Transcript Slide 1

THE CHANGE EQUATION
Building your Capability for Change
ORGANISATIONAL CAPABILITY
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PROJECT
Peter Duschinsky
Managing Director, The Imaginist Company
© Imaginist 2011
The Purpose of this presentation
To:
 Examine what makes an organisation good at managing
change
 Introduce the key models and tools in the Change Equation
methodology
 Develop the concepts of:
Change Readiness and Capability for Change
 Show how the Change Equation can be incorporated into your
standard practices:
• at project level - to deliver consistently improved project outcomes
• at programme level – to deliver Capability for Change into the
organisation as a key outcome
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70% of projects fail to deliver
the planned benefits
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Internal Change Programmes
fare no better
 The Harvard Business School tracked the impact of change
efforts among the Fortune 100 and found that only 30%
produced a positive bottom-line improvement…
 A survey of change programmes in 400 European
organisations quoted by Prof. John Oakland, Emeritus
Professor, Leeds University Business School found that:
• 90% of change programmes faced major implementation problems
• Only 30% delivered measurable business improvements
 A CIPD survey of 800 executives found that reorganisations
failed to deliver real improvement in performance in 40% of
cases
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What makes an organisation
good at managing change?
 Are there characteristics we can look out for?
• Strong, visible, empowering, leadership
• Clearly articulated and shared vision
• Attention paid to supporting core values
• High level of trust between managers and staff
– decision-making devolved wherever possible
• People able to give priority to new initiatives – overload issue
managed well
• Innovation encouraged and well managed
• Good communication between departments
• Collaboration with customers and suppliers
• Adherence to standard ways of doing things
• HR benefits and rewards aligned to business objectives
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What makes an organisation
good at managing change?
 Does your organisation have these characteristics?
 Then you are likely to have:
• High level of involvement and commitment
• Low resistance to change
• Resilience in the face of challenges
• Able to bring in changes rapidly and effectively in response to need
 Capability for Change
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Capability for Change
“Stock of capability”
(Rebecca Henderson, Harvard Business School)
 “Attention and resources focused on people and processes,
developing the organisation’s capability and resilience”
• Crucial if you want to respond to the accelerating pace of change
and rising levels of business complexity
• But erodes through natural entropy and neglect, so requires
continual investment and maintenance
 Any Change / Transformation Programme needs this to be
part of its core deliverables, but many don’t
 The Change Equation provides the tools you need
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The Principles behind the
Change Equation
The Change Equation is based on 3 key contentions:
1. Projects fail when the complexity of the project exceeds the
capability of the organisation to cope
2. The changes needed in a complex project cannot be achieved
within its lifecycle
3. A conventional ’command & control’ approach to
management of complex change projects will not achieve
consistently successful outcomes
Let’s apply these…
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Contention 1
“Projects fail when the complexity of the project exceeds
the capability of the organisation to cope”
Management typically:
•
•
Underestimates the complexity of its projects
Overestimates the capability of their organisation
So if we want to be able to predict success or failure, we need
to measure project complexity and organisational capability
We do this by undertaking a Change Readiness Assessment
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Change Readiness Assessment
 The Change Readiness Assessment (CRA) comprises:
• Stakeholder interviews, review of project documentation, analysis,
senior management team workshop, report & recommendations
 It allows us to:
•
•
•
•
identify the underlying causes of low and negative ROI on projects
quantify the barriers to success
predict the success or failure of projects
deliver a Route Map and Action Plan to help clients gain ownership
of the risks and improve performance
 Undertaking a CRA at the planning stage will improve a
project’s outcomes
 Integrating CRA into your standard project planning process
will deliver consistently improved project outcomes
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Change Readiness Assessment
 We use a number of key models and tools
 We will come back to these…
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Contention 2
“The changes needed in a complex project cannot be
achieved within its lifecycle”
The actions needed to achieve and embed behaviour change
usually have to be linked to a wider programme
Building these into a Change (or Transformation) Programme
will enable the development of an organisation’s Capability for
Change
The Change Equation principles provide the framework
The CRA Route Maps and Action Plans provide the content
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Contention 3
“A conventional ’command & control’ approach to
management of complex change projects will not achieve
consistently successful outcomes”
 Conventional change management interventions attempt to
impose change…so people give up, fall back on ‘what’s in it for
me’ and the change project fails
In a complex project, newly emergent ways of working and new
forms of organisation need to be recognised, nurtured and
embedded
You need to employ project and programme managers with the
right skill-sets to achieve this
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Integrating the Change Equation
into standard practice
1. Audit
• Undertake CRAs on selected projects
• Stakeholder face-to-face interviews
2. Analyse
• Identify and quantify key common barriers
• Adapt methodology, terminology
3. Integrate
• CRA into standard project management practice
• Change Equation principles into programme architecture
4. Implement
• Employ project and programme managers with right skill-sets
 Consistent improvement in project outcomes
 Capability for Change
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Change Readiness Assessment:
Models and tools
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Change Readiness Assessment:
Models and tools
Organisational Culture
Evolution model
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Assessing an
Organisation’s Culture
Levels of
organisational culture
9
8
7
6
5
4
3
2
1
ORGANISATION
‘External’ Focus:
• The organisation’s
needs and direction
• Systems and processes
• Efficiency
© Imaginist 2011
Point of
balance
THE INDIVIDUAL
‘Internal’ Focus:
• Culture
• People’s perceptions, attitudes,
motivations, aspirations
• Effectiveness
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Organisational Culture
Evolution Model
8
Systemist
7
Imaginist
3
Dialectic
4
Aligned
1 Pragmatist/Anarchic
2
Structuralist
5 Pragmatist/Aligned
6
Empiricist
9 Pragmatist/Empowered
EXTERNAL
© Imaginist 2011
INTERNAL
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Organisational Culture
Evolution Model
8
Systemist
7
Imaginist
3
Dialectic
2
Structuralist
4
Aligned
1 Pragmatist/Anarchic
