THE TRANSFORMATION ISSUE - Harvey Nash€¦ · trying to bring about change. It adds up to a blueprint for success for both interim managers and the organisations that employ them

THE TRANSFORMATION ISSUE

ISSUE 30

Editorial Jane Simms and Andy BooklessDesign Phil Shakespeare

IMPACT is a publication of Impact Executives, a division of Harvey Nash plc

Impact Executives LtdHeron Tower, 110 Bishopsgate,London EC2N 4AY+44 (0)20 7314 2011www.impactexecutives.com

©2014 Harvey Nash plcAll rights reserved. Contents may not be reproduced in whole or in part without the written consent of the publishers

The articles in this issue of IMPACT JOURNAL offer numerous clues about the qualities a successful leader needs to effect transformational change.

Christer Cragnell, for instance, a very senior Scandinavian executive and

interim manager, has always sought responsibility and delivered on his promises, and has an innate curiosity and determination to achieve more. His training as an engineer instilled in him a structured and logical approach, but he has balanced this with a strong focus on people. Clear targets, strong leadership and excellent communication are, he says, the critical factors in successful change. An outside perspective married with honed political skills go a long way to overcoming one of the biggest barriers to change - executives’ reluctance to admit that they are the source of the problem.

In the UK, Jason Millett, one of the men responsible for delivering London 2012, cites vision, leadership, communication and high-level support as being key to the spectacular success of the Games. ‘Grey hair’ also came into it. “Age and experience were very important,” he recalls.

Former Volvo executive Malin Persson, meanwhile, talks about the importance of trust and courage when trying to bring about change.

It adds up to a blueprint for success for both interim managers and the organisations that employ them to help effect transformational change.

ISSUE 30

THE JOURNAL FOR CHANGE LEADERS

Christine de LargyManaging Director,Impact Executives - Global Interim [email protected]+44 (0) 20 7314 2003

ABOUT IMPACT EXECUTIVESImpact Executives is a leading provider of interim managers to organisations of all sizes in the UK and around the world. With offices covering the UK, the Nordics, Europe, Asia Pacific and North America, Impact Executives is part of the global recruitment specialist Harvey Nash Group plc. Over the past 20 years it has helped more than 2,000 organisations, including over two-thirds of FTSE-250 companies, to engage interim talent at short notice to help them manage periods of growth, manage projects including transformation and downsizing, or to replace key management.

3Impact Executives / IMPACT / Issue 30

WHAT DOES A TRANSFORMATIONAL CHANGE LEADER LOOK LIKE?Change leaders come in many guises. Learning from their approach can help us transform our own organisations. Pages 4-5.

CHANGE AGENTChrister Cragnell who has held top-level roles at companies including Swedbank, Handelsbanken, Unisys and SEB, provides insights into why so many change programmes fail.

Pages 8-9.

NUDGING CHANGE VS.

LEADING CHANGE

Academics Richard H. Thaler

and Cass R. Sunstein, from the

University of Chicago, argue for

the merits of their ‘Nudge’ theory,

while John P. Kotter and Dan S.

Cohen present the case for ‘Leading’

change. Pages 18-19. DESTINATION RIO

Jason Millett helped to mastermind

the delivery of the biggest and most

complex sports project in UK history.

He reflects on the critical factors

that made the London 2012 Olympic

Games such an outstanding success,

and how the team behind Rio 2016

are fast learning similar lessons.

Pages 16-17.

BLOOD, SWEAT AND GEARS, BRITAIN'S THOROUGHLY MODERN ENGINEERING REVOLUTIONLord Digby Jones casts his expert eye over the transformation of the UK manufacturing sector and finds a thoroughly modern, and uniquely British, engineering revolution that is succeeding on a global scale. Pages 6-7.

CONTENTS

IMPACT EXECUTIVES CHANGE SURVEY RESULTS

Results and analysis from the annual Impact Executives Change Survey:

Business leaders are adapting better to change, are more growth-oriented and are more optimistic about their companies’ prospects. Pages 12-15.

THE COURAGE TO INNOVATE

A leader is responsible for creating

a climate where innovation can

flourish. However, Malin Persson

believes most business leaders are

insufficiently courageous.

Pages 10-11.

CHANGE LEADER

WHAT DOES A TRANSFORMATIONAL CHANGE LEADER LOOK LIKE?

Change can be difficult, its processes can be messy and its outcomes hard to

define. Transformational leadership can take many forms: energising an underperforming team, growing a business into new markets or industries, reforming local or national government departments, responding to world events and leading in times of crisis.

