John Kotter, one of America’s most influential business gurus, has hit the presses recently with a piece on urgency. I always find Kotter’s material a very clear reminder of the basics that make change successful.
On November 12, I will be speaking at the IT and Business Alignment Forum at the Red Rock Resort in Las Vegas. The Forum is actually three conferences in one: Enterprise Architecture, Business Process Management & Enterprise Web, and Portals & Collaborative Technologies. In short, these conferences are designed for the people who design and implement processes and technologies to improve the way people work. Our focus is on the people side of implementation.
In similar previous conferences there has been a lot of conversation along the lines of: “We have designed something great, but nobody wants it.” As it turns out, people are usually resisting the changes - not the new technology. In short, if people are not aware of change well in advance, understand the rationale for the change, and participate in creating the change - the risk of resistance will remain high. The much easier path is to actively lead the change process and help impacted people accept change along the way.
I’ll be posting my materials from the conference in mid-November. If by chance you are interested in attending and would like discounted admission, feel free to use discount code SPKRITBIZSR.
Transformational change results in lower productivity. People are worrying about jobs, who is getting which job, how they will work in the new job, and a gazillion other things. Every level in the organization is wondering, “What’s in it for me?” The wondering and worrying translates into lost productivity - and large opportunity costs. What value would employees create if they weren’t worrying about the big change?
It would probably take a doctoral study to analyze the numbers comprehensively, but some directional assumptions point toward a scary story. The spreadsheet below takes some average numbers for revenue and costs per employee, and estimates the value created by each employee.
The logic continues that if the average employee’s productivity falls 10% during the change, the company has foregone $2,070 in value. Because the employee contributed 10% less, less value was created. People aren’t creating new products, selling to new customers, analyzing trends for opportunities, negotiating better prices, etc… They are too busy wondering and worrying.
Carrying the logic all the way out, if the change program lasts 12 months and the company has 1,000 employees, the company has an opportunity cost of nearly $25M.
$25M is a big number, and one would naturally ask, what can be done to reduce it?
The two options are “faster” and “better.” Faster says: get the 12 month project done in 11 months. Better says: get the project done in a manner whereby productivity is preserved. (This productivity preservation requires change management approaches.) Based on the assumptions I used, “better” is clearly - well… better.
A couple comments in closing:
To repeat - these numbers aren’t an analysis. These numbers are directional estimate based on some reasonable assumptions. Using the mildest of assumptions, however, shows that productivity losses extrapolate into some large foregone value.
I was recently asked by a Human Resources professional how he could help their company become better at managing change.
I felt a little bit like the doctor answering the question, “I have a bad headache, what’s wrong with me?”
Without a lot more information, the answer will be simple, “Take two aspirin, and call me in the morning.”
Resisting the urge to encourage him to call my office, I gave my diagnosis-free prescription: “Improve senior management leadership capabilities.”
Without a doubt, the approach will help. As detailed in a prior post, CEOs believe senior manager skills and experience stand in the way of implementing change. Not only are senior manager skills an opportunity, but improving their capabilities will give you leverage in future initiatives.
The better diagnosis would come after some frank conversations in the C-Suite. Six topics should be covered:
1. Please tell me about the largest change initiatives you have gone through in the last five to seven years.
2. What went well with those initiatives, and what did not go as well?
3. How likely are we to go through large-scale change in the next three years?
4. How likely are we to repeat the positives and negatives of your previous experiences?
5. How well prepared are our senior and middle managers to lead future changes?
6. What should we do now to best prepare for the future?
After having this conversation with each member of the C-Suite, I would identify the common themes and report back to them as a group. The report would have three elements:
What did they say?
How does their collective view compare to best practices and experiences in other organizations?
My recommendations to address the opportunities.
Those recommendations could cover a wide range of options, but people-related opportunities are likely to dominate. The best part of approach is that the go-forward plan will be largely of their creation. They will give you a charter to prepare for change and become your guiding coalition in that journey.
Perhaps I should give my acquaintance a call and give him some new advice. He needs to go have a frank conversation with the C-Suite.
Monday’s post was about the types of change occurring in large companies. Today’s is about what stands in the way of organizations implementing large-scale change.
PriceWaterhouseCoopers’ 11th Annual CEO Survey asked: “Which of the following people challenges were critical barriers for your organization in terms of achieving the desired benefits?” Frankly, the answers are fairly depressing.
The depressing part is that all five of these barriers are within the CEO’s control. The CEOs are talking about their own people.
Some observations:
As Bill Gates said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” He was likely not referring to the pace of change within a company, but the quote is still appropriate. The C-Suite is typically looking for transformational change to occur much more quickly than it actually takes. What might be seen as a two-year project is usually a three-year project. Sometimes the factors above play a role, but sometimes it is just plain old, overly optimistic, bad estimating.
The Human Resources function has a responsibility to address. If speed, flexibility and agility equal competitive advantage, and senior management skill sets are a significant barrier, HR should be forcing change management skill development.
The CEOs never mention that they themselves may be part of the issue. They aren’t saying, “Failure to hire appropriately skilled senior managers,” or, “Inadequate time spent on leading change initiative.” The cure for some of these issues could very well be the personal demonstration of change management skills.
Today has been a rather exciting day for orgreadiness.com. We have been added to alltop.com’s HR section as a “top site.”
Alltop.com is a website aggregator that acts a “digital magazine rack” of the internet. They strive to provide “aggregation without aggravation.” Even without their inclusion of orgreadiness, I’ve got to say, I like their site. It is definitely worth a look.
