Organizational agility — the ability to continuously improve, iterate, and adapt to fast-changing technology developments and customer expectations — has long set apart corporate leaders from laggards. The pace of change and innovation has never been faster and technology developments and digitalization set the pace as much as they demonstrate the impact of change for businesses and individuals alike.
If the pace of change, (and need to keep up to remain competitive) wasn’t already fast enough, the current environment, shaped by a global health crisis and the related economic uncertainty, is recognized as a (digital) change accelerator extraordinaire. A number of data points emerge that confirm the extraordinary pace and magnitude of change that is occurring. In a survey by Fortune, for example, 77% of CEOs say that their company’s “digital transformation was accelerated during the crisis.” And of the 100 CIOs, CTOs, and CDOs who attended the Metis Strategy Digital Symposium this summer, 72% said that the pace of their organization’s digital transformation accelerated since the pandemic started.
The crisis is expected to further shape the competitive landscape and likely widen the gap between organizations on the path to a successful future and those fighting for survival in a post-Covid “new normal” world.
Of the factors that will determine success or failure, two feature prominently on essentially all executives’ agendas: digital readiness and organizational agility. Both of these are tied to an organization’s organizational change management capabilities.
It may appear logical that organizations and their business and technology leaders would focus relentlessly on making sure that organizational change management (OCM) capabilities are mature and ready to be deployed at a moment’s notice, especially since change initiatives will remain an integral part of business operations and are widely expected to increase. However, despite the widely recognized need for more organizational agility, OCM is still an underdeveloped, underutilized, and underappreciated competence, even in organizations that are otherwise recognized as being high-performing and successful in their core competencies.
Most companies have some change management capabilities within their organizations, but often these efforts start too late or are haphazard in their implementation. This can lead to frustration among employees and customers and may ultimately lead to higher cost and/or risk. Digital transformation, for example, requires a great deal of change, and 70 percent of digital transformation efforts do not fulfill the promises made. Sometimes, change management may be viewed as a “soft” topic that is difficult to explore and even harder to influence in the pursuit of “hard” business results.
This presents a significant opportunity to improve operational performance and shape more favorable business outcomes by applying well-established change management approaches differently and adopting a more strategic and data-driven approach to change leadership.
Bestselling author, thought leader, and Harvard Business School professor John Kotter and his 8-Step Process for Leading Change are widely regarded as the authority on change management and leadership. The 8-Step Process, which ranges from “Create a Sense of Urgency” to “Institute Change,” provides a useful framework for a number of change initiatives. Metis Strategy has used it as a starting point for the change efforts we are involved in and built upon it to address individual situations.
As robust and proven as Kotter’s 8-Step process is, it doesn’t guarantee success; it’s thoughtful execution and careful tailoring to the unique organizational context will make the difference.
In order to build upon the power of Kotter’s framework and to address the issues we have encountered in our OCM and organizational agility work with technology and business leaders across industries, we have identified five “Moments of Truth” in change management. These work in concert with Kotter’s eight steps and make the approach more powerful and more likely to produce the desired business outcomes. We will explore each Moment of Truth below:
The delineation between continuous evolution, which ideally is part of business-as-usual, and a significant change event is gray. Where the line is crossed will depend on how much change is “normal” within an organizational context. As soon as an action or development falls out of the norm, leaders should communicate that change is taking place even if the extent and impact of any such change is still not entirely known. Doing so will allow organizations to begin managing that change and reduce the potential costs and risks associated with not addressing it early enough.
After significant change is identified but before Kotter’s “burning platform” has been identified or the sense of urgency created, firms should determine the outcomes that the change process is expected to deliver. Companies should list desired outcomes of the change initiative, as well as consequences that may occur if the change is left to occur without significant oversight. Think of this as the risk/return calculus or scenarios analysis of change. If the outcomes of freely occurring change pose a risk of being costly or distracting to the organization, active management may be necessary.
If active management is necessary, firms should assess their change readiness and put an explicit plan in place. These plans can be brief, corresponding to the magnitude and implications of the change and the desired business outcomes. At this point, the needs for change management (such as risk avoidance or mitigation), as well as related opportunities (such as faster realization of benefits) will begin to emerge. These will help make the case for – as well as increase the likelihood of – successful change management. At this stage, leaders should also gather and gain alignment among relevant stakeholders, as well as have initial conversations about change management activities and success metrics.
A high-level change readiness assessment will help firms understand the costs and benefits of OCM efforts in its fundamental terms. It will also provide an opportunity for companies to solicit perspectives and perceptions from teams or employees affected by the change. People respond to change – or even the prospect of change — in different ways, and it’s important to acknowledge the different types of perspectives and reactions that play a role in change management. This may include enthusiasts, skeptics, those who are complacent, and others.
