Many senior managers find the prospect of large-scale change daunting to the point of complete paralysis. To avoid contemplating such an unattractive proposition, they will simply ignore the warning signs and hope to escape to another, more successful company or into retirement before judgement day dawns. Unfortunately, this course of action often results in the problems getting worse rather than better. Eventually, the company will slide into oblivion or will be forced into drastic action under what may be the most unfavourable conditions. Apart from the generally recognised difficulty of carrying out major change, the reluctance to act stems from a lack of confidence in handling the process, or a recognition that it is a very long haul – longer often than the likely tenure of many senior executives.
Fortunately, several companies have been brave, or foolish, enough to undertake major change programmes and have blazed a trail others can now follow. Although the approaches described here can be used to prevent extinction, they can also help any company improve performance significantly and gain considerable advantage over their competitors.
Essentially, the approach described in this paper adopts best practice ideas from companies and academics around the world, notably in the USA, the UK and Japan, and from initiatives in the UK such as the Royal Society of Arts ‘Tomorrow’s Company’ enquiry. By looking around to see what works, we can benefit from the experience of pioneering companies such as Xerox and Hewlett-Packard in the USA and Unipart, British Airways and BAA in the UK. What the experience of these companies shows is that there are four common themes which run through successful change programmes.
- By the CEO and senior team on the key issue
- On the change process and programme itself
- Constantly expounding and explaining the vision and strategy
- Making the whole programme very open and all elements public within the company
- The change team and CEO being seen to lead the programme
- Ensuring ownership at every level by allowing people to define their own contributions
- By recognising success publicly
- By ensuring that all actions support the realisation of the vision
- Ensuring horizontal and vertical links
Most of the elements of the approach proposed here can be found in books and articles on topics such as strategy, change management, TQM, BPR, culture change and policy deployment. This deliberate attempt to take the best from previous approaches and learn from the mistakes and successes of experience means that we have a much better understanding of the consequences of our actions. It also means that we are not attempting to reinvent wheels when perfectly good ones already exist. We are working with clients to exploit what is known rather than explore the unknown. The evidence from successful, rapid change programmes such as Southern Pacific Railway is that it is not so much a question of trying to discover wonderful new techniques to revolutionise management practice, but of using existing, proven management tools imaginatively in combination with one another.
These cases also highlight the critical importance of six factors:
- A clear, simple and explicit vision which can be linked to specific actions throughout the company: a vision which is based upon a sound understanding of the business environment and of competitive threats
- From the vision, the identification of a key goal which become the sole focus of the business
- At the outset of the project, the establishment by the managers concerned of agreed plans to reach their targets
- A concentration on managing the process rather than the outputs
- A highly visible, rigorous and disciplined approach to managing the project
- The absolute and explicit determination of the chief executive to prevent anyone from impeding progress
This approach can be considered as having two parallel streams of activity. The first concentrates on the hard elements of strategy and turning a well thought out and articulated vision into specific actions right through the organisation. The second stream concerns the softer elements to ensure commitment and includes the provision of training necessary to support the change process when it is needed, the development of appropriate reward and recognition systems and the implementation of recruitment policies which support the future needs of the business. The implementation of the specific actions required is not left to chance. In both streams, the programme is very actively managed by a process of regular reviews led by the chief executive. Also, there is a continuing process of negotiated dialogue between senior management, middle management and the implementation teams to establish and agree specific targets and appropriate measures. Individuals and teams must be regularly monitored and held accountable for the achievement of their programmes.
i Defining the vision and setting goals
- Establish an inspiring and stretching, but achievable vision of the future
- Develop a coherent and robust strategy capable of delivering the vision
- Set strategic goals that will contribute to the realisation of the vision. Establish these on the basis of a competitive audit and good information. You have to be at least as good as the average in all areas
- Create a ‘change team’ staffed by the most able people to manage the programme
- Change is a hearts and minds process – facts and emotions are both important – use hard data and war stories
- Translate the long-term strategy into medium-term and short-term targets
- Develop financial plans to support the strategy and to illustrate the benefits
- Let each department or division develop its own local vision and strategy to contribute to the overall vision and strategy. Ensure that these are consistent.
