Why Change Initiatives Fail

Why Change Initiatives Fail (Again and Again and…)

Lynn A. Becker

D.P Associates, Inc

STC 50th Annual Conference

Introduction

Industry worldwide is faced with the ongoing struggle of keeping up with constantly shifting technology, market demands, “best practices”, shareholder expectations, and more discerning customers. To keep up with the change, many companies are restructuring in effort to minimize waste, optimize resources and maximize return on investment (ROI).

"I cannot say whether things will get better if we change; what I can say is they must change if they are to get better."

-G. C. Lichtenberg

Success?

The success of these initiatives depends largely on leadership and each leaders’ ability to not only cope with the change but to welcome it and facilitate it. In addition, leaders must ensure that those who work for them will not only accept the change but embrace it.

Past Decade

Nearly 50% of all U.S. companies were restructured, reengineered, right sized or downsized

Over 80,000 firms were acquired or merged At least 700,000 organizations sought

bankruptcy protection Over 450,000 companies failed

Need for Change

Change = D x M x P > C

D = dissatisfaction with status quo M = new management model P = process for managing change C = cost of change

Why Do Most Change Initiatives Fail? “The company-as-a-machine model fits how people think about

and operate conventional companies. And, of course, it fits how people think about changing conventional companies. You have a broken company, and you need to change it, to fix it. You hire a mechanic, who trades out old parts that are broken and brings in new parts that are going to fix the machine. That’s why we need “change agents” and leaders who can “drive change”.

But go back and consider all of the evidence that says most change efforts aren’t very successful. Here is our first plausible explanation: Companies are actually living organisms, not machines. That might explain why it’s so difficult for us to succeed in our efforts to produce change.….

We keep bringing in mechanics -- when what we need are gardeners. We keep trying to drive change -- when what we need to do is cultivate change….”

Learning for a Change, Alan M. Webber, 1999:Interview with Peter Senge in Fast Company (FC24, p. 178)

Reengineering

50% of the companies that participated in the study reported that the most difficult part of reengineering is dealing with fear and anxiety in their organizations;

73% of the companies said that they were using reengineering to eliminate, on average, 21% of the jobs; and,

Of 99 completed reengineering initiatives, 67% were judged as producing mediocre, marginal, or failed results.

1994 CSC Index “State of Reengineering Report

Reengineering “The most profound lesson of business process reengineering was

never reengineering, but business processes. Processes are how we work. Any company that ignores its business processes or fails to improve them risks its future. That said, companies can use many different approaches to process improvement without ever embarking on a high-risk reengineering project.

For technologists, the lesson from reengineering is a reminder of an old truth: information technology is only useful if it helps people do their work better and differently. Companies are still throwing money at technology - instead of working with the people in the organization to infuse technology.

Finally, reengineering’s enduring lesson is that the bigger the hype the greater the chances of failure. Before reengineering became The Reengineering Revolution, innovators were experimenting with a variety of change practices. With the exaggerated promises and heightened expectations came faddishness and failure. The lesson: companies should underpromise and overdeliver. The time to trumpet change programs is after results are safely in the can.”

Fast Company: The Fad that Forgot People, Thomas H. Davenport (FC01, p. 70)

Some More …

Nearly two-thirds of all major changes in organizations fail.

According to Hammer and Champy, only 20 to 30 percent of all reengineering projects succeed.

Only 23 percent of all mergers and acquisitions make back their costs.

Just 43 percent of quality-improvement efforts make satisfactory progress.

9 percent of all major software development applications in large organizations are worth the cost; 31 percent get cancelled before completion; 9 percent will result in cost overruns by 189 percent

Anthills (Complex Adaptive Systems)

“First, they are open, dynamic systems. The Marshall ball-in-a-bowl system is closed; no energy or mass enters or leaves, and the system can settle into an equilibrium state. By contrast, the energy and mass that constantly flow through a complex adaptive system keep it in dynamic disequilibrium. An anthill, for example, is a perpetual-motion machine in which patterns of behavior are constantly shifting; some patterns appear stable, others chaotic.

Second, these systems are made up of interacting agents, such as ants, people, molecules, or computer programs. What each agent does affects one or more of the other agents at least some of the time; this creates complexity and makes outcomes difficult to predict. The interactions of agents in a complex system are guided by rules: laws of physics, codes of conduct, or economic imperatives such as “cut prices if your competitor does.” If the repertoire of rules is fixed, the result is a complex system. If the rules are evolving, as with genes encoded in DNA or the strategies pursued by players in a game, the result is a complex adaptive system.

