(Editors Note: This is the third and last of three articles on change management and leadership in conducting effective Sales and Operations Planning [S&OP] as a dynamic business process in manufacturing.)
Executive Summary
Only when leaders have taken ownership and responsibility for the needed changes can the organization assure meeting its objectives. Ultimately, the goal of involving leaders early, and throughout the course of the strategic change, is to mitigate the risk of not achieving ROI and long-term sustainable improvement. It takes effort from both the project team and the leaders themselves. The good news is it does not take extraordinary efforts to achieve extraordinary results if you just know how.
Part Three: The Plan for Leaders—How to Effectively Lead Change
Many times, organizational change strategies outline the need to inform or communicate to leaders that they and their teams will be impacted. They are also told that they - Leadership - are accountable for making the change successful.
Where organizational change strategies fail over and over again is in addressing HOW a leader can successfully lead their team through the transition.
1. Understand How Change Works
Below is a brief explanation of key change management concepts and ultimately, how they link to ROI.
Organizational and Personal Transitions
There are two sides to change:
- Personal transitions
- Organizational transitions
One of the old paradigms in change management was that it was only the organizational that was going through the change, de-emphasizing the personal aspect. But an organization is made up of a triad of people, process and technology. We understand that the only part of that triad that might have resistance to change is the personal. As a result, an organizational change strategy must focus not only on organizational transitions; it must also focus on personal transitions. From a leadership perspective, this means proactively understanding the affect on various stakeholders and leaders, for example looking at:
- Who in the organization is going to gain and lose power
- Who in the organization might experience a positive or a negative careers move
- Who might be exposed when the changes show how poorly things were done in the past
- Who has the most to risk by making these changing and why
In order to understand, from each of their perspectives the perceived risk, time should be spent conducting interviews as well as a leader and stakeholder analysis. The reason this is critical to building sustainable change is that you will then know what the objections are and how best to be proactive in handling those.
From this process one can gain buy-in with the people who can give or decline support for the project. If the stakeholder or leader feels as though you have their best interest in mind, they are more likely to support suggested changes down the road. If they do not feel included, they can block the project altogether, even if the changes make good business sense. The leader interviews and analysis is a process that needs special attention, unique planning and tailored action to ensure that more resistance is not created.
Three Phases of Personal Transitions and Their Productivity Impact
“Lasting changes don’t happen by official pronouncements. Change takes place slowly inside each of us by the choices we contemplate in the quiet, wakeful moments in the early dawn.”
-- Peter Block,
The Empowered Manager
Next, leaders need to understand the three phases of personal transition, none of which can be skipped or discounted if they want a positive return on the investment. The three phases include:
- Endings
- The neutral Zone
- New Beginnings
Most leaders ignore the first two, expecting employees to be in the new beginnings stage right after a change is announced. However, this means ignoring how humans process change. Since all humans go through this process, it needs to be acknowledged as part of the leadership activities.
Figure 1 shows the financial impact (business performance/productivity and project time line) to the transition phases. The depth (loss of productivity) and width (increased time line) of the transition phases is directly proportional to how well the change is handled by leaders. If leaders do a poor job of leading change, the Valley of Despair will widen and deepen, meaning that the project will run over budget, over schedule and the scope will creep.
Figure 1. Phases of Personal Transition
vs. the Productivity Dip
However, if leaders have been trained in change management, research shows they can skillfully lead employees through the transition phases with the least amount of impact to the project. The stages of managing the personal transitions include employee:
- Awareness and Understanding
- Buy-in
- Ownership
Organizational Transitions and How They Impact Productivity
When leaders have mastered leading personal transitions, they can lead the overall organizational transition. When they have mastered organizational change leadership, they will be able to reduce the time and productivity dip as seen in Figure 2.
Figure 2. Phases of Organizational Transition
vs. the Productivity Dip
The goal with teaching leaders to lead change is to reduce the personal transition dip and thereby reduce the organizational transition dip.
The goal with teaching leaders to lead change is to reduce the personal transition dip and thereby reduce the organizational transition dip.
