Because times change and organizations evolve, virtually all companies that wish to keep their doors open for a long time need to successfully undergo organizational change sooner or later.
Generally speaking, change management refers to switching up the way things are done at an organization.
Whether that means reallocating the distribution of resources or budgets or changing processes altogether depends on the organization’s specific situation.
So how can you ensure your change management initiatives are successful? Here are five real-world case studies that should provide some insight into how strong companies pivot successfully.
In July 2012, shares of Nokia were trading below $2 — far off from their highs of nearly $60 in 2000 and nearly $40 in 2007. At the time of this writing, the shares have somewhat rebounded, up more than 300% after having climbed into the $6.50 range.
At the turn of the millennium, Nokia was one of the world’s largest suppliers of mobile devices. This, of course, was before smartphone mania swept the nation (and the world).
Fast forward to 2010, and while Nokia remained profitable, the writing was on the wall. It was only a matter of time before Nokia phones, as they currently existed, would remain relevant.
Because Apple beat Nokia to market with its iPhone, the latter company missed its opportunity to lead the smartphone revolution.
Understanding this all too well — Nokia has reinvented itself time and again in its 150-plus-year history — the Finland-based company hired a new CEO to take the reins.
Ultimately, Nokia’s new management team decided to sell the company’s struggling phone division to Microsoft.
Like it has done so many times over the years (how else does a company founded in 1865 become the worldwide leader in mobile devices in the 1990s?), Nokia has changed the focus of its operations once more.
Currently, the company is building network and mapping technologies, among other initiatives.
When Asa Griggs Candler founded The Coca-Cola Company in the late 1800s, there was no way he knew his company would one day be valued at upwards of $180 billion. That’s a lot of money for a business that sells soft drinks.
But Coca-Cola didn’t become the powerful force it is today by sheer chance.
An illustration: In the 1980s, Coke’s biggest rival, Pepsi, was aggressively targeting it. This caused Coca-Cola to reevaluate its offerings. Eventually, the company decided to concoct a new, sweeter soda. They called it simply New Coke.
Unfortunately, the public didn’t take too kindly to the new beverage. But Coke’s executives didn’t let the mishap derail their success.
Quickly, management decided to pull New Coke and replace it with the older, established formula. Lo and behold, Coca-Cola Classic was born, and Coke maintained its market dominance.
Just as quickly as Coke changed to accommodate its customers’ sweeter palates, it changed direction again when it realized it made the wrong move.
But that’s not the only instance where Coca-Cola listened to its customers and enacted change. Again, how is a company primarily known for selling sugary drinks valued at $180 billion in 2016?
Coke doesn’t only sell sweetened carbonated beverages. In fact, the beverage king sells more than 500 brands to customers in over 200 countries.
Today, many of its offerings — like DASANI, vitaminwater, and Evian — are even considered healthy drinks.
In other words, Coca-Cola has consistently strived to diversify its product portfolio and expand into new markets. By and large, Coke has succeeded in these efforts.
In the aftermath of World War II, the Japanese auto market was nearing destruction. On the other hand, American car manufacturers like Ford and General Motors were crushing it.
Understanding that something major had to be done in order to keep pace with their Western rivals, Taiichi Ohno, an engineer at Toyota, convinced his managers to implement the just-in-time approach to manufacturing.
Instead of having to order and store an insane amount of heavy equipment and machinery, Ohno thought it made a whole lot more sense to receive supplies the moment they were ready to be used.
This way, Toyota wouldn’t have to waste any space, time, money, or energies dealing with supplies that would just collect dust until they were needed.
Additionally, Toyota would have more cash on hand to pursue other opportunities; it wouldn’t be tied up in inventory.
Toyota implemented Ohno’s suggestions, opting to take the just-in-time approach to manufacturing. Though it didn’t happen overnight, Ohno’s recommended changes ended up transforming the Japanese automaker for the better.
Ohno ended up becoming an executive.
When Jack Welch assumed the top position at General Electric in 1981, he inherited a company that had a market value of $12 billion — certainly a modest number, by today’s standards. By the time he left in 1998, GE was worth $280 billion.
While leading GE, Welch was charged with the task of making the conglomerate better by any means necessary. With his gut telling him that his company was due for a complete overhaul, Welch decided to implement Six Sigma at GE in 1995.
Six Sigma is a methodology that aims to reduce defects and errors in all processes, including transactional processes and manufacturing processes. Organizations that use Six Sigma test their processes again and again to make sure that they are as close to perfect as possible.
Five years after Welch’s decision to implement Six Sigma, GE had saved a mind-blowing $10 billion.
Welch claimed to have spent as much as half of his time working on people issues.
By assembling the right team and ingraining them with the right management philosophies, Welch successfully oversaw the transformation of GE from a relatively strong company to a true international juggernaut.
