Expert Opinion

Many existing organisations have been designed for stability and have operated in an environment in which gradual change was the norm. Christopher Worley, research scientist, and Edward Lawler, director of the Centre for Effective Organisations at the University of Southern California writes that [1] the pace of change, technology advances, and the general uncertainty associated with today's global market place are forcing organisations to consider new ways in which to remain competitive. New organisational models are now required in which "business as usual' is modelled on continuous change. Organisations, while needing to pursue short term competitive advantages, must also ask:

• "What do we now need to learn?"
• "How do our current capabilities need to evolve?", and
• "What new capabilities do we need to develop?"

Processes, reward systems, and structures need to be carefully managed to ensure that they support each other and the organisation's strategic intent. The concept of "implementation and re-implementation of strategy" needs to be embraced as a continuous process. New budgeting processes are also required to enable independent decision-making by profit centres having access to transparent/current financial information. Shared leadership is also a feature of these reshaped and flexible organisations; the CEO is no longer seen as a figure at the helm of an inertia-laden ship. Rather the organisation is visualised as a large community spread out over many hills, forests, and fields, with competent leaders spread across the countryside helping to move everyone in new directions, and providing connections, along with a shared sense of identity. These changes represent a significant cultural movement for the organisations involved. [1]

 Cultural Change

The belief that organisational culture is linked with successful performance has led organisations towards taking a keen interest in cultural intervention. Emmanuel Ogbonna and Lloyd C. Harris, Cardiff Business School  define [2] an organisation's culture  as " the collective sum of beliefs, values, meanings and assumptions that are shared by a social group and that help to shape the ways in which they respond to each other and to their external environment."  Managing an organisation's culture is one of the most popular forms of managerial intervention, and surveys indicate that some 90 percent of UK organisations have been engaged in bringing about planned cultural changes. [2]

Philip Atkinson, Director of UK Learning Strategies Ltd., writes [3] that cultural change is able to deliver bottom line results. Culture change is undertaken essentially to secure economic viability, and this can be achieved by adding value to existing customers, winning new ones, developing a strong competitive edge, developing core competencies, and attracting and retaining the best people. Atkinson suggests that four factors commonly hold back organisations from reaping the benefits of changed cultures i.e.:

1. Tactical versus strategic focus. Organisations tend to direct their efforts towards real time tactics. Planning seldom relates to  more that one year in advance, and little thought is given to establishing the longer term strategies required for future success.
2. Leadership's lack of confidence in decision making. As the pressure to change increases many organisations actually slow down their decision-making processes rather than responding quickly to new challenges. This equates to a lack of confidence in decision-making which leads to procrastination.
3. Silo Mentalities. Little or no commitment is made to shift people out from their familiar hierarchies and functional silos, and to direct them to work as cross-organisational members on critical customer facing business processes.
4. Fire-fighting. Most effort is spent on fire-fighting and fixing problems with little emphasis being given to planning and prevention.

These four factors in combination describe an organisation with a backward looking and reactive culture, rather than a forward looking and proactive one. By minimising rework, or the costs associated with multiple cycles of attempted service delivery, it is estimated that at least 20% of an organisation's cost of service delivery could be saved. Atkinson states that "the cost of service delivery associated with many organisations in the UK is in the region of 20-40% of labour or operating cost, depending on the nature of the organisation". Reducing these significant costs can have a powerful impact on the bottom line results of the organisation; and to achieve this it is necessary to create a culture where investment in prevention becomes the norm. [3]

 Through the process of diligently clarifying vision and values it is possible to create a tangible short and long term business plan. Atkinson [4] states that strong business arguments in favour of developing a powerful vision, mission and associated values include:

• Clarifying the central focus of the organisation.
• Evaluating the achievement of targets and their relationship to core strategies.
• Assessing various components of the organisation in regard to the support of the whole organisation.
• Assessing whether the culture of the business is delivering business results.
• Assessing whether the current vision, culture and values are appropriately focused towards the achievement of growth and success. 

