Strategies and Approaches for Managing Change Doug Webster, Ph.D. May 3, 2006.

Strategies and Approachesfor

Managing Change

Doug Webster, Ph.D.May 3, 2006

© Grant Thornton 2

Outline

• Facing a Common Challenge: Change

• Defining the Challenge

• Designing an Integrated Change Framework

• Applying the Integrated Change Framework

© Grant Thornton 3

Facing a Common Challenge:

Change

© Grant Thornton 4

Why We Are Here

• Similarities– Everyone here is present because they face change– Every speaker has talked about facing change

• Differences– Change may be forcing itself upon you, or you may be

proactively getting in front of coming change– You may be leading efforts to change, advising others

on how to change, or working as a team member to implement change

• The "Bottom Line"– In any case, Change is a common denominator among

all of us.

© Grant Thornton 5

How is the Public Sector Changing:A 1996 perspective

• The Organization for Economic Cooperation and Development's (OECD) first ministerial-level meeting on public management held in 1996

• In her summary report, the meeting chair stated that most of the 24 member governments were facing the same fundamental pressures for change, including:– Global economy– Dissatisfied citizens– Fiscal crisis

© Grant Thornton 6

A 1995 Perspective (continued)

• And that most governments were responding in similar ways:– Decentralization of authority and delegation of

responsibilities to lower levels of government– Questioning what government should both do and pay for,

what it should pay for but not do, and what it should neither do nor pay for

– Downsizing public service and privatization of activities– Consideration of more cost-effective ways of delivering

services, such as contracting out and user charges– Customer orientation; quality standards for public services– Benchmarking and measuring performance, and – Reforms designed to simplify regulation and reduce its

costs

© Grant Thornton 7

What Has Changed in Ten Years?

What have we learned in the past two days?

© Grant Thornton 8

The Challenge of Change

• While we all face change, the track record of successfully implementing change is poor– Various sources claim from 70-90% of project

"fail" to meet expectations– Personal experience of most people supports

this claim

© Grant Thornton 9

The International Challenge

• An evaluation of World Bank support for Public Sector Reforms since 1980 found:– Only about one-third of the Bank’s projects had

satisfactory outcomes– Even when satisfactory outcomes were achieved, it

appeared unlikely in most cases that they would be sustained.

“Civil Service Reform. A Review of World Bank Experience.” (Operations Evaluation Department, Report No. 19599)

• Understanding the underlying challenges facing change is key to improving success

© Grant Thornton 10

Defining the Challenge


The Dilemma of "Change"

• Some claim you cannot manage change, while others claim you must do so

• "Change" that cannot be managed is the change in the environment that goes on around us every day.– Physical Environment– Demographics– Customer needs/desires– Advancing Technology– Regulatory Environment– Resources/inputs/suppliers– Process innovation– New entrants (products, services, or providers)


Environment versus Response

• Such change indeed cannot be managed. Often, once unleashed, there is no going back. Generally, an organization can have little influence over evolving external change.

• However, we all chose how we will respond to external change. We:– Identify– Evaluate– Prioritize

– Resource– Implement– Monitor

Therefore, we Manage our response


How do People React to Change?

• Opportunity• Rejuvenation• Progress• Innovation• Growth

• Instability• Upheaval• Unpredictability• Threat• Disorientation

• Inability to adapt to change has been the downfall of many an organization, but…

• An ability to learn and change has been a key competitive advantage for other organizations

• What differentiates these groups?


Obstacles versus Opportunities

• How you view change depends on:– Attitude

• Which is driven by:– Understanding– Capacity to

respond

Change can be viewed as a threat or opportunity. Your attitude will determine whether the path ahead is built with stepping stones or stumbling blocks.


A Century of Change

• Over the past century there has been a convergence of thought between two approaches to change:– "Engineers" (a mechanical focus on change)– "Behaviorists" (human focus on change)

Engineers

Behaviorists


"Engineering" Change

• Since the late 19th century, managers have sought to improve the mechanical aspects of organizations.

