Business Transformation Cultural ChallengesChange Management

Akhil Munjal

Organizational Change SuccessHow can we improve chances of a successful change implementation

2* Business Process Management Journal, Bradford 2001** The Social Economy, McKinsey & Company, 2012

70% of all Change Initiatives fail to get implemented *

A recent survey of senior executives in 14 industries confirmed that the benefits of a major change initiative had been substantially delayed and/or negated due to:• Lack of buy-in that change is necessary

64%• Lack of adequate skills or experience

44%• No senior management champion

44%• Turf battles

44%• Lack of congruent reward system

36%• Inability or unwillingness to downsize

31%

A study of financial services firms get as little as 20% of the promised payoff after having completed 80% of the work. The remaining 80% of the benefits comes from dealing with people issues

Phase I Phase II

Envisionthe Future

AssessCurrent

Situation

DevelopChange

Plan

Implementation

DevelopOptions

Implement

• Senior management aspirations

• Project team aspirations

• Project team collects data internally and externally

• Create a parallel organization (move into the house before it’s complete)

• Make use of focus groups/ workshops to engage employees

• Extensive piloting activity• Rotate new participants into project team• Develop and report quantitative and qualitative

results• Develop a culture of change-readiness through

adoption of Organizational Learning methodologies

Avoid Failure

Culture ChangeSponsorship

• Identify decision makers, opinion leaders and other stakeholders

• Engage them by defining the distinct part they each play in making the change happen (i.e., terms of reference)

• Facilitate alignment among decision makers to create consistent sponsorship “voice”

• Support their sponsorship (e.g., communications rollout)

• Establish linkages and networks with all the stakeholders

Initiating sponsors• authorize the change• have passion for the

change effortSustaining sponsors• lead by working through

their change issues first (and often)

• promote the change throughout their organizations

• actively model desired changes

• deploy appropriate resources needed to implement the change

Initiating Sponsors

Sustaining Sponsors

Discipline and Building Sponsorship Sponsorship Alignment is Key

Organizational ChangeChoice of the correct approach is crucial for success

4

The answers to these questions guide the process of change management

Clarion CallMobilize commitment from the top down

Burning PlatformMobilize compliance from the top down

Concerted ActionMobilize commitment by delegating responsibility

Long MarchDrive for long-term value change

SpeedHow important is speed to accomplishing the objectives of the change effort?

ConformanceHow closely must we conform to a specific process or outcome to achieve our goals?

CommitmentWhich is more important to achieving our goals: compliance or commitment?

Approach to Change

Management

Conformance

Comm

itment

Speed

High High High Clarion Call

High High Low Burning Platform

High Low High Concerted Action

Low High High Long March

Choice of Four Types of Approach Attributes of Each Approach

Change ManagementCampaign Strategy is determined by the Change Management Approach

• Unequivocal message about current situation and dire implications of inaction

• Need for strong direction to survive

• Centralized vision• Detailed advance

planning with small trusted cadre

• Disciplined roll-out

• “Big bang” opening• Experience of pain• Unambiguous direction• Common threat

• Set clear quantitative targets and reward performance

• Anticipate resistance• Give “field promotions” to

opinion leaders

• Establish clear milestones, benchmarks

• Be prepared to penalize those who deviate

• Prepare recovery plans• Report positive results

• Attractive, inspirational vision

• Common values• Opportunities for

greatness• Evolving strategic story

• Disciplined experimentation

• Centralized visioning• Sub-unit responsibility• Emphasis on incremental

change

• “Rising tide” opening• “Rolling wave” as time

goes on• Simple, robust themes

• Selectively recruit to the center of influence

• Honor as a key virtue• Emphasize benefits for

future generations

• Establish broad outlines of future state and then intermediate measures of progress

• Report positive and negative results to sustain commitment

• Unequivocal message about current situation and dire implications of inaction

• Stress inspirational message

• Strategic story

• Detailed advance planning with key power brokers and thought leaders

• Minimum critical specification

• Outcome orientation

• “Big bang” opening followed by rolling wave

• Strong emphasis on customizing the message to sub-units

• Frequent reminder messages

• Set combination of quantitative and quantitative targets and reward performance

• Give resources to subunits to reward performance

• Establish clear milestones, benchmarks

• Be prepared to penalize those who deviate

• Regular surveys• Report positive results

quickly

• Unequivocal message about current situation and dire implications of inaction

• Need for collaboration to survive

• Centralized visioning• Clear sub-unit

goals/processes• Selective decentralization

• “Big bang” opening• Experience of pain• Strong emphasis on

customizing the message to sub-units

• Target opinion leaders and reward them for duty above and beyond the call

• Rapid set-up of focus groups to mobilize commitment

• Establish clear milestones, benchmarks

• Prepare recovery plans• Focus groups establish local

performance measures• Report positive results

Clar

ion

Call

Burn

ing

Plat

form

Conc

erte

d Ac

tion

Long

Mar

ch

Content Coordination Communication Commitment Continuous ImprovementClarion Call

Burning Platform

Concerted Action

Long March

Content

Coordination

Continuous improvement

Comm

unicationCom

mitm

ent

Campaign Strategy

for Change

Change ManagementChange Checklist

1. Leading change (who is responsible) Do we have a leader …• Who owns and champions the change?• Who demonstrates public commitment to making it happen?• Who will garner resources to sustain it?• Who will invest personal time and attention to following it through?

2. Creating a shared need (why do it) Do employees …• See the reason for change?• Understand why the change is important?• See how it will help them and/or the business in the short and the long term?

3. Shaping a vision (what will it look like when we are done?) Do employees …• See the outcomes of the change in behavioral terms (I.e., what they will do differently as a result

of the change)?• Get excited about these outcomes?• Understand how the change will benefit customers and other stakeholders?

4. Mobilizing commitment (who else needs to be involved) Do the sponsors of the change…• Recognize who else needs to be committed to the change for it to happen?• Know how to build a coalition of support for the change?• Have the ability to enlist the support of key individuals in the organization?• Have the ability to build a responsibility matrix to make the change happen?

5. Building enabling systems (how will it be institutionalized) Do the sponsors of the change…• Understand how to sustain change through modifying people systems?• Recognize the technology investment required to implement the change?• Have access to financial resources to sustain the change?

6. Monitoring and demonstrating progress Do the sponsors of the change…• Have a means of measuring the success of the change?• Plan to benchmark progress on both the results of the change and the implementation process?

7. Making it last (how will it be initiated and sustained?) Do the sponsors of the change…• Recognize the first steps needed to get started?• Have a short and long term plan to keep attention focused on the change?• Have a plan for adapting the change over time to shifting circumstances?

Change ManagementChange is not easy….

• Allowing too much complacency• Failing to create a powerful guiding

coalition• Underestimating the power of

vision• Under-communicating the vision by

a factor of 10• Permitting obstacles to block the

new vision• Failing to create short-term wins• Declaring victory too soon• Neglecting to anchor changes

firmly in the corporate culture

• Establish a sense of urgency• Create the guiding coalition• Developing a vision and

strategy• Communicating the change

vision• Empowering broad-based

action• Generating short term wins• Consolidating gains and

producing more change• Anchoring new approaches in

the culture

Problems Solutions

Source: Leading Change, Harvard Business School Press, 1996.

Culture ChangeTen tips for Culture Change

focus on the vision diagnosis is key obtain and nurture sponsorship culture change is not an isolated program create demand for culture change support the employees incorporate quick wins encourage open communications make culture change measurable be persistent