Wondering why your old tried and tested change formula doesn’t work? Perhaps it’s time to change it, say BT Wholesale’s Head of Organisation Development, Matt Hudson and ER Consultants’ Sukhvinder Dhat

It’s 3am and I still can’t sleep. What began a few weeks ago as a nagging concern has suddenly transformed into real fear. I am now certain that the major change I was responsible for introducing to the organisation resembles a stagnant pool that very much looks like the old organisation. How did this happen? I followed the standard model for organisational change that the best business schools teach and the most successful organisations practice. I gathered the best people and inspired them to take up the challenges ahead. I hired a top consulting firm to provide me and my team with the latest techniques to effectively manage any resistance. And sure enough, this all-star team produced innovative strategies to move the organisation forward. Yet, as I stare at the ceiling, a loud voice inside me says, “Nobody is supporting this. The resistors will win the day.” I look for a scapegoat: “So who is to blame this time for this situation? The consultants? The committee members who put in so many late nights? Me?”

Have we not seen this scenario time and time again in restructuring and change programmes? It’s certainly a scenario that many a change professional is grappling with today. On a positive note, no one is to blame. Everyone followed current best practice. The problem is that the very paradigm that prescribed my actions, as well as those of my consultants and team members, needs development itself. In order to understand why let’s look at the beginnings of change management.

The birth of change

The change management paradigm is part of a process first understood by the Western Electric Hawthorne experiments in 1939. This work identified the critical role of people in organisations and the discovery that only through people can we find new ways of unleashing their potential.

Organisation theorist Richard C Beckhard2 was the first to recognise the importance of creating a development structure for generating organisational change. Although the processes of employee involvement, quality improvement and self directed teams were first developed in the late 1960s and early 1970s, they were not commonly used until the late 1980s. With the advent of employee involvement, quality circles used a change organisation programme structure to bring about change. Mainstream consulting firms recognised the success of this organisation model and soon adopted it under the rubric of change management. The key components of an organisation change process include a sponsor group, a steering committee and design groups. The change programme structure and the accompanying change management paradigm have become the ‘process of choice’ for changing the organisation.

The Change Organisation Structure

Typically, the Change programme structure is composed of:

• A sponsor group of senior leaders, who initiate the process, cheer-lead the efforts and provide the funding.
• A steering committee that represents a cross section of people from all levels and functions who manage the change process
• One or more design groups that develop the specific changes.

Together, this functions alongside the regular organisation structure and is there to plan, design, manage, accelerate and reduce the barriers to change. The promise of this micro organisation is based on the following assumptions:

• A diversity of members on the teams, along with key decision makers, provides a way to overcome red tape and is the most efficient governance structure for the change process.
• Teams populated with the ‘the best and the brightest’ ensure high-quality solutions.
• Cross-functional and multilevel membership breaks down the silos and guarantees solutions that favour the total organisation.
• The team members’ cooperation will be transmitted throughout the organisation.
• The committees’ consensus decision making ensures both high-quality solutions and members’ buy-in.
• The teams’ cross-functional and cross-hierarchal nature ensures that members will believe they were represented in the process.
• The teams’ credibility ensures that organisation members will readily accept their ideas.

The problem with Change Management

The adoption of this organisational model by mainstream consulting firms to bring about change was unquestionably a great advance. However, it has failed to continue to deliver change in the present environment for five reasons:

1. Promising to deliver change at a pace that is not achievable, and as a result placing all the emphasis on a project plan/timeline that does not relate to other changes taking place. Often the change team push forward because they are terrified of slipping off the schedule. An observation here is that traditional project methodologies tend to focus on process and project activity and not changing the behaviours at the coal-face that we are after.

2. Participants in the change structure often fail to effectively include the rest of the organisation in the change process (sometime because of the above), which produces what Professor Peter Senge3 calls the ‘engagement gap’. Those in the inner circle become increasingly distant from those outside it. In the dynamics of ‘true believers and non-believers,’ Senge observes that each group develops negative stereotypes of the other that, if left unattended, can cause failure.

