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Change Management: Fueling successful transformation

Change Management: Fueling successful transformation

Digital transformation offers enormous potential for companies to increase their efficiency, maximise profit, and cultivate customer intimacy, and yet some 70 percent of digital transformation initiatives fail to reach their goals. 

Digital technology alone can’t transform a business unless the people and practices involved are receptive to change. This is where change management is essential.

This recent Harvard Business Review piece identifies five key lessons that have helped successfully lead organisations through digital transformations: figuring out business strategy before investing in digital transformation; leveraging insiders rather than consultants; designing customer experience from the outside in; recognising and adapting employees’ fear of being replaced; and bringing the agility of a Silicon Valley start-up inside your organisation.

The following guide offers an overview of change management and how to successfully implement and measure it, including key industry examples, tools and software, links to change management leaders, and suggested further reading.

What is change management?

Change management is the discipline that guides how an organisation prepares, equips and supports its people in order to successfully adopt change and drive business success. It takes care of the people side of change.

In order for new technologies to succeed and change to achieve its potential, an organisation must ensure its people are equipped to successfully implement the transition. Change management provides a structured approach for supporting individuals as an organisation moves from its current to future state. 

Change management involves preparing, managing, and reinforcing change on an individual level. Effectively managed change boosts the potential for success, and poorly managed change can be costly.

a. Individual, Organisational and Enterprise change management

There are three levels of change management.

1. Individual

Individual change management means understanding how people experience change and what they need to change successfully. While people may be initially resistant to change, they are also resilient and adaptable. Knowing what it is that will help them make a successful change is the key. 

2. Organisational

Organisational, or initiative, change management covers the processes at a project level that support successful individual change. It is the set of actions to help build awareness, desire, knowledge, ability and reinforcement across the organisation.

Organisational change management involves identifying the people and groups who will need to change as the result of a project, and creating customised plans to ensure those impacted receive the awareness, leadership and training they need change successfully. It should effectively compliment project management.

3. Enterprise

Enterprise change management is an organisational core competency that provides competitive differentiation and the ability to effectively adapt to change. It means effective change management is embedded into your organisation, from its people to processes, so that a business is capable of embracing and implementing change quickly and successfully. Enterprise change management capability requires a strategic approach to embed change management across an organisation.

b. Why is change management important?

Effective change management drives more successful change, helping organisations realise their project goals. Given the growing amount of change occurring in businesses today, change management helps organisations to improve their ability to implement change, and address the costs of change that is poorly managed. Change management aligns an organisation’s practices with its values, prepares it for the future by building in change capability, and helps create consistencies and efficiencies in change management practices. 

Recognizing the need for change

Change is essential if an organisation is to grow, maximise profits, and satisfy customers in an ever-evolving marketplace. Change necessitates moving from the current business state, through a transition state, in order to realise the potential of a future state.

c. The principles of change management

Change management can be a challenge, especially given the upheaval that change brings for employees, and the difficulty in sustaining change over time. Here are 10 guiding principles for leading change management:

  1. Lead with culture. Culture is everything. Successful change managers tap into the energy of existing company culture in order to understand the way individuals behave and boost new change initiatives.
  2. Start at the top. Successful change management initiatives begin with committed and well-aligned executives who are committed to the case for change and how to implement it.
  3. Involve every layer. Remember to tap midline and frontline people for early input on issues. The less resistance to change at every level, the smoother the transition.
  4. Make the rational and emotional case together. Strategic objectives are important, but they don’t reach people emotionally as much as appeals to the heart and mind, making each employee feel that they’re part of something important.
  5. Act your way into new thinking. Define the critical behaviours essential to change, and conduct your business with these behaviours front and centre. Lead by example.
  6. Engage, engage, engage. Powerful and sustained change requires constant communication, not only throughout the rollout but after the major elements of the plan are in place. Symbols reinforce words.
  7. Lead outside the lines. Change works when everyone with authority and influence is involved, including those whose power is more informal and is related to their expertise, connections, or to personal qualities that engender trust – such as motivating “pride builders”, go-to people or “trusted nodes”, and cultural ambassadors who “live” the change in action.
  8. Leverage formal solutions. Persuading people to change their behavior works best when formal elements – such as structure, reward systems, ways of operating, training, and development – are redesigned to support them.
  9. Leverage informal solutions. Formal elements need to be supported by an effective company culture.
  10. Assess and adapt. Measure your success before moving forward. Identify ways to adapt across the change lifecycle

