Managing Organizational Change
Organizational Change is an important competence in today’s swift-moving, dynamic world. For most organizations change is an imperative in order to grow and prosper in a world in which the list of Fortune 500 companies is hardly recognizable from one decade to the next. Change is no longer an option in today’s competitive markets as we are living in an era profoundly impacted by global connectivity, free trade, digilitalization, consumer power and the concomitant trend toward individualization, demographic movements and the explosion of information and other technologies.
The Process Edge Change Management Model has grown out of successful change efforts in major organizations, some of which are best industry practices world-wide and are case studies in MBA programs in major universities. It is particularly applicable to the Healthcare Industry in these times of rapid change.
Competitive challenges can emerge from any place at any time and, for ambitious quick-stepping companies, opportunities can also show up any place at any time. Core competencies such as agility, flexibility, integration and innovation can be as important to the enterprise as strategic planning itself.
Not only is the world a more competitive place today, but also what was “real” little more than a decade ago is no longer “real” today. Our competitive world is a truly different kind of world. In the product centered world of yesterday, for which traditional accounting concepts were designed, the left hand side of the balance sheet was viewed as a list of the so-called wealth producing tangibles we still call “assets”, while on the right hand side of the balance sheet were those “liabilities” thought to threaten wealth.
In today’s customer dominated world in which services, partnerships and unique experiences create loyalty, the right hand side of the balance sheet becomes an important creator of wealth. Indeed firms such as Ebay and Amazon.com compete essentially from the right hand side of the balance sheet.
Cost reduction efforts, in yesterday’s world, aimed their guns at the right hand side of the balance sheet, an aim that could put a modern era firm out of business. Many change programs, by attacking the “costs” on the right hand side, unwittingly destroy the competencies and capabilities needed to shape the future. Meanwhile, the huge hidden wastes of poor or missed coordination and costs of opportunity do not show up at all on any balance sheet and remain invisible to management, continuing to destroy significant levels of wealth.
Today’s true competitive assets include business processes, critical organizational competencies (agility, flexibility, integration, innovation, learning, execution, etc.), financial, pragmatic and symbolic capital, leadership, culture, strategic applications of information technology, and mobilization capabilities. These competencies assume a sophisticated skill for listening to relevant changes and trends in global and local environments, changes in technology, preferences, customer concerns, environmental concerns, geo-politics, culture and others, and to manage these with existing or ad hoc processes.
Sophisticated listening takes place both in the temporal horizon of the here-and-now and the visionary horizon of the future. Listening in the here-and-now has a lot to do with identifying breakdowns, discovering their root causes and eliminating them so that they do not show up again in the future. This characterizes the traditional focus of programs such as Six Sigma. Learning in the domain of the here and now creates organization fitness for the current business environment but does not necessarily prepare it for the future.
The future requires a different kind of listening which shows up in new interpretations, innovations and different ways of doing things, such as “Dell Direct”, Wal-Mart’s Supply Chain Management, or Amazon’s e-commerce. The domain of the “Constitution” of the business has a lot to do with interpretation and style and the declaration of promises which define the identity of the organization. One example of enterprise identity is the 24 hour delivery promise of Fedex.. Fedex listens not only to the need for a speedy delivery but for a firm promise that only reliable processes can secure.
The Process Edge Change Management Model
There are many different ways to look at a business, some of these interpretations are powerful and visionary, others are short-sighted and weak. Dell sees its business as a rapid “assemble to order” operation in which the name of the game is Return on Invested Capital. Dell is one of the few enterprises to operate with negative working capital, virtually no inventory, and an annual ROIC of over 300%. This is no accident. Dell’s business model is a financial model and to make it work Dell must see itself as the assembler on demand of the newest and best components for individual needs in a market where made to inventory products are often obsolete by the time they reach their retail destination. Much of Dell’s “Order to Delivery” process is embedded in software, connected to suppliers and visible to customers. Competitor’s such as Gateway and Acer have caught on and are trying to catch up. Dell’s interpretation is losing its power, however, as improved standard offers by competitors often match the needs of customers and eliminate the need for a personalized configuration. Dell may soon have to reinvent itself.
