2004 Life Convention 7-9 November · business delivery. 4 Why are we here? The Standish Group has,...

2004 Life Convention7-9 November

EICC Edinburgh Scotland

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A practical introduction to changemanagement for actuaries

Brian WoodTelos Solutions

abcd

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A practical introduction to changemanagement for actuaries

� Most change programmes fail to deliver their promised businessbenefits – despite the fact that they are run by intelligent, well-intentioned people who care about what they are doing. Thissession provides some insights and techniques for improvingdelivery. It will cover:� The main reasons that projects fail – and how to counter them� The nature and requirements of different project types: eg technical

vs operational� The difference between ‘busy-ness’ and real progress� Some simple techniques that improve effectiveness� How actuaries can use their unique skills to make a difference to

business delivery

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Why are we here?

� The Standish Group has, since 1994, published theannual results of research into projects. Standishfound that:� 70% of projects are delivered late, over budget, or fail

completely� 23% are cancelled before completion� The average time overrun adds 63% to the original estimate� The average cost overrun adds 45% to the original budget

forecast

Source: The Standish Group

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What gets done

The importance of change management

� Organisational capacityexists at three levels:1. Hardware, what gets done2. Processes, policies,

systems, structures3. Capacity for change

� Each level changes thelower ones

� Effective changemanagement is essential tobusiness survival

"It is not the strongest species that survive, nor the most intelligent,but the ones most responsive to change." Charles Darwin

Processes,policies

ChangeCapacity

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Presentation roadmap

� Introduction and basicdefinitions� Simple change, projects and

programmes� Causes of failure and

guidelines for success� Simple change, projects and

programmes� Change Management hints

and tips� Actuaries and change

management

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Presentation roadmap

� Introduction and basicdefinitions� Simple change, projects and

programmes� Causes of failure and

guidelines for success� Simple change, projects and

programmes� Change Management hints

and tips� Actuaries and change

management

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Introductions

� Fellow of the Faculty ofActuaries

� Life assurance: Albany Life,Scot Eq, CEO at WindsorLife & PPP lifetime

� Consulting: CEO atWinchester White & Telos

� Worked recently with Faculty& Institute presidents onchange in the profession

� Change managementbusiness

� Specialising in, but notrestricted to, financialservices

� Staffed by experiencedchange managers

� Efficient and successfulbusiness model

� www.telossolutions.co.uk

Brian Wood Telos Solutions

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Change management

� Every business change starts with an idea insomeone’s head

� Change management is about taking the idea andmaking it work for real

� Actuaries:� Tend to be good at conceptualising, coming up with ideas� Are rarely trained in the practical aspects of delivery

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Factors for project success

� The Top Ten Factors, weighted according toinfluence on project success, are:

1. User Involvement 202. Executive Support 153. Clear Business Objectives 154. Experienced Project Manager 155. Small Milestones 106. Firm Basic Requirements 57. Competent Staff 58. Proper Planning 59. Ownership 510.Other 5

Source: The Standish Group

The morefactors, thehigher the

confidence level.

Good ChangeManagementdelivers all of

these.

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Effective change

� Effective change delivers business benefits:� Profits, survival, sales, service, costs, reputation

� Effective change has two components:1. Something that is different in the world

� eg a new product, service, system, report2. Active involvement and use by people

� staff, customers, the press, regulators etc

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2. How it isused

Effective change

� Something physical must bedifferent

� Input focus� Scope for ‘busyness’� Creates zero benefit by itself

� All the benefits flow fromhow the difference is used

� Output focus� Source of real progress� Is often neglected!

1. Somethingdifferent Benefits

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Ineffective change

� “The top obstacle to successful change is employeeresistance at all levels: front-line, middle managers,and senior managers.”

� “When asked what they would do differently nexttime, most teams would begin their changemanagement activities earlier in their next project,instead of viewing it as an add-on or afterthought.”