2. The change management steps

Successful change programs that are accepted, sustainable and deliver results are the result of careful planning and well-managed implementation. Here are the key steps to follow.

a. Strategy and vision: Winning support

It is essential to define your strategy for change against the organisation’s objectives. Why do we need to change? Why is change required? Define you vision, scope and objectives.

A clear approach to change and its expected outcomes is essential before developing a detailed plan. Well-defined goals will help in gaining support for change across the organisation.  

b. Assigning roles and responsibilities

Define the key roles in implementing the change strategy. (See also: Appendix.) Assess leadership support and alignment on the change. Leadership is one of the organisational design enablers and can make the difference between success and failure. Leaders should communicate a clear vision, motivate people, demonstrate commitment and model new behaviours.

Define who your main stakeholders are and align them with what you need them to do.  Stakeholders include:

  • Sponsors: who approve overall strategy
  • Advocates: supporters with strong influence
  • Impacted: those indirectly affected by change
  • Targets: those directly affected
  • Change agents: people instrumental in introducing change
  • Blockers: people or groups who can prevent change happening
  • Casual: those interest groups who will wait and see

A change readiness analysis will further allow you to plan the actions required to move people through the stages of adoption – from denial and resistance to exploration and commitment to the change.

c. Training, education and hiring

Plan your project team structure, set up the change management project team, and align leadership, stakeholder engagement and communications. Getting the right team is key to implementing change. 

Determine the most effective means of communicating the change. People need to be educated as to why the change is important. How will people perceive the change?

Knowing how the change will impact people is essential to managing it. Ask what are the impacts of the change, who will they affect most, and how will change be received? 

If there is something new or different to learn, such as a new system being implements, then training will be required to teach people the skills and knowledge they need as the change is rolled out. 

You may also need to consider hiring staff whose skills and knowledge assist in implementing the change among others.

d. Managing the change process

To be effective, change plans must be rigorously monitored, regularly updated and communicated to those involved. It is important to recognise resistance and be able to manage it effectively. 

Ensure there is a support structure to employees to help emotionally and practically adjust to the change and to build proficiency of behaviors and technical skills needed to achieve desired business results.

Ensure there is an effective way to measure the change management process, to manage feedback and to build in proficiencies. Ask whether the change was successful, and assess what might have been done differently.  

e. Best practice

If the change has been planned and executed well, it is important to develop a comprehensive plan to embed the change. Embedding the change means sustaining momentum to ensure the success of an initiative, by providing resources and support for the life of the project, and putting in place ways to measure the ongoing success of the change implementation.

3. Change management models and theories

a. Lewin’s change management model

The popular Lewin’s model is useful for when a business requires in-depth analysis and improvement. It describes three stages of change management:

Unfreezing process and perceptions. Once change is deemed necessary, “unfreeze” your current process and analyse every element for potential improvements. This addresses core problems, not symptoms.

Make changes. Communication, support, education and training are essential as you guide the team through the change.

Refreeze. Once the changes have been made, it is essential to “refreeze” the new status quo, anchoring and sustaining the new changes by employing regular reviews and feedback.

b. Kotter’s 8-step change model

Kotter’s theory focuses less on the change itself and more on the people behind it. Since Kotter’s theory is a top-down approach, it functions best as a checklist supplemented with other approaches. It works by:

  • Creating a sense of urgency
  • Building a core coalition
  • Forming a strategic vision
  • Getting everyone on board
  • Removing barriers and reducing friction
  • Generating short-term wins
  • Sustaining acceleration
  • Setting the changes in stone

c. Prosci ADKAR Model

This bottom-up model focuses on the individuals behind the change. It is less a sequential method and more a set of goals to reach. ADKAR helps plan out change on an individual and organisational level, by focusing on achieving: 

