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THE CHANGE EQUATION Building your Capability for Change. Peter Duschinsky Managing 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 - PowerPoint PPT Presentation
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© Imaginist 2011
THE CHANGE EQUATION
Building your Capability for Change
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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© Imaginist 2011
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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© Imaginist 2011
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 objectives5
© 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 - Attention and resources focused on people and processes, developing the organisation’s capability and resilience” (Rebecca Henderson, Harvard Business School)
Resilience: “The attitudes, skills and strengths, that enable individuals, and teams to thrive within organisational change” (The Taylor Clarke Partnership)
• A Capability for Change is crucial if you want to respond to the accelerating pace of change and rising levels of business complexity
• But it 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 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…
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© Imaginist 2011
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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© Imaginist 2011
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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© Imaginist 2011
Change Readiness Assessment
We use a number of key models and tools
We will come back to these…
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© Imaginist 2011
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
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© Imaginist 2011
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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© Imaginist 2011
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
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© Imaginist 2011 15
Change Readiness Assessment:
Models and tools
© Imaginist 2011
Change Readiness Assessment:
Models and tools
Organisational Culture Evolution model
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© Imaginist 2011
Assessing an Organisation’s Culture
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3
45
6
7
89
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
© Imaginist 2011EXTERNAL INTERNAL
Structuralist2
1 Pragmatist/Anarchic
3Dialectic Aligned
4
5 Pragmatist/Aligned
6Empiricist
Imaginist7
9 Pragmatist/Empowered
8Systemist
Organisational Culture Evolution Model
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© Imaginist 2011
Organisational Culture Evolution Model
EXTERNAL INTERNAL
8SystemistImaginist
7
6Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
1 Pragmatist/AnarchicStructuralist
2
3Dialectic Aligned
4
19
© Imaginist 2011EXTERNAL INTERNAL
8SystemistImaginist
7
6Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
3Dialectic Aligned
4
1 Pragmatist/Anarchic
Structuralist2
Organisational Culture Evolution Model
20
© Imaginist 2011EXTERNAL INTERNAL
8SystemistImaginist
7
6Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
Structuralist2
Aligned4
1 Pragmatist/Anarchic
3Dialectic
3Rationalist
Organisational Culture Evolution Model
21
© Imaginist 2011EXTERNAL INTERNAL
8SystemistImaginist
7
6Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
Structuralist2
Aligned4
1 Pragmatist/Anarchic
3Dialectic
Organisational Culture Evolution Model
22
© Imaginist 2011
Organisational Culture Evolution Model
EXTERNAL INTERNAL
8SystemistImaginist
7
6Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
Structuralist2
1 Pragmatist/Anarchic
3Dialectic
4Aligned
23
© Imaginist 2011EXTERNAL INTERNAL
8SystemistImaginist
7
6Empiricist
9 Pragmatist/Empowered
Structuralist2
1 Pragmatist/Anarchic
3Dialectic Aligned
4
5 Pragmatist/Aligned
Organisational Culture Evolution Model
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Where are you now?
© Imaginist 2011
Where are you now?Where do you need to be?
EXTERNAL INTERNAL
Structuralist2
1 Pragmatist/Anarchic
3Dialectic Aligned
4
5 Pragmatist/Aligned
6Empiricist
Imaginist7
9 Pragmatist/Empowered
8Systemist
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© 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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© Imaginist 2011
The Organisational Capability Indicator
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© 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
‘Developmental’Apply management
improvement techniques to “make it work better”
‘Developmental’Apply management
improvement techniques to “make it work better”
‘Transitional’Replace one system or process with another
‘Transitional’Replace one system or process with another
‘Transformational’
Scrap whole operation/business and
start again
‘Transformational’
Scrap whole operation/business and
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 knowable28
© 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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© Imaginist 2011
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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© Imaginist 2011
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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© Imaginist 2011
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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© 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
‘Developmental’Apply management
improvement techniques to “make it work better”
‘Developmental’Apply management
improvement techniques to “make it work better”
‘Transitional’Replace one system or process with another
‘Transitional’Replace one system or process with another
‘Transformational’
Scrap whole operation/business and
start again
‘Transformational’
Scrap whole operation/business and
start again
e.g.
How should we measure complexity?
Co
mp
lexi
ty F
acto
r
75 4803600
10800
32400
72000
05000
1000015000
2000025000
3000035000
4000045000
5000055000
6000065000
7000075000
80000
1 2 3 4 5 6Exponential Complexity Model
Co
mp
lexi
ty F
acto
r
75 4803600
10800
32400
72000
05000
1000015000
2000025000
3000035000
4000045000
5000055000
6000065000
7000075000
80000
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
© 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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© Imaginist 2011
The Exponential Complexity ToolC
om
ple
xity
Fac
tor
75 4803600
10800
32400
72000
05000
1000015000
2000025000
3000035000
4000045000
5000055000
6000065000
7000075000
80000
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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© Imaginist 2011
Combining Capability and Complexity
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© Imaginist 2011
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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© Imaginist 2011
Deliverables: Route Map
INTERNAL
(Individual)
Structuralist
21 Pragmatist/Anarchic
3Dialectic Aligned
4
5 Pragmatist/Aligned
6Empiricist
Imaginist7
9 Pragmatist/Empowered
8Systemist
EXTERNAL
(Organisation)
You are here
You need to be here
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© 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
(NB this needs to be coupled with strong, visible, creative leadership – we hope you agree that’s a given…)
If you think this approach might be of value to your organisation, please contact us
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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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