5 Pragmatist/Aligned
6
Empiricist
9 Pragmatist/Empowered
EXTERNAL
© Imaginist 2011
INTERNAL
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Organisational Culture
Evolution Model
8
Systemist
7
Imaginist
3
Dialectic
4
Aligned
1 Pragmatist/Anarchic
2
Structuralist
5 Pragmatist/Aligned
6
Empiricist
9 Pragmatist/Empowered
EXTERNAL
© Imaginist 2011
INTERNAL
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Organisational Culture
Evolution Model
8
Systemist
7
Imaginist
3
Dialectic
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Aligned
Rationalist
1 Pragmatist/Anarchic
2
Structuralist
5 Pragmatist/Aligned
6
Empiricist
9 Pragmatist/Empowered
EXTERNAL
© Imaginist 2011
INTERNAL
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Organisational Culture
Evolution Model
8
Systemist
7
Imaginist
3
Dialectic
4
Aligned
1 Pragmatist/Anarchic
2
Structuralist
5 Pragmatist/Aligned
6
Empiricist
9 Pragmatist/Empowered
EXTERNAL
© Imaginist 2011
INTERNAL
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Organisational Culture
Evolution Model
8
Systemist
7
Imaginist
3
Dialectic
4
Aligned
1 Pragmatist/Anarchic
2
Structuralist
5 Pragmatist/Aligned
6
Empiricist
9 Pragmatist/Empowered
EXTERNAL
© Imaginist 2011
INTERNAL
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Where are youCulture
now?
Organisational
Evolution Model
8
Systemist
7
Imaginist
3
Dialectic
4
Aligned
1 Pragmatist/Anarchic
2
Structuralist
5 Pragmatist/Aligned
6
Empiricist
9 Pragmatist/Empowered
EXTERNAL
© Imaginist 2011
INTERNAL
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Where
now?
Where
do are
youyou
need
to be?
8
Systemist
7
Imaginist
3
Dialectic
4
Aligned
1 Pragmatist/Anarchic
2
Structuralist
5 Pragmatist/Aligned
6
Empiricist
9 Pragmatist/Empowered
EXTERNAL
© Imaginist 2011
INTERNAL
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Assessing an Organisation’s
Process Management Capability
Where are you?
Where do you need to be?
What’s stopping you?
5. Optimising
Effective process
4. Quantitatively
Managed
Measured process
3. Defined
Standard process
2. Managed
Repeatable process
1. Initial
Ad hoc process
Continuing Improvement
Quality and Productive Improvement
Consistent Execution
Controlled environment
Chaotic
Software Engineering Institute
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The Organisational Capability
Indicator
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How should we
measure complexity?
LOW
‘Developmental’
‘Developmental’
e.g.
Complexity
‘Transitional’
‘Transitional’
Apply
management
Replace
oneone
system
oror
Apply
management
Replace
system
improvement
with
another
improvement
techniques to process
process
with
another
techniques
“make
it
“make ittowork
better”
work better”
Little impact on people
Some impact on people
HIGH
‘Transformational’
‘Transformational
Scrap’ whole
operation/business
and
Scrap whole
start again and
operation/business
start again
Major impact on people
Complicated = not simple, but outcomes are ultimately knowable
Complex = not simple and outcomes are never fully knowable
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Terminal 5
Over 28,000 lost bags, 700 cancelled planes and more than 150,000
disrupted passengers
“The Terminal 5 debacle is a national disgrace”
Daily Mail, 14 April 2008
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So what went wrong?
1. Shortage of staff car parking
spaces
2. Only one employee security
checkpoint operating
3. Some staff unable to log on
to the computer system
4. Hand-held communication
software running slow
5. No managers on the ground to
re-allocate work
6. Shortage of bar-reading storage
bins
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 Baggage handling staff late in
arriving
 60 staff queue to get into terminal
 6am: 3 planes leave without bags
 Bags pile up, unattended
 By midday 20 flights cancelled
 4pm: baggage conveyor belt
grinds to a halt, BA suspends all
baggage check-in
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“The Perfect Storm”
 In 2004, HP's project managers knew all of the things that could
go wrong with their ERP centralisation programme. But they just
didn't plan for so many of them to happen at once.
 The project eventually cost HP $160 million in order backlogs
and lost revenue—more than five times the project's estimated
cost.
 Gilles Bouchard, then-CIO of HP's global operations, says: "We
had a series of small problems, none of which individually would
have been too much to handle. But together they created the
perfect storm.”
 Complexity is exponential!
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Complexity is Exponential
”We live in a world that can change exponentially – but we have brains that
are hardwired to plot things out linearly - the software in our brains compels
us to think about progressions as being simple arithmetic ones
So as a species, and a society, we deal poorly with uncertainty in non-linear
domains.” Prof Albert Bartlett, University of Colorado
That’s one good reason why management typically underestimates the complexity of projects!
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How should we
measure complexity?
LOW
Complexity
‘Developmental’
‘Developmental’
Complexity Factor
e.g.
Apply
management
Apply
management
80000
improvement
improvement
techniques
75000
techniques
towork
“make
it
better”
70000 “make it
65000 work better”
60000 impact on people
Little
55000
50000
45000
40000
35000
30000
Simple
25000
project
20000
15000
10000
5000
0
75
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HIGH
‘Transitional’
‘Transitional’
‘Transformational’
‘Transformational
Scrap’ whole
Replace
oneone
system
oror
Replace
system
with
another
to process
process
with
another
Your project and
operation/business
Scrap
whole
is
too
start
again
operation/business
and 72000
complex –
Some impact on people
A complicated
project –
Not simple
needs an
- needs some experienced
project
project
management
manager
start
again
break
it down
into separate
A complex
projects
Major impact
onand
people
project –
employ a
needs a
programme
dedicated
manager
project team
32400
10800
480
3600
Exponential
Complexity
Model
2 Exponential
3 Complexity
4 Model
5
6
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The Exponential Complexity Tool
 Which 3 factors? They must be:
• Common to all projects
• Quantifiable by stakeholders
• Good predictors of the complexity of a project
 The Exponential Complexity Tool uses the following 3 factors:
1. Number of people or Stakeholders involved
(More people = more complex = higher risk)
2. Number of business activities or Processes affected
(More ambitious = more complex = higher risk)
3. Elapsed Time to implement (in months)
(Longer to implement = more complex = higher risk)
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The Exponential Complexity Tool
•
•
•
Think about a project you are familiar with
Where on the scale do you think you are?
Now do the numbers: Stakeholders x Processes x Time
Complexity Factor
20
80000
75000
70000
65000
60000
55000
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
© Imaginist 2011
A complicated
project –
Not simple
needs an
- needs some experienced
project
project
management
manager
Simple
project
200
18 mths
Your project
is too
complex –
break it down
into separate
projects and
employ a
programme
manager
A complex
project –
needs a
dedicated
project team
72000
72,000
32400
10800
480
75
1
2
3600
Exponential
3 Complexity
4 Model
5
6
35
Combining Capability
and Complexity
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Deliverables: Action Plan
Organisation
Component
Implication
Action required
Management
Culture