  • Awareness (of the need to change)
  • Desire (to participate and support the change)
  • Knowledge (on how to change)
  • Ability (to implement required skills and behaviors)
  • Reinforcement (to sustain the change)

d. McKinsey 7-S Model

This model is useful for analysing how coherent a company is, and helping determine the changes that need to be made for the better. It involves assessing and cross-examining seven aspects of a business:

  1. Strategy. What are your objectives? How will you achieve them? Is the strategy adaptable?
  2. Structure. How is the company structured? How are teams organised? How is information communicated?
  3. Systems. What are the core systems in the business? How are they tracked and assessed?
  4. Shared values. Analyze the company’s core values and culture.
  5. Style. Take note of your management and leadership style. Is it active? Effective? Inspiring?
  6. Staff. List your staff, assess whether you have the required positions filled. Do you need to hire?
  7. Skills. Do your employees have the skills required?

4. Communicating the change management plan

Effective communication drives business performance and organisational success. Companies with high effectiveness in change management and communication are more likely to significantly outperform their industry peers than firms that are not effective in these areas.

The fundamentals of communication and change management are more effective when grounded in a deep understanding of an organisation’s culture and workforce. Segmenting and understanding employee groups help communication and change professionals create the relevant programs needed to drive the right behaviors and deliver results.

When effectively trained and informed, managers represent an untapped resource that can create the culture and drive the behaviors needed to develop competitive advantage.    

Successful communication of the change management plan can be assessed across four tiers of practice: 

  • Essential: Understand culture and behavior to improve effectiveness
  • Foundational: Build a compelling Employee Value Proposition (EVP) and deliver on it
  • Strategic: Manage change well by leveraging manager effectiveness
  • Behavioural: Cultivate a culture of community and information sharing

5. Why change management fails    

a. Resistance to change (Human Factor)

In general, individuals don’t resist technical change, but the social change that accompanies it – the feeling that their human relationships will be affected as a result of the technical change. 

b. Costs: Managing up

Successfully managing change takes time, energy and resources. When change is managed poorly, productivity and quality decreases, morale declines, and projects fail to meet objectives.

c. Sustaining change

Unless plans to reinforce change initiatives are put in place, people can have a tendency to fall back on what they are comfortable with. In order to lock in successful change, it is essential to develop plans to reinforce and sustain change before the change occurs, and to allocate resources to reinforcing the change after the project has closed.

6. Measuring successful change management

Your measurement strategy should assess the change management activities and the outcomes of those activities at both the individual and organisational levels. It should measure:

  • Organisational performance: Did the initiative deliver what was expected? Has there been an improvement in performance? Did the project adhere to plan?
  • Individual performance: How were the individuals impacted by the change, and are they progressing through their change journeys? Performance metrics such as employee adoption, proficiency, behaviour and satisfaction are essential tools here.
  • Change management performance: The metrics here are connected to the actual activities carried out by the change management team. Are the change management activities aligning with the plan? 

Whatever your project, look for ways to measure project performance, individual performance and change management performance so you can thoroughly gauge and report on the effectiveness of your change management activities. 

(See also: Appendix.)

There are several KPIs useful in monitoring successful change management:    

  • Reduction in the number of unauthorised changes
  • Number of changes rejected due to any reason
  • Increase in the number of changes introduced to services meeting customer requirements
  • Reduction in the change requests backlog
  • An overall reduction in the number of failed changes
  • Increase in overall change success rate
  • Number of changes following the lead time process
  • Reduction in the number of incidents attributing to changes
  • Improvement in the average time taken to implement changes based on type, urgency or priority
  • Number of successful changes implemented in a particular time frame
  • Changes performed during business hours
  • Number of emergency changes performed with or without incident
  • Number of changes causing an interruption in any service during business hours