3. When the change organisation becomes the mainstream structure, it is often adopted without its underlying values of high employee involvement and participative decision making. Consultants begin to lead ‘to get the job done’ rather than facilitate the process, using team members as sources of information instead of working with them to design and implement change from within. This use of participative structures, where the answers are already known, produces organisational defensiveness, increasing the resistance to change rather than reducing it. Most consultancies see line resistance as a wall to knock-over not work with to gain ownership.

4. Although using the change organisation model includes people from various levels and functions, along with consultants, to identify and determine needed change, it often fails to include stakeholders, such as customers, suppliers and community members in the process. Outside stakeholders introduce variety and new thinking into the system, heavily increasing the emergence of creative solutions.

5. Change management concentrates on process improvements at the expense of cultural issues. Often shifting the organisation’s culture becomes secondary to implementing change, using new technology as an enabler. Even though the developments of new systems and structures required people to change how they worked and with whom they worked, consultants often ignore these cultural aspects. People find themselves in new organisational configurations designed to improve co-operation, teamwork, and customer service, while the old hierarchical culture remains unchanged.

The rest of the story

If that was all, it would be not too hard to fix. The truth is that there are two competing strategies for change. At one end, and most popular with financial markets is that there is one measure of success and that is ‘shareholder value’. Here the work is tough and ‘hard’ with economic incentives, massive lay-offs, radical de-layering, downsizing and restructuring.

At the other end of the spectrum, and popular with managers with a belief that this view of ‘shareholder value’ exclusivity can damage the company, is a ‘soft’ focus on corporate culture and that people capability can drive change through learning.

“The ‘bar’ on expectations is higher and the ‘need for speed’ is increasing. That means you need to find new and intelligent ways of carrying out change because the current approach is just not sufficient any more”

Much work has been done by managers to integrate the two approaches above, but with little success in resolving the inherent tensions between the two competing strategies for change. Some argue that because of this complexity we should adopt one or the other. The rationale against this is that if we truly believe that we want to create a company that is adaptive and flexible to deliver the value the markets require in the long term, we have to integrate both effectively. How? To do so requires us to see change as an integral part of the development process. Much work is needed to reconcile differences between individuals and their world views to build a strong and integrated approach. An example of this balance is demonstrated by ASDA’s CEO Archie Norman’s opening speech on their recent change programme, when he said: “Our number one objective is to secure shareholder value for our shareholders and secure the trading future of the business. I am not coming in with any magical solutions. I intend to spend the next few weeks listening and forming new ideas for our precise direction… We need a culture built around common ideas and goals that include listening, learning and speed of response from the stores upwards. But there will be management reorganisation. My objective is to establish clear focus on stores, shorten lines of communication and build one team.”

Norman clearly demonstrates an integrated approach to development and involvement with restructuring to enhance shareholder value. So how do we do this magic trick? Firstly, as outlined above, reconcile the two approaches and then build on that foundation with the seven steps to achieve change, (see ‘Tried and tested’ below).

Back to where we started

Going back to the original scenario: It has become clear that the old approach to change, which once used to be successful, simply doesn’t work anymore. The ‘bar’ on expectations is higher and the ‘need for speed’ is increasing. That means you need to find new and more intelligent ways of carrying out change because the current approach is just not sufficient any more. Now that that’s clear, perhaps you’ll get some sleep. But if you still can’t get any shuteye then feel free to email us for advice (matt.hudson@bt.com or topics@erconsultants.co.uk)

Tried and Tested

The seven steps to effective change:

There is plenty of anecdotal evidence that the current method of bringing about change does not work. In 40 years of studying change, Michael Beer and Nitin Nohria, both Professors of Business Administration at the Harvard Business School, have observed the brutal fact that 70% of change initiatives fail to deliver promised business benefits to time and budget.

From our perspective, effective change occurs when an organisation follows seven steps:

1. Mobilise commitment through joint diagnosis of the issues.
2. Build change that incorporates both ‘hard’ and ‘soft’ approaches to change (the what and the how).
3. Develop and maintain a shared vision of how to organise and manage for competitiveness;
4. Foster consensus for the new vision, competence to enact it and cohesion to move it along;
5. Spread revitalisation to all departments without pushing it from the top;
6. Embed revitalisation through formal policies, management practices, systems and structures;
7. Monitor and adjust strategies to emerging problems