Ever since Amazon went online in 1995, the e-commerce juggernaut has undergone a slew of changes — despite being led by the same man, Jeff Bezos, during the ensuing two-plus decades.
When the Seattle-based company first launched its website, all it sold was books. Gradually, Bezos and his team expanded Amazon’s offerings to include things like CDs and DVDs.
But Amazon never really stopped changing the inventory it sold.
Bezos said he wanted his store to become the world’s largest, so he worked hard toward meeting that goal — whether that meant offering new products, launching Amazon Prime, launching Amazon Instant Video ... the list goes on and on.
Today, Amazon sells more than 200 million products to customers all over the world.
Though for years, Amazon’s detractors insisted that the company wasn’t making enough profits to justify any investments, that all changed in 2015 when the company posted back-to-back successful quarters.
The market responded kindly, and today, Amazon boasts a market valuation of more than $440 billion.
But Bezos isn’t anywhere close to done yet. There are talks of Amazon delivering packages via drone.
And if that wasn’t enough, Bezos recently said he hopes Amazon can produce as many as 16 feature films each year. In 2017, Bezos & his team took home three Oscars.
Indeed, it appears as though Amazon is a company that can be characterized as changing constantly. To date, they’ve been successful, probably because the company is always putting its customers first.
Is it time for your company to move forward with organizational change?
Check out our comprehensive guide about everything you need to know to make your change management initatives succeed. It'll get you pointed in the right direction.
This knowledge is brought to you by organisational change management expert Viisti Dickens, just one of thousands of top management consultants on Expert360. Sign up free to hire freelancers here, or apply to become an Expert360 consultant here.
Table of Contents
- Scoping Change: Single Initiative To Complete Transformation
- Types Of Change
- Is Change Management An Oxymoron?
- Why is Managing Change Important?
- When To Engage A Change Manager?
- How To Set Up A Change Framework
- Changing Role Of Change Managers
- Summary And Essentials
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Change management is the approach used to optimise the people-based ‘return on investment’, upon which the execution of business strategy is dependent. Effective change management in an organisation enables people to be ready, willing and able to accept, drive and lead change.
This becomes even more important as the speed and complexity of change is increasing for many organisations. Many types of significant change impact all sectors and industries, and often simultaneously:
- the need to respond to rapid market disruption
- strategic decisions around new technologies
- mergers, acquisitions or divestments
- new leadership and restructures
- changes to regulatory environment
- new culture and different ways of working
- new processes and key performance indicators
- customer and consumer trends, behaviour and actions
- product development and innovation
- physical relocation or geographic dispersal of ‘value chain’.
Typically, well-executed change management programs enable the effective delivery of strategic programs in response to market dynamics, Board decisions and priorities as below:
Scoping Change: Single Initiative To Complete Transformation
Project and Program Change
Discrete change projects and programs are often contained to one site, business unit or specific type of change. Examples include system upgrades, specific process improvements, or the organisational redesign of a particular team.
For these types of change, change management often follows a more linear process across stages of stakeholder awareness to engagement and complete integration into a ‘new business as usual’. Expert change support is focused on ensuring this ‘business acceptance’ and user adoption using a change toolkit and strong focus on people engagement.
By comparison, transformation encompasses large-scale, multi-faceted and complex change comprising multiple programs, projects and tools. Often, such enterprise or portfolio change enables the execution of strategic business choices such as growth, turnaround/ restructuring, organisational structure, new business model, and innovation. A strong correlation binds digital disruption and transformation. In other words, transformation entails ‘step-change’ – not incremental change.
Transformational change is often also cross-functional in nature, simultaneously spanning multiple business units such as finance, sales, HR, technology, operations and supply chain. This can include multiple types of change per function or business unit – such as operating model, organisation design, technology/ system implementation, culture, values, leadership and location.
Managing a portfolio or enterprise view of transformational change is therefore complex. The holistic view of change ‘hitting’ the organisation must be considered. A tailored change strategy should be developed, based on an effective assessment of the scope, size and impact of change. This is best undertaken by change experts through early engagement at the business case stage of strategic planning.
Types Of Change
Three common types of change include:
- Process or system improvement or upgrades
- Change support is focused on human centred design, user experience and adoption
- Infrequent and short-term
- Often comprising strategic or scheduled programs or projects of change
- Examples include new enterprise systems or new organisational design
- Usually confined to one business unit/ department
- Change management business consultants typically work with program teams and enable business readiness
- Multiple types of change impacts occur at once: culture, leadership, operating model, technology, process, customer, location, business model
- Multiple parts of the organisation impacted such as finance, HR, operations, retail, supply chain, sales and marketing, customer support, technology
- Requires a holistic and strategic view of change managed carefully to avoid risk
- Change expertise is required at the coach and facilitator level, as well as delivery for each large program stream of work, as well as to support delivery teams
Is Change Management An Oxymoron?
