© imaginist 2011 the change equation building your capability for change peter duschinsky managing...

© Imaginist 2011

THE CHANGE EQUATION

Building your Capability for Change

ORGANISATI ONAL CAPABILITY

THE PROJ ECT

Culture Proce

ss

£

ORGANISATI ONAL CAPABILITY

THE PROJ ECT

Culture Proce

ss

£

Peter DuschinskyManaging Director, The Imaginist Company

© Imaginist 2011

The Purpose of this Presentation

To: Examine what makes an organisation good at managing

change Introduce the key models and tools in the Change Equation

methodology Develop the concepts of:

Change Readiness and Capability for Change Show how the Change Equation can be incorporated into your

standard practices:• at project level - to deliver consistently improved project outcomes• at programme level – to deliver Capability for Change into the

organisation as a key outcome

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© Imaginist 2011

70% of projects fail to deliver the planned benefits

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Internal Change Programmes fare no better

The Harvard Business School tracked the impact of change efforts among the Fortune 100 and found that only 30% produced a positive bottom-line improvement…

A survey of change programmes in 400 European organisations quoted by Prof. John Oakland, Emeritus Professor, Leeds University Business School found that:• 90% of change programmes faced major implementation problems• Only 30% delivered measurable business improvements

A CIPD survey of 800 executives found that reorganisations failed to deliver real improvement in performance in 40% of cases

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Why is it critical to be good at managing change?

The world’s private and public sector leaders have reported to IBM that a rapid escalation of “complexity” is the biggest challenge confronting them (IBM Global CEO Study 2010)

Events, threats and opportunities aren’t just coming at us faster or with less predictability; they are converging and influencing each other to create entirely unique situations

They expect this to continue - indeed, to accelerate - in the coming years: “The complexity our organization will have to master over the next five

years is off the charts — a 100 on your scale from 1 to 5.” (Edward Lonergan, President and CEO, Diversey, Inc)

They are equally clear that their enterprises today are not equipped to cope effectively with this complexity in the global environment

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Why is it critical to be good at managing change?

David Snowden, CEO of Cognitive Edge, sees this as as shift: “from a world where we can predict probable risks and use risk

management systems to make our plans robust, to one where we need to accept that complex and interdependent risks

will occur, and find new ways to cope, building ‘resilience’ into our organisations”

A resilient system accepts that failure is inevitable and focuses instead on early discovery and fast recovery from failure

This places greater reliance on skilled managers being able to spot, analyse and respond to an emerging and fast-moving situation - and to turn it to the organisation’s advantage

They need to operate within a fast-reacting and resilient organisation – one that is good at managing change

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What makes an organisation good at managing change?

Are there characteristics we can look out for?

• Strong, visible, empowering, leadership

• High level of trust between managers and staff – decision-making devolved wherever possible

• Clearly articulated and shared vision

• Attention paid to supporting core values

• People able to give priority to new initiatives – overload issue managed well

• Innovation encouraged and well managed

• Good communication between departments

• Collaboration with customers and suppliers

• Adherence to standard ways of doing things

• HR benefits and rewards aligned to business objectives7

© Imaginist 2011

What makes an organisation good at managing change?

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Does your organisation have these characteristics?

Then you are likely to have:

• High level of involvement and commitment

• Low resistance to change

• Resilience in the face of challenges

• Able to bring in changes rapidly and effectively in response to need

Capability for Change

© Imaginist 2011

Capability for Change

“Stock of capability”(Rebecca Henderson, Harvard Business School)

“Attention and resources focused on people and processes, developing the organisation’s capability and resilience”• Crucial if you want to respond to the accelerating pace of change

and rising levels of business complexity• But erodes through natural entropy and neglect, so requires

continual investment and maintenance

Any Change / Transformation Programme needs this to be part of its core deliverables, but many don’t

The Change Equation provides the tools you need

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© Imaginist 2011

The Principles behind the Change Equation

The Change Equation is based on 3 key contentions:

1. Projects fail when the complexity of the project exceeds the capability of the organisation to cope

2. The changes needed for a complex project cannot be achieved within its lifecycle

3. A conventional ’command & control’ approach to management of complex change projects will not achieve consistently successful outcomes

Let’s apply these…

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Contention 1

“Projects fail when the complexity of the project exceeds the capability of the organisation to cope”

