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The Hard Side of Change Management

• Managing change is tough, but part of the problem is that there is little agreement on what factors most influence transformation initiatives.

• In recent years, many change management gurus have focused on soft issues, such as culture, leadership, and motivation.

  • Such elements are important for success, but managing these aspects alone isnt sufficient to implement transformation projects.

• Whats missing, we believe, is a focus on the not-so-fashionable aspects of change management: the hard factors.

  • These factors bear three distinct characteristics.

    • First, companies are able to measure them in direct or indirect ways.

    • Second, companies can easily communicate their importance, both within and outside organizations.

    • Third, and perhaps most important, businesses are capable of influencing those elements quickly.

  • Some of the hard factors that affect a transformation initiative are the time necessary to complete it, the number of people required to execute it, and the financial results that intended actions are expected to achieve.

  • Our research shows that change projects fail to get off the ground when companies neglect the hard factors.

    • That doesnt mean that executives can ignore the soft elements; that would be a grave mistake.

    • However, if companies dont pay attention to the hard issues first, transformation programs will break down before the soft elements come into play.

• In 1992, we started with the contrarian hypothesis that organizations handle transformations in remarkably similar ways.

  • Our initial 225-company study revealed a consistent correlation between the outcomes of change programs and four hard factors:

    • Project duration

    • Performance integrity

    • Commitment of both senior executives and the staff whom the change will affect the most

    • The additional effort that employees must make to cope with the change.

      • We call these variables the DICE factors

• We competed our study in 1994, and in the 11 years since then, the Boston Consulting Group has used those four factors to predict the outcomes, and guide the execution, of more than 1,000 change management initiatives worldwide.

The Four Key Factors

• Businesses can easily identify change programs at either end of the spectrum, but most initiatives occupy the middle ground where the likelihood of success of failure is difficult to assess.

  • Executives must study the four DICE factors carefully to figure out if their change programs will fly or die.

• Duration:

  • Companies make the mistake of worrying mostly about the time it will take to implement change programs.

    • They assume that the longer an initiative carries on, the more likely it is to fail.

    • However, contrary to popular perception, our studies show that a long project that is reviewed frequently is more likely to succeed than a short project that isnt reviewed frequently.

    • Thus, the time between reviews is more critical for success than a projects life span.

  • Companies should formally review transformation projects at least bimonthly.

    • Complex projects should be reviewed fortnightly; more familiar or straightforward initiatives can be assessed every six to eight weeks.

  • Scheduling milestones and assessing their impact are the best way by which executives can review the execution of projects, identify gaps, and spot new risks.

  • When a milestone looks as though it wont be reached on time, the project team must try to understand why take corrective action, and learn from the experience to prevent problems from recurring.

• Integrity:

  • By performance integrity, we mean the extent to which companies can rely on teams of managers, supervisors, and staff to execute change projects successfully.

  • Executives often make the mistake of assuming that because someone is a good, well-liked manager, he or she will also make a decent team leader.

    • That sounds reasonable, but effective managers of the status quo arent necessarily good at changing organizations.

    • Usually, good team leaders have problem-solving skills, are results driven, are methodical in their approach but tolerate ambiguity, are organizationally savvy, are willing to accept responsibility for decisions, and while being highly motivated, dont crave the limelight.

• Commitment:

  • Companies must boost the commitment of two different groups of people if they want change projects to take root:

    • They must get visible backing from the most influential executives (who we call C1), who are not necessarily those with the top titles.

    • And they must take into account the enthusiasm or often, lack thereof of the people who must deal with the new systems, processes, or ways of working (C2).

  • Top-level commitment is vital to engendering commitment from those at the coal face.

    • If employees dont see that the companys leadership is backing a project, theyre unlikely to change.

  • A rule of thumb: When you feel that you are talking up a change initiative at least three times more than you need to, your managers will feel that you are backing the transformation.

  • If senior executives do not communicate the need for change, and what it means for employees, they endanger the projects success.

• Effort:

  • When companies launch transformation efforts, they frequently dont realize, or know how to deal with the fact, that employees are already busy with their day-to-day responsibilities.

    • If, on top of existing responsibilities, line managers and staff have to deal with changes to their work or to the systems they use, they will resist.

  • Project teams must calculate how must work employees will have to do beyond their existing responsibilities to change over to new process.

    • Ideally, no ones workload should increase more than 10%.

  • Companies must decide whether to take away some of the regular work of employees who will play key roles in the transformation project.

Creating the Framework

• As we came to understand the four factors better, we created a framework that would help executives evaluate their transformation initiatives.

  • We developed a scoring system based on the variables that affect each factor.

  • Executives can assign scores to the DICE factors and combine them to arrive at a project score.

• Although the assessments are subjective, the system gives companies an objective framework for making decisions.

• Projects clearly fell into three categories or zones:

  • Win, which means that any project with a score in that range is statistically likely to succeed

  • Worry, which suggests that the projects outcome is hard to predict

  • Woe, which implies that the project is totally unpredictable or fated for mediocrity or failure.

Applying the DICE framework

• Smart companies ensure that they dont fall into a trap by using DICE framework in one of three ways:

  • Track Projects:

    • Some companies train managers in how to use the DICE framework before they start transformation programs.

    • Senior executives often use DICE assessments as early warning indicators that the transformation initiatives are in trouble.

  • Manage portfolios of projects:

    • When companies launch large transformation programs, they kick off many projects to attain their objectives.

    • But if executives dont manage the portfolio properly, those tasks end up competing for attention and resources.

    • By deploying our framework before they start transformation initiatives, companies can identify problem projects in portfolios, focus execution expertise and senior management attention where it is most needed and defuse political issues.

  • Force conversation:

    • When different executives calculate DICE scores for the same project, the results vary widely.

    • The difference in scores is particularly important in terms of the dialogue it triggers.

    • It provokes participants and engages them in debate over questions like Why do we see the project in different ways? and What can we agree to do to ensure that the project will succeed?

    • By using DICE framework, companies can create a common language and force the right discussions.

    • Conversations about DICE scores are particularly useful for large-scale transformations that cut across business units, functions, and locations.