Tuesday, June 16, 2009

Reality of Change Management Part I

A week does not go by without hearing the word "change" or "culture change." Owners, managers, and executives seem to constantly want things and people to be different. Unfortunately, most of the desired changes we hear are based on conclusions about reality rather than a clear description of what's going on, what changes are required, and how those changes actually advance a clear strategy. For example, here's one executive's contention, "We need to change our culture. It does not support what we're trying to achieve."

When asked, "What is the current culture?" this executive replied, "People aren't proactive enough. They don't understand where we're going and are unable to get buy-in from the people that report to them. We need people to step up and take more initiative."

Notice he adds the "problems" of "being proactive" and "taking initiative." This conversation is going nowhere and represents a common pattern in today's business discussions.

Many of today's managers and employees are cogs in obsolete machinery. The corporate death rate is increasing. In the near future, perhaps as many as half the nameplate companies of today will no longer exist.

Here's the dilemma of change. Today's business owners and executives are tasked with increasing today's level of performance while simultaneously making radical changes. This involves two conflicting forces - optimization and growth. This can be a deadly conflict as the organization oscillates between a desire for change and the tendency to seek balance, predictability, and equilibrium. The mental models of most executives come from their experience, yet many organizations have been ruined by executives clinging to their "proven" assumptions that are no longer valid. Outsiders are better equipped to detect and challenge such deeply held beliefs. Unfortunately, some outside consultants bring their own obsolete assumptions to the table further clouding the waters.

For example, in most organizations IT is an integral component in any change effort. Even the smallest upstarts are required to invest in technology. In spite of this, in one Canadian corporation, business management referred to IT people as "Martians" who ask questions with an astonishing lack of knowledge about our business. Another referred to IT as a "black hole" that sucks up our resources.

Large corporations regularly spend a fortune on computer systems and programs to reinforce obsolete corporate structures and work routines. For example, a recent report by ESR Research, a firm that focuses on studying sales effectiveness, states clearly that "CRM systems may, in fact, hamper the effectiveness of a high-performance sales force."

Today's business models require joint creativity between business processes, technology, and people. Changing technology alone is doomed to fail. Process reengineering is initially attractive, but often fails to hit sustainable gains. Reengineering, according to its creator Michael Hammer, had a 70% failure rate. Failures occur when a sledge-hammer approach is used to change corporate culture. Executive's attempts at creating their desired future by asking others what they think "we should" do often create more confusion than clarity. Even asking customers what they want, while important, does not give an organization much more than ideas to retool past processes.

For a change effort to be successful it is critical that a crystal clear view of reality be connected to a strong vision of what the enterprise aspires to become. This includes accepting brutal truths about reality and uncovering deeply held, but flawed assumptions about change. In addition, it's critical to connect people's deepest aspirations and values to the aspirations of the enterprise.

Click here for Dave's 7 minute presentation on Change

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