• This approach focuses on observable, measurable elements that can be changed or improved, including strategy, processes, systems, organizational structures and job roles.

• Organizations embracing a mechanical approach to improvement typically did not embrace change management concepts until their projects encountered resistance or faced serious problems during implementation.

• Even after this realization, many organizations' approach to change management was ad hoc and lacked a solid framework for actively managing change through the process.


"Behaviorist" Change

• In parallel with the "engineer" approach to change is the view of behaviorists, who are concerned with how humans react to their environment.

• The fields of psychology and organizational development have often focused on how individuals think and behave in a particular situation. Because humans are often exposed to change, psychologists and behaviorists can study how humans react to change, both individually and in organizations.

How can these very different points of view be integrated to help manage change?


Colliding Theories

• Unfortunately, conflicting theories and prescriptions for change management abound

• While some theories focus on the mechanical aspects of change, others focus on the "soft" side of human and organizational change

• What has been lacking is an overall integrative framework that explains the relationship between the mechanical and behavioral aspects of change


Designing an

Integrated Change Framework


Phases of Change

• Change can be considered from three perspectives or phases:– Strategic Management Phase– Project Management Phase– Change Management Phase


The Strategic Management Phase

Today'sOrganization

Products & Services;Outcomes

Customer needs; environmental demands

Environment

DesiredOrganization

• Strategic planning requires environmental scanning, and evaluation of the demands the shifting environment places on the organization

• The change in the demands of the environment creates a 1st Order Change Gap

1st Order Change Gap


The Strategic Management Phase (continued)

Today'sOrganization

2nd Order Change


Customer needs; environmental demands

Environment

DesiredOrganization

• Organizations can determine to close all or some of the gap– Partial Change

– Complete Change

• Organizations can even elect to proactively lead change to close the gap to a future predicted environmental state

1st Order Change Gap


The Project Management Phase

Today'sOrganization


Environment

• Organizations initiate projects to execute change

• Projects must consider multiple dimensions of change

Future DesiredOrganization

2nd Order Change2nd Order Change Dimensions

Project Plan

Projected 1st Order Change Gap


The Change Management Phase

Today'sOrganization

Environment

• This is what most organizational change plans look like

• But organizations are typically not prepared to address change equally in all dimensions


2nd Order Change

Project Plan

Readiness for Change

2nd Order Change Gaps



The Change Management Phase

Today'sOrganization

Environment

• Dimensions of change should be assessed to identify gaps in change readiness


2nd Order Change

Project Plan

Change Plan:

Readiness for Change

2nd Order Change Gaps

Personal

Organizational



Points to Consider from the Integrated Change Framework (ICF)

• We cannot manage 1st order change; we must manage 2nd order change

• Most organizations face a gap in being able to implement 2nd order change, resulting in high failure rates

• A Change Plan for closing the change readiness gap is essential to success– May be formal or informal– May be stand alone or part of a project plan


Change Management and the Change Readiness Gap

Change Management …

is the process, tools and techniques to manage the human side of organizational change needed to achieve desired outcomes

• When part of a Change Plan, Change Management is key to closing the change readiness gap and achieving long-term success


Applying an

Integrated Change Framework


• Sources of Resistance• Changing Attitudes and Building Change Capacity


Understanding Sources of Change Resistance

• Developing a capacity for change involves– Overcoming resistance to change– Developing the requisite understanding

• Saying "people resist change" sheds no light on how to overcome change

• Resistance to change stems from:– Factors that encourage people to resist changing

existing behavior in any context (regardless of being in an organization)

– Ways that organizations influence members to be more likely to resist changing the way they do their job

– Factors related to bureaucratic organizations– Factors related to government organizations– Factors related to developing nations


Factors that encourage people to resist changing existing behavior in any context