Culture is often viewed as an intangible component of an organisation that contributes to its success in some uncertain manner. In fact culture needs to be shaped to enable the achievement of desired goals. Culture does in fact lead to results, and successful organisations carefully create a culture that enhances performance. Successful organisations have strong, positive, cultures which are the engine driving top performance. [4]

According to George Day [5], Professor of Marketing at the University of Pennsylvania, organisations are being (a) pulled by their strategies and (b) pushed by increasingly assertive customers to restructure their organisations based on customer groupings rather than the traditional product or functional lines. This, coupled with the need to improve profit margins, is leading increasing numbers of organisations to dismantle their existing structures and cultures in order to become more responsive to customer needs. [5]

Outsourcing and Transformational Change

Outsourcing can be more than just a tool for cutting costs and for improving an organisation's focus. Jane Linder, director of research at the Accenture Institute for High Performance Business in Cambridge, Massachusetts writes [6] that increasingly outsourcing is also being used as a means of acquiring new capabilities and bringing about fundamental organisational strategic and structural changes. Linder describes four categories of transformational outsourcing commonly found in practice:

1. Rapid Start-up; These organisations want to get innovative new products to market first, or to set an industry standard, or compete with entrenched industry leaders. If they move too slowly they fear that they will be overtaken by larger companies with greater market power. They need to launch new products and to scale up rapidly; and for this the help of an outsourcing partner is required.
2. Pathway to Growth; These organisations may be termed "Crouching Tigers" because they have large strategic aspirations, but are being held back by deficiencies in certain key capabilities. They might perhaps lack marketing or product development skills and need to fill this gap in order to grow. Or they may require the injection of new capital which can be made available via an outsourcing arrangement.
3. Catalyst for Change; This category of organisation can be classed as "Fallen Angels", having once been successful they have now settled into a poor performance trajectory and need strong action to get back on track. These organisations mainly employ outsourcing partnerships to catalyse broad organisational changes by which it is hoped to regain their past standing.
4. Total, or Radical, Renewal; This type of organisations is one in need of urgent attention to ensure survival through the radical renovation of critical processes and functions. An end-to-end transformation bringing new life is required. The following table adapted from [6] describes each of the four main categories along with their associated features: 

Five C's For Managing Change

Research by academics and major consulting firms has revealed that some 70% of business and technology change initiatives fail to deliver their intended results. To overcome this Jeff Freedman, president of ClearPath Alliance, describes [7] the following "5 C's" for managing change:

1.       Clarity:  Clarity commits the organisation's leaders to action. Clarify the need for change by asking questions that clearly focus on the issues e.g.

• What specific issues/opportunities are prompting changes?
• How are changes linked to the strategy/objectives of the organisation?
• How will the changes add value or improve the organisation?
• Who are the champions of the proposed changes?

2.       Capability: Determine the organization's capability. The successful implementation of change is founded upon capabilities of people, processes, and technology, and these in turn are linked with the organisation's culture, resources, and systems. To probe for the appropriate organisational fit the following questions may be posed:

• Do we possess the necessary values and culture to facilitate the change?
• Do we have dedicated assets to support the change?
• Do we have the required technology and processes to facilitate the change?
• Do we have the required leadership and associates to support the change?

3.       Choices: Make choices and manage risk, Business imperatives which impact upon an organisation's performance, require leaders and their associates to interpret data, make informed decisions, and to take action. The following questions can assist in this process:

• What are the expectations of key stakeholders?
• What alternatives should be evaluated for the changes?
• What might go wrong and what are the probabilities and impact?

4.       Create an action plan: This is the ultimate factor which will lead to successful implementation. The following questions can assist with the execution of the right priorities:

• What is the ultimate desired future state and transition pathway?
• What needs to get done to implement the change?
• What progress is being made toward achieving the change?
• Who will hold authority and accountability for the change?

5.        Continuity: Ensure continuity of the change through understanding the dynamics involved via the people who drive, design, and execute organisational change. The following questions can help in managing behaviours, goals, and communication:

• How can we engage the head, heart, and hands of our leaders and associates?
• What are the critical roles associated with sustaining the change?
• How will we align behaviour and goals?
• How will we ensure positive momentum?

[7]

Communicating Change

Authors Robert Kaplan and David Norton [8] state that research indicates that less than 5 per cent of a typical workforce understand their organisation's strategy. Most organisations make extensive promotional efforts when introducing new products; however they put far less effort into communicating with their staff when introducing new strategic initiatives. In reality the introduction of new organisational strategies can be significantly more complex than the introduction of a new product. For this reason organisations should use similar communication processes to those employed for new product introductions when they launch new strategies. The communication processes recommended is:

1. Start with education (creating strategy awareness);
2. Then test if employees understand the message (strategy mind share),
3. Then check if employees believe that the strategy is being followed (strategy loyalty), and
4. Finally determine how many are passing on to others what they have learned about the strategy (becoming a strategy missionary).