Given change is ‘constant’ in the workplace, some might suggest that ‘managing’ change is impossible, or even that ‘change management’ is an oxymoron. How can you manage something that is not always tangible, but is rather constantly moving and evolving?
Accepting that change is inevitable and can be positive relates to organisational psychology, organisational development, culture, mindsets and leadership. Change experts can design and execute programs and interventions, to help build this ‘change readiness’ within organisations. Using online tools and a focus on shared purpose and values are examples.
When change is a point in time choice – based on a strategic decision – then the conscious management of specific programs requires concerted action. This includes the engagement of change experts – for discrete programs such as process improvement or new system implementation, or for multifaceted transformational change.
What is certain in an ambiguous operating environment is that the ‘how to’ manage change is changing. Change tools now include more online assessments, personalised and responsive feedback loops and platform-enabled people engagement.
So although the type of change intervention can vary from a linear process to a more flexible and agile activity, managing change still requires planning, analysis and good execution.
Why Is Managing Change Important?
For most organisations, although change is increasingly common – it is not always easy. Mckinsey research indicates a high failure rate of Change Programs as being around 70% (McKinsey, 2015). Contributing factors include:
- an unclear ‘future state vision’
- poor or absent executive sponsorship
- lack of leadership alignment
- a ‘frozen middle management layer’
- passive or active resistance
- poor culture or behavioural norms
- ineffective engagement and communication
- lack of user experience considered early enough
- underestimation of change impacts
- discordant parts of change programs
- lack of coordination across functions
- low levels of change resilience, and
- a lack of change capability and maturity within organisations.
In other words, contributing factors are mostly people related. By focusing on the ‘people side’, change experts work with leaders and teams to avoid these ‘change risks’. Change experts instead focusing on engaging with stakeholders to accelerate adoption and ultimately, the intended business benefits.
When To Engage A Change Manager?
Organisations can identify, manage and hence minimise risks associated with a single project or complete transformation by engaging skilled, strategic change management consulting professionals early.
Ideally, change leads are brought in at the time of business case development, before programs have kicked off. At this point, the change expert helps the program, business and transformation leads understand and express the holistic change vision. The business case should also include some assessment of the type of change, impacts and risks, and resourcing requirements (to include in the budget). These will differ by change type: implementing new technology, a new operating model, system and process, or culture change.
Experienced change managers should then be retained to assess the change impacts in more detail for each major program or project, as well as cross-functionally. Those programs or projects that have the highest change impacts and risks will require more focused change support to execute and manage the change through implementation.
Prosci research and publications recommend that around 10% of program budget should be allocated to change support, for those programs with high people impacts. This correlates with the high dependency on people for program success. However, not all projects/programs are adequately resourced or funded to enable the change function to be effective and have the intended outcomes. Having the right change framework helps.
How To Set Up A Change Framework
Setting up a change framework must consider both the discrete project and program based change, as well as the continuous, fluctuating change that is synonymous with a ‘VUCA world’ (characterised by Volatility, Uncertainty, Complexity and Ambiguity). This requires a two-track approach to change – one that is both considered and pre-emptive for ‘known changes’, as well as being responsive and agile to ‘constant change’. Change experts work with executives and teams to guide organisations through different types of changes.
A structured change approach enables a range of situationally appropriate individual and organisational responses. This is essential to maximising results and minimising program delivery risk. The change framework should include key steps to execution and a flexible and responsive change toolkit.
An example change management approach used by CQ Connection is illustrated in the steps below. This approach can be modified to fit the type of organisation, specific requirements, and type of change to be implemented.
Step 1: Understand change early
Early understanding of the high-level change type, scope, the scale and impacts of change programs is essential. In addition, the intersections and dependencies on different parts of the organisation, including key stakeholders and timeframes must be considered early.
Expert Change professionals use this base level of understanding of the change to develop a right fit change strategy. CQ Connection has a bespoke assessment tool to undertake this important analysis.
Step 2: Set the change strategy
The change strategy must support the business strategy – articulating what, where and how the business is moving ‘from’ and ‘to’. Not all of the information is always known at the outset, and many organisations have a ‘fuzzy future’ state. This can cause anxiety or resistance in change planning and execution.
Working with leaders to ‘chunk down’ the change via a clear strategy can alleviate such ‘people risks’. This could include definition of the ‘future state’ vision, co-creation of high level change impacts from current state through transition to future state. Allocation of effort (through external support and internal resources) is also critical to success.
Step 3: Engagement approach and actions
To integrate change – and “make change stick” – people need to be fully engaged. Yet not everyone is ready, willing and able to define, lead, believe in and execute change effectively from the outset. The change expert acts as a facilitator and catalyst, identifying people risks, key influencers, and enabling stakeholders to drive, lead or deliver change effectively. The organisational values and culture as well as individual mindsets and behaviours are also integral to successful change programs.
