Change - Strategic Facilitationby Tony Mann
Pace of change and degrees of uncertainty
Change invariably takes place in response to the impact of key drivers. The force and imminence of these drivers dictates the degree of change needed and the timescale of change involved. Obviously, if an organisation is required to undertake major change and do it rapidly, then it has been overlooking the key drivers and has not been consciously watching the external environment.
One way of visually representing this pressure in a strategic planning workshop is to use a four-box rate-of-change model and to place the different aspects of the business, such as the different products/services or the different divisions, where they sit in relation to the degree of change anticipated and the priority in terms of time pressure. The ones in the top right-hand box are the ones under most risk: the timeframe is short and the degree of change required is high.
Degree of uncertainty
Another way of thinking about it is to look at the degree of uncertainty involved.
- Certainty is rare since the financial crisis; organisations rarely find that the external environment is stable and that their only challenge is innovation.
- The next stage is complexity, where the key drivers are relatively stable, but an internal response is needed to ensure that the organisation stays relevant. This is also unusual in the current situation.
- Uncertainty is much more prevalent: the external environment is in turmoil and the key driver analysis has revealed that major change is inevitable (see below).
The key issue here is that the more uncertain the environment, the longer it will take to implement change. In a relatively stable environment, innovation can be managed in a finite time. However, as the external environment becomes unstable and the key drivers need a response, the timescale increases, potentially to two and a half times that which has been imagined. This becomes much more serious in uncertainty, when the time needed to respond and act and bring about change is increased to fourfold (and more) times that which people would imagine is required. This is why organisations that face a crisis often fail to find a way forward: the time needed outweighs the time available before catastrophe overtakes them. Process aware organisations avoid getting themselves in this situation by constantly monitoring the external environment and acting early and decisively.
Degree of uncertainty
The external environment is stable and the key drivers suggest no real change is needed, only improvement and innovation.
Time required = T
The external environment is relatively stable, but there are some key drivers which need attention and action.
T x 2½
The external environment is in turmoil and the key drivers suggest major change is required.
T x 4½
Process aware organisations value internal feedback mechanisms and encourage staff to contribute their knowledge and expertise. In the recent banking crisis, it is now known that in one of the leading banks all dissention and disagreement with the strategy and the way the strategy was achieved was squashed. The specialist responsibility of (financial) risk management was not taken seriously and in fact a marketing person was put in their place on the board by the CEO. Consequently, when the crisis hit, the bank had no time to respond and take action to mitigate the disaster. The key drivers were being ignored and the bank continued to remain oblivious of the dangers.
Failure to change early enough
Sadly, most significant change fails to meet the expectations and targets of those initiating it. The failure may not come directly from resistance to the change; instead, it can be driven by noble and principled motives. What is often forgotten is that resistance can be justified if the criteria for change are not well articulated or the senior management is blind to the crucial issues. Remember again the world-wide banking crisis. The boards of the big banks were in many cases unaware of what was being done by more junior people and they were unaware of the potential dangers facing their institutions. In addition, corporate ambition drove many CEOs to seek exorbitant growth that put the banks at risk.
Senior management is frequently unreasonable in its expectations and time scale, forgetting the process that it had to go through in understanding the organisational need for change.
The world-wide banking crisis had the follow-on consequence of hitting car sales, pushing GM, among others, towards bankruptcy. On 30 May 2009, it was announced that a deal had been reached to transfer New GM Europe (Opel plus Vauxhall, minus Saab) assets to a separate company, controlled by a trustee. GM was expected to keep a 35 per cent minority stake in the new company and Opel staff ten per cent, with a plan which proposed to sell the majority of the business to one of two partners, the preferred one being a consortium majority, owned by Sberbank of Russia (35 per cent), Magna International of Canada (20 per cent), and Opel employees and car dealers (ten per cent).
On 1 June 2009, GM filed for bankruptcy in a court in New York. As the sale of Opel and Vauxhall had been negotiated two days before, both companies were in effect ring-fenced from any GM asset liquidation. However, negotiations broke down with Magna over details. Towards the end of August 2009 there were doubts over whether a sale of Opel would actually go ahead, though a German government official later revealed that talks were continuing. This was followed by RHJ International raising its bid for Opel to €300m from €275m.