7. Change management examples by industry

a. Oil and Gas

In recent years, Russian giant Lukoil – one of the largest oil and gas companies in the world, with more than 106,000 employees and vertically-integrated control over all aspects of the value chain – was compelled to rethink how its business would move forward in light of the ongoing oil crisis. Reducing expenses, focusing on the efficiency of operations, and moving ahead with advanced extraction technology became priority concerns, while the company had to restructure by carving out all of the service companies that were traditionally part of its operation. Over five years, the restructure helped Lukoil build a competitive environment and focus on their core strategic business areas.

b. Projects & Construction

This 2017 McKinsey survey of over 2,000 executives across 900 companies reveals insights to successful change implementation. ‘Good implementers’ retain more value than their peers at every stage of implementation. The greatest impact on a major change effort’s outcome comes from ownership of, and commitment to, change across the organisation. Those that were most successful were able to prioritise initiatives, devote resources and capabilities to the change, and practice good implementation.

c. Manufacturing

This pharmaceutical industry case study examines the need for a robust change management system to both reactively manage change – where the business is forced to change – and proactively manage change – as part of voluntary business improvement activities. It advocates for continual improvement within a company culture leading to process change, via a robust change management system, and process control, wherein the change is verified as successful.    

d. Engineering Design

Aberdeen Group’s survey of 200 leading engineering companies identified five best practices to improve engineering change management:

Process. Create formal plans for implementing engineering changes.

Knowledge management. Ensure information and support data related to change is readily available.

Organisational support. Use a change review board to review and support changes.

Performance measurement and continuous improvement. Audit the change process, allow for feedback, and track change effectiveness.

Enabling technology. Use product lifecycle management software to manage engineering change.

8. Change management tools and software

a. Process mapping

Process maps help visualize the various processes in the organisation for the benefit of everyone. A process map visually shows the steps of a work activity and the people who are involved in carrying out each step. Digitising processes serves as a single source of truth, and helps identify repeatable, scalable process across the enterprise.

Types of process maps:

  • Basic flowchart. A simple map visualising process steps with inputs and outputs.
  • High-level process map. Shows the core activities of the process.
  • Detailed process map. A flowchart that shows a drill-down version of a process, with all the details of the sub process.
  • Cross-functional flowchart. Shows the relationships between process steps and the functional units (teams/ departments) responsible for them.
  • SIPOC. Shows the key elements of a process such as Suppliers, Inputs, Process, Outputs, and Customers.
  • Value Stream Map. Visualises the flow of material and information that is needed to bring your product to the customer.

Process maps are created through the following steps:

  • Identify the process you need to map
  • Bring together the right team
  • Gather all the necessary information
  • Organise the steps in a sequential order
  • Draw the baseline process map
  • Analyse the map to find areas for improvement
  • Implement and monitor improvements

b. Infrastructure

Data governance is a formalised approach to managing a company's data assets, establishing how data should be structured, maintained and updated for quality, accuracy and consistency. 

Evaluating and selecting a data governance tool depends on not only features and functionality, but also how you will use the tool to add value to your organisation. Look for software that prioritises core functions like information and data artifacts, data management elements, governance operations, workflow management and business alignment. Consider such things as whether your organisation prefers tools that are deployed on premises or cloud-based, whether they connect to existing software, or if you are looking to govern big data environments. 

Leading data governance software to consider:

  • Alation Data Catalog
  • Adaptive Metadata Manager
  • Collibra Data Governance Center
  • Data3Disxty
  • Diaku Axon
  • IBM Information Governance catalog
  • Informatica Master Data Management
  • Information Builders’ Omni-Gen
  • SAP Master Data Governance 
  • SAS Data Governance

c. Enable workforce productivity

How long does it take front-line workers to access information they need to do their job timely and effectively? Without a Connected Worker strategy, front-line workers feel disconnected from the rest of the operation, like they’re stuck on a deserted island.

Empower your front-line workers through a connected worker strategy and improve how work is performed as part of your Maintenance, Inspection, and Operation processes while boosting compliance and safety with Connected Workers - rescue them off the island and bring them into twenty-first century civilization.