Management typically: • Underestimates the complexity of its projects • Overestimates the capability of their organisation

So if we want to be able to predict success or failure, we need to measure project complexity and organisational capability

We do this by undertaking a Change Readiness Assessment

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Change Readiness Assessment

The Change Readiness Assessment (CRA) comprises: • Stakeholder interviews, review of project documentation, analysis,

senior management team workshop, report & recommendations

It allows us to:• identify the underlying causes of low and negative ROI on projects• quantify the barriers to success• predict the success or failure of projects• deliver a Route Map and Action Plan to help clients gain ownership of

the risks and improve performance

Undertaking a CRA at the planning stage will improve a project’s outcomes

Integrating CRA into your standard project planning process will deliver consistently improved project outcomes

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Change Readiness Assessment

We use a number of key models and tools

We will come back to these…

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Integrating the Change Equation into standard practice

1. Audit• Undertake CRAs on selected completed projects• Stakeholder face-to-face interviews

2. Analyse• Identify and quantify key common barriers• Adapt methodology, terminology

3. Integrate• CRA into standard project management practice• Change Equation principles into programme architecture

4. Implement• Employ project and programme managers with right skill-sets

Consistent improvement in project outcomes Capability for Change

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Contention 2

“The changes needed for a complex project cannot be achieved within its lifecycle”

The actions needed to achieve and embed behaviour change usually have to be linked to a wider programme

Building these into a Change (or Transformation) Programme will enable the development of an organisation’s Capability for Change

The Change Equation principles provide the framework

The CRA Route Maps and Action Plans provide the content

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Contention 3

“A conventional ’command & control’ approach to management of complex change projects will not achieve consistently successful outcomes”

Conventional change management interventions attempt to impose change…so people give up, fall back on ‘what’s in it for me’ and the change project fails

In a complex project, newly emergent ways of working and new forms of organisation need to be recognised, nurtured and embedded

You need to employ project and programme managers with the right skill-sets to achieve this

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Change Readiness Assessment:

Models and tools

© Imaginist 2011

Change Readiness Assessment:

Models and tools

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© Imaginist 2011

Assessing an Organisation’s CultureUsing the Organisational Culture Evolution model

There’s an inherent tension between the individual and the organisation…

Between the aspirations and motivations of people and the external systems and controls that they work with…

Think of this as a pendulum

© Imaginist 2011

Assessing an Organisation’s Culture




When it swings to the left, people are ignored in favour of rules and processes…

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When it swings to the right, systems are ignored in favour of people’ doing their own thing’

© Imaginist 2011

Point of balance

THE ORGANISATION‘External’ Focus:• The organisation’s needs

and direction• Systems and processes• Efficiency

THE INDIVIDUAL‘Internal’ Focus:• Culture• People’s perceptions, attitudes,

motivations, aspirations• Effectiveness

When the pendulum is at the point of balance, the organisation is working well…

But any disruption sets the pendulum swinging…


© Imaginist 2011

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Point of balance

THE ORGANISATION‘External’ Focus:• The organisation’s needs

and direction• Systems and processes• Efficiency

THE INDIVIDUAL‘Internal’ Focus:• Culture• People’s perceptions, attitudes,

motivations, aspirations• Effectiveness

The evolution of an organisation’s culture can be described as a set of 9 points on a spiral


Each culture builds upon the earlier ones, progressing up the spiral

Each point or ‘level’ represents a separate, definable culture

To progress up the culture spiral we have to deal with the underlying tension between:

The ‘External’ Focus:• The organisation’s

needs and direction• Systems and processes• Efficiency

The ‘Internal’ Focus:• Culture• People’s perceptions,

attitudes, motivations, aspirations

• Effectiveness


The 9 Culture Levels

Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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1. Focused on me

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Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

1. Focused on me

3. Engaged

5. Devolved

7. Creative

9. Empowered

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We all start by doing everything

ourselves.This works for a

while, but…

We all start by doing everything

ourselves.This works for a

while, but…


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Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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As we grow, we need to

delegate. This needs rules

and processes…

As we grow, we need to

delegate. This needs rules

and processes…


1. Focused on me

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Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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This needs rules and

processes…The problem

with this is that it becomes

bureaucratic and ‘tribal’.

This needs rules and

processes…The problem

with this is that it becomes

bureaucratic and ‘tribal’.

