Leading Change: Effective Change Management Practices

Change Management is a well-known term for managers in the business world. And every manager has to practice it in a world characterized by volatility, uncertainty, complexity, and ambiguity.  The initial letters form the acronym VUCA introduced by the U.S. Army War College in the 1990s. VUCA impacts companies and necessitates change management to keep the company on the market and not-for-profit organizations purposeful.

But do we have an agreement on what the best practice is in change management? Clearly not! Here is an attempt to lift the fog and chisel out a contour of its key elements.

Here is my definition to start with:

“Change Management is a comprehensive and structured approach for transitioning individuals, groups, and organizations from a current state to a future state with intended business benefits.”

It starts with goal setting at the top of the organizational unit. This can be in the directors’ meeting of a multinational company involving thousands of legal entities or, more commonly, with the manager of a group of teams in a business unit. Either way, it involves individuals, groups, and some organizational context. The time frame is typically 1-3 years. Interventions under one year typically lack comprehensiveness and sustainability.

Foundation and Roots

The roots of modern change management theory go back to the 1930s in the United States. Kurt Lewin, a German American psychologist, pioneered the field with action research and group communication.  His field theory and T-Group experiments are still valuable to the practitioner today. Lewin’s three stages of unfreezing, changing, and re-freezing model is well known. It is one of the essential tools in the change manager’s toolbox for comprehensive and structured transitions.

Change Management Models

Change management models build on qualified assumptions about how organizations, teams, and individual people function. Let’s visit some established models.

Friedrich Glasl, an Austrian consultant and business professor rooted in the NPI (Netherlands Pedagogical Institute) approach, developed a four-stage model (Glasl, 1997).

Glasl’s Four-Stage Model

  • Pioneer Phase – The enterprise as a large family or tribe
  • Differentiated Phase – The enterprise as a mechanism
  • Integrated Phase – The enterprise as a living organism
  • Associative Phase – The enterprise as a distinctive part of the biotope or network

The practicing manager is well advised to analyze the organization he/she wants to change. Different rules apply for change based on the phase the company is in.

John Kotter, a Harvard Business School Professor, developed an eight-step change model (Kotter, 2012).

He clearly builds the model on the shoulders of Kurt Lewin.

There are more models or frameworks for change available. These include the 7-S Framework from MC-Kinsey, The Burke-Litwin Change model, and my Integrated System Model of the Organization (ISMO). Each has their strength and contributes to a successful change management project.

Change Management – Project Management

The link between change management and project management is evident. Change management is a project. But it is a project with very specific characteristics.

Firstly, and surprisingly little understood, the system (company, business unit) attempts to change itself. All the actors are involved and have their own personal stakes. There is no objectivity. The blind spot hampers rationality. The Johari Window, a tool created by Joseph Luft and Harrington Ingham in 1955, is handy to better understanding this phenomenon. For a deeper understanding, check out the concept of autopoiesis developed by Humberto Maturana and Francisco Varela, which can be seen as part of the second-order cybernetics group of theoreticians.

Secondly, we are dealing with the complexity of multi-project management. Not just one ball in the air to juggle but many balls. So, a corporate change management project will profit from a Project Management Office (PMO) to fulfill its targets.

Why Do Change Management Projects Fail?

Let’s start with the obvious. Project management is very often underestimated. Make use of a professional Project Management Office (PMO), and you have covered this.

Corporate political motives very often drive change management projects. Not all of the motives are rational. And top management or the supervisory board might not be well aligned, sending mixed messages.

In a VUCA world, many change management projects are driven by external necessities rather than internal design and managerial intent. Current examples include extremely short timelines due to, e.g., rebuilding the supply chain due to a pandemic or a weather catastrophe. Even worse, if you are in the middle of a war or a coup d’état in a country where you are headquartered or have significant operations. This form of change management is rather crisis management and typically very expensive in coin, and the emotional damage done might be critical for the organization’s sustainability.

