to clarify acceptable behaviors in the new environment
ƒ Link the reward and recognition system to the clearly stated roles and behaviors
expected
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Every Organization Has a Critical Few People Who Can
are Important Influencers of Opinion and Behavior
Typically a small cadre of influencers are the key links in the
organizational chain
Keys to Leveraging Influential People
ƒ Identify both natural opinion leaders and ‘mavericks’ or skeptics
ƒ Gain public support of the organizational ‘skeptics’
ƒ INVOLVE – give key influencers transitional roles in the effort
ƒ Focus major effort on strategic populations – usually front line supervision of the
audience most affected by change
ƒ Focus on early adopters; when 20% of the population embraces change it can
become self-sustaining.*
* Rogers, Everett M. Diffusion of Innovations. 1983 New York, New York
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Most Change Efforts Underestimate the Importance of
Communication
Create a strategic communication process as part of a leadership plan
Keys to building Effective Strategic Communications Plans
ƒ Create a communication map, a matrix of the critical audiences that need information to
take action or make decisions; the key messages that need to be understood; and the
channels of communication that will get the messages across to each audience
effectively.
ƒ Create a timeline for development, implementation
and the evaluation method to determine the effectiveness
of each communication event.
ƒ Communicate the values, vision, mission and the strategy
broadly and frequently to ensure widespread understanding
and buy-in.
ƒ Ensure there are plenty of two-way communications channels
– in multiple formats – to encourage dialogue
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RBOC Case Study: The importance of training and
acceptance in implementing new technology
Situation
ƒ Implementing the financial
suite of an ERP package with
need to have the front-line
Outside Plan techs utilize
the Project module for all
projects
ƒ Target users not ‘technology
savvy’ with IT business
applications
ƒ Initially, senior management
resisted concept of two
weeks of training to be
performed by the direct
supervisors
ƒ Previous ERP efforts at this
organization had a history of
difficult implementations
Actions
ƒ Implemented ‘train the trainer’
approach
ƒ All supervisors got three weeks
training over three months:
• 1 week of application training
• Two days of effective training
techniques instruction
• One day of training set up and
management
• 2 weeks of delivering the
training to their people
Results
•
Success was ‘phenomenal’
•
Excellent system adoption,
very little work disruption
•
overall user buy-in and
acceptance,
•
highly successful roll-out
raised the confidence of the
organization
•
System was rolled out to
3000 people in 17 locations
over a three-week time period
Experience has shown that a skeptical, resistant target group is best addressed
through it’s direct managers rather than higher-ups or ‘outsiders’
Source: Capgemini client case study
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Case Study:
Handling Sensitive Issues in Downsizing Environment
One organization – two divergent approaches and results:
Situation
ƒ Implementing multiple
modules of and ERP suite
ƒ Moving to a ‘shared services’
approach
ƒ Efficiency gains through the
technology and shared
services approach created
need to downsize the
organization
ƒ Functional executives
needed to plan for and
communicate the workforce
reduction impacts while
maintaining service in the
transition period
ƒ Focus: Customer
Service/Call centers and
Finance
Actions
Call Centers:
ƒ Implemented ‘staypay’
program
ƒ provided outplacement
services
ƒ early and frequent
communications
ƒ first run on other job
opportunities
ƒ planned and focused "lay off"
conversation with local HR and
plant directors
Finance:
• Limited communications
• No local coordination
• Reactive vs. proactive
approach
Results
Call Centers:
•
Successful go-live with no
issues
•
Employees conscientiously
transferred their duties
•
Little early departures or work
disruption
Finance:
•
Rampant and destructive
rumors
•
Disruption to local plants
•
Early defections
•
Missed financial closing
cycles
Source: Capgemini client case study
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GE: A Case Study in Effective Business Change
Situation
Actions
Results
GE Before the Transformation
GE During the Transformation
The New GE
ƒ Failed to generate real earnings
growth
ƒ Rewarded seniority, not
performance
ƒ Focused on CEO satisfaction,
not customer satisfaction
ƒ Lagged competition in
productivity growth
ƒ Produced negative operating
cash flow
ƒ Fell behind in technology
development
ƒ Established profit and loss
responsibility at the business unit
level
ƒ Created entrepreneurial spirit
and a flexible, innovative culture
in a large company
ƒ Selected leaders with clear vision
and an ability to energize others
for change
ƒ Established businesses as
market leaders
ƒ Eliminated layers of resistance
(unnecessary management) and
increased span of control
ƒ Invested in education and
communication
ƒ Conducted work out sessions
ƒ Invited debate/constructive conflict
ƒ Shifted to new strategy model
ƒ Increased revenues from $50
billion in 1991 to $100 billion in
1998
ƒ Grew net income 350% between
1991 and 1998
ƒ Improved Return on Equity to
25%
ƒ Significantly increased
shareholder value to over $330
billion
A dramatic shift in focus and accountability enabled by effective business
change, has led to a new organization, exceeding original expectations
Source: Fortune, May 29, 1995; Sales and Marketing Management, February 1995; Control Your Own Destiny or
Someone Else Will, Tichy & Sherman, One Source, Analyst Report: Morgan Stanley Dean Witter, 10/98
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IBM: A Case Study in Effective Business Change
Situation
Actions
Results
IBM Before the Transformation
IBM During the Transformation
The New IBM
ƒ Developed complicated
products which did not
effectively meet the
customers need
ƒ Communicated sense of
urgency to change
ƒ Missed the technological shift
from main frames to PCs
ƒ Focused employees on the
customer, on providing
customers with one stop
shopping
ƒ Maintained a rigid culture and
applied an ironclad dress
code
ƒ Introduced a new leadership
team
ƒ Increased share of new, highgrowth businesses from 7% to
47% of total revenue
ƒ Emerged as world’s largest
seller of software
ƒ Established a workplace
attractive to current and
prospective employees
ƒ Provided market specific
product offerings
ƒ Reduced SG&A expenses by
25%
ƒ Entered new markets, e.g.
