“In the corporate world, most approaches in defining the business value of change involve hard benefits such as revenue, cost, and time. For example, increased revenue per customer, reduced people costs, and improvement in processing time. Yes, there are non-financial benefits such as capability improvement and strategic alignment. However, in practice, most tend to focus more on hard benefits that are more tangible and easier to track.
The problem is that benefits are usually defined in a top-down, linear way and have not taken into account the environment that determines the benefits. For example, a Strategy department defines the need to cut people costs by 10% and therefore the analysis will subsequently focus on headcount reduction or pay and benefits reduction. Finance will therefore work with HR and the business to start defining which headcounts to cut and any opportunities to reduce pay and benefits. A list is then gathered to report on potential cost savings in dollar terms.
What is wrong with this scenario?
On paper, everything looks fine, but without actually involving those managers in business and understanding the environment in which the costs will be saved it is hard to determine the actual benefits. How much influence do these roles have on the organization from lateral networking and influencing perspective? Can any of these roles be critical in implementing the change process? What are the potential impacts in service delivery resulting from these cuts? The learning here is that top-down analysis of benefits can often only be treated as high level and we need to work within the organization to find out the real benefits.
In a previous role, an IT department wanted to reduce the $25 per call for employees to change their passwords. When I started finding out more about the experience and the process for an employee to change passwords the discovery I made was quite shocking. The $25 was negligible compared to the real cost. For example, my colleague Barbra just returned from maternity leave and had forgotten her login password. She rang the Helpdesk 4 times to try and retrieve her password but was unsuccessful for some reason. Barbara became increasingly irate. We’ve heard her screaming at the phone, taking breaks to calm down, and talking to others to express her frustration. For days she was not able to log on. For Barbara’s case, the company has lost the equivalent of 3 days in productivity to the tune of $2500. We’ve also found other similar cases.
So how might we better analyse and assess the benefits of change initiatives?
We can do this by observing the environment for those impacted by the change initiative. Utilise human-centred approaches in observing the employee or the customer and how the initiatives may impact their lives. These include observation, seeing the whole picture by putting yourself into their shoes, identifying the impacts on various people and processes, and if needed interviewing them after observation to find out more. What else will be happening in their worlds other than the change initiative in concern? Will there be risks of overlaps or time conflicts for different initiatives?
Tally various sources of benefits observed. Who are the people potentially impacted by the change initiative? What processes and systems are impacted? Therefore, what are the sources of potential benefits in terms of time, cost, or revenue?
Test change initiative and benefits before large-scale rollout
Test at a smaller scale initial change implementation approaches on the selected target audience and observe the effects of change and resulting benefits. Experiment and tweak these approaches before larger-scale implementation.
In the new digital world, we are all about using technology and the web to make our lives easier, more productive, and efficient. However, in the change management world, there is not a lot of tools out there to help us become leaner and more effective in managing change. A lot of other functions and disciplines have a range of digital tools to help them become more effective, but the same range of change management software is not yet available for change practitioners.
Why do we need software to manage change impacts?
In large companies, most departments are siloed and therefore it is difficult to get one integrated view of all changes
As the pace of change increases many companies are finding it simply too complex to try and manage change using spreadsheets. Change initiative information, like any data, becomes redundant very quickly therefore we need technology tools to help keep the data current.
Change impact information is critical for operational resource planning and managing customer experience. Constant and relevant data is required. Without a view of all the change impacts, including those deemed projects, improvement initiatives, Six Sigma, cultural change, product launches it is hard for us to see what changes are going to happen.
Often we are making business change decisions based on opinions and with the right software we can ensure that we are using data to make decisions
What are some of the existing offerings?
A quick search through the posts and articles in this Linkedin group has surfaced mostly with technical change management tools. There are lots of tools that focus on digital engagement, social networks, and collaboration. These include Pinipa, Sharepoint, and Change Scout. And others focus on Training such as WalkMe.
What is the current gap?
Most companies have data on typical project information such as cost and timeline. However, what we need is information on the nature of the change impact on employees and customers, e.g. what type of change, the quantum of change, when, in what location, and who are impacted.
The Change Compass provides a solution for companies undergoing multiple changes to have an integrated view of change impacts and guides business leaders to make the right data-based decisions.
As change practitioners, we often hear that Change is intangible and hard to measure – A key concern with change management metrics. As a result, the discipline is often perceived as less value-adding and less critical to the business and program performance. We work with technical, finance, process, and operations specialists who often do not get what we are on about.
In Michael Tushman’s Harvard Business Review article about change management he asserted that change management must become more data-driven to keep up with business demands. Otherwise, change management will no longer contribute critical value to the organisation that it should, and instead, risk being overlooked.
A typical scenario that Change practitioners often complain about is that they are in a typical project meeting where everyone is consumed with technical defects, testing data, project cost, and delivery resource requirements. From an analytics and reporting perspective, I often hear how hard it is to highlight and position the importance of Change data. But, as a part of Change delivery, we do produce various data to track progress. Why are we still not able to be at the centre of the table?