• Change may make people worse off– At a minimum, change requires learning

something new– Behavioral consistency often seen as a virtue– Mere exposure creates commitment to a

previously undertaken course of action (i.e., the status quo)

– Behaviors can become embedded– People misjudge the gap between their

performance and "good" performance


Organizational Influence

• Inherent tension between organizing and innovating

• Organizations recruit for and reward current practice

• Organizations create member commitment to current practices

• Change affects power relationships• Knowledge structures created by organizations

(i.e., paradigms) make it hard for people to notice signals that change is needed

• Change can impact job security


Bureaucratic Influence

• Rules, hierarchy and specialization—the foundation of bureaucracies—typically work against change and innovation

• Strict bureaucracies restrict workers to following rules or pass decisions up the channel; creativity of thought is discouraged, or at least not generally exercised

• Rules provide a defense in the face of criticism

Management or administration marked by hierarchical authority among numerous offices and by fixed procedures

Bureaucracy:


Government Organizations

• Private sector survival depends on profitability; government organizations can generally be more forgiving of poor performance

• "Foot dragging" at lower levels is easier because executive levels often turn over more frequently

• Government is more likely to have more people with long tenure at working levels (higher percentage of "career" people), and such people may be more likely to resist change


Government Organizations (continued)

• The environment punishes error more than it rewards excellence, making government organizations conservative and inclined to the status quo– "The dirty little secret is that innovation requires failure.

The corollary is that unless an organization tolerates…failure, it is unlikely to get much innovation."

• Government is more likely to have vague and multiple goals, both of which encourage further bureaucracy.

• Rules and hierarchy have particular legitimacy in government as tools of democracy and "equal treatment"


Challenges in Developing Countries

• Change in developing countries has its own challenges

• Corruption and influence peddling can be widespread

• Patronage is often the norm; many get jobs because of connections rather than qualifications

• The public sector is often the employer of last resort for the unemployed

• Courts and police may not be fully independent of political control, so prosecution of corruption is difficult


Challenges in Developing Countries (cont.)

• In such situations, the general guidance on change management remains valid, but must include additional considerations:– Does the sponsor for change truly want change

and all that it implies, or is the change initiative "for show" only?

– How dependent is the change program on information systems (to track funds, performance, accountability, etc) that may not exist?


Building a Capacity for "Change"

• Mobilize: Pull together the guiding team, and build commitment through Joint Identification of organization problems and challenges

• Strategize: Develop a Shared Vision and strategy for change

• Communicate: Build a broad foundation of understanding and buy-in

• Plan: Build project and change plans that recognize capabilities and limitations


Building a Capacity for "Change" (continued)

• Implement: Integrate project and change management planning and execution– Focus on results, not activities– Use pilots and achieve quick wins– Institutionalize success with formal policies and systems

• Monitor: Develop a "performance budget" laying out expected improvements across the project lifetime, and check for variances

• Adjust: Adjust implementation approach and strategies in response to problems in the change process or to a shifting environment


The Culture of Change

• Cultural attitudes to change differ– Change is random, – Change is cyclical, and one expects

circumstances to recur– Change is essentially determined by the

consequences of the actions of mankind and environment

– Change is driven by predetermined events and is outside of mankind's control


The Culture of Change (continued)

• One's cultural values and beliefs affects the way one looks at and responds to change

• Changing wide-spread cultural values is neither simple nor quick, and may be impractical in some cases– Recognize change limitations and integrate into the

change plan

• Seek to make people accountable for what is inside their control, while driving out fear of what is outside their control


Closing Thoughts

• There are many prescriptions for implementing Change Management, and little time to discuss them

• Today's intent was to:– Explain the importance of Change Management– Provide a logical model to help understand the role and

importance of Change Management

• Questions:– What are your experiences?– What might you do differently to incorporate Change

Management?


Questions?

Strategies and Approaches for Managing Change Doug Webster, Ph.D. May 3, 2006.

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