Interpretation is an active executive listening skill which focuses on the Business Environment, the Resource Supply, the Competitive Environment, Customers, and Financial Stakeholders. Skillful listening enables powerful interpretations of how to create a unique identity and competitive edge through identity and priority processes as well as an organizational culture and style that will together produce the most financial, pragmatic and symbolic value for the enterprise. A strong interpretation eliminates the present and future concerns of customers, ensures reliable value adding resources and a supportive business environment.
Most views of leadership not only do not appreciate the importance of the ability to listen, but also fail to distinguish between the unique set of competencies required to produce change and those required to produce impeccable execution. They are different sets of competencies with different finalities. Both are vital in different instances. The failure to make this distinction can be a costly mistake.
Most views of culture do not understand that culture is essentially a phenomenon that deals with how we listen to the world, the assessments we make, the moods that these assessments produce, and the practices that listening, assessments and moods call into being. Change initiatives that do not produce a different kind of listening, new criteria and standards for making assessments, powerful positive moods and new sets of practices will either stumble or fall in the process of change. Changing culture is not about communication, it is about producing a new kind of listening, a new kind of shared common sense and a new set of practices.
The dynamics of resource novelty, environmental complexities, customer power, and stakeholder expectations require that the enterprise be an agile, flexible, innovative, and integrated adaptive system. These core competencies must be built into the processes and culture of the firm and embodied in its leadership. Today’s enterprise must adapt continuously to the changing world in which it competes to take ever stronger positions in the evolving landscape.
The Process Edge Change Management methodology has the right kind of know-how and tools to address the adaptive process, beginning with:
- Evaluation of the business and competitive environments,
- Creation of powerful interpretations for accumulating financial, pragmatic and symbolic power for the firm, and the
- Understanding of how to leverage resources and coordinate commitments to gain customer loyalty.
We produce in our clients the kind of competencies and practices needed to engage in continual ongoing processes of sustainable change and adaptation both in the pragmatic horizon of the here and now and in the visionary horizon of the future; producing innovation of new possibilities and new offers.
We are able to accomplish these result using Our Change Management Model and associated methodologies which are described in detail in the following paragraphs:
Change Management Model
Creating the Should Be” Vision of the Enterprise
Before looking at the way the enterprise “Is”, it is helpful to suspend all assessments of how well we are or are not doing and to develop a powerful interpretation of what the business “should be” in the future. This means listening carefully to the contexts and environments in which the enterprise is embedded and in the kinds of resources that are or are becoming available, financial, technological, research, IT, and so on.
Listening Skills Workshop: We tend to think that “listening” is something that we do naturally and do not readily sense that the way in which we listen is a legacy held in place by the historical style in which we live and by the way we have learned to select automatically from what happens around us. We do not have a deep understanding of how powerful “listening” occurs or how to expand the range of our listening capabilities. We use the world “listening” to include such concepts as “seeing”, “identifying patterns”, “evaluating”, “intuiting” and a relatively sizeable number of verbs that put us in deeper touch with the world around us. Our ability to assess the future depends directly on the kinds of listening skills we are able to develop. Our ability to innovate depends in large part on the same set of skills.
Environmental Scoping: The enterprise is a systemic entity in constant inter- action with other systems and is embedded as well in larger systems, regulatory, environmental, socio-political, and cultural, to mention a few. These systems can be seen as environments. Environments impose important constraints on the systems that live within their boundaries. Systems must adapt to their environments in order to survive and this often produces the interpretation that the system is “regulated” by environmental imperatives to which it must always and in every way conform. This is a passive way of viewing the relationship between systems and their environments. Systems can also shape their environments and in the relationship between systems and environments, both are changing, both are adapting. A system with acute listening capabilities can move in advantageous ways, can shape its environment and at the same time shape its own future and occupy spaces not seen by others.
Stakeholder Workshop: This is an in-depth listening exercise in which an ample and representative group of internal and external stakeholders, including suppliers and customers, discuss their listening of the future, what it will look like and what are the current impediments to change. The purpose of the workshop is to create a broad and deep way of appreciating what is coming and the problems confronted by all in getting there. The workshop produces a shared common sense, a shared urgency, a shared commitment to collaborate and coordinate the building of a new and mutually beneficial future.
