Research indicates that more than half of change initiatives around the world fail, with digital transformations proving even more difficult to get right. Despite this, scores of businesses are beginning to rapidly implement digital change. A critical question to ask is why these strategies fail. Gavin Isaacs, COO, Unisa Graduate School of Business Leadership tells what to ask…
According to a 2018 report by leading research and advisory company Gartner, the typical organisation today has undertaken five major firmwide changes in the past three years with almost 75% of organisations expecting to multiply the types of major change initiatives they will undertake in the next three years. Yet the report states that half of the change initiatives fail, and only 34% are a clear success.
In 2016, an executive survey by McKinsey & Company found that just 20% of executives believed company change had been very or completely successful at both improving performance and equipping the organisation to sustain improvements over time. This figure remains unchanged from 2012, which might indicate that despite a collective and growing body of both theoretical knowledge and experience, implementing change is not getting any easier.
For many organisations, digital change has become an urgent financial imperative in the bid to be responsive and relevant in a highly competitive market. From a universe of almost 2,000 surveyed business people last year across the globe and from varied industries and sizes, more than eight in ten participants said that they had taken part in at least one digital transformation in the past five years at either their current or previous company. Of the self-same group, a mere 16% believed these initiatives to have successfully improved company performance or equipped them to sustain changes in the long term. And a further 7% believed that performance had improved but such improvements were not sustained.
A large reason for the failure of change initiatives is due to a persistent misunderstanding and misinterpretation of what change management is as a discipline and what it entails. Many media articles and opinion pieces today like to refer to change management as being obsolete and unsuited to today’s business environments, where change is constant and ubiquitous. Undoubtedly there is a need for continuous change and change readiness, but this should refer more to a business’s agility in delivering change.
The driving factor behind any new programme or initiative is ultimately to bring about some form of change; albeit implementing a new ICT system, or supply and logistics systems among others, a change will be necessary. Yet most programmes or initiatives are conceived and managed as projects rather than change programmes.
The project is invariably plotted out as a work breakdown structure (WBS, which is a key project deliverable that organises the team’s work into manageable sections) and captured into best-practice project management methodologies such as Prince2. Change management in these methodologies is linked to the operational environment, where its purpose is to achieve the successful introduction of changes to the IT system or environment.
Success is measured as a balance of the timeliness and completeness of change implementation, the cost of implementation, and the minimisation of disruption caused in the target system or environment. The above accurately describes technical change requests rather than the full ambit of change management.
Projects that will necessitate change often fall to people who are not formally trained in the aspects of change management. A major ICT or digitisation project will invariably fall to technical specialists who are neither project managers nor experienced in change management. Yet they are being tasked with implementing change that is so significant that the organisation could never be the same again.
To effectively lead organisational or structural change, all systems must be in place to accommodate that change. Who usually assumes responsibility for implementing change initiatives? More often than not, change (initiatives) in whatever form, is implemented from the top. The decision most often falls to the executive team who must make the decision or agree to implement changes that address ‘bottom-up’ obstacles which may be impediments to an organisation’s performance.
Change management, when defined, should include ‘effective leadership’. Effective change management demands effective and participative leadership supported by effective communication and a keen insight into behavioural aspects of the organisation.
Consult, include, inform
Around the world, change in highly competitive environments is arguably an ‘adapt or die’ process. The South African context is somewhat unique for certain companies, academia and the public sector who, by necessity, might operate in a highly unionised context. Here change management is critically important and it could be argued that many projects that have not been entirely successful, are as a direct result of not managing change in a consultative, inclusive and informative process both before and throughout project implementation to a conclusion.
Companies often view the biggest risk with up-front consultation to delaying project implementation and thus having an impact on the project budget. Yet, budget challenges with projects come about most often through project push-backs later in the project’s lifespan. Stakeholders thus must be part of the process, not an afterthought, especially for significant projects or decisions whereas many stakeholders as possible should be included. Once there is buy-in from stakeholders, a sense of commitment and responsibility becomes part of the change process and makes it difficult for people to ‘opt-out’ as the project progresses.
Effective consultation does not imply the giving up of control to various stakeholders but works towards obtaining buy-in. Ultimately, management remains responsible and accountable for ensuring the validity, timely and successful implementation and completion of the project.
Ongoing communication should take place following an initial face-to-face staff meeting or meetings, where all stakeholders are able to ask questions and obtain explanations about the anticipated changes. Communication via email updates or other forms of digital tools to staff, that consist of clear and accurate information, should be an ongoing activity as change happens. Even if there is no particular update at a given time, this can also be communicated to staff members. If communication drops off, people begin to lose momentum (of the project) with the result that the project could begin to lose the buy-in it might have had initially.
Understand the impact
In leading the entire process of change, effective leaders should understand what the consequences and impact may be from each decision. Up to 80% of projects fail as a result of resistance to change and staff turnover intention during the project. Turnover intention is a measurement of whether a business or organisation’s employees plan to leave their positions.
There are three types of organisational commitment, which is the bond employees experience with their organisation. Affective commitment relates to how much employees want to stay at their organisation and are those employees who feel passionate about the company and are supportive of its decisions. Normative commitment is driven by a sense of responsibility to the company and an obligation by employees to do what is required of them. They will support the company through a sense of duty. Continuance commitment relates to how much an employee feels that they need to remain at the company in order to get what they need, thus coming from a position of ‘what’s in it for me’.
Each of these three commitment ‘types’ needs to be considered when embarking on change and the impact that may be experienced by these different groups when the project is implemented. Before embarking on any project, consider the questions of impact and what this impact will have on the individual. Who will feel the impact? What will the impact be? How will the impact on the individual be managed?
Change happens in between
The definition of change management is ‘a process or system of transitioning people, processes or projects from one state of being to another state of being’ but this doesn’t really account for what is happening – or can happen – in between. Nor does change always fit neatly into change models such as John Kotter’s long-standing eight-step process or Lewin’s Three-Stage Model of Change.
Implementing change today is more challenging than ever, with competing interests, rapidly changing markets and evolving digital environments. What, then, will ensure success in our dynamic business settings? If change is managed by effective and participative leadership, through a consultative stakeholder process that is supported by clear and consistent communication there is far more chance of success. Considering change management as a subproject of project implementation, or as an after-thought to manage staff push-back, will not bring about success.