Organised 2.1. Focused on me

© Imaginist 2011

Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

1. Focused on me

3. Engaged

5. Devolved

7. Creative

9. Empowered

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So we streamline our processes…

So we streamline our processes…

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Organised 2.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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sAssessing an Organisation’s Culture

But that didn’t seem to work

very well. Why?

But that didn’t seem to work

very well. Why?

Efficient 4.

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1. Focused on me

© Imaginist 2011

Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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Perhaps we didn’t spend enough time gaining

ownership for the changes…

Perhaps we didn’t spend enough time gaining

ownership for the changes…

1. Focused on me

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Organised 2.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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When we involve people in creating their future, they pull the changes through, instead

of resisting them! ‘Efficiency’ +

people = ‘Effectiveness’

When we involve people in creating their future, they pull the changes through, instead

of resisting them! ‘Efficiency’ +

people = ‘Effectiveness’

Efficient 4.

1. Focused on me

© Imaginist 2011

Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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And when everyone is pulling in the

same direction, we can give people more control over

how they achieve results

And when everyone is pulling in the

same direction, we can give people more control over

how they achieve results


1. Focused on me

© Imaginist 2011

Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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Now that we are working as

a team, communication

flows undistorted -

across as well as up and down

– so we can

focus outwards and use real-

time information to make better decisions

Now that we are working as

a team, communication

flows undistorted -

across as well as up and down

– so we can

focus outwards and use real-

time information to make better decisions 1. Focused on me

© Imaginist 2011

Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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Now managers have the

information to enable them to make radical

and innovative decisions

Now managers have the

information to enable them to make radical

and innovative decisions

1. Focused on me

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Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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Now the captain at the helm can stop fire-fighting and intervening

- and start thinking

strategically

Now the captain at the helm can stop fire-fighting and intervening

- and start thinking

strategically

1. Focused on me

© Imaginist 2011

Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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Now people can be empowered to manage their own work - the most effective organisational

culture

Now people can be empowered to manage their own work - the most effective organisational

culture

1. Focused on me


Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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Where are you now?

Where do you need to be?


1. Focused on me

© Imaginist 2011

Assessing an Organisation’s Process Management Capability

1. Initial Ad hoc process Chaotic

2. ManagedRepeatable process

Controlled environment

3. Defined Standard process

Consistent Execution

4. Quantitatively Managed

Measured process

Quality and Productive Improvement

5. Optimising Effective process

Continuing Improvement

Software Engineering Institute

Where are you?Where do you need to be?

What’s stopping you?

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The Organisational Capability Indicator

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Management Culture

9. Empowered

8. Holistic

7. Creative

6.Informed

5. Devolved

4. Efficient

3.Engaged

4.Organised

1. Focused on me

© Imaginist 2011

‘Transformational’

Scrap whole operation/business and

start again

Major impact on people

‘Transitional’Replace one system or process with another

Some impact on people

‘Developmental’Apply management

improvement techniques to “make it work better”

Little impact on people

LOW Complexity HIGH









start again



start again

e.g.

How should we measure complexity?

Complicated = not simple, but outcomes are ultimately knowable

Complex = not simple and outcomes are never fully knowable40

© Imaginist 2011

Terminal 5

Over 28,000 lost bags, 700 cancelled planes and more than 150,000 disrupted passengers

“The Terminal 5 debacle is a national disgrace” Daily Mail, 14 April 2008

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So what went wrong?

1. Shortage of staff car parking spaces

2. Only one employee security checkpoint operating

3. Some staff unable to log on to the computer system

4. Hand-held communication software running slow

5. No managers on the ground to re-allocate work

6. Shortage of bar-reading storage bins

Baggage handling staff late in arriving

60 staff queue to get into terminal

6am: 3 planes leave without bags

Bags pile up, unattended

By midday 20 flights cancelled

4pm: baggage conveyor belt grinds to a halt, BA suspends all baggage check-in

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In 2004, HP's project managers knew all of the things that could go wrong with their ERP centralisation programme. But they just didn't plan for so many of them to happen at once.

The project eventually cost HP $160 million in order backlogs and lost revenue—more than five times the project's estimated cost.

Gilles Bouchard, then-CIO of HP's global operations, says: "We had a series of small problems, none of which individually would have been too much to handle. But together they created the perfect storm.”

Complexity is exponential!

