the change equation building your capability for change

THE CHANGE EQUATION

Building your Capability for Change

ORGANISATIONAL CAPABILITY

THE PROJECT

Culture Proces

ORGANISATIONAL CAPABILITY

THE PROJECT

Culture Proces

Peter DuschinskyManaging Director, The Imaginist Company

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

70% of projects fail to deliver the planned benefits

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

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 objectives

What makes an organisation good at managing change?

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

“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

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 in 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…

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

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

Change Readiness Assessment

We use a number of key models and tools

We will come back to these…

Contention 2

“The changes needed in 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

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

Integrating the Change Equation into standard practice

1. Audit• Undertake CRAs on selected 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

Change Readiness Assessment:

Models and tools

Change Readiness Assessment:

Models and tools

Organisational Culture Evolution model

Assessing an Organisation’s Culture

Levels of organisational culture

ORGANISATION‘External’ Focus:• The organisation’s

needs and direction• Systems and processes• Efficiency

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

motivations, aspirations• EffectivenessPoint of

balance17

Structuralist2

1 Pragmatist/Anarchic

3Dialectic Aligned

5 Pragmatist/Aligned

6Empiricist

Imaginist7

9 Pragmatist/Empowered

8Systemist

Organisational Culture Evolution Model

EXTERNAL INTERNAL

8SystemistImaginist

6Empiricist

1 Pragmatist/AnarchicStructuralist

3Dialectic Aligned

8SystemistImaginist

6Empiricist

3Dialectic Aligned

Structuralist2

8SystemistImaginist

6Empiricist

Structuralist2

Aligned4

3Dialectic

3Rationalist

8SystemistImaginist

6Empiricist

Structuralist2

Aligned4

3Dialectic

EXTERNAL INTERNAL

8SystemistImaginist

6Empiricist

Structuralist2

3Dialectic

4Aligned

8SystemistImaginist

6Empiricist

Structuralist2

3Dialectic Aligned

Where are you now?

Where are you now?Where do you need to be?

EXTERNAL INTERNAL

Structuralist2

3Dialectic Aligned

6Empiricist

Imaginist7

8Systemist

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 processQuality 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?

The Organisational Capability Indicator

‘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

improvement techniques to “make it work better”

‘Transformational’

Scrap whole operation/business and

start again

How should we measure complexity?

Complicated = not simple, but outcomes are ultimately knowableComplex = not simple and outcomes are never fully knowable

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

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

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”

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!

‘Transformational’Scrap whole

operation/business and start again

Major impact on people

Some impact on people

improvement techniques to “make it

work better”Little impact on people

LOW Complexity HIGH

improvement techniques to “make it work better”

‘Transformational’

Scrap whole operation/business and

start again

How should we measure complexity?

75 4803600

100001500020000250003000035000400004500050000550006000065000700007500080000

1 2 3 4 5 6Exponential Complexity Model

75 4803600

100001500020000250003000035000400004500050000550006000065000700007500080000

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 Model33

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)

The Exponential Complexity ToolC

75 4803600

100001500020000250003000035000400004500050000550006000065000700007500080000

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

Combining Capability and Complexity

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.

Deliverables: Route Map

INTERNAL

(Individual)

Structuralist2

3Dialectic Aligned

6Empiricist

Imaginist7

8Systemist

EXTERNAL

(Organisation)

You are hereYou need to be here

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

If you think this approach might be of value to your organisation, please contact us

Peter DuschinskyManaging DirectorThe Imaginist Company

Email: peterd@imaginist.co.ukTel: 020 8201 1478Mob: 07801 802 571Web: http://www.imaginist.co.uk

‘The Change Equation’ is available from Amazon.co.uk

the change equation building your capability for change

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