Organizational Change: Learning From the Masters

Managing change in today’s organizations is not getting any easier. However, doing it well is the new imperative. How are organizations faring with moving their people and systems in new directions? IBM Global Business Services researched change management practices across the globe. Their extensive Making Change Work Study quizzed over 1,500 project leaders, sponsors, project managers and change managers from many of the world’s leading organizations, ranging from small to very large in size.

The IBM survey was fairly representative, covering a wide range of small to large projects designed to implement strategic, organizational, operational and technology based change. Project objectives included improving customer satisfaction, sales and revenue growth, reducing costs, innovating processes, implementing technology and entering new markets.

The stand out feature of the IBM study is its solid reinforcement of the business imperative: for companies to survive and strive in today’s competitive environment, they will need to change quickly and successfully. Managing change is now a core competence that can no longer be considered a discretionary “nice to have”. Yet most organizations are falling short in the race to adapt. The accelerating pace of change coupled with increasing uncertainty and complexity has pushed up this skills gap to what is now a major area of concern.

The IBM study reveals that the percentage of CEOs expecting substantial change has risen from 65% in 2006 to 83% in 2008. However, CEOs reporting that they had managed change well in past projects climbed from 57% in 2006 to only 61% in 2008. This constitutes a more than tripling in the size of the gap between actual change capability and needed capability. The costs to organizations are real and sizeable. Failed change initiatives bring in their wake budget overruns, disgruntled customers and demoralized employees.

How successful are organizations at implementing change? The IBM study reports most CEOs considering themselves and their organizations largely ineffective at bringing about change. The change practitioners themselves reported the following change program success rates:

41% fully met objectives
44% missed at least one objective
15% missed all objectives or aborted

In all, 59% of change initiatives failed to meet their objectives. This is quite a sobering result as we set about entering the second decade of the 21st century. Another sobering thought is the stark contrast between those organizations getting change management right and those that are struggling. The top 20% of organizations, the study reveals, are successful 80% of the time. Conversely, the bottom 20% of organizations only manage to achieve their change objectives 8% of the time. The top 20% of companies are ten times more likely to lead a successful change initiative than the bottom 20%.

Clearly, underachieving organizations can draw important lessons from the top achievers. What are the barriers to successful change and what are the key success factors that poor performers can leverage to their competitive advantage? The IBM study provides valuable insights into what poorly performing organizations can do to emulate the success of their better performing competitors. What are these lessons?

Through their research study, IBM revealed these key barriers to successful change:

58% Changing mindsets and attitudes
49% Corporate culture
35% Complexity is underestimated
33% Shortage of resources
32% Lack of commitment of higher management
20% Lack of change know how
18% Lack of transparency because of missing or wrong information
16% Lack of motivation of involved employees
15% Change of process
12% Change of IT systems
8% Technology barriers

Note how people factors account for the top three challenges and for four out of the top five. Getting the “soft” stuff right turns out harder to do than getting the traditional “hard” stuff, such as resources and technology, correctly aligned. What was once considered the unimportant “soft and fuzzy” aspect of organizational life turns out to be what makes or breaks change projects. This picture of what enables successful change is highlighted again in IBM’s uncovering of the key success factors. These key ingredients for successful change, as revealed by the top performers in the study, are:

92% Top management sponsorship
72% Employee involvement
70% Honest and timely communication
65% Corporate culture that motivates and promotes change
55% Change agents (pioneers of change)
48% Change supported by culture
38% Efficient training programs
36% Adjustment of performance measures
33% Efficient organization structure
19% Monetary and non-monetary incentives

Once again, tuning in to the “soft” factors makes up for the top six key aspects for successful change. How does your organization measure up on its change management scorecard?

Pull out a blank sheet of paper and place a line down the middle of the sheet, from top to bottom. On the left hand side of the sheet, enter all of the above key barriers. At the top of the sheet, label this list with “Forces Against Change”. On the right hand side of the sheet, list the above key success factors and label the list “Forces For Change”.

Now place a line under each factor pointing to your center line. Make the length of each line proportional to the strength of each force; either for or against the planned change. You have now an instant picture of the current health of your change program. Work with your team to develop strategies for leveraging the predominant forces for change and for mitigating the strongest forces against change.

Find out all you can about how to weaken the barriers against change and strengthen the key success factors. Respect and develop your own skills as a change leader and invest in the skill development of your change team. All the while, keep uppermost in your considerations the central learning from this IBM study: that people matter the most.

References:

IBM Corporation, (2008) Making Change Work Study
www-935.ibm.com/services/us/gbs/bus/pdf/gbe03100-usen-03-making-change-work.pdf

© Leslie Allan. All rights reserved.