FAST LEARNER

A lot has been written about Steve Ballmer since he announced his retirement from Microsoft in 2013. He has received more than his fair share of criticism for the organisation’s performance in recent years, but no one can question the enormous value Microsoft has accrued during his career. In 1980, when Ballmer was only 24 years old, he became the 30th employee of a fledgling technology start-up called Microsoft. Once hired, and with

no experience in the technology industry, Ballmer learned quickly on the job. After heading several Microsoft divisions including operations, operating systems development and sales, Ballmer oversaw a dramatic shift away from the company’s PC-first heritage and helped grow Microsoft’s annual revenue from $25 billion to $70 billion during his tenure as Chief Executive Officer.

IMPACT JOURNAL SAYS: “Transformational leadership abilities cannot be created in a vacuum. Ballmer learned on the job by being given responsibility early in his career and working in an environment with other change agents. Seek out opportunities that enable you to learn about other areas of your organisation.”

EMOTIONALLY INTELLIGENT

Leading the Midlands Air Ambulance service, its three air ambulance helicopters, crews of pilots, doctors, paramedics and support staff who respond to an average of 2,000 missions each year requires significant skills. Yet it was the decision to re-establish the charity as wholly independent from the National Health Service that required high levels of emotional intelligence from Chief Executive Hanna Sebright: “Emotional intelligence is often overlooked by leaders as

they seek to pursue change. It’s not tangible, and it takes time to hone. However, without being aware of one’s own emotions and the emotions of others in your team, to read and reduce stresses, to resolve resistance positively and swiftly when it occurs, and to communicate effectively to win hearts and minds, leaders would be unable to build the support they need to deliver change programmes like we have at Midlands Air Ambulance.”

IMPACT JOURNAL SAYS: “Hone your emotional intelligence by listening more than you talk. The signs may be subtle but your people will indicate when there is a real fear of transformational change; it requires an open dialogue to overcome a fear of the unknown.”

Impact Executives / IMPACT / Issue 304

CHANGE LEADER

WHAT DOES A TRANSFORMATIONAL CHANGE LEADER LOOK LIKE?

Change can be difficult, its processes can be messy and its outcomes hard to

define. Transformational leadership can take many forms: energising an underperforming team, growing a business into new markets or industries, reforming local or national government departments, responding to world events and leading in times of crisis.

These individuals are often highly driven, goal orientated, and in possession of strong leadership styles. Change leaders are by their very nature outstanding figures and they can provide certainty and direction. They don’t fit in with the crowd. Yet by recognising the traits of exceptional change leaders, we can apply some of their lessons to help transform our own organisations.

COURAGEOUS

Rudolph (Rudy) W. Giuliani is the former Mayor of New York City, known around the world for his courage in leading the city during its darkest hours, after the worst terrorist attack in the history of the United States. However, Mayor Giuliani left a legacy of transformational change in New York City as a result of his courageous leadership style that began well before 11 September 2001. As U.S. Attorney for the Southern District of New York in the 1980s Giuliani led successful efforts against

organised crime, often placing himself and his team of public prosecutors in great personal danger. In his early years as Mayor he focused on reducing crime, reforming welfare, and improving the quality of life for residents. His tough and pragmatic leadership style cut through city bureaucracy. A willingness to honestly, even bluntly, express his frustration when reform was not occurring fast enough mirrored the feelings of many New Yorkers and endeared Rudy to voters from across the political spectrum.

IMPACT JOURNAL SAYS: “Brave, personal leadership is difficult. Staying true to your values, speaking honestly, and leading by example are character traits that can inspire the people who work for you and help transform your organisation.”

A TEACHER AND MENTOR

Transformational leaders by definition act as catalysts for change. They inspire positive changes in those who follow them, leaving a powerful legacy long after they’ve gone. They engage their mentees in a way that moves them to also become leaders. Rather like a stone thrown in a pond, the ripples carry on and on. Consider the continuing influence in fashion of Gianni Versace years after his death, or the enduring strength of Apple since Steve Jobs passed away.

“I believe I have achieved what I have because of a transformational mentor who was ruthlessly honest with me. He encouraged me, challenged me, pushed me and gave me a couple of game changing breaks. And I’m not alone. Whenever I talk to successful people from whatever walk of life, I always hear something similar about the debt they owe to a great mentor.” Margot Katz, Group Talent Director for Harvey Nash plc, mentor, and executive coach.