But let’s stay with non-crisis management projects. Many change management projects have simply unrealistic goals. Too much in too little time. The lack of resources can be financial due to insufficient funds allocated. And do not forget, your employees still have a day job. The change management project comes for most on top of their regular jobs—additional hours during evenings and weekends.

The most critical issue is the lack of experience and skills with respect to change management which is not daily management to them. They never learned to analyze, conceptualize, design, and implement change. I just touched upon the matter when listing the models above. In addition, most managers do a good job running operations at a wind strength of up to 6 on the Beaufort scale. This is a strong breeze with large waves, and an umbrella is already a nuisance. At level 7, it becomes quite inconvenient to walk against the wind. At level 8, twigs break off trees. At level 10, you have a full-blown storm with trees uprooted. Many substantial change management projects are between 7 and 10. It takes an excellent captain and an experienced crew in a fully operational ship to get through that well. And do not forget, you are changing and repairing the ship in the storm on the high sea and not in the dock in the harbor. You must prepare and learn before the storm. In the storm, you cannot do it. There is no time, and the sea has no mercy.

Resistance to Change

I have much good to say about the resistance to change. Without it, organizations would lose their grip on business in no time. There are just too many ideas and conflicting agendas around. Here is where top management comes into play. It has to listen to customers, employees, and other stakeholders and explore the opportunities (and risks) ahead. Based on that, a change agenda will be developed with a mid to long-term range into the future as long as VUCA does not strike too heavily. By the way, VUCA can bring a windfall of opportunities too.

Employees and other change stakeholder groups typically resist for two reasons. Convenience is king. Do not rock the boat. By the way, this includes management too. The other reason is fear. Lack of required soft- and hard skills does not make you willing to sail unchartered water. So having a crew with the right skill set is imperative. And this is not for free. Training and an attractive corporate culture are a necessity.  This brings us right to the next topic, digitization.

Digitization Challenges

Digitization is not new but speeds up. Many new technologies developed over decades reach the level of maturity where they leave the “laboratory” and enter the market. One example is Artificial Intelligence (AI). The topic is decades old and matured, for example, IBM’s Watson, but when ChatGPT gained the attention of the public at the beginning of 2023, the genie was out of the box. New AI applications are appearing every day on a major scale now.

A little warning here. Integrating Artificial Intelligence (AI) tools without a clear cost-benefit and risk analysis will cause much damage. The opportunities of digitization are realized when they are an integral part of the business model otherwise. So, you have to reinvent your organization and implement a fitting change management strategy. The most dangerous competitor is not the one with the same business model as you but the one that uses new technologies and disrupts the industry. Check out the successful unicorns that emerged over the last twenty-plus years. So, prepare for storms around level 10 at the Beaufort scale.

Rapping it up, we have major challenges due to VUCA and new technologies. Revisit your midterm business strategy and derive key change management projects supported by a state-of-the-art Project Management Office (PMO). Do not forget to offer your employees development opportunities and build an attractive, sustainable culture.

References

  • Burke W.W & Litwin G.H. (1992).  A causal model of organisational performance and change. Journal of Management.
  • Glasl, F. (1997). The Enterprise of the Future. Hawthorn Press.
  • Kotter, J. P. (2012). Leading Change. Harvard Business Review Press.
  • Lewin, Kurt Retrieved from https://en.wikipedia.org/wiki/Kurt_Lewin on May 2, 2023.
  • Luft, J.; Ingham, H. (1955). The Johari window, a graphic model of interpersonal awareness”. Proceedings of the Western Training Laboratory in Group Development. Los Angeles: University of California, Los Angeles.
  • Maturana, H. R.; Varela, F. J. (1972). Autopoiesis and cognition: the realization of the living. Boston studies in the philosophy and history of science (1 ed.). Dordrecht: Reidel.
  • McKinsey&Company  Retrieved from https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/enduring-ideas-the-7-s-framework# on May 2, 2023.
  • Singer, G. (2011). Integrated System Model of the Organization – ISMO. Zurich.

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