What are the rules of engagement that leaders must adhere to in order to create effective and positive change in their organizations? How did Lou Gerstner, former chief executive of IBM, lead one of the most successful business transformations in history? How do leaders of professional services organizations in today’s global, networked and competitive economy create change that helps their company operate better? The short answer is that it’s different for every company because of the people in it. And that can have an impact on the type of PSA tools one might employ. From project and resource management to creating an operational system of record to training and morale issues, change is not typically well received. In fact, the status quo can be a company’s most profound challenge.
Changing the infrastructure of an organization to stay ahead of trends and the competition indicates that change is already taking shape. This year’s State of the Services Economy report notes that CRM, collaboration, and accounting systems have already been adopted by many professional and creative services organizations, with 48% reporting that a PSA (Professional Services Automation) solution is already up and running.
The same report projects that this year, if predictions hold true, 80% of all PS (Professional Services) firms will have a PSA solution in place. What this portends is more disruption in the workplace and the need for a plan of attack. As the graph below indicates, it will take people and time to make the change work.
Positive Change Can Be Elusive
In an article published in Strategy and Business, authors DeAnne Aquirre and Micah Alpern point to 10 classic principles that are time-honored techniques and tools that can help leaders transform their organizations quickly. The Title is 10 Principles of Leading Change Management. We’ll review the first five here and will complete our overview in a subsequent blog.
“According to a 2013 Strategy&/Katzenbach Center survey of global senior executives on culture and change management, the success rate of major change initiatives is only 54 percent.” The authors say: “This is far too low. When change efforts go wrong—not only financially but also in confusion, employees who have endured real upheaval and put in significant extra hours for an initiative that was announced with great fanfare see it simply fizzle out, cynicism sets in.”
The authors have identified three major hurdles that must be overcome:
1. Change Fatigue - too many changes at once. The Katzenbach Center reported that this was a problem with 65% of the respondents.
2. Lack of skills to sustain the change - Nearly half (48%) of the respondents reported this as an issue.
3. C-Suite myopia - Not seeking input throughout the organization. 44% of respondents report confusion and 38% don’t agree with the changes.
There is a Way
To overcome these obstacles takes a plan. Here are the highlights of five of the guiding principles for change that can help executives navigate the art of transformation in a systematic way:
1. Lead with the culture.
“In the Katzenbach Center survey, 84 percent said that the organization’s culture was critical to the success of change management, and 64 percent saw it as more critical than strategy or operating model. Yet change leaders often fail to address culture—in terms of either overcoming cultural resistance or making the most of cultural support. This may be true because change initiatives often wrongly assume that the culture may be what’s holding up the transformation. More skilled change managers, conscious of organizational change management best practices, always make the most of their company’s existing culture. Instead of trying to change the culture itself, they draw emotional energy from it.”
2. Start at the top.
“Although it’s important to engage employees at every level early on, all successful change management initiatives start at the top, with a committed and well-aligned group of executives strongly supported by the CEO. This alignment can’t be taken for granted. Rather, work must be done in advance to ensure that everyone agrees about the case for the change and the particulars for implementing it.”
3. Involve every layer.
“Planners who resist early engagement at multiple levels of the hierarchy often do so because they believe that the process will be more efficient if fewer people are involved in planning. But although it may take longer in the beginning, ensuring broad involvement saves untold headaches later on. Not only does more information surface, but people are more invested when they’ve had a hand in developing a plan. One common aphorism in change management is ‘you have to go slow to go fast.’”
4. Make the rational and emotional case together.
“Leaders will often make the case for major change on the sole basis of strategic business objectives such as “we will enter new markets” or “we will grow 20 percent a year for the next three years.” Such objectives are fine as far as they go, but they rarely reach people emotionally in a way that ensures genuine commitment to the cause. Human beings respond to calls to action that engage their hearts as well as their minds, making them feel as if they’re part of something consequential.”
5. Act your way into new thinking.
“Lines on a revised on an org chart and bold statements of intent have only so much impact. Far more critical to the success of any change initiative is ensuring that people’s daily behaviors reflect the imperative of change. Start by defining a critical few behaviors that will be essential to the success of the initiative. Then conduct everyday business with those behaviors front and center. Senior leaders must visibly model these new behaviors themselves, right from the start, because employees will believe real change is occurring only when they see it happening at the top of the company.”
Five Down Five to Go
In the article, these first five principles are more detailed and include specific company and organization examples on how to be best apply what others have learned for the challenge that you may be facing today. Part 2 concludes the overview and focuses on the remaining five principles for leading change and will appear in a subsequent blog post.