The problem is that most of the data we produce is data that is not positioned to link strongly to ultimate business outcomes. For example:
Employee feedback
Employee opinions are useful and insightful, however, this often reflects what stakeholders already suspected.
Change readiness surveys
Again, potentially useful and insightful. But, is agreeing to the statements in the survey equivalent to actual behavior change? (i.e. knowing vs doing) Does positive survey results guarantee business impact and full benefits realized.
Training completion rates
Training completion rates may be a minimum requirement to ensure the knowledge transfer has happened. However, will the behavior change? What is the impact on the operations?
What else to focus on measuring?
What we need is to focus on the critical business outcomes and be able to demonstrate how change management data provides leading indicators to:
1) the likelihood of realizing initiative benefits, and
2) impact on the business.
For example, if an organization is focused on improving customer experience, then we need to demonstrate how initiatives could impact their experience. Firstly, we need to work out to what extent the customer cares about the effects of the initiative, the magnitude of the impacts on customers, and whether the impacts are positive or negative (from the perspective of the customer).
With our understanding of employee and stakeholder readiness and adoption levels, these can be turned into the extent to which benefits may be realised. Any potential blockers in terms of adoption progress and sentiments may be utilised as an indication for benefit realisation.
Example of setting up a Change dashboard from Change Automator
In these ways, we have demonstrated the importance of managing change impacts over the timeline since any increase or decrease in customer experience could equate to hundreds of millions of dollars (according to Forrester research). Suddenly, we are now talking about top-line revenue impacts that will put us in the centre of attention. What has been your experience in linking change data to business results?
Managing customer experience has been in vogue for a number of years. This is particularly the case for competitive industries where there is little differentiation in terms of price points and services offered such as banking, retail and utilities. Touting the company’s focus on ‘customer experience is the new mantra for a lot of companies.
Most financial services firms and telecom companies, amongst others, have been jumping on this bandwagon and have built various customer experience teams and centres of excellence. However, for large innovative US companies such Starbucks, Apple and Intel, Customer Experience has been at the heart of how products and services have been designed for over 20 years.
What are the key challenges in driving customer experience management? Research by Harvard Business Review Analytics Services in 2014 showed that 51% of companies surveyed indicated one of their top challenges to be achieving a single view of the customer. In addition, 51% of companies surveyed also indicated that building new customer experiences is another key challenge. These two are not mutually exclusive as you may point out.
This conundrum strikes at the heart of the reality for large organisations – the ability to integrate different sources of customer data across different departments, channels, and systems into a picture that can be easily understood and utilised. This is necessary to truly achieve a single view of the customer. It is then through a single view of the customer that companies may be able to change or build new customer experiences.
However, there is one very large gap in this equation. The key focus on driving customer experience improvements through data has been on CRM systems that capture various customer and marketing data. CRM systems have focused on providing effective marketing automation, salesforce automation, and contact centre automation. Other than data companies have also invested heavily in digital and other self-service channels.
What about the other side of the equation? I.e. an integrated single picture of the initiatives that the company is driving to define/change the customer experience (intentionally or unintentionally)?
These initiatives include not only marketing and promotional campaigns, but also product changes, legislative change communications, pricing changes, IT changes, and even other companies’ initiatives that can indirectly impact customer service or the media. Most large organisations either have no way of creating this integrated picture or have disconnected spreadsheets that track segments of the overall initiatives.
What risks does this create for companies? By not having an integrated picture of how a company is impacting and shaping its customer experience it cannot truly manage that experience holistically. Banks often experience this. One department called for a credit card to be end of life whilst another called for increased sales to meet the target. The bankers and customers became very confused as you can imagine. A 2013 Ernst & Young survey found that companies are losing $720 per negative customer experience. The same research also found that 40% of households have had a negative experience with a telecommunications company, whilst 25% have had a negative experience with a utilities company. There is a lot of money at stake here as you can see.
The solution is to piece together all company change initiatives that impact customers (directly, and indirectly through employees) with a specific focus on change impacts.
A single view of change impact data of what type of customer, when, to what level, with what change, etc. can be integrated with other sources of customer data (e.g. CRM system data and customer experience mapping info) to create a powerful picture of:
-What the company is planning to roll out to customers at a holistic and aggregate level, and how this is shaping the customer experience?
-How aligned or misaligned these customer change impacts are with the customer strategy?
-To what extent there are clashes amongst different change initiatives from different departments in conveying the targeted customer experience?
-To what extent there is too much or too little change in shaping the customer experience within the initiative pipeline, as aligned with the strategy?
-From these powerful integrated pictures of what is happening to the customer’s experience critical decisions may be made to best design the optimal experience?
Here is an example of a customer heatmap that outlines key initiative impacts on various customer segements.