Most importantly, leaders should identify key change agents and potential change inhibitors, as both of these groups should be engaged with care and diligence. The former can serve as advocates and accelerators of change, while the latter may need to be proactively engaged to limit the emergence of negative sentiments or inaccurate information that will be difficult to remedy after the fact. Ideally, a broad set of perspectives from all relevant levels and functional areas will be represented as the change management work kicks off in earnest. Now that the need for change management has been identified and the fundamentals are in place – with the opportunity to iteratively enhance or scale them as efforts progress – companies are ready to identify the burning platform and create the sense of urgency that will launch the change efforts in a more public and open manner.
As organizations prepare to share their change management plans widely (in the transition between Kotter’s “Create a Vision for Change” and “Communicate the Vision” steps), it is important to assess the organizational context that is relevant for the change at hand. Many change efforts often fall short because they fail to consider organizational realities, such as the circumstances of an organization’s operations or the perceptions and feelings of its employees.
At this point in the change management process, the desire for and commitment to the change efforts should be clear. This may cause employees’ natural fears and anxieties to flare up. Unless the change management plan, specifically the communication and engagement efforts, reflect specific thoughts and concerns, there’s a risk that the change efforts will meet resistance from a growing number of people affected by the change.
In order to manage this critical juncture effectively, empathy and transparency become important tools in the change leader’s toolkit. Employees are looking for leaders and colleagues to listen and to understand. They want to be heard and see their concerns and expectations addressed. The more clearly and specifically senior leaders can relate to employees of all functions and demographics, the more likely it is that their message will resonate.
A practice that I have seen work well to express empathy and ensure that team members feel heard and understood is cross-functional communication at the executive level. For example, if the chief marketing officer can explain the move towards DevOps and a microservices architecture, the CIO references the newest design standards, or the Chief Data Officer shares the vision for the customer engagement campaign, employees will take note and recognize the shared commitment to the change objective.
In our experience, honesty and plain-spokenness go a long way. Simple language and basic concepts coupled with real-world examples will be more effective than a well-drafted and well-polished presentation.
A key recommendation relative to this step is to embrace the ideas of “servant leadership” and the role of clearing obstacles in the way of change, no matter what they are. Empowering employees, delegating responsibilities, and providing space for creativity will instill and strengthen trust that is likely to yield benefits well beyond an individual change effort.
As you begin to implement your change management initiatives and realize a few “quick wins,” change leaders will transition to ensuring the sustainability and institutionalization of change, as Kotter outlines in the last two steps of his 8-Step Change Process. This is the time to not only scale the change management initiatives, but also to document and scale lessons learned so that they can be applied to other change management efforts, even those that are not the focus of the original project.
The opportunity to scale, repeat, and improve what has already worked is both difficult and valuable. If the change efforts can be broken down into individual components, the organization has the opportunity to iterate on each component in pursuit of different change objectives and business outcomes. If, for example, the original change effort focused on developing a Scrum product team, the organization could consider taking the dedicated or capability team concept to other parts of the business; explore whether other parts of the organizations are ripe for a project to product operating model shift; improve demand and capacity planning practices; or apply minimum-viable-product (MVP) principles to general operations.
The scalability and repeatability of change will be both a source and an indicator of change management maturity and the culture of change at an organization. In many cases, the success of change can be attributed to heroic efforts of individuals or teams or is the result of extensive deployment of resources to effect the change. While changes achieved under these circumstances are still commendable and, and many will be deemed successful, they may not be repeatable or scalable, either because motivation or resources cannot be replicated, or other contributing factors are no longer at play (e.g., a crisis or emergency, a regulatory deadline).
Like all business capabilities, an organization’s change management competencies should not be static. They should be subject to continuous review and iterative improvement. As you learn which change management activities work and which ones don’t, you will develop the type of change management capabilities that best meet your organization’s needs. To the extent possible, it can be useful to create a data-driven after-action review. Identify and document the insights, and work with change management and functional leaders to turn the lessons learned into concrete improvements.
A well-written OCM playbook will enable an organization to leverage the advantages of similar or even repeatable change management efforts while also building capabilities that can successfully manage new or uncertain challenges. While there are universal OCM “best practices,” what is right for your organization will largely be driven by the prevailing organizational culture.
In addition to these five Moments of Truth in Change Management, two critical ingredients to OCM and Organizational Agility must be called out. First is recognizing that organizational culture will not only make or break any particular change effort. It will also determine the sustainability and repeatability of change.
Secondly, data and analytics in change management is becoming an increasingly powerful tool to enhance the effectiveness of an organization’s change management capabilities and counter the false yet common perception that change management is “soft.” These powerful tools at change leaders’ disposal should be used throughout the change effort and beyond.
A data-driven approach to change management includes:
These two critical success factors of culture and data and intrinsically linked. An organizational culture that embraces changes and develops a data-driven mindset is a rare but powerful combination that all organizations and leaders should aspire to attain.
Throughout this article, we have emphasized the symbiotic relationship between organizational agility, organizational culture, and change management capabilities. In this setup, culture and agility will likely continue to shape change management capabilities more than the other way around. Ