The art of effective change management
The core issue is more around people resistance and their degree of adaptability to the new changes which impacts the sustainability of these programs
Managing adoption in a transformation journey is more of an art than a science & requires a deeper understanding of organization construct, socially accepted values and culture
Large scale organization transformation projects are a norm of the day. However, it is interesting to observe the high rate of failure of these programs. It has been observed that statistically, close to seventy percent of the business transformation projects fail to achieve their intended outcome. While the project teams focus most of their energy on business levers – what usually goes wrong is a lack of focus on people transition, which leads to lower adoption and hence the unrealized potential of economic and operational value. This article attempts to unravel key issues that derail the success of a transformation program and the mitigation approach to avoid such a failure.
The genesis of any business transformation program arises as a response to complex variables driving disruption in business. Fluctuating market demands, ever changing technology landscape, digitization, stiff competition and millennial workforce are some of the factors driving change today. Uncertainty is rampant and only thing that is constant in business is ‘change’ itself. As a natural response to adapting to this shifting ecosystem of market forces, organizations are embracing transformation journeys not only as a means of survival against the backdrop of the changes but also as a means to pursue growth and achieve competitive advantage. Some of the typical transformation programs commonly seen in the market today includes technology implementation, outsourcing non-core functions, operating model changes, M&A, disinvestment, cost-cutting, transitioning to cloud, restructuring etc. While senior leadership’s decision on undertaking transformation programs is a necessity and more often the right thing to do – the issue arises in successful execution. Most of these programs, while it starts with quick wins and visible level of acceptance are hardly sustainable in the long run. In fact, in vast majority of the cases, fault lines start appearing a few months after the kick-off and the impact gradually fades before losing its relevance, resulting in the project being shelved off the CEO agenda!
What usually goes wrong in such transformation programs? Let us try to analyze the situation from the perspective of the quality of the project team, the rigor around planning and executing the transformation journey as well as the overall level of leadership support. The project teams involved in managing transformation projects are usually the internal strategy team or a combination of external consultants and internal team members. Needless to mention, the panel of experts and SMEs, anchoring such programs are high on both caliber and seniority. The level of meticulous planning to get the value proposition right and the effort that goes in executing them is also commendable. In fact, contingencies are accounted not only to manage unknown business variables in near term but also in the middle and long term. Besides, in most cases these programs have strong sponsorship from the senior leadership team and hence more often very well-funded. It becomes really intriguing that such transformation programs, despite deploying most competent people and doing spotless planning and robust execution with complete leadership sponsorship – still fail! The underlying pattern of some of these transformation journeys indicates that seldom are the business variables the sole contributor to unrealized value. The core issue is more around people resistance and their degree of adaptability to the new changes which impacts the sustainability of these programs. This can only be addressed by focusing on people adoption – the most neglected dimension of any transformation journey.
Essentially, we are highlighting two dimensions— the business related forces and the people related forces act as the key determinants of the success of any transformation program. While business related forces impact the organization ecosystem in terms of changes in strategy, structure, operating model, products, technology and processes etc. and is absolutely necessary to get them right at the first place, the sustainability of these changes depends on how seamlessly the human capital makes a transition to the “To Be” world. This calls for running a robust change management program as an integral part of any transformation journey.
A robust change management program unlocks business value in a transformation journey by ensuring that people adopt the new changes and the organization as a whole is directionally aligned to make a transition to the new state. It involves planning systemic interventions to manage stakeholder adoption and avoid any potential business disruption. For it to be effective, the change team should be on-boarded right at the beginning when the transformation program is being conceptualized. The change lead should be an experienced veteran who has a good experience of business or the industry and also has a deep understanding of the nuances and subtleties of the industry/sector/business inplanning effective change interventions. The change team should be structured in the form of three sub-teams namely the workforce transition team, the communication team and the training team. While the workforce transition team focuses on understanding the impacts on various stakeholders and helping each stakeholder group to transition to their new role, the communication team is involved in creating the change brand whereas the training team creates the right level of support system to enable the stakeholders to pick-up new knowledge, skills or competencies.
Change management teams need to have a sharp eye on the differentiated needs of the impacted stakeholders to be able to plan for smooth transition. It should analyze the cumulative impact of the portfolio of all business initiatives launched by the organization on each stakeholder group. This helps the change team to plan interventions by ensuring that change fatigue does not set in. Besides, an organization wide branding program needs to be launched to give proper visibility to the program and seek buy-in and commitment from all quarters. Customized training programs also need to be rolled-out to enable skill upgradation for employees. Impact on roles need to be measured and appropriate changes in accountability, KPIs and authority need to be socialized. Building a fair degree of measurability of the success of change program by closely linking change levers to the value realization metric for the overall program and closely tracking the progress on a regular basis can also be done. This is crucial as it guides the change team to focus efforts only on areas which have high leverage to success.
Managing adoption in a transformation journey is more of an art than a science. It requires a deeper understanding of organization construct, socially accepted values and culture and planning interventions that is in alignment to the overall ethos of the organization. The change team needs to act as a balancing force and ensure that the entire project team has a view on the long term repercussions of a transformation program and not plan initiatives based on ‘here and now’ mindset. It should sensitize all stakeholders to have a holistic viewpoint by accounting for the people dimension in business decisions – thereby making the change stick. Alignment between the business and the people strategy goes a long way in executing successful transformation program thereby unlocking value for shareholders.