The lack of information-sharing, alignment
and empowerment will jeopardise the
success of the project. At the very least it
will mean poor take-up and a lower than
planned level of benefits.

A programme of interaction and dialogue
across the organisation is urgently needed to
improve the management culture. This needs
to include increasing trust, see below.
Process
Capability

The organisation’s process capability is
poor. This means that any projects which
seek to standardise and improve
processes to achieve greater efficiency
will be very difficult to achieve.

Consider carrying out a programme to raise
the levels of process capability ahead of
implementing the project or using the project
itself to inject the necessary disciplines. In
this case it is crucial for the Board to make
compliance to the new processes mandatory.
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Deliverables: Route Map
8
Systemist
7
Imaginist
3
Dialectic
4
Aligned
1 Pragmatist/Anarchic
2
Structuralist
You are here
5 Pragmatist/Aligned
6
Empiricist
You need
to be here
9 Pragmatist/Empowered
EXTERNAL
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(Organisation)
INTERNAL
(Individual)
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Summary

The Change Equation methodology is designed to be
integrated into standard practice:
• at Project level – CRA ensures Change Readiness and
deliver consistent improvement in change project outcomes
• at Programme level – Change Equation principles, Route
Maps and Action Plans provides framework and content to
deliver organisational Capability for Change as a key
outcome
 If you think this approach might be of value to your
organisation, please contact us
© Imaginist 2011
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Peter Duschinsky
Managing Director
The Imaginist Company
Email: [email protected]
Tel: 020 8201 1478
Mob: 07801 802 571
Web: http://www.imaginist.co.uk
‘The Change Equation’
is available from Amazon.co.uk
© Imaginist 2011
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