IMPACT JOURNAL SAYS: “Creating a sustainable culture of transformation depends on the ability of those that succeed you. Coaching and mentoring the next generation of change leaders has never been more important.”

Impact Executives / IMPACT / Issue 30 5

REVOLUTION

BLOOD, SWEATAND GEARSBritain’s Thoroughly Modern Engineering Revolution

Transformation can be painful. Economies and individual industries that undergo transformation often experience significant job losses, creating personal and social upheaval as businesses restructure for a new competitive reality. This was certainly

the case in the United Kingdom during the early 1980s and 1990s, in particular across the manufacturing region located near Birmingham. Someone with a front row seat at that time was a young business lawyer called Digby Jones, now Lord Jones of Birmingham. He provides a first-hand account of the struggle manufacturing businesses in the region faced, and through their transformational efforts, how they created a thoroughly modern, and uniquely British, engineering revolution allowing them to compete on a global scale.

THE CHALLENGE

I was a young business lawyer in Birmingham during the ‘blue collar’ manufacturing recession of the early 1980s, and I was Deputy Senior Partner of a major corporate law firm in the same city during the ‘white collar’ recession of the early 1990s. The manufacturing recession barely touched London and the South-East of England, but the latter hammered the entire nation. However, as a result of both recessions a fundamental shift was exposed in the UK manufacturing sector. Pure and simple, global manufacturing competition had reached a critical mass. Ignoring it was no longer an option. The choice was clear, but not easy to accept. Either hold tight to the systems that had made British engineering the envy of the world, but had done so in a bygone era. Or embrace global competitiveness, accept the pain of transformation, but look to reap the long-lasting benefits available in a global marketplace.

IMPACT JOURNAL SAYS: “The need for change can often be clear, but maintaining the status quo can appear less painful. Transformative change leaders prepare their organisation for the tougher path.”


REVOLUTION

THE HARD CHOICES

British industry had become fat, complacent and weak during the years of the Commonwealth Preference, when overseas markets were protected for UK goods. Vicious trade unions relentlessly pushed up the cost of labour, weak and poorly-trained management let them, paying Danegeld* when they felt threatened, while successive governments pursued interventionist policies and spent other people’s money attempting to buy popularity. The two recessions put paid to all that. UK business retrenched, many companies closed altogether, but the clever ones watched, listened and learned. The non-protectionist welcome of overseas investment that gave the UK an advantage over the protectionist nationalism of France and the United States came to the fore as Nissan, Toyota and Honda opened factories in Britain, showing UK manufacturers how to make quality, reliable products at affordable prices, on time, every time. * ‘Danegeld’ was a tax raised to pay tribute to the Viking raiders to save a land from being ravaged.

IMPACT JOURNAL SAYS:“Transformative change leaders look beyond their immediate environment to learn best practice that can maximise competitiveness in a constantly evolving global market.”

THE (THOROUGHLY BRITISH) SUCCESS STORIES

By the end of the last century, emboldened by new political leadership and a growing sense of global opportunity, business owners and new investors drove hard for a slice of the global manufacturing market, focused on value-added, quality innovation. So today, advancing into the second decade of the 21st century, those automotive pioneers of the 1980s and 1990s are still delivering a class act in Britain, but their transformative programmes have spread throughout the manufacturing sector. From BMW’s Mini to Jaguar Land Rover, from Triumph Motorcycles to JCB, from Airbus wings to Formula One cars, the United Kingdom is now globally competitive on a grand manufacturing scale. We export like never before because we make quality stuff that the world wants to buy. We deliver excellent training for the young. We wear ‘Brand Britain’ with pride. And as for that young lawyer who watched the world end in Birmingham all those years ago? Well ... he couldn’t be more proud of his city, his region and his country!

IMPACT JOURNAL SAYS: “Timescales in major transformational change can be measured in years rather than months. A long-term view is essential, but equally important are regular check-points.”


CHANGE AGENT

IJ: What are the three key factors in successfulchange programmes?CC: Clear targets, strong leadership and excellent communication. Organisations usually know they have a problem, but they can’t detect exactly what it is. Very often they blame it on ‘IT’ – but that is

Christer Cragnell has held top-level roles at organisationsincluding Swedbank, Handelsbanken, Unisys and SEB and is now bringing the benefit of his experience to other companies as an interim executive. He tells IMPACT about the combination of skills an interim manager needs – and provides insights into whyso many change programmes fail.