9. Cutting-edge change management thinkers

The following list is a great starting point for leaders to follow in the change management field:

Mike Lehr - Expert Change Management Consulting Firm

Carthage BuckleyCoaching Positive Performance

Mike BrownThe Brainzooming Group

Braden KelleyThe World's Most Popular Innovation Web Site

Mark Graban - Keynote Speaker, Consultant, Author of "Lean Hospitals" and "Healthcare Kaizen"

Kate NasserKate Nasser, The People-Skills Coach

Tripp BradenLinkedIn

Management 3.0Management 3.0 #Workout Best Practices and Reviews

Jason LittleInnovative Practices for Managing Organisational Change

Janelle McLaughlin - Innovative Education Solutions

Josée LafontaineLinkedIn

Daniel Lock - The Definitive Guide: What is Change Management

Raúl González GarcíaRaúl González García

André D. HarrellVision - AH2 & Beyond Consulting

Carla JenkinsCarla R. Jenkins

Christopher SmithChange! - Change Management Tools

Dr. Gerard DanfordAcademyBridge - Business Education Videos

Tina Schuelke - Change Management | CMCC LLC

Maria Geokezas – Heinz Marketing

10. Best books on change management

A select list of recommended books on change management:

  • Leading Change – John Kotter
  • HBR's 10 Must Reads on Change Management – John Kotter
  • Switch: How to Change Things When Change Is Hard – Chip Heath and Dan Heath
  • Prosci Best Practices in Change Management Report
  • Images of Organisation – Gareth Morgan
  • The Fifth Discipline – Peter Senge
  • Creating Leaderful Organisations – Joseph Raelin
  • Big Change Best Path – Warren Parry

11. Conclusion

Change management is an essential element of any organisation’s digital transformation. Change management guides how an organisation prepares, equips and supports its people in order to successfully adopt change. Across individual, organisational and enterprise levels, change management aligns a firm’s practices with its values, preparing it for the future by building in change capability and creating consistencies and efficiencies in change management practices. Successful change programs that are accepted, sustainable and deliver results are the result of careful planning and well-managed implementation.

APPENDIX INFORMATION

Assigning Roles

Sustaining a change toward digital adoption needs a framework for success that allocates roles and responsibilities in the change effectively. Ackerman and Anderson’s Change Leader’s Roadmap (2001) provides excellent guidance for operations leaders in undertaking effective change management.

Roles

Sponsor

A sponsor is an individual with highest line authority over the transformation. They are the primary influencer of values and culture, setting parameters, allocating resources, and often having veto power over decisions. They also appoint and support the change process leader (below). Sponsors model the transformation through leading by example.

Sponsors are the “glue” in transition, keeping the transformation in alignment with overall business strategy, handling major communications, celebrating and acknowledging benchmark successes and maintaining on-going links with key stakeholders. 

Executive Team

The organization’s executive leadership team (either of the entire company or a specific function or segment) must be adequately briefed of the transition. They are responsible for supporting and modeling the desired outcomes of the transformation (usually at a vision, strategy, and behavioral level). The executive team buffers the change effort from organizational constraints, making strategic decisions for the transformation as negotiated with the sponsor (however, the sponsor and the executive team in a large organization-wide transformation may delegate all or part of this responsibility to a change leadership team [below].). They also participate in designing the change strategy and design of the desired state, as needed. 

Change Leadership Team

This is the group of cross-functional leaders or key stakeholder representatives from the entire system being transformed. They hold delegated authority to shape both the desired outcomes and the change process, and usually focus on the vision, strategy, and managerial-level design and planning of change activities. They assure adequate resources from sponsor and executive team while being actively involved in directing and guiding communications. When encountering challenges, this team is responsible for ‘course correcting’ the transformation. Depending on the scope of the transformation, this team may be the same as the executive team, meaning it would assume the combined functions of both teams. 

Change Process Leader

The sponsor delegates authority to a line manager or executive as high in the organization as possible to lead the change process. They are responsible for defining, planning and ‘course correcting’ the transformation strategy and process. They clarify the scope, outcomes, pace, conditions for success, constraints, and infrastructure. They advocate transformation initiatives and secure resources to implement these changes. Provides feedback and coaching to all change leaders and stakeholders while leading the change leadership team and the change project team. 