China
ƒ Increased Return on Equity to
over 29%
ƒ Aligned compensation to
performance
ƒ Changed the culture
A dramatic shift in focus and accountability enabled by effective business
change has led to a new organization which exceeded the original expectations
Source: Sales and Marketing Management, October 1994; Business Week, May 1, 1995; Wall Street Journal, January 12, 1995,
January 19, 1995, February 3, 1995, April 26, 1995, May 15, 1995. One Source, Analyst Report: SG Cowen, 12/98
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The Nestle USA Team Learned Some Sobering – Yet
Familiar, Lessons
Background:
ƒ June 2000, Nestle signed a massive contract with SAP to implement an ERP
solution ($280 million software+consulting)
ƒ One analyst immediately downgraded the stock: “It touches the corporate
culture . . . That’s risky. It’s always a risk when you touch the corporate
culture.”
Post-Mortem quotes:
ƒ “No major software implementation is really about the software. It’s about change management.”
ƒ “When you move to SAP, you are changing the way people work. . .you are challenging their
principles, their beliefs and they way they have done things for many, many years.”
ƒ “much of the employee resistance could be traced to a mistake that dated back to the project’s
inception: None of the groups that were going to be directly affected by the . . change . . were
represented”
ƒ “we were really naïve in the respect that these changes had to be managed”
ƒ “morale tumbled . . Nobody wanted to learn the new way to do things . . Why? . . too many
competing initiatives . . Y2K . .
ƒ “the project team had lost the big picture of how the various components would work together”
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The Failure to Enlist Key Influencers and Lack of Strategic
Communications Hurt Nestle
ƒ Project was re-started . . “begin at the beginning, starting with the business requirements then
reaching an end date. They also concluded that they needed better support from key divisional
heads and that all the employees knew exactly what changes were taking place, when.”
ƒ “the End Game: Sadder but Wiser” Nestle team built a “detailed road map to follow” and hired a
director of process change, who “was shocked by the still poor relationship between the divisions
and the project team”
ƒ Conducted regular surveys of employees readiness to change; based on poor feedback a key
module was delayed for six months because users were not prepared
ƒ “to do it all over again, . . focus first on changing business processes and achieving universal buy-in,
and then and only then on installing the software.”
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Appendix
Change Management Research Sources
Sources of Validated Research on Effectiveness of
Change Management Approaches
Everett Rogers’ Diffusion of Innovations
ƒ
Rogers, Everett M. Diffusion of Innovations. (4th ed.). New York: Free Press, 1995
−
the standard textbook and reference on diffusion studies. Now, in the fourth edition, Rogers presents the culmination of more than thirty
years of research
−
Includes review and synthesis of 5,000 diffusion publications.
The Delta Technique
ƒ Armstrong, J. Scott “Strategies for Implementing Change: An Experiential Approach” Group and Organizational
Studies Vol. 7 #4 (1982)
Some selected research analyst statistics:
ƒ Organization and Process are cited as among the top barriers to improving Network Operations Center capabilities
(Lucent survey of 99 NOCs, 37% of respondents)
ƒ Without the appropriate change implementation support, a company spends $3-10 for every dollar invested in the
technology to retrofit it to the culture (Gartner Group)
ƒ Organizations that under-invest in training are three times more prone to lengthy implementations and cost overruns
(Gartner Group, 0.7 probability)
ƒ Over 80% of trained users achieve at least 50% productivity improvement over untrained users (AutoCAD User
Survey)
ƒ
Untrained users require three to six times more support than trained users (Gartner Group)
ƒ Nearly half of all major technical initiatives fail because of fear and anxiety in the organization, and resistance from
key managers (Computer World, 1995)
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Contact Information
J. Scott Hyde
Capgemini
10500 N.E. 8th Street
Suite 1400
Bellevue, WA 98004
206-321-1409
[email protected]
www.us.capgemini.com