CHANGE AGENT

IMPACT JOURNAL (IJ): The focus of your career has been in IT and finance, but you have been heavily involved in transformational change projects. What led you down this route? Christer Cragnell (CC): Getting involved in transformational change projects was never part of my career plan. I just got drawn along that

path, but that is to do with the kind of person I am. You build your career by playing to your strengths, and I was always interested in taking on responsibility and delivering on my

promises, and I was always curious to learn and keen to achieve more. That combination of attributes naturally puts you in change situations. I have never labelled myself as ‘a change agent’, but delivering change has certainly been an important part of the roles I have done throughout my career.

IJ: What combination of skills do you believe a good interim executive needs?CC: My first degree was a Master of Science in Industrial Engineering and Management, and that took me straight into the IT industry: my first jobs were in the production planning and finance departments of Ericsson. The logical, ordered thinking that my technical training gave me has proved very useful in whatever task I have faced ever since, because I can see a structure and logic to the way things work, and how that might be applied in different situations. That makes it easy for me to move into new areas, and to handle change programmes related to business development, governance and other complex issues. But it’s important to balance that technical focus with good people skills, and early on in my career I gained management qualifications to help develop my leadership and motivation skills. The combination of technical focus and people skills is critical.

You build your career by playing to your strengths


CHANGE AGENT

an easy scapegoat and is rarely the real culprit. The root cause of failing change programmes is typically related to governance, culture, leadership and management. If you’re not clear about how you are meant to be operating and where you are trying to go, it is very difficult to lead and manage effectively. There may be technology problems, but once you have the right governance, culture, leadership and management these are relatively easy to fix. It is, however, very difficult to get the climate right, because leaders and managers are reluctant to recognise that it is they who are the problem. That’s human nature, of course – but it is why an outsider’s perspective can be valuable.

IJ: How do you hold the mirror up to business leaders without offending them?

CC: You have to have a solution mentality, not a blame mentality. And you need

to be quite a skilled politician – and that’s something I have

learned over my years of dealing with many

different stakeholders in big organisations.

Because people find it difficult to

accept what they need to do, you

have to take them back to basics and ask ‘how can we do this differently?’ But you only achieve this sort of cultural

change through

a phased approach. You

can’t do it all at once.

IJ: What if rapid

change is essential to survival?

CC: A burning platform is the best spur to change. If your

very survival is at stake – your cost base is out of control or there is some

kind of external threat to your business – you become very target driven. That's when you

get management commitment and things start happening. Sometimes you can manufacture a burning platform in order to create a sense of urgency – but you need to do this with the collusion of strong management.

IJ: Respondents to the latest Impact Executives survey said that change projects fail because they prioritise ‘process’ over ‘people’. Do you agree?CC: Yes: the overwhelming focus on process issues at the expense of people issues is a real barrier to effective change and innovation. The most important thing to get right is to establish what you and all your different stakeholders expect to come out of the change. If you are not clear about that, you can’t hope to succeed. Also, change projects have to be closely aligned to business development rather than being seen as ‘an IT project’. Delegating change to the IT team is a dangerous strategy. Nordic businesses are, arguably, better at the people side of things than companies elsewhere, and I think that has something to do with the fact that the Nordics is a collection of very small nations. Companies, including those in financial services, seem to be able to co-operate and compete at the same time. IJ: The survey respondents also said that strategic thinking needs to improve if organisations are to successfully meet the change challenges of the future. Can strategic thinking be taught?CC: You can learn to think strategically – provided you have sound governance, a good planning process and the kind of climate and leadership that promote innovative thinking. But outside stimulus can be very helpful because it is objective and based on experience from elsewhere. So as well as being able to help companies facing some sort of crisis, interim managers can also help to establish new thinking or a new culture within organisations.

IJ: You have had a distinguished executive career, and, more recently, acted as a consultant and adviser to the boards of several high-profile companies. But your current role as interim CIO at Swedish retailer Axstores is your first long interim management assignment. What is your remit and, three months into an 18-month role, what have you achieved so far?CC: I have stepped in to help Axstores as interim CIO and to support the delivery of a major ERP [Enterprise Resource Planning] implementation project and, as part of that, to put a new programme manager in place. But I am also focusing on establishing the appropriate governance of IT and aligning IT with the business as a whole. A related task is to develop the IT organisation itself – from being the guys in the cellar running the service to a more mature proactive function that is aligned with the overall objectives of the business.

This article first appeared in the AQ magazine, a publication by Alumni, a member of Harvey Nash Group plc.