Some examples of engagement activities undertaken by Change Managers include workshop design and facilitation on vision, risks or impacts, as well as change coaching, co-creation of ‘change messages’, and engaging sponsors, managers and teams to lead change and communicate consistently. Including diverse thinking and innovation can be another change for some organisations.
The simple diagram below of the ‘Innovation Adoption Curve’ illustrates how different cohorts of people react differently to change, particularly technology adoption.
To accelerate change adoption, change experts may use a number of levers based on stakeholder engagement, including:
- leadership alignment
- change influencer network
- roles and KPIs
- capability uplift and culture ‘re-set’.
Step 4: Execution
Effective change practitioners enable a bridge to be built between program teams planning and delivering the change and the organisation receiving the change. This needs to be considered at an individual, team and organisational level.
During the execution and delivery of change programs, Change Managers operate as part of a ‘change enabling system’ that can include various subject matter expertise contributing to the change or transformation program execution (example below adapted from Prosci):
In other words, as more change occurs across more parts of organisations simultaneously, and more quickly, the social dynamics of organisations also change as part of ‘change system’. This requires a different approach to managing change, in addition to deep functional expertise. Managing change is increasingly collaborative and trust-based. Change experts are increasingly required to be coaches, advisors and strategic partners, as execution is dispersed and dependent on multiple stakeholders across various functions.
Changing Role Of Change Managers
The Change Management Institute Whitepaper ‘Change in the Age of Disruption’ (published in 2016) lists the core competencies of ‘Change Management 1.0’, namely:
- change maturity and capability
- leadership and sponsorship,
These remain important today. However, in an increasingly ‘VUCA world’ (see above for definition) an additional set of competencies and themes have evolved for organisational change management experts. These are illustrated in the table below:
Evolution of organisational change management (Change Management Institute White paper, 2016)
Many organisations are responding the ‘VUCA world’ by moving to non-linear, agile change delivery. For example, many small and large change programs are using daily stand-ups, visual scoreboards and design thinking in program design and delivery.
There is also an increasing focus on early consideration of user experience, employee and customer engagement to ensure the process, product or service is fit for purpose and works well. As more organisations use ‘human centred design’ to achieve this, there is more acknowledgement of the importance of engaging people throughout the change process – from ideation to co-creation and ultimately, adoption.
As a result, the role of the Change Manager has also evolved to be a guide, a coach and a facilitator – enabling others in the organisations become change agents and to lead change.
To do so requires Change experts having both a seat at the table with Transformation and senior leadership teams, as well as the ability to influence program and project delivery.
Upskilling peers and leveraging change networks – both formal and informal – is increasingly necessary, particularly in cost-conscious and dynamic environments. This is made more complex with matrix, virtual and cross-functional onshore/offshore teams.
Working between the change program and the business, change experts ensure the organisation and the individuals are ready, willing and able to accept and deliver change.
Summary And Essentials
Organisational change management enables the return on investment of discrete projects or large transformations by focusing on those elements that are dependent on people for their success. Change expertise supports business and operating model change, mergers and acquisitions, technology implementation, process improvement, culture change and capability uplift.
Some questions to determine when to engage a Change experts include:
- How much of your transformation program depends on people doing something different, or thinking or behaving differently (eg risk culture)?
- How ready, willing and able are leaders and teams to deliver the strategy?
- What assumptions have been made about executing change and transformation?
- Have you assessed all the risks and impacts associated with delivering the change?
- Is there a clear vision or a ‘fuzzy future’? How passionate are people about it?
- How change ready and resilient is the organisation – teams and key people?
- How ready or mature is the in-house change management capability?
- How aware, engaged and invested is the business in making change a success?
- Have organisational resources been allocated in accordance with size/ impact?
Key to the success of change and transformation programs from strategy to execution is the collective vision, maturity, and capability of in-house teams – from sponsors and senior executives, to middle managers and operational/ delivery teams executing the changes. Change experts can coach and build this change capability.
Understanding the role of people in strategy execution cannot be underestimated. Engaging change experts drives business benefits whilst minimising risk, through people.
Make sure you share your thoughts on this piece in the comments below. Be part of the discussion!
Director at CQ Connection
Viisti Dickens is a Director at CQ Connection (www.cqconnection.com), a boutique advisory business with a primary focus on helping organisations with change, transformation, culture, strategy development and implementation. She has more than 15 years’ experience in Australia and overseas. She is a former Global Board member of the Change Management Institute, a Member of the Australian Institute of Company Directors and a graduate of the Asialink Leaders Program. She has a Masters of Law, Masters of International Relations and a Business degree. Organisations she has worked with include financial services, professional services, telecommunications, media, technology, government and education.