On 10 September 2009, GM agreed to sell a 55 per cent stake in its Opel and Vauxhall Motors brands to the Magna group with the approval of the German government. However, on 3 November 2009 the GM board called off the Magna deal after coming to the conclusion that Opel and Vauxhall Motors were crucial to GM's global strategy. Little wonder that the unions and individual workers felt let down and abandoned and resistant to suggestions from management that they needed to change their working practices and be more productive.
Tackling resistance in a proactive way
An effective change agent will prepare an organisation for change in the early stages by taking senior managers through the Key driver analysis and helping them to face and tackle their personal resistance to change.
This process is likely to encourage buy in. It will also surface the moment that resistance becomes vested interest. It is vital that the change agent points out this resistance to the senior managers so that they know how they feel and react and how it will feel for others who have less control and influence over events than them. Running a resistance-to-change workshop for the SMT is a crucial part of managing change.
A Primary Care Trust in the UK had disturbing statistics for patients’ access to their doctors. The evidence showed, for example, that patients in this particular area had great difficulty booking appointments and getting to see their doctor of choice. Things had to change. It was decided to run a workshop in which the doctors were shown the statistics and a patient video. In addition they were asked to think of times that they had been let down by organisations (for example, their insurance company when making a claim or their bank when arranging a meeting) and to explore how they felt and how it made them feel. In addition, they were given case studies and asked how they would go about the change. This surfaced their emotions and resistance to change and it helped them to see the access programme in a different light.
The change agent needs to tackle resistance by positive interventions early in the change agenda, detecting resistance as early as possible by keeping an open ear to conversations and being watchful by monitoring for covert resistance. They should take positive action to reduce resistance and re-focus that energy into positive action by engagement, involvement and participation.
Resistance is one of the key factors in why change fails. A recent informal UK survey of 120 government transformation programmes identified that
- 15 per cent achieved their objectives
- 20 per cent failed to achieve their objectives, but were nevertheless regarded as satisfactory
- 65 per cent were unsatisfactory.
Listed below are several key factors that explain why change fails.
- The organisation is unclear about the reasons for the change and the overall purpose of the intended change. To those outside the loop it therefore appears random and ill-conceived. This plays into the hands of any politically-motivated managers and increases the risk of resistance. The change agent must help the SMT articulate the rationale for change and that must be driven by the KDs, and not by vested interests.
- The SMT fails, following the KD analysis, to move to action quickly enough. This leads to mixed messages – is change inevitable? Is it necessary? This causes a build up of resistance.
- The leaders were not prepared for the change of management style required to manage a changed organisation. Old habits die hard and the managers may resist adopting the style of leadership and management needed in the new environment. The change agent should be ready to adopt a coaching style to help the leaders adapt and to encourage them to feel that they are still relevant and valuable.
- Change programmes fail if they are seen as ‘programmes’. The idea that ‘now we're going to do change and then we'll get back to normal’ causes people to lose confidence and belief in the intended changes. Indeed, in many cases change has taken place only to be reversed a couple of years later. Change should be a style of management where the organisation is sensitive to the external KDs and responds appropriately.
- The organisation chose a change methodology or approach that did not suit the organisation, or, worse still, used a multitude of different models and approaches that conflicted or confused people. The role of the change agent is to recommend the approach and the methodology and to select the most appropriate models and build these into a cohesive change process. Remember that in a crisis driven by the external need it may be appropriate to ‘tell’ and direct the change – participation may be inappropriate (for example, the car industry in 2008/9).
- Creating programmes upon programmes. If the organisation has a myriad of conflicting activities going on, change will look (and be) confusing. Programmes such as Six Sigma, applying the balanced scorecard and process re-engineering have their place; however, the change leader must co-ordinate and integrate programmes and ensure that each one is justified and will contribute to the change and not sap the organisation’s energy.
- The organisation is prepared and the internal culture had 'pushed back' against the change. This is again is a consequence of not undertaking the UIA=0+E process. When and where to use models and tools The change agent, in other words the strategic facilitator, must help the change leader prepare the organisation for the change.
- The organisation has re-engineered/re-focused certain departments/functions with little regard to the overall strategic purpose and the integration of processes (in other words: they had changed one high-level process and not considered the impact of this on other parts of the organisation). The change agent and change leader must work together to ensure an integrated programme of change.
- The SMT set the strategic focus for the change and then remained remote from the change process, leaving the actual change to less motivated/articulate people. The change agent and change leader must at all times ensure that the ‘baton’ of change is handed over effectively at each stage and at each level.