A burning platform is the best

spur to change


THE COURAGE TO INNOVATE

COURAGE

The leader is responsible for creating a climate where innovation can flourish. However, Malin Persson, former CEO of Volvo Technology, believes most business leaders are insufficiently courageous.

I see innovation as an important driving force to improve things and build value. We have moved away from the idea that innovation is synonymous with invention – people understand that it is far more than that – but I am concerned that it seems recently to have become something of a buzzword. That may be explained by the new post-recession focus on growth, but the problem with buzzwords is that they tend to come and go – along with the concepts they describe. Innovation has to be part of the culture of an organisation; it’s not a quick fix.

IMPACT JOURNAL SAYS: “Innovation needs to stop being used as a management buzzword and become embedded in the culture of every organisation.”

As companies emerge from recession they are still extremely cost conscious and nothing is more guaranteed to add to the cost base than deciding to ‘bolt on’ innovation as a route to growth. However, having an innovation ‘mentality’ helps you come up with ideas for how to make and save money. But creating and nurturing an innovation culture is not easy. It relies on diverse teams of people pooling their ideas and challenging each other, and that creates friction. Leaders need to ensure that such friction is productive, and also encourage teams to share good ideas rather than trying to keep them within their own areas.

IMPACT JOURNAL SAYS: “Leaders seeking to develop an innovation culture must recognise and manage the inherent conflict created by people challenging each other as part of the innovation process.”

Different organisations have different stimuli for innovation. Sometimes a threat coming up behind you will get you off the ground. But trying to manufacture a challenge is unlikely to succeed because you can’t fool people. What you could do, however, is create realistic scenarios where you anticipate what future threats might look like, and then put strategies in place to respond to those as and when they arise. Boards can have a strong influence here. They can ask other boards how they do things, and posing simple questions to their own executives – like ‘how do you measure innovation?’ – can really get people thinking.

IMPACT JOURNAL SAYS: "Innovation needs a stimulus. Keep asking questions to keep it on the agenda - what are other people doing? what would happen if we didn't innovate? how do we measure it?"


COURAGE

You can mitigate the inherent risk in innovation by having a structure and process, but it’s also true that many of the giant leaps forward are the result of ‘skunk work’ – that is, someone’s not got the green light for something but persists with it below the organisational radar. You have to balance ‘process’ with ‘people’ though because, in my experience, environments where there is a high level of trust adapt far better to the challenges of change. We are all, innately, programmed to innovate, but change can feel very threatening, and people's first thoughts are, understandably, how is it going to affect me? Leaders have to overcome resistance to change by engendering a climate of trust.

IMPACT JOURNAL SAYS: “Establishing a culture of trust is far more likely to lead to true change and innovation.”

The key to creating such an environment of trust is for the business leaders to communicate frequently and transparently, and if they don’t know the answer to something, or can’t reveal certain information, they should be honest about it. You should never lie. Leaders, clearly, are responsible for creating a climate and culture where change can happen, but they are often too cautious and risk-averse themselves to be able to promote an environment where innovation can flourish. Unfortunately, I think organisations get the leaders they deserve. Boards either recruit in their own image, or they go for someone who is different and strong but, when that individual joins the organisation, they don’t back them to drive the change, so there is a clash. I think this is one of the biggest challenges that companies face: how courageous are our leaders and what do we pay them to do?

IMPACT JOURNAL SAYS: “ The pursuit of cultural innovation can be messy and fraught with risk. Those who succeed communicate where challenges may emerge and work collectively to overcome them.”

Malin Persson was formerly CEO of Volvo Technology and is now President and CEO of Chalmers University Foundation in Sweden.She is a board member of several companies.


Responses this year came from directors and senior managers in a range of private, public-sector and not-for-profit

organisations in 19 countries. Around 55 per cent of respondents sat on the main board of their companies, and 34 per cent held chairman, CEO, COO or CFO roles. Over 70 per cent were aged between 45 and 59, and responses came from a broad cross-section of different-sized companies.

Business leaders were asked to name the single biggest challenge their company faces this year. Top of the list came lack of visibility of future demand, pressure on margins and not having the right staff or skills.

0 5% 10% 15% 20%

Acquisition

Lack of productivity

Uncertainty over global economy

Additional regulatory burden

Local competitors

Operating costs increasing

International competitors

Not having the right staff / skills

Margin pressure

Lack of visibility of future demand

SURVEY 2014 SURVEYRESULTSBusiness leaders are adapting better to change, are more growth-oriented and are more optimistic about their companies’ prospects over the coming 12 months than they were last year, according to Impact Executives’ latest survey. However, while more change projects are achieving their aims this year, success is being compromised by an approach that prioritises ‘processes’ over ‘people’ and by business leaders’ focus on tangible short-term results at the expense of longer-term investment.