Source: Change management benchmarking study, Prosci, 2003

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Types of change

� Simple change� Single goal, the work is

completely under your owncontrol

� Business project� Single goal, a number of

people are involved� Business programme

� Complex goal (usuallystrategic), many people andprojects involved

� High profile, high risk£50k

£100k- £1m

£5m -£500m

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Presentation roadmap

� Introduction and basicdefinitions� Simple change, projects and

programmes� Causes of failure and

guidelines for success� Simple change, projects and

programmes� Change Management hints

and tips� Actuaries and change

management

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Simple change

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Simple change: causes of failure

� Poor goal-setting� Starting without thinking

� Poor planning� Underestimating the time it takes� Assuming that no difficulties will emerge

� Low benefit delivery� It’s not what the customer wants/needs� The world has moved on

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Guidelines for simple change

� Be clear about the goal� What benefit is it designed to provide?� Is it worth the effort?

� Design a process to get from A to B� Understand the steps� Use accurate data� Lists, time estimates etc

� Modify the plan as new information emerges� Unanticipated difficulties or easiness� Changes in the goal

� Check that the goal delivers the benefits

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Business projects

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Business projects: causes of failure

� Resistance from staff:� Lack of understanding� Fear of the unknown, job losses etc� De-sensitised to change from past failures

� Resistance from managers:� Loss of power and control� Overload – pressure from the day job� Lack of change skills and experience� Scepticism/ disagreement about the need for change

� Weak support from sponsor� Lack of clarity amongst the team

as for simple change, plus:

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Extra guidelines for projects (1)

� Get a strong sponsor� Scope out what needs to be done� Engage the team� Secure any other resources� Engage the beneficiary� Establish a steering committee� Communicate

… then you can start!

as for simple change, plus:

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Extra guidelines for projects (2)

� Take responsibility for delivering the result� Convert what is needed now into digestible chunks� Chase progress� Manage cross-functional conflict

� Report:� Let people know what is expected of them� Manage expectations around delivery� Keep the sponsor informed

� Re-plan, re-define, re-organise, re-structure� Communicate, communicate, communicate� Celebrate success

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Business programmes

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Business programmes: causes of failure

� Managing the tangible (inputs),ignoring the rest (outputs)� Staff motivation, training� Customer acceptance

� Allowing the ‘top-down’ and‘bottom-up’ to diverge� Disconnect between strategy

and what is delivered� Trying to manage the

programme as a list of separateprojects� Complexity and dependencies

need to be managed

� Not managing expectations� Clear scope, board support� Communications to all affected� Truthful reporting & resolution

of issues� Over-reliance on existing skills

� Well-intentioned internalmanagers

� IT project managers

as for simple change and projects, plus:

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Extra guidelines for programmes

� Formally establish aprogramme� Appoint an experienced

Programme Manager� Understand the strategic

benefits at a deep level� The goal will tend to be

large, pervasive andground-breaking

� Manage the board� Mobilise properly

� Establish an appropriatepace from outset

� Integrate with ‘business-as-usual’

� Manage and eliminate risk

as for simple change and projects, plus:

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Examples of Programme failure (1)

� The war in Iraq� Poor data� Inadequate goal-setting

� “let’s kick ass!”� Inadequate planning (for

success)

� Scottish Parliament� Vague goal-setting� Lack of clear sponsorship� Programme Manager with

no power� No control over changes

� No management ofexpectations

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Examples of Programme failure (2)

� Millennium Dome� Focus on inputs (the

building), not the benefits� Lack of engagement with

beneficiaries� Inadequate resource

assessment

� Your systems!� Unrealistic scope (try to do

too much)� Lack of engagement with

beneficiaries (users andcustomers)

� Planning for systemimplementation, not benefitdelivery

� Poor management ofexpectations

… in other words, inadequate change management

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Crude success rates

10%

30%

55%Source: The Standish Group

“People are happy tomake the decision touse specialists in theirdomestic life (dentists,plumbers, mechanics)and in business(accountants, lawyers,actuaries) …”

“… but otherwise-sanepeople will place complex

multi-million pound,business-critical change

programmes into thehands of non-specialist

managers, or those withlimited experience.”