Financial budgets should be allocated for communicating with and educating, employees. George Bernard Shaw said: "The greatest problem with communication is the illusion that it has been accomplished. Just because a message has been sent, it doesn't mean that it has been received. The output measure for the communications process should be shared understanding among employees." Without a good understanding of an organisation's vision and strategy, employees cannot improvise and find innovative ways to help the organisation achieve its objectives. 

Underscoring the importance of communications a study [8] of high and low performing organisations yielded the following information: 

Most organisations tend to utilise a mixture of communications channels when rolling out their strategies. Some channels can be classed as being "rich" e.g. face to face meetings, while others are "lean" e.g. newsletters. Rich channels are highly effective, but more expensive and limited in their reach; lean channels on the other hand, although less personal, are more economical and touch more people. The Diagram below adapted from [8] depicts the continuum of rich to lean communication channels:

Roger D'Aprix and Chris Cay of ROI Communications provide [9] the following key principles of leadership communication strategy:

1. Change communication strategies hinge on the commitment of people to change their behaviour in alignment with the changing needs and goals of the organisation. Without this communication has failed.
2. Change communication must be proactive, not reactive. Similar to all organisational systems change communication needs to be ordered, disciplined, and frequent. An effective communications strategy requires a clear explanation of the critical issues, appropriate tactics, defined roles and responsibilities, and training, all of which are aligned with the overall organisational strategy.
3. Communication should relate more to the organisation's external market and provide an explanation to employees why changes are proposed. Specific details of what is planned are then more likely to be intelligently embraced.
4. Communicating change is a leadership responsibility and cannot be delegated.
5. Change strategy requires good governance i.e. agreement on roles and responsibilities, consistent messages, and measures of progress and success. Engaging leaders in the critical task of change communication is a deliberate and never-ending process. The following diagram adapted from [9] depicts the ongoing need for change communications in response to employee reactions to change:
   

Employee involvement

Organisations tend to only involve employees in planning change management initiatives well after the big decisions have been made. This ignores the fact that people who have a hand in creating change are more likely to support it, and conversely the uninvolved tend to resist changes. Quoting Richard Axelrod et al [10] "any change initiative necessarily begins with a group of people who grasp the need for change. Typically, such a group will form a preliminary consensus around the problems that need to be addressed and then select a vehicle for change, including a basic approach or methodology, a change consultant (or consulting group), a set of goals and objectives, and an implementation plan. At this point, a gap exists between the initiated (those who are part of the instigating group) and the uninitiated (everyone else). This is the engagement gap ....and is an inescapable part of organizational change." Seventy percent of organisational change efforts fail, or fall short, of achieving their intended objectives. This figure is even more astounding when one takes account of a recent Oxford University study on change which found that over 68% of employees welcomed meaningful involvement in change. There is undoubtedly a relationship between the failure rate of organisational change efforts and people's desire for meaningful involvement. Success depends on closing the engagement gap. Three core principles i.e., voice, cohesion, and action underlie effective change processes which involve people:

1. Voice: or the power to influence. This enables individuals to influence larger outcomes and answers the questions, "who is involved, and how do they meaningfully participate?" This contrasts with traditional change initiatives which are usually developed by small groups and then "sold" to the organisation at large
2. Cohesion: the power to make a difference; by enabling individuals to come together in self organising groups or communities which have the power to make a difference.
3. Action: the power to execute; for total effectiveness discussions and group wisdom need to be translated into meaningful action by answering the question, "How do we effectively implement any agreed set of changes?"

By maximising "Voice" a critical mass of champions can emerge who will support change processes from the outset. This enables higher levels of ownership and feeds back into the process producing cohesive groups that are united by a compelling purpose. In addition an environment is created whereby ongoing learning, adaptation, and innovation may occur. [10]

Many people automatically resist organisational change, and this in turn leads to stress. Carole Spiers, of UK based International Stress Management and Employee Wellbeing Consultancy, [11] suggests that major changes within organisations can be managed by:

1. Thinking through the changes and providing a clear implementation plan for the personnel affected. Employees tend to respond more positively when they feel involved in decision making processes, and they cope better with change when they feel at least in partial control of it.
2. Keeping all parties informed as much as possible concerning timetables and important details. Regular meetings are essential; it is unwise to impose changes without consultation. People cooperate more effectively when they can see a benefit for themselves in proposed changes.
3. Attempting to break down changes into manageable steps so that the overall plans are not too overwhelming. People's capacity for change is different and some will respond quicker or more easily than others. Consider running a pilot operation to identify problems and to gain input from users. Once changes have been implemented don't allow the option of returning to previous ways of operation.

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