What is your single biggest challenge?

However, worries about the global economy seem to have receded: less than five per cent of respondents cited this as their biggest challenge, compared with 17 per cent last year. Nor are they as concerned about regulation: just five per cent cited it as their primary challenge, compared with 11 per cent last year. However, having the right staff and skills is a bigger challenge this year than it was last: 16 per cent of respondents said it was their single biggest challenge, compared with 12 per cent last year.

And it appears that the pace of change has slowed – albeit slightly. Nearly 84 per cent said they are experiencing more change than ever before, compared with 87 per cent last year. However, the proportion of companies prioritising growth over cost savings and efficiencies this year has risen significantly – from 53 per cent last year to 62 per cent this year.

Growth62%

Cost saving / efficiency38%

SURVEY


What's more important - Cost cutting or growth?

This finding is consistent with UK macroeconomic data, which indicates that the UK economy is finally starting to grow, albeit very slowly. And the new focus on growth is also reflected in Impact Executives’ assignments: the number of sales and marketing roles outstrips finance roles (and by a big margin – well over 100 per cent) for the first time in many years, while ‘growth’ is the primary driver of assignments this year.

“This is very welcome news,” says Impact Executives’ Managing Director Christine de Largy. “Businesses understand that you can only cut costs

so far before you start to cut into muscle, and they are now starting to invest for growth.”

However, the scrutiny of costs and efficiencies that has characterised the past few years has not gone away. While respondents said that growing into a new

sector, region or market would be the biggest driver for change in their organisations over the coming 12 months, ‘re-engineering processes to drive operational improvements and save costs’, and ‘restructuring the organisation to drive out cost reductions and business efficiencies’ were also high on the list, as was ‘significant investment in IT or system upgrade’.

Clearly, despite the significant shift in focus towards investing for growth, restructuring and re-engineering, often helped by IT, is still very much on boards’ agendas.

Continuous change is a fact of today’s business life, but while organisations are getting themselves in shape in order to be able to survive and thrive in the new conditions, attracting and retaining the kind of people who can help them do that remains a perennial problem. However, they seem to be adopting strategies to cope with the challenge: while 83 per cent said they use their own permanent internal people to lead and manage change, 21 per cent have hired a new permanent resource (a change director, for example), 18 per cent use management consultants and 26 per cent have appointed an interim manager.

Their more creative resourcing strategies seem to be paying off. Nearly 80 per cent of respondents said that at least half of the change projects they have had direct experience of have achieved a good return on investment; the number last year was just 70 per cent.

This positive story is reflected in respondents’ experience with their most recent change project: over 62 per cent this year, compared with 54 per cent last year, said that it had achieved most or all of its original aims and provided good ROI. The proportion of respondents saying the project didn’t achieve its original aims and provided poor ROI nearly halved – from 13 per cent last year to just eight per cent now.

However, when projects fail, the reasons are the same as they were last year. Some 64 per cent said stakeholders were not engaged effectively, 54 per cent cited poor initial scoping, 39 per cent blamed unrealistic timings, 28 per cent cited poor communication through the project life cycle and 28 per cent mentioned a lack of passion and real belief in the outcome.

SURVEY


0 10% 20% 30% 40% 50% 60% 70% 80%

Inexperience

Lack of financial control

Inability to secure resources

Business strategy changed

People covering up failure

Lack of process

Poor communication

A lack of belief in the end outcome

Unrealistic timings

Poor initial scoping

Stakeholders not engaged


Managing ‘change’ should not be seen as a ‘project’; it should be embedded as a required management and

leadership skill, as part of the routine of doing business

Why projects fail

But although the focus on ‘process’ at the expense of ‘passion’ continues to blight change projects, business leaders themselves are aware of the problem. They acknowledge that the top three things change leaders need to do to improve their success in meeting the change challenge are people-related – namely strategic thinking (cited by 42 per cent), influencing (39 per cent) and emotional intelligence (37 per cent).

Yet, knowing what they need to do and actually doing it are two different things. When asked what proportion of time change leaders spend delivering ‘intangible’ deliverables (such as culture change, winning people over and so on) as opposed to ‘tangible’ ones (projects, key performance indicators etc) survey respondents tended to focused on the tangible.