Change Project Team

Cross-functional representatives, process leaders, and/or specially skilled individuals who assist the change process leader in the day-to-day activities of the change effort, doing the work required to complete the various activities of the change process (for example, impact analysis or technology scoping). Pursue feedback and information for course correcting; and communicate as appropriate. 

Change Consultant

External change process expert. Acts as a sounding board and third party who educates about transformation and strategies. They help plan change strategy and major events, communications, training sessions, and meetings. During change, they assess progress, problems, concerns, political and cultural issues and facilitate change in mindset and behavior. They provide experience in course corrections to the change strategy and change process. They work with the sponsor to coach, provides feedback, and acts as a conscience for the sponsor, change process leader, executive team, change leadership team, and change project team. This may be a software vendor with expertise in your industry, or a subject matter expert sourced from the market.

The importance of change process leader

The person selected as the change process leader will represent how important the organisation views transformation. The more well respected the person is, the more important the change will be perceived. Ackerman and Anderson advocate, in most cases, for a high-level line executive to fill the role of change process leader. This role should not be filled by an external consultant or a staff person, unless the change is occurring primarily in a specific function and that person is well respected by the leaders and the organization. 

The critical factor in managing change is that the entire workforce must respond positively to the change leader. The person selected to fill this role is one of the first clear signals leaders send about the magnitude and priority of what is to follow. The change process leader should be selected not only for the respect he or she commands from the line organizations, but also for his or her ability to demonstrate conscious process thinking and design skills and a facilitative change leadership style. The more dedicated he or she is to personal development, the better.

Create optimal working relationships

Once roles are assigned, building and sustaining effective working relationships is an important condition for success. When people take on special change leadership roles, it is essential to clarify the working relationships among them and with their peers who retain existing functional roles. Too often, old political struggles will surface and hinder the change leaders from doing what is required. 

Leaders can ensure the cleanest, clearest leadership thinking and behavior to support the overall transformation by addressing and clearing up history, conflicts, or political dynamics. Having the leaders model the healing of broken relationships and the creation of effective partnerships is a powerful cultural intervention, one that is absolutely required to make your change effort, not only successful but timely. 

When key change leadership roles, such as the change process leader or the change consultants, are filled by people from lower levels in the organization, you must reestablish effective working relationships among all the change leaders and the executives. Everyone who has a key role must be clear about who has responsibility and authority over every action, so that everyone can pull in the same direction. It is especially critical that people from lower in the hierarchy be given the authority they need to succeed in their new roles. 

The relationship between the executive team running the business and the change leadership team changing it must be crystal clear. The business must continue to operate effectively during the transformation, and it must also be enabled to change so that it can better serve the digital age. This requires negotiating clear decision authority and responsibilities between these two teams. Make the predictable tension between these teams overt and clarify how both teams can best serve the overall good of the organization. Organization development consultants can assist with this work, which should begin when the change leadership team is established and be re-visited periodically throughout the transformation.

Measuring successful change management

Progress measuring and monitoring is essential to sustaining change. This is where most organisations fail. Just as you would with any other priority business initiative, rigorous measurement allows executives to identify backsliding, correct course where needed, and demonstrate tangible evidence of improvement – which can help to maintain positive momentum over the long haul.

Executives should pay attention to four areas:

1. Business performance

Are key performance indicators improving? Are relevant growth targets being reached more frequently? What is happening with less obvious indicators, such as local sales improvements or decreases in customer complaints?

2. Critical behaviours

Have enough people at multiple levels started to exhibit the few behaviors that matter most? For example, if customer relationships are crucial, do managers update the CRM database on a regular basis?

3. Milestones

Have specific intervention milestones been reached? For example, has a new policy successfully been implemented? Are people living up to their commitments to key account targets?

4. Underlying beliefs, feelings, and mind-sets

Are key cultural attitudes moving in the right direction, as indicated by the results of employee surveys?

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