ii Developing Commitment
- Run a ‘headline’ event, facilitated by professionals, to disseminate and discuss the vision, long and short-term strategy and financial plans: you need to involve people
- Run workshops in each department or division to debate and agree their local contribution
- Managers of each operating unit need to identify their own performance criteria and indicators
- Review horizontal as well as vertical linkages to ensure consistency of purpose
- Publish each manager’s list of criteria and key performance indicators
- Recognise the power structure which exists. If you have unions, involve them from the start and continue to communicate
- Ensure that the whole process is open and honest – don’t try and hide mistakes.
iii Managing the Process
- Each manager needs to agree, with the change team, benchmarks and measure for local criteria
- Establish milestones on the way to achieving the target performance
- Let managers form improvement teams to work out how to achieve targets. Links between improvement teams – KPIs – strategic plan – vision, lock everyone into common overall purpose
- Start teams on their own: simple improvements before moving to complex process improvements
- Publish an ‘accountability matrix’ which includes:
- the corporate objective
- the department objective
- measures to be taken
- who is responsible
- the KPI impacted
- the benchmark
- date for review
- Establish regular reviews to create and maintain urgency – top management involvement via change team. Focus reviews on process and learning
- Share best practice: encourage peer group learning
- Change team must review KPIs and financials monthly
- Progress towards targets is reflected in managers’ pay
- Aim at improving KPIs at 25% a year, year-on-year
- Be prepared to modify or add performance indicators and targets – some will have been based upon guesswork
- Well into the project try and convert improvements into monetary values
- Process problems will impede some performance improvements. Prioritise and allocate to manager responsible. Aim at over 50% improvement a year.
iv Involvement of Senior Managers
- The CEO must be seen to lead the programme by:
- introducing it
- appearing at all training courses
- chairing the change action group
- having the manager leading the change team reporting to him
- allowing change team hiring, including external specialists
- firing those who obstruct progress
- conducting the review process, getting involved and asking questions
- The change team must comprise senior, experienced people. Recruit the best into the team, including external resources.
v Training and Stealing
- Use the change team to train others – you will need well-trained, internal facilitators
- Resist the temptation to invent everything for yourselves: steal good ideas from wherever you can.
- ‘Borrow’ tools and techniques and training programmes
- Actively seek new approaches, but evaluate them before using
- Use the ‘action learning’ approach to training and make it ‘just-in-time’
- Invest in training for key project staff to help manage the process.
vi Telling the World
- Maintain a constant flow of information on progress internally
- Tell suppliers early on. It’s very hard to improve if they don’t. Work with them to improve their performance
- Make sure you can deliver before you tell customers. Don’t raise expectations before you can satisfy them.
vii Making it Stick
- Maintain an active role by the CEO – leadership of the process cannot be delegated
- Recognise the enthusiasm will wax and wane. Be prepared to re-invigorate.
Most managers will recognise much of what has been outlined here and either be doing it or have already tried it. But this is not from the ‘been there, done that, got the t-shirt’ school of management. Of course, the various elements of the process should be familiar, that is the point. It is like using a recipe where many of the ingredients are familiar, but their use in that particular way and in that combination, is not.
An important difference between the approach outlined and conventional approaches is that the whole programme is planned end-to-end at the outset. It is not designed as a series of stop-start stages which are reviewed and decisions made regarding what to do next. The essence of this approach is that it is planned as a smooth curve, necessarily slower at the start while the whole programme is planned, but accelerating as it progresses. Reviews take place regularly, but without slowing progress. The pattern is illustrated in Figure 1 below. Curve ABC shows what is often assumed – constant change. ABDE is closer to what normally happens with progress being halted while reviews are held and decisions on what to do next are made. Time is wasted and momentum lost. Curve AF, of course, represents an ideal picture, but is close to what can be achieved if the whole programme is planned in advance. Progress is never exactly as planned, but small adjustments can be made without slowing the programme.
The proof of any pudding is, of course, in the eating. This one is no different. I know from a great deal of evidence and my own previous experience that major, transitional change is difficult, dangerous and takes a long time. Where this approach has been used, change which might have been expected to take five to ten years has been completed in two or three: that’s something worth making an effort for.