This is the third installment of our series on managing change in today’s networked economy. We started with a focus on professional services and the transformation taking place in that sector as markets and competition all seem to be moving faster than ever before, indicating the need to keep up with the speed of change. The cost of not keeping up with these changes or not initiating the right new system to manage change can cripple a company. This is especially true and obvious for professional services organizations that are completely people powered. Firms that sell knowledge and experience need the right tools to manage their resources. We introduced the concept of an operational system of record that can work in concert with existing CRM and ERP tools.
Our next installment highlighted the reasons for change and addressed “how” change can best be implemented and monitored. Again, as so many experts have pointed out in these articles, the reasons for change can be many and although there may be broad reasons to initiate change, the actual and specific goals for every company are different. So before we begin with our review of change management measurement, let’s take a look at setting objectives.
In 1964, Charles H. Granger in The Hierarchy of Objectives, his 1964 Harvard Business Review article wrote: “Having lost sight of our objective, we redoubled our efforts.”
In an article for Klipfolio, Jonathan Taylor identifies the following as a tried and true methodology.
- Assemble the core team that will be responsible—keeping in mind that the larger this team gets, the more difficult it will be to keep each person in the loop and aligned.
- The core team interviews leaders from each department, asking them: "What do you see as the company’s long-term goals (say 5 years) and which quarterly steps will be most crucial for us to reach them?"
- Each individual from the core team answers that question and then conducts a collective SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis.
- Using all assets from the interviews and the SWOT Analysis, the core team collectively sets SMART (Specific, Measurable, Attainable, Relevant, Time-bound) organizational objectives.
This is more than simple, it also is an empowering process because it gets the very top people on the same page and it allows the CEO to lead the initiative versus having to manage it.
The Change Process
An excerpt from the whitepaper Change Management, You’re Doing it Wrong.
“Kurt Lewin developed his change management model in the 1940s. It’s a 3-stage process whereby you create the perception that change is needed, then you move towards that future state, and finally you solidify the new state as the norm. This model is commonly described using the analogy of an ice cube that you want to refreeze in the shape of a cone. You first thaw out the cube shape to make it amenable to change (unfreeze), then pour the water into the cone shape you want (change), then finally solidify the new shape (refreeze).”
Each of the phases of this model has suggested key steps to make this more practical for change management practitioners to follow and execute:
UNFREEZE: determine what needs to change, ensure there is strong support from leadership, create the need for change, manage/understand doubts and concerns
CHANGE: communicate often, dispel rumors, empower action, involve people in the process
REFREEZE: anchor change to the culture, develop ways to sustain the change, provide support and training, celebrate success
Measurement Metrics Matter
The next important component of a successful change management program is measurement. Understanding the metrics of success, then building models and processes to monitor ROI and progress, become the essential marching orders for companies taking their firms to the next level. Establishing the appropriate Key Performance Indicators (KPI’s) requires setting a value for how well a business objective is achieved. In other words, how close did we come to turning an ice cube into a snow cone?
The KPI toolbox can be immense ranging from profit margins, client retention, Net Promoter Score (NPS), to likes on a Facebook page. Whatever you decide, there has to be a starting point or benchmark. And at some point the KPI should be able to become a predictor of future change. If A generates B then A + 1 should equal B + 1. Jonathan Taylor reminds us however that setting the right measurement tools in place may not be that easy and points to the four most common mistakes in setting up KPI’s.
- Reliance on intuition. This can arise from the overconfidence effect.
- Blindly adopting commonly held best practices rather than creating your own.
- Bias toward the most recent information learned.
- Confusing lagging indicators (the easy-to-measure output) with leading indicators (the difficult-to-measure input).
People Matter Too
Besides measuring the organization changes, there are also the issues of adoption and even appreciation by your people that are central to success. For more information on managing and measuring change consider an effective model by Prosci, called ADKAR which address both organizational and individual change.
The Final Score
Change, as we’ve covered in these last three articles, is possible with little trauma and high success. The main thing to remember is it’s different for everybody and every organization, and it’s easier when it’s controlled with a plan versus reacting to situations. Want to go to the next level, change your career or your company? Ask yourself what it’s worth. And with that I’ll leave you with a quote from writer and philosopher John O’Donohue: “There can be no growth if we do not remain open and vulnerable to what is new and different. I have never seen anyone take a risk for growth that was not rewarded a thousand times over.”