“The Perfect Storm”

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Complexity is Exponential

”We live in a world that can change exponentially – but we have brains that are hardwired to plot things out linearly - the software in our brains compels us to think about progressions as being simple arithmetic ones

So as a species, and a society, we deal poorly with uncertainty in non-linear domains.” Prof Albert Bartlett, University of Colorado

That’s one good reason why management typically under-estimates the complexity of projects!

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start again

Major impact on people


Some impact on people



Little impact on people

LOW Complexity HIGH









start again



start again

e.g.

How should we measure complexity?

Co

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1 2 3 4 5 6Exponential Complexity Model

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Not simple - needs some

project management

A complicated project – needs an

experienced project

manager

Your project is too

complex – break it down into separate projects and

employ a programme

manager

Simple project

A complex project – needs a

dedicated project team

Exponential Complexity Model45

If complexity is exponential, we can build it with just 3 factors: X * Y * Z

© Imaginist 2011

The Exponential Complexity Tool

Which 3 factors? They must be:• Common to all projects• Quantifiable by stakeholders• Good predictors of the complexity of a project

The Exponential Complexity Tool uses the following 3 factors:

1. Number of people or Stakeholders involved

(More people = more complex = higher risk)

• Number of business activities or Processes affected

(More ambitious = more complex = higher risk)

• Elapsed Time to implement (in months)

(Longer to implement = more complex = higher risk)

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The Exponential Complexity ToolC

om

ple

xity

Fac

tor

75 4803600

10800

32400

72000

05000

1000015000

2000025000

3000035000

4000045000

5000055000

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7000075000

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1 2 3 4 5 6

Not simple - needs some

project management

A complicated project – needs an

experienced project

manager

Your project is too

complex – break it down into separate projects and

employ a programme

manager

Simple project

A complex project – needs a

dedicated project team

Exponential Complexity Model

72,000

• Think about a project you are familiar with• Where on the scale do you think you are?

• Think about a project you are familiar with• Where on the scale do you think you are?• Now do the numbers: Stakeholders x Processes x

Time 20 200 18 mths

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Deliverables: Action Plan

Organisation

Component Implication Action required

Management Culture

The lack of information-sharing, alignment and empowerment will jeopardise the success of the project. At the very least it will mean poor take-up and a lower than planned level of benefits.

A programme of interaction and dialogue across the organisation is urgently needed to improve the management culture. This needs to include increasing trust, see below.

ProcessCapability

The organisation’s process capability is poor. This means that any projects which seek to standardise and improve processes to achieve greater efficiency will be very difficult to achieve.

Consider carrying out a programme to raise the levels of process capability ahead of implementing the project or using the project itself to inject the necessary disciplines. In this case it is crucial for the Board to make compliance to the new processes mandatory.

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Organised 2.

Efficient 4.

Informed 6.

Holistic 8.

3. Engaged

5. Devolved

7. Creative

9. Empowered

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You are here

You need to be here

1. Focused on me

© Imaginist 2011

Deliverables: Calculation of the Impact

- %Total potential impact on benefits

+ %Total potential impact on project timescales/costs

Other factors impact estimated at:

IT Solution9

Relationship with suppliers8

OTHER FACTORS

Delivery of Project Impact estimated at:

Benefits Realisation7

Distrust factor6

Visibility of process5

DELIVERY OF PROJECT

Project Impact estimated at:

Complexity of project4

Clarity of objectives3

PROJECT

Capability Impact estimated at:

Capability Maturity2

Management Culture1

ORGANISATION

Benefits-%

Time/Cost +%

Potential ImpactStatusComponent

© Imaginist 2011

Summary

The Change Equation methodology is designed to be integrated into standard practice:

• at Project level – CRA ensures Change Readiness and deliver consistent improvement in change project outcomes

• at Programme level – Change Equation principles, Route Maps and Action Plans provides framework and content to deliver organisational Capability for Change as a key outcome

Only with both of these in place can an organisation respond to the challenges it faces with the speed and resilience it needs to survive

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© Imaginist 2011

Peter Duschinsky

Managing Director

The Imaginist Company

Email: [email protected]

Tel: 020 8201 1478

Mob: 07801 802 571

Web: http://www.imaginist.co.uk‘The Change Equation’ is available from Amazon.co.uk

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© imaginist 2011 the change equation building your capability for change peter duschinsky managing...

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