Responses to another question suggest that organisations may be a little too rigid and process driven to deal with the fast pace of change. Almost 91 per cent said they have a formal structure/organisation chart, with 60 per cent saying all layers are mapped and 28 per cent saying only certain areas (senior management for instance) are mapped. Given the need for flatter and more fluid organisational structures in order to be able to respond with agility to rapidly changing circumstances, could these structures be a further barrier to innovation? While 41 per cent say the chart gives a basic overview but not the detail, 46 per cent say the chart is very accurate in reflecting the reality of the organisation, and is good at mapping responsibility and reporting lines.

Overall, business leaders were optimistic about their organisation’s prospects over the coming 12 months. Nearly 65 per cent of them expected to do better this year than they did last year, a quarter expected to do the same and only 11 per cent expected things to get worse.

Change projectsare not complicated;

people are

SURVEY


Mostly intangible11%

Equal mix oftangible/intangible43%

Mostlytangible

47%


Where people focus their time

LEADERSHIP

Getting the right people and the right teams was essential. The ODA was formed under the leadership of Jack Lemley and when he resigned in 2006 John Armitt took over as chairman. The appointment of David Higgins as chief executive was

critical. Armitt and Higgins were running a brand new delivery organisation with no baggage whatsoever. They made

it clear that they would report on the budget quarterly and that it was open to scrutiny but otherwise they expected to be

left alone to get on with things.

DESTINATION RIOTEAMS

There was bench strength in both the ODA and CLM. We broke tradition because those teams contained a lot of

‘grey hair’: age and experience were very important. People were prepared to operate at a level below what they were

used to because of the experience of working in such a unique culture. Many of us were heavily incentivised, which

prompted some debate. But it meant that everyone was highly focused on meeting budgets, deadlines and other key performance indicators. You need those incentives to create high-performing teams. But the environment was

attractive too: aside from the feel-good factor we created new apprenticeships, conditions for workers were good and we employed high numbers of women in construction roles.

VISION

Lord Coe headed the successful London bid for the Games. The bid team had a well thought through and well-articulated plan. Lord Coe’s speech in Singapore in 2005, which set out a compelling vision for the London Games as being the greenest, most sustainable and most inspirational

to engage more people in sport, is agreed as being instrumental to the win. These simple, high-level messages resonated with people. The

Olympic Delivery Authority (ODA) and CLM then had to take those aspirations and turn them into reality through design, procurement, contracting strategy, legacy and so on. National Audit Office reports

show that generally we were successful.

Impact Executives / IMPACT / Issue 29Impact Executives / IMPACT / Issue 3016

As chief executive of CLM, the private-sector delivery partner for London 2012, Jason Mill ett helped to mastermind what is probably the biggest, most complex and most successful project in UK history. Now, as COO for Major Programmes and Infrastructure at Mace, he reflects on the critical factors that made the London Games such an outstanding success.

LESSONS FROM LONDON 2012

DESTINATION RIO

Impact Executives / IMPACT / Issue 29Impact Executives / IMPACT / Issue 30 17

COMMUNICATION

We had a simple high-level plan, which we called ‘241’. Two years to plan, four years to build and one year to test and get the Games ready. We articulated

that through very simple communications plans such as ‘the big dig’ or ‘the big build’. We turned our objectives into public milestones for everyone to see.

GOVERNANCE

Governance between the private company LOCOG (the London Organising Committee of the Olympic and Paralympic Games), the

public company ODA, and the British Olympic Association (BOA) and other sporting bodies

was very strong. The ODA owned the budget and the business case but contracted CLM to do all

the heavy lifting. However, that relationship was innovative too, in that it was essentially a very

high-level collaboration.

As chief executive of CLM, the private-sector delivery partner for London 2012, Jason Mill ett helped to mastermind what is probably the biggest, most complex and most successful project in UK history. Now, as COO for Major Programmes and Infrastructure at Mace, he reflects on the critical factors that made the London Games such an outstanding success.

LESSONS FROM LONDON 2012

PLANNING

We won the bid in 2005 but it took until November 2007 to have a clear understanding about the responsibilities of each party (LOCOG, the ODA, the Legacy Company and so on), how each

aspect would be funded, how long it would take, and budgets, assumptions and business cases for every single project. We

encapsulated all of that in a ‘bible’ commonly referred to as ‘The Yellow Book’ and measured and delivered everything against that baseline. Lots of projects and programmes go wrong because they never have that baseline in place, which is why, although people

say they are good at managing change, many of them aren’t. They allow the reference point to fluctuate.