Given the rapid pace of industry changes across numerous industries and sectors, it is not surprising that most companies are dealing with at least several significant change initiatives. For many companies, the approach is to hire a Change practitioner as a contractor to carry out various tasks so that change is managed.
Is this the right approach? Is hiring contractor Change practitioners considered outsourcing too much of a core management responsibility and capability? Smaller companies may not have the luxury of having full-time Change practitioners on staff, so wouldn’t this be the best approach? For larger companies with multiple change initiatives, wouldn’t this also be the best approach to cater to business needs and achieve resource efficiency? In many countries, this seems to be the standard approach. Is this wrong?
Firstly, is change management a core part of management and leadership? Most would agree that, given the rapidly changing industries we are facing, change management forms a key requirement for successful leadership, and that a leader simply will not be successful without good Change Management skills.
This is also widely supported by most authorities: There are numerous Harvard Business Review articles on this, with one calling out that “Change is one of the skills leaders need at every level” (Zenger & Folkman, 2014). Warren Bennis, whom I had the pleasure of meeting at conferences (and who sadly passed away a few years ago), continually acknowledged that “a leader has to be able to change an organization”. Jack Welch was renowned as a strong leader in driving total cultural change at GE, and Marissa Mayer is applauded for driving significant product changes at Yahoo within a short period of time.
So, if Change Management is a core part of management and leadership what are the risks of outsourcing this activity?
One company I consulted for was a large Australian company with several large-scale change initiatives being rolled out concurrently. What struck me about this company was that Change Management was treated more as a project activity that is outside of Operations and can therefore be managed through additional project staff such as contractors. Managers were more than happy to send communications to staff and to participate in various Change Management activities, but did not see this as their core accountability. The common perception by managers was that the external Change practitioner’s job was to help them execute the initiative, more as a pair of hands to do the work.
As a result, what typically happened with larger transformations was that it was hard to drive behavioral change that led to clear business results because Managers did not feel they owned this personally. By the time management had realized that targeted benefits were not achieved, the project had folded and contractors had moved on to the next project.
The typical scenario then was management blaming contractors and providers and other extraneous business factors. Even for those initiatives that had somehow landed well without significant management sponsorship, the result was that the company had not progressed in building change capability, year in year out. Luckily, this was a government-regulated industry with little industry competition. In other industries, this company would basically not be able to survive.
From this example, you can see that if the approach was to continually outsource Change Management, there is a risk that managers do not sufficiently own and drive the initiative, and results will therefore not be achieved. Moreover, the company not only incurs more cost to rely on external support, but it also risks not developing the ability to implement the changes outlined in its strategy and successfully drive initiatives to compete in a changing industry.
So, developing one’s Change Management capability is critical. However, lots of companies have spent significant investment in sending managers and staff to various training courses to learn how to better deal with or manage change. It is not always the case that change capability investment leads to improved organizational capability, or even people capability. Why? There could be myriad reasons for this. This is like asking why training investment doesn’t always lead to direct workplace application and therefore business benefits. We can probably all name training courses we’ve been on where we felt inspired; however, the enthusiasm started to wane as soon as we left the training session.
Recommended approaches to build change capability
How would one develop change capability in a way that will lead to sustained capability improvement and business results? There are several approaches that I recommend:
For companies lacking in fundamental change management capability, hire a change consultant who can work with you on leading change initiatives and embed business capability development as a part of the work. Key up-and-coming talents may be selected to participate in the project. However, the key is to look for consultants who have experience in developing broad organizational capabilities (vs. skills training) as well as project delivery. This may involve coaching managers, conducting brown-bag sessions, facilitating change agent sessions, facilitating planning sessions, aligning with the performance management system, etc.
For companies wishing to acquire a broader level of change capability, training may help to provide a clear understanding. However, without direct application of what was learned and receiving ongoing feedback to master the skill, the learning may simply remain on the shelf. Again, after training has been rolled out, work with Change practitioners who can design ongoing capability development as a part of initiative planning & execution to further embed the learning.
For larger companies with numerous concurrent change initiatives, work on developing change processes and systems to manage the overall portfolio of initiatives. This includes developing an integrated view and a central repository of change initiatives, details of initiative impact (including employee, business, and customer impacts), benefits targeted, and delivery risks.
A robust, integrated view of changes across the company should also be complemented by operating rhythms where regular dashboards and reports are fed into Operations and Leadership discussions. This ensures that managers regularly review the progress of changes, are aware of identified risks, and can make data-based decisions to maximize benefit realization. The onus is on managers to be accountable for the successful progress of initiatives.
At an enterprise level, an integrated operating rhythm for Change Management will also help break silos and highlight cross-divisional work required in successful change delivery. This essentially means that managers across divisions can regularly discuss change implementation issues and risks, and work together to overcome these.
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References
Reinventing Leadership: Strategies to Empower the Organization (2005), by Warren G. Bennis and Robert Townsend, p. 91
“The Skills Leaders Need at Every Level”, Jack Zenger and Joseph Folkman, July 20, 2014, Harvard Business Review