“Should be” Value Map: This is a broad stroke map about the promises the enterprise must make to produce a powerful identity with customers and a sense of partnership and loyalty, a strong partnering relationship with suppliers, and a convincing impact on financial stakeholders, as well as environmental positioning. The “should be” identity and priority processes are mapped, change readiness is assessed, a “go forward” model is produced and a “Should” Design Strategy and Plan are developed. It will make assessments about how strategic applications of Information Technology can support process excellence.
Evaluating the “Is” Interpretation of the Enterprise
Before the enterprise embarks on a mission of change, it is important to take stock of where the business is today. Many of the assessments made in the Stakeholder Workshop will have removed the blindness around present practices, gaps and constraints.
Last Trip Map of “Order to Delivery”: Using the Winograd commitment coordination mapping methodology, the “last trip map” takes a random sample of typical orders and traces them through the entire order to delivery cycle, revealing the actual capabilities of the enterprise to coordinate the value chain and supporting processes. It becomes possible to see the missing links in coordination and to estimate value lost through waste. The application of this methodology makes it clear what changes must be made to produce velocity, flexibility and impeccability in the future as well as areas in which integration and innovation is a must. The “last trip map” will show how value is produced in the present organization and will obviate where and why value is lost.
KPA and Management Assessment: This exercise will map the tree of the indicators and measures currently in use to drive the business. This will be useful to view in the context of the “Last Trip Map” to see if current processes and practices are tied to the measures in place and to understand what must be changed if the business is to be seen in a different way.
Change Readiness Assessment: The ability to change is influenced by a number of important things. Legacy systems, legacy thinking, organization culture and style, evaluation and feedback systems, consequence and reward systems, formal and informal, listening skills, practices, moods and attitudes can all determine whether a change program will succeed or fail. It is important to assess these constraints and make a grounded assessment about what is required to bring about a change.
Leadership Style Assessment: There are two distinct sets of leadership competencies, one set vital to those who must bring about change, the other set vital to those who must obtain high levels of execution and impeccability in making and keeping commitments. Today’s organizations with a high orientation to service, relationships and partnering, must be seen and designed as networks for the coordination of commitments. This requires that more and more autonomy be moved to those who must actually make and keep their promises, that is, more autonomy at lower levels in the organization, accompanied by a commitment to the organization and its goals. Change leadership must often confront legacies and practices and challenge people to change both views and practices, acting in such a way those organization members realize that change in today’s world is a way of life. A culture based on commitment and transparency will enable leaders to empower employees to be both responsible and accountable.
Human Resources Systems and Practices: Evaluation and reward systems often do not ensure the alignment between activities and priorities and business results. In a commitment based organization, priorities are important, promises are important and making good on promises are important. Culture, style, leadership and practices should all be congruent and people should all be focused on those processes and activities that produce identity and capital for the enterprise. People should be rewarded for contribution and developed to increase their ability to contribute. Policies and practices that do not support change efforts must be identified and targeted for change.
Mobilization of Change – Evaluations into Action
Mobilization Team: Taking into account the initial focus on the Identity Process and the Priority Processes that support the Identity Process, a multidisciplinary team involving an important number of the people playing key roles in these processes will be created and trained in process design skills and in process change competencies, especially those required to mobilize resources. They will play a key role in the design of the project plan and coordinating the mobilization effort.
Project Plan: The project plan includes the processes that are changing and the value to be produced, as well as the required changes in culture, style and practices that must be changed. The plan will include the coordination technology and IT applications and other support that will enable the new or redesigned processes and include evaluation mechanisms to ensure that the creation of value approximates estimates. The development of the plan, to the degree possible, will involve those ultimately important to its successful implementation.
Cultural Change Plan: The Cultural Change Plan contemplates the development of Leadership competencies, training in interaction skills, emotional intelligence, feedback skills, coordination skills, commitment practices and effective meetings. It will be coordinated with the Project Plan, be included in the same Gantt chart and include a communication plan.
Training Plan: The Training Plan will include all required knowledge, skills and competencies necessary to support the mobilization and implementation of the Project and to ensure success in the operation and evolution of the new enterprise.
Many efforts to bring about deep change in organizations fail and the reasons for failure are discussed in such enlightening books as Peter Senge’s “Dance of Change.” Many reasons for change project failure can be both anticipated and managed in the design of the change process itself; others require creating leadership and mobilization competencies. There is no substitute, however, for a powerful business case and strong project management skills. World benchmark projects are never a product of luck.