2. Pursue Transformational Leadership Skills
In order to be successful with transformational scale change, leaders must deploy different skills, some of which they may need to add to their current skill set. Some leaders may also need to evaluate their attitude and beliefs about how to handle change. Through an edification process, leaders can begin that shift.
We have found that the leadership skills required for leading large-scale change versus day-to-day management are in fact very different. One of the first aspects of leading change is to understand that 80 percent of any group will resist change. The other 20 percent are those that will get behind the change and pull the other 80 percent along. In order to motivate those 20 percent and eventually enroll the other 80 percent, a leader may need new leadership skills. What you don’t want is to create resistance in the 80 percent group, because no matter how excited the 20 percent group is, negative group-think is nearly impossible to over come.
Research also shows that one of the primary reasons that so few programs produce the expected results is that change leaders don’t understand the distinction between asking versus telling, when they lead. The traditional methodology used for leading change projects requires these steps:
1. Identify the problem
2. Tell people how to do their jobs differently
3. Spend tremendous amounts of time, energy and money trying to
overcome the resistance and recover the decreased morale caused by Step 3.
Many leaders tell people what they need to do differently, versus spending the time to enroll and engage the employees in an interactive dialogue where they are asked what they think. The telling is part of what puts people in a threatened mode. Being told traditionally does have a certain appeal. It seems easier when someone else, especially an expert, gives us the answer. The problems come later when resistance develops and someone else’s approach does not work for us. Asking versus telling is one of the keys to reducing the resistance to change.
An effective leader of change also understands that change naturally creates conflict. A leader’s ability to handle conflict will directly impact their effectiveness in leading change. As agents of change, a leader’s responsibility is to take the change, which is normally thought of as crisis, and communicate it as an opportunity. In order to do that, they need to have an understanding of what makes the conflict improve and what makes it worse.
3. Develop a Leadership Engagement Action Plan (LEAP)
With an understanding of how change works and the skills necessary for effective transformation, Project leaders and executives can asses their own change leadership skills and create an engagement action plan for the lifecycle of the initiative. This plan should deal with clearing organizational resistance, participating in early visioning sessions, supporting the project delivery team, communicating clearly and repeatedly on the reason for change, articulating and supporting the business case and truly being engaged in the transformation effort.
Experience has shown that leaders get actively involved when there is a crisis in a project or something goes awry. A reflective and pro-active leader in this situation should recognize that earlier involvement – real involvement and engagement many times can prevent serious issues. However, a formal LEAP properly initiated early is the best way to prevent such issues from occurring.
About the authors:
Beth Montag Schmaltz (bmontag@hitachiconsulting.com) is a Senior Manager and Organizational Change Competency Leader with Hitachi Consulting.
David Williams (dbwilliams@hitachiconsulting.com) is a Senior Manager and Supply Chain Planning Competency Leader with Hitachi Consulting.
As Hitachi, Ltd.'s (NYSE: HIT) global consulting company, Hitachi
Consulting is a recognized leader in delivering proven business and IT
solutions. From business strategy development through application
deployment, we leverage decades of business process, vertical industry,
and technology experience to understand each company's unique needs and to achieve sustainable ROI.
References
Sales and Operations Planning, A Cornerstone of DDSN Leadership, AMR Research, July 2005
The Heart of Change, John Kotter and Dan Cohen, Harvard Business School Publishing, 2002
Managing Transitions: Making the Most of Change, William Bridges, Perseus Books, 1991
Articles
“Software disasters are often people problems”, CNN
“Crisis Leadership: What Dr. Martin Luther King Can Teach Us About Business Change”, IBM Global Services
“Keith Yamashita Wants to Reinvent Your Company”, Fast Company
“Helping Employees Embrace Change”, The McKinsey Quarterly
Dr. Darrol Stanley, The Impact of Empowered Employees on Corporate Value
© 2005 Hitachi Consulting Corporation. All rights reserved. "Inspiring your next success", "Knowledge-Driven Consulting", "Information Velocity" and “Dove Consulting” are registered service marks of Hitachi Consulting Corporation.
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