Change management Why change today hasn’t changed, but it needs to. Mark P. McDonald Group Vice President Gartner Executive Programs [email protected]

Change managementWhy change today hasn’t changed, but it needs to.

Mark P. McDonaldGroup Vice PresidentGartner Executive [email protected]

The ability of a business to change drives the difference between spending money and realizing returns on investments.

3© 2006 Gartner, Inc. All Rights Reserved.

Change management is changing

Evolving business requirements for CIOs and IT.

The traditional change management approach

An obstacles based change management approach

Alternative change management approaches

Recommendations


The current trend calls for higher business expectations for CIOs and IT.

As CIOs deliver IT services and manage costs, business expectations expand to how IT can support enterprise growth and competitiveness.

CIOs are responding to growing business expectations that are reflected in CIO priorities:

- Supporting enterprise growth and competitiveness.

- Managing an IT budget more like a business budget

- Leading the IS organization to deliver strategies focused on growth, alignment and business skills.

- Investing in technologies that support enterprise competitiveness


The business expects IT to support growth and competitiveness.

Source: Gartner Executive Programs 2006 CIO survey 1.400 responses


CIOs must take the lead in removing the barriers between business and IT.

Business IT

The business does not know what it wants from IT

25%

24%

21%

Business professionals do not collaborate effectively with IT

Business leaders are trying to solve a business problem with technology

12%

3%

IS does not know what the business wants.

IS does not collaborate effectively with the business

15% -- Other

Survey Question: What is the most significant barrier to IT making its business contribution?

Source: Gartner Executive Programs 2006 CIO survey 1.400 responses


CIOs Understand That the Biggest Barriers are on the 'Soft Side'

10 20 30 40 50 60

The culture is too difficult to change 52%

Too many conflicting priorities 45%

Organizational politics 41%

Lack of necessary funding 28%

Lack of skills/competencies 27%

Organizational model/structures 24%

Lack of vision and leadership 21%

Lack of executive buy-in 18%

Lack of IT — Business alignment 14%

No methodologies in place 14%

Too many change approaches 12%Other 3%

Source: Gartner/Meta, 2004 survey of 115 CIOs.Percentage of CIOs naming an item as a top 3 barrier to enterprise change

CIO views on the barriers to enterprise change


IN

IN the business issues concentrate on current operations and improvements. “In the business” issues focus on the current fiscal year. These include the infrastructure required to operate the business effectively at scale.

The Business

Successful deployment requires two different activities.

ON the business issues deal with the future shape of the enterprise in terms of its products, services and structure. CIOs working on transformational change are working “on the business.”

The Business

ON

Adapted from: The E-Myth by M. Gerber





An obstacles based change management approach


Recommendations


Leading Change Involves Leading Change Processes, Content and Context

Ch

ang

e C

on

ten

t

ChangeProcess

Acquire change methodology

Build team

Build case for change

Examine architecture and infrastructure

Define new business process

Select and test new technology

Define new roles and organizations

Pilot and roll out new business process

Pilot and roll out new technology

Pilot and roll out new roles and organization structures

Implement continuous improvement

Implement ongoing support

Install new performance measures aimed at culture

People

Technology

Process

Develop and Implement

Change

SustainImproved

Performance

Compelling Case and Strategy for Change

Design ChangeProgram

ChangeContext


Participants in Enterprise Change Follow a Predictable Cycle of Resistance and Adoption


Blame Denial Testing Skepticism Disbelief HopeInitial Action

InitialSuccess Acceptance

OngoingImprovementHard Work

Sponsors, Agents and Targets Progress Through the Change Struggles at Different Times and Rates

Sponsors

Agents

Targets








The traditional change management process looks at the world from a particular angle.

Change is viewed as an activity- Its discrete with its own process and playbook.

- It is an event, it happens at the end of a major IT investment or transformation program

- It is personal and requires people to cascade their sponsorship and ownership as a unique act

This view relegates change management to an ancillary activity- It is something you do rather than a characteristic of the company.

- It is outside the responsibilities of general management and requires special roles such as sponsorship, owner or champion.

- IT is viewed as a specialty that is housed outside of line management and operational reporting responsibilities.