Based on casual conversations with just about anybody in the business world today, large-scale change is commonplace. The Society for Human Resources (SHRM) published the Change Management Survey in 2007 and quantified those types of change. Over the two years leading up to the survey, companies with more than 500 employees had the following types of change:
The key takeaway: change is occurring for any and all reasons. In the words of Benjamin Disraeli, “Change is inevitable. Change is constant.”
This post is not intended to be an analytical review of demographic differences. The sample size is essentially one, my daughter - and a few of her friends. Today’s high school seniors are different than those in the past, and their behavior will seem mighty strange when they hit the business world in five years.
E-mail is so yesterday - The only reason to look at an e-mail account is to communicate with somebody older than 35. There are no e-mails to peers.
The cellphone is primarily for texting - If I text her, I get an immediate response. My calls go unanswered however. It isn’t just my calls, she isn’t attuned to the sound of her own ringer.
Facebook changes the rules - She has “friends” she doesn’t and won’t talk to. Let me explain: A neighbor’s 18 year-old daughter was led away in handcuffs. The handcuffed girl attends a different school than my daughter and they are far from friendly. Here are the surprises…
They were Facebook friends. Not only were these two “friends,” but I found my daughter had many other “friends” she never spoke to. The biggest shock was she was “friends” with the captain of the archrival school’s basketball team. They elbow each other all night, never speak, and “friend” each other.
The girl shared things on Facebook my generation would have definitely kept quiet. Our scandals were definitely hushed up.
At a minimum, businesses will need to change how to communicate with employees. Definitions of acceptable behavior will be challenged as well.
By the way, she already knows demographics are on her side. She knows baby boomers are retiring and will be looking for as many young workers as they can get. She has also been studying Chinese for the last four years. Assuming past performance is an indicator of future success, she will be highly marketable. She thinks my generation will change - not hers.
Young and cocky is not a new combination. Fundamentally changing the “what” and “how” of communication is.
A large part of this year’s summer vacation involved college visits with my high school senior. I had plenty of time to reflect on all the things that have happened in her lifetime as I drove through cornfield after cornfield, and she slept soundly with her iPod blaring. One of those thoughts was a wake-up call for me.
About the time my daughter was born, I gave a speech at the annual meeting of the National Food Broker Association about technology changes and business. I can remember showing a mockup of an e-mail message and talking about how e-mail would change how business would operate. I remember the following line in particular:
“I estimate the average age in this room is about 40 years old. My guess is that many of you have never used a personal computer. There is now this thing called e-mail and many of you will think that your secretary will take care of your e-mail just as she has always typed your memos. The reality is - most of you have 25 or more years in the workforce. If you think you can avoid using a personal computer for the next 25 years - good luck. There will be plenty of 20- and 30-somethings who will be happy to compete for your job.”
Guess what? I am now the guy in the audience. I’m the one who is at risk of falling behind. The scary part is, I’m an early adopter of technology and I struggle to keep up with the pace of change.
So like e-mail from the early 1990s, what is the technology innovation with the most potential to disrupt how businesses operate in the 2010s? I won’t claim it is No. 1, but Web feeds or syndication is good choice. It is those little buttons:
If you don’t know what they are, you need to. The 3:44 video explains it better than any text could:
Think about some of the changes that are enabled in a business environment:
Collaboration and Innovation - Technology becomes another glue to connect knowledge - relationships are no longer the sole connector. An engineer working in a widget factory in Poland can easily be aware of developments in the widget factories in South Korea and Tennessee. New communities develop throughout the organization, and traditional boundaries blur.
Productivity - Access to information directly correlates with an ability to perform in a work setting. Syndication fundamentally changes how information can be provided and increases in productivity should be expected. At a minimum, managerial spans of control can be expanded.
Rethinking the Internal Communication Function - The internal communication function typically works as a mass-media broadcaster today. Messages are controlled and broadcast over a few channels of distribution. With corporate blogging and syndication now available with virtually no barrier to entry, message control is gone and channels multiply wildly. Doesn’t this change the work of Internal Communications?
You might want to try to figure out those orange buttons before some whippersnapper is competing for your job.
The question invariably comes. “How long will this ‘transformation’ take?”
The client is thinking that, like the children of Lake Wobegon, the employees of this company are above average, so it won’t take long. But whether it is a merger integration, a change in direction or a large-scale reorganization, it almost always takes longer to achieve the vision than the client would like. The reason is simple: it takes time to move a group of people to do anything, and moving a group of people takes work.
Take this example from my vacation: seven people deciding on lunch. The conversation started at 11:30 and covered the following topics: choice of food, best place to obtain, who would drive, relevant allergies, how the choice would mesh with the dinner choice, what would be for dinner, confirmation of location, take out or pick up, getting a menu, what the kids would eat, the need to make a quick phone call, the need to change shoes, cleaning the back seat of the car, forgetting the cell phone, and who would sit in the front seat. The cars left the driveway at 12:10. It took 40 minutes to accomplish the simplest of tasks.
Granted, part of this debacle was the effects of Parkinson’s Law: work expands to fill available time. Given that it was vacation, time was aplenty, the adults weren’t truly hungry, and the kids weren’t screaming. The debate stretched on because it could. Unfortunately, decisions at work can drag on as well - and so does the transformation.
So what is a change leader to do? The answer is simple: cut the available time. When establishing goals for a transformation, a leader cannot just set the long-term, visionary goal. A leader also must set milestones along the path, and hold people accountable for achieving the interim goals along the way. The change leader must create a sense of urgency by helping people move from milestone to milestone as quickly as possible. The leader must break the long visionary journey into a series of discrete, focused trips.
“All changes, even the most longed for, have their melancholy; for what we leave behind is a part of ourselves; we must die to one life before we can enter into another!”
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