LEGACY

Planning for legacy at the same time as planning for the Games was crucial. We had to challenge the International Olympic Committee (IOC) over which venues would

be permanent and which temporary. London ended up with more temporary venues than in previous Games. The IOC have now adopted that as a future blueprint because they understand that fewer permanent venues will make the legacy more successful. We spent £30-40 million on a basketball arena, for example, and took it down after

the event. Very few leisure venues make money, so we took away that long-term asset management problem. In Greece, former Olympic venues are rusting away because there

is no legacy plan for them. Aside from the physical legacy that’s left – the multipurpose arena, the park, the velodrome, new housing and so on, the feel-good factor lives on. But probably the most important legacy of all is that the Games have put the UK back on the

map as a country that can deliver major capital programmes of work.

18 Impact Executives / IMPACT / Issue 30

NUDGING CHANGE VS LEADING CHANGE

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The excellent book Nudge: Improving decisions about health, wealth and happiness

by academics Richard H. Thaler and Cass R. Sunstein, from the University of Chicago, argues that effecting a change in behaviour depends on a coordinated effort by managers influencing an often invisible myriad of stimuli to affect how employees embrace change.

In their book The Heart of Change: Real-life stories of how people change their organisations John P. Kotter and Dan S. Cohen showed that most people did not handle large-scale change well, mainly because they had little exposure to successful transformations, and required strong leadership to set the tone for effective change.

NUDGING CHANGE

Following the herd

Thaler and Sunstein argue that one of the most effective ways to nudge people towards change is social influence, either through providing information about

what most other people do, or through peer pressure. “There are considerable requirements for organisations to look internally at processes and address six key strategies for change: (1) develop a compelling mission, vision and

values to bind people to your change agenda, (2) enhance communications to reinforce the change mantra, (3) create a sense of urgency, (4) employ top talent

to evangelise change, (5) be disciplined in execution, and (6) deliver extreme customer focus and share the results with your employees to show progress.”

Nigel Conder, Commercial Director, Illustratio Consulting

NUDGING CHANGE

Framing

Framing decisions around a change programme can work because people tend to be passive decision makers, not questioning the way they have been

asked, and are also loss averse. For example, people who are told they will lose money if they don’t conserve energy are more likely to take action than if told

they can save the same amount. “Senior executives should spend more time on the thought behind the initial framing of the business case for change.

Using more science and rigorous fact-based analysis to support the argument for change will validate that the delivery is achievable and realistic - and not

simply a loose ambition.” Gary Thomas, Interim Finance and Change Professional,Oakhurst Associates Ltd

Does transformational change need to be big and bold, or can you nudge your organisation towards meaningful change?

NUDGING

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19Impact Executives / IMPACT / Issue 30

NUDGING CHANGE VS LEADING CHANGE

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LEADING CHANGE

Empower action

One ‘old school’ superintendent in a company was very resistant to change, and had great pride in the company’s products, rejecting any customer criticism. Instead of trying to replace him, he was placed in a customer’s

business for six months to act as an inspector of products. Despite his initial reluctance, he turned out to be the best inspector the customer had ever had. When he returned, his passion for improving products made him one of the

best managers the company had.

LEADING CHANGE

Get the vision right

It took a new leader of an aircraft assembly factory to take a bold move to get his vision in place. When he first arrived he focused on talking about

improving quality, timing and cost. Some people made a bit of an effort, but mostly they ignored his arguments, feeling that things were too difficult to change, and the plant remained very inefficient. If parts weren’t available the aircraft moved along the production line anyway, and when the parts

did arrive, were retro-fitted. The leader then changed his approach. He ruled that the plane would not move along the line until the highest quality was

achieved, and all parts were in place. Employees thought he was crazy and that planes would never be delivered in time. Instead, the procurement team got motivated as they had never been before, quality went up and aircraft were

delivered to customers early.

Does transformational change need to be big and bold, or can you nudge your organisation towards meaningful change?

LEADING

CONCLUSIONReal-world examples provide enticing arguments for Thaler and Sunstein’s managing change ‘nudge’ theory, as well as the case for ‘bold action in bold times’ defined by Kotter and Cohen’s change leadership advocates. As is often the case, neither theory will be a perfect fit for your change environment but they both offer excellent ideas for you to adapt and use in your own change programmes

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THE TRANSFORMATION ISSUE - Harvey Nash€¦ · trying to bring about change. It adds up to a blueprint for success for both interim managers and the organisations that employ them