TransformationalChange

Continuous Improvement

Traditional notions are too extreme at both extremes to meet the needs of business.

Effectiveness

Frequency of Change

“No Man’s Land”

High

Generational

High

Monthly

Business as usual Burning platform

Effectiveness






Recommendations


Operations

Viewed with a different lens, change management becomes a way of exciting enterprise decisions.

Decision


Which record is better in your enterprise?

5 and 0

27 and 6or


Alternative approaches achieve the same objectives but using management techniques.

Overcoming obstacles

Strengthening the information value chain

Model based management

Enterprise dynamics


Overcoming four critical categories of change obstacles

ProcessFinance

PersonnelProcurement

PeopleExecutives

IT staffMission staff

PoliticsElected Officials

ExecutivesUnions

PrioritiesPoliticalAgency

Operational

Internal

External

Local

Cross- Functional

Stakeholder obstacles

Organizational obstacles


Use these steps to determine the best strategy for negotiating an obstacle

Sense Interpret Plan Select Execute

Gather information about the obstacle: Size Motion Malleability

Understand the nature of the obstacle: Real Persistent Critical

Outline possible options for negotiating the obstacleInclude risk and reward scenarios for each

Assess and select an option for dealing with the obstacleWeigh greatest value against acceptable risks

Execute on best option Look for potential new obstacles on the other side


Four obstacle negotiation strategies

MinimizeTake the shortest route around the obstacle; the path of least resistance

“Use sole source rather than RFP procurements when possible”

MaximizeConvert the obstacle to an asset; the obstacle becomes an accelerator

“My CFO used to be against the IT re-organization, but now she’s in favor of it!”

NeutralizeRemove the obstacle from your path

“You’re fired! I’m hiring a new contractor!”

Obstacle

AvoidPlan a route that ensures you do not encounter the obstacle at all

“Ask for new IT budget money in the middle of an electoral cycle”


Negotiate Obstacles to Change Using Four Strategies and Tactical Toolsets

Reward systems must be used in conjunction with other tools to generate high performance.

Performance management programs can create a negative "punishment" culture when over-applied.

Use "Carrots":Use performance management programs and metrics to drive change.

Minimize

Neutralize

Maximize

Avoid

Strategy

Strong action is sometimes required to demonstrate the CIO's determination to proceed with the change program.

Elimination of staff can create a negative tone in organizations when over-applied.

Apply "Sticks": Fire or move personnel who actively resist the change program.

Decide how much support for the change effort is "enough."

Know when it is no longer possible or advisable to convert challengers to allies.

Influence: Use influential allies to help drive the change effort throughout the organization.

Stakeholders may begin as allies, neutrals and challengers, but may shift positions over time. Monitor support as it evolves.

Don't mistake an individual's enthusiasm for ability to support the change initiative.

Communicate and Plan:

Create a stakeholder map to identify potential allies, neutrals and challengers in advance.

ImplicationsRisksTactics


Is it critical to deal with the change obstacle to proceed with the change initiative?

Will the obstacle create an unacceptably long delay in the progress of the change initiative? Minimize

MaximizeIs the change obstacle unresponsive to positive incentives or remedial actions?

Will the change obstacle provide future value or benefits to the organization? Neutralize

Assess the need to negotiate the obstacle against the time sensitivity or urgency of the change initiative

Yes

Yes

Yes

Yes, then consider No, then consider

No, then consider

No, then consider

The nature of the obstacle and the desired rate of change determine your obstacle strategy

No

Avoid






Enterprise dynamics


The strength of the information value chain determines your ability to innovate and grow.

Needs GrowthCapture and understand needs

Capture and understand needs

Develop customer and market driven solutions

Develop customer and market driven solutions

Use solutions to open new markets and attract new customers

Use solutions to open new markets and attract new customers

Information Innovation GrowthGrowthNeeds Growth

Change LeadershipChange Leadership

AgilityAgility

Enterprise Issues

Information Value Chain


Innovation – strategic experiments.