- an experiencedchange manager

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Presentation roadmap

� Introduction and basicdefinitions� Simple change, projects and

programmes� Causes of failure and

guidelines for success� Simple change, projects and

programmes� Change Management hints

and tips� Actuaries and change

management

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Hints and tips

1. The Sponsor2. It’s not just the IT …3. … it’s the people stupid!4. Communication5. Plans and planning6. Cost of change management

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Hints and tips 1:The Sponsor

� Is the owner of the project orprogramme goal

� Is the primary focus forupwards reporting

� Must:� Have political clout in the

organisation� Be committed to the

business benefits

� Clears political blockages� Provides guidance on

changes in scope� Usually chairs the steering

committee

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Hints and tips 2:It’s not just the IT …

� Typically, organisations do alot to get the IT ready for thebusiness…

� … but don’t appreciate thework necessary to get thebusiness ready for the IT

� Change is about outputs, notjust inputs

� Example: NHS NationalProgramme for IT

� Current procurement cost£6.3bn – funded centrally

� Implementation cost now afurther £12bn-£24bn� no budget� to be funded locally by

cash-strapped Trusts� requirements unclear� high risk of resistance

“If the initiative does not live up to expectations, it will be one of thebiggest technological failures in history.” (Computer Weekly)

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Hints and tips 3:… it’s the people stupid!

� ALL change is deliveredthrough people� and for people

� People don’t comply with therules of logic – actuarial orotherwise

� People downwards,alongside, upwards

� People will always act fortheir own benefit� You do, so why not them?� Try to look at things from

their perspective� Explain how your change

will benefit them� Deal with reality

� Whether or not people‘should’ want something isirrelevant

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Hints and tips 4:Communication

� Before, during, after� Why the project/programme

is necessary� What ‘after’ will look like� How it affects/benefits the

audience

“What does thismean for me?”- is rarely answeredby issuing reams ofdata

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Hints and tips 5:Plans and planning

� IT departments love GANTT charts� Boards hate them!

� Sophisticated plans, produced by expensivesoftware, provide an illusion of control� Plans are static

� Real control flows from the project/programmemanager’s ability to respond and adapt� Planning is a continuous, active, process

“The plan is nothing – planning is everything”Dwight D Eisenhower

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Hints and tips 6:Cost of change management

� The real cost of changemanagement is the cost ofnot doing it� rarely accounted for� delays, cost overruns,

morale, reputation� Rule of thumb:

� budget for 10% of costs� The larger and more

complex the change, thegreater the need� but it is still cost-effective for

simple change

10%

30%

55%Success rates (Standish)

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Presentation roadmap

� Introduction and basicdefinitions� Simple change, projects and

programmes� Causes of failure and

guidelines for success� Simple change, projects and

programmes� Change Management hints

and tips� Actuaries and change

management

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Actuaries and change management

� Analytical skills� Problem solving� Designing solutions

� Good at understandingcomplex issues

� Comfortable with the needfor process

� Not often political: will dowhat is needed

� People skills� Ensuring the solution works

for the people who use it� Engaging and motivating a

change team� Paralysis by analysis

� Need to maintain pace ofdelivery

� Passive rather than active� Technicians rather than

contributors?

Strengths Possible weaknesses

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Summary:10 practical steps you can take

1. Make sure your change has aneffective sponsor

2. Ensure your goal is clear,relevant, and described interms of benefits

3. Avoid rushing into work beforeyou have a rough idea of its fullscope

4. Use whatever planning toolswork for you – and keep re-planning

5. Take part pro-actively, ratherthan sitting on the sidelines andcriticising

6. Recognise the value of ‘goodenough’ over perfection

7. Focus on delivering the benefits– outputs, not inputs

8. Contingencies always happen –so allow spare time andresources

9. Be prepared to change thescope – smaller chunks aremore manageable

10. If the change is at all significant,invest in specialist changemanagement skills

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And finally …

� If it is possible to design a change programme thatwill maximise delivery, then …

� Logically, it is also possible to design a changeprogramme that will maximise failure:1. Don’t be specific about the goal2. just start working, (let’s kick ass!)3. keep working, (no time for anything else!)4. get a good sweat on, (the boss will be impressed!)5. head down, (ignore the evidence of history!)6. whoops!

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� Questions & discussion

A practical introduction to changemanagement for actuaries

Brian WoodTelos Solutions

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