Third, complex adaptive systems exhibit emergence and self-organization. As individuals, ants don’t do much. But put them in a group where they can interact, and an anthill emerges. Because the anthill rises out of the bottom-up dynamic interactions of the ants and not from a top-down master plan, it is said to be self-organized. The emergent structure is independent of specific agents; while individual ants may come and go, the pattern of the anthill persists.”

Eric Beinhocker, Strategy at the Edge of Chaos, The McKinsey Quarterly, 1997 Number 1.

Project Outcomes

"Progress, far from consisting in change, depends on retentiveness. Those who cannot remember the past are condemned to repeat it."

-George Santayana

Research on change reveals that many business process engineering (BPR) initiatives failed because focus was on process and technology but not on people.

The application of contingency and situational leadership models addresses people issues within the environment so should be more effective in change initiatives

Biggest Management Mistakes

Delegation of sponsorship Not being directly involved with the project Not engaging all management levels in the

change Sending inconsistent signals or not

communicating enough Shifting focus or changing priorities too soon Not providing adequate resources

“Change is good. You go first.” - Scott Adams

Risk Taxonomy:Inadequate design completeness and correctness

Inadequate understanding of requirements for redesign Inadequate basis (data/information) for design Failure to adequately address the root causes Failure to address correct root causes

Inadequate attention to implications Inadequate design detail to implement Internal inconsistencies in design Theoretically unsound or impractical to implement Inadequate understanding of design prerequisites

and dependencies Design inadequate to achieve objectives Inflexible design (lacks robustness in the face of

variation and change) Design unacceptable to organization

Art Gemmer, Rockwell Collins

Risk Taxonomy:Inadequate design completeness and correctness

Inadequate integration Inadequate integration with other processes Inadequate integration with other change initiatives Design encourages suboptimization Dependence of other change initiatives (design

represents risks to their implementation) Inadequate process ownership buy-in

Inadequate Galbraith fit (processes, structure, information systems, rewards, renewal, leadership) Excessive focus on processes Inadequate alignment of measures and rewards Inability to align structures


Risk Taxonomy:Inadequate change management

Inadequate time and attention paid to change management Underestimation of time require to change behavior Inadequate measurement of change progress

Inadequate case for change Inadequate quantification of benefits Inadequate consideration of case for change for the individual Inadequate communication

Inadequate leadership participation and buy-in Unclear process ownership Inadequate senior leadership participation and buy-in Inadequate middle management participation and buy-in Inadequate line management participation and buy-in Ineffective identification and management of specific blockers

(resistance) Excessive compromise and dilution of design to gain consensus

and buy-in Unnecessary divergence of implementation (e.g., by business area)


Risk Taxonomy:Inadequate change management

Improper sequencing of changes Inadequate understanding of implementation dependencies Resource conflicts

Inadequate training Underestimation of training development and delivery effort Inadequate understanding of learning objectives Failure to address organizational and investment level

training Inadequate coverage those requiring training Poor training materials Inadequate instructor quality and credibility Inadequate instructor bandwidth Inadequate follow-on support Inappropriate timing of training to first use Inadequate reinforcement of training


Risk Taxonomy:Inadequate planning and management of initiative

Inadequate process rigor for team size and complexity of initiative Inadequate scope management Inadequate schedule management Inadequate risk management Inadequate quality control (standards,

completeness/correctness checks) Inadequate configuration control of deliverables Inadequate chartering of design teams

Poor estimates Unprecedented activities Underestimation of schedule tasks


Risk Taxonomy:Inadequate planning and management of initiative

Inadequate resources applied Part-time assignment along with “day job” Inadequate knowledge or experience on the part of the

resources Inadequate discipline

Failure to recognize importance of rigor and discipline Inadequate program/project management skills Unclear roles and responsibilities Failure to update plans Inadequate review of status Inadequate measurement of effectiveness Inadequate coordination with other initiatives


Resistance to Change

Level 1 – facts, ideas, figures Tendency is to address with more and better

information Level 1 may come from

Lack of information Disagreement with the idea itself Lack of exposure Confusion

Rick Maurer, Why Resistance Matters, beyondresistance.com


Level 2 - emotional and physiological reaction to change. Level 2 can be triggered without conscious awareness. Based on fear or loss.

Tendency to treat as Level 1 Level 2 may come from fear over a perceived . .

Loss of power or control Loss of status Loss of face or respect Feeling of incompetence Feeling of isolation or abandonment Sense that they can't take on anything else (too much

change



Level 3 is also the domain of cultural, religious, and racial differences. People may resist whom you represent.

Difficult to see that our ability to see others’ points of view is limited by these factors

Level 3 may come from . . . Personal history of mistrust Cultural, ethnic, racial, gender differences Significant disagreement over values Transference. The person being resisted represents

someone else such as a mother or father.


One Change Process Model

Preconditions Top-management commitment Assemble change team Allocate resources and authority

Analysis Operation and organization at multiple levels Benchmark Determine SWOTs

Design Idealized model of operations Align organization with operational flows Redesign relationships

Kai Simon, Redwood Research ©1995

The Rest of the Story

Implementation Modify existing activities Integrate into processes Establish new management style

Fine tuning Benchmark new operations Institute improvement program Align with new management style

Reconsideration Evaluate change process and results Institute organizational learning Make change permanent

Kai Simon, Redwood Research ©1995

Another Change Process Model

Leading change Creating a shared need

Case for Change Threat vs. Opportunity Matrix Force Field Analysis

Communicating desired outcome(s) Elevator speech

Mobilizing commitment Stakeholder Analysis Commitment Plan VSM Prep Worksheet RPI Contract

Another Change Process Model (2)

Developing/Selecting a Change Strategy VSM RPI Burst 5S Processes Social Analysis

Implementing Change Activity Plan Communication Plan Measurement Plan

Another Change Process Model (3)

Sustainment/Monitoring Progress/Renewal Event Follow-ups Cadence Reviews Measurement Plan Alternative Rewards

Change Agents & Leaders

What makes a change agent and/or leader effective?

What makes a follower more apt to participate in certain change initiatives?

"None of us knows what the next change is going to be, what unexpected opportunity is just around the corner, waiting a few

months or a few years to change all the tenor of our lives." -Kathleen Norris, Hands Full of Living

Kurt LewinField Theory and Group Dynamics

Why are groups so ineffective in getting things done?

How is influence spread? How is a group affected by their perceptions of

events? How do groups relate with each other? How do individuals adjust to these conditions? How can training leaders improve the functioning

of groups (t-groups)?

“Continuous improvement requires a commitment to learning.”David Garvin, Harvard University

Cycles of Change

"It is not necessary to change. Survival is not mandatory." -W. Edwards Deming

Phases of Change

Loss Doubt Discomfort <<<Danger Zone>>>> Discovery Understanding Integration

"We live in a moment of history where change is so speeded up that we begin to see the present only when it is already disappearing."

-R. D. Laing, The Politics of Experience

Elements of Change

Vision Direction Teamwork Process People Technology Sustainment

“If you want to make enemies, try to change something.” - Woodrow Wilson

Initiating Change

Levels, goals and strategies

Metrics

Sequence of steps

Implementation and organizational change

“Change before you have to.” - Jack Welch

Levels of Change

The Tale of Three Villages: The chiefs of three villages each set out to build a bridge across a wide chasm. If they could build this bridge, the trade that came would enrich the lives of villagers for generations to come.

The first chief told his workers, "Go forth and work. Do whatever is necessary to build that bridge." The villagers established a frenzied pace, for this chief abused those workers who did not follow his commands. The first chief boasted to the other two leaders about the speed of his construction. Unfortunately, because no one coordinated these worker's efforts, the bridge was a haphazard collection of nails and boards. It soon collapsed.

Second and Third Villages

The second chief was watching this mess and decided to learn from the first chief's mistakes. She organized her workers into teams, and gave them a plan to build a bridge. At first, these workers had success, and built the bridge straight as an arrow far over the chasm. She boasted to the two other chiefs about the accomplishments of her workers. Unfortunately, the the next major storm destroyed the bridge for the chief did not know how to build structural supports. Her workers became discouraged and abandoned their efforts.

The third chief was watching their efforts and decided to learn from the other chiefs' mistakes. He sent his workers to the other villages to learn what they had done, and what they hadn't done. His workers then developed a plan. In their first step, they did not build the bridge at all, but focused on creating the support columns they would need. When they completed this task, they rapidly finished the bridge.

Level 1

Shaping and anticipating the future:

Few assumptions about the business itself Generate alternate scenarios Defines opportunities Assesses strengths and weaknesses of

scenarios

Level 2

Defining what business to be in: Many start here because

assumption that future will be like the past CEO’s vision for the future set don’t know where else to start afraid to start at Level 1because changes needed

to future requirements only charge is to refine the mission that already

exists

Level 3

Reengineering processes: focus on fundamentally changing how work is

accomplished major structural changes may be aftermath or consequence of level 1 or

2 or may be done as independent action

Level 4

Incrementally changing processes focus on making small changes to existing

work processes assumes that existing processes only need

minor refinement; may end up ignoring or failing to address structural, system-wide problems

Where to Start?

Level 1 through 3 - high need for change, risk-tolerant management, relatively few constraints, and has good consensus among management on direction; environment requires rapid adaptation to fast-moving events

Level 4 - perception that there is only modest need for change, relatively risk-avoidant, has many constraints, and little consensus on direction; slow moving industries

10 Challenges of Change Management/Sustainment Initiating Change

Time Support & resources Case for change Value vs actual beahvior

Sustaining Momentum Fear & anxiety Metrics Cult

“Change is not without its inconveniences, even from worse to better.” - Richard Hooker

10 Challenges of Change Management/Sustainment System-wide Redesign and Rethinking

Control issues Not building on previous successes Strategy and purpose not sustained

Peter Senge, The Dance of Change: The Challenges to Sustaining Momentum in Learning Organizations. Doubleday/Currency, March 1999

Change Tactics

Education = resistance due to lack of info Participation = others have info or power Facilitation = fear Negotiation = power differences Co-optation = politics & power Manipulation = politics or expense Coercion = speed and you have the power

Strategies to Minimize Resistance

Tell the truth Involve people as much as possible Communicate Educate/Train Provide a forum for feedback Keep the transition period short Be the change

Sustaining Change

Transitional change will not be effective if old behaviors are allowed to continue

Resistance must be addressed adequately Must have support structures in place Must remove the ability and/or the desire to

return to the old ways Leadership and employees must live up to

the commitments of the change

Resistance from Above

Resistance from leadership is unique Lack of support Lack of resources Unwillingness to change

Resistance may arrive by surprise “Nice work, but no.” “You don’t understand.” “I didn’t know you were doing THAT.” “You want how many people/how much money?” “You don’t see the Big Picture.”

How to Handle

Early involvement in the change Help with definition Understanding of boundary conditions

Renew case for change frequently Show bottom line benefits Explain transition characteristics Describe future state in WIIFM terms

If There is …

If there is perceived resistance from above on a project, DON’T START UNTIL: Boundary conditions are identified Buy-in on the project is reached All parties agree on the project scope,

including stakeholders Following these steps does not ensure that

resistance will be satisfied Relationship with leadership may need to be

revisited

Communication – Prior to Change

Negative Talk badly about the change Talk badly about the

organization Talk one way in public, but

another in private conversations

Stop performing your current responsibilities, or perform them carelessly

Have secret meetings where the change is not taken seriously

Positive Learn about the change Ask how you can help Find out how to prepare for the

change Be positive Be open and honest with your

feedback Encourage constructive

conversations about the change

Communication –During Change

Negative Block progress or sabotage the

change Talk negatively about the

change in private conversations

Ignore the change – pretend it’s not happening

Prevent others from participating in the design or implementation of the change

Positive Ask questions about the future Ask how the change will impact

day-to-day operations Provide input to the solution Find out what new skills will be

needed and seek training Take advantage of the change

to develop new skills and grow professionally

Communication –After Change

Negative Avoid using the new tools or

processes Tell peers or subordinates that

using the new tools or processes is no big deal and shouldn’t be taken too seriously

Revert to the old way of doing work when problems or issues arise

Take advantage of problems during implementation of the change to demonstrate why the change won’t work

Positive Reinforce the change with

peers and subordinates Help the business achieve the

objectives of the change Avoid reverting back to the old

ways of doing work when problems arise

Help solve problems that arise during implementation

Documents

Why Change Initiatives Fail