Refine

DecideDecide

Source: Growth and Innovation, EXP Signature Report,

Refine the experiment based on the results, update the idea, and adjust for the next iteration to improve the result

Review the results, and clearly state what has been learned

Create an explanation of the business strategy, its key mechanisms, and how it will work to create competitive advantage

Run the strategic experiment as time-boxed iteration, observe and gather efficiency and effectiveness information

Build theTheory

Run aTest

Refine

Decide to iterate again, close or transfer to product development

DecideDecide New

product or service

Experience and insight

Review Results


Enterprise agility – changing at speed, scale with managed cost and risk.

IT Service Delivery

Governance and Leadership

Project Delivery

ITAgility

Technology is an accelerator

Working “ON” the business …

CEO/CIORelationship

Meeting current commitments

Working on what’s important …

Now and In the future … Enterprise

Agility






Enterprise dynamics


Model based development looks at the enterprise as designed system.

Think of the enterprise as a designed system that can be measured and improved.

Basis for common operations and managed performance

Based on capabilities rather than products or services- Capability: sets of resources that

form distinct operations that are designed to operate together


Traditional view of the enterprise assumes that it is a set of components.

Strategy

BusinessProcess

HumanCapital

InformationTechnology

Facilities &Equipment

Culture

While this view is accurate it is incomplete to meet the needs of a globally-connected economy. Strategy execution is viewed as changing components individually.

© 2005, Mark McDonald Architecting the Enterprise: an approach for designing performance, integration, consistency and flexibility.”


An enterprise in a globally connected economy requires a more expansive view.

Strategy

Capability

ValueNetwork

TradingPartner

Culture

BusinessProcess

HumanCapital

Applications Facilities &Equipment

Performance

Enterprise

TechnicalInfrastructure

Capability Interface

© 2005, Mark McDonald Architecting the Enterprise: an approach for designing performance, integration, consistency and flexibility.”






Enterprise dynamics


Enterprise dynamics, the world is binary either tactical or strategic.

Tactical Strategic0 – 12 months + 12 months

Executive

Leadership Focus

ManagementObjective

Goal

Responsibility

Information

IT Role

CFO & BU leadership

Deliver current year financial plan and earnings commitments

Operational effectiveness and efficiency

Delivering current top/bottom line results and investor expectations

CFO/COO. Business Unit Heads

Transactions

High quality, cost effective services, deliver accurate information

CEO

Lead the strategic plan and long term value of the company

Sustainable competitive advantage, long term growth

Communicating the enterprises long term potential

CEO, Corporate Development

Market Dynamics

Support implementation of strategic plan.Enterprise agility


Executing a business strategy involves changing enterprise dynamics.

StrategicTacticalDynamic

0 – 12 months 24 - 36 months

12 – 24 months

Focus

ManagementObjective

Goal

Responsibility

Information

IT Role

Current year budget

Operational effectiveness and efficiency

Delivering current top/bottom line

CFO/COO. Business Unit Heads

Transactions

High quality, cost effective services, deliver accurate information

Strategic plan

Sustainable competitive advantage, long term growth

Communicating the enterprises long term potential

CEO, Corporate Development

Market Dynamics

Support implementation of strategic plan.Enterprise agility

Changing enterprise capability performance to drive growth

Realize new capabilities and transform current capabilities to deliver the strategy

Create sources of sustainable competitive advantage

CIO, Corporate Development, Product Development

Combine information analytics and business processes transformation and product/serve delivery

Use operational knowledge, data, and operational capability to create new capabilities.






Recommendations


Implement a policy deployment capability that is part of your daily and strategic management processes.


Recommendations

Recognize the difference between working “IN” the business and “ON” the business.

Establish a policy deployment capability Eliminate change management as a distinct and

separate capability Make change techniques part of standard

management techniques Build muscle and make evolution/improvement an

expectation across the company Recognize that the threat of extinction only works

once, but that actual extinction only happens once.


Gartner Executive Programs

This presentation is based on the following Gartner Executive Programs research projects:- “Growing IT’s Contribution: the 2006 CIO agenda”

- “Leading Enterprise Change”

- “Overcoming Change Obstacles”

- “Putting the “I” back in CIO” – under development

- “Strengthening the Information Value Chain”

This presentation rests on the experience of more than 40 company case studies.

Documents

Change management Why change today hasn’t changed, but it needs to. Mark P. McDonald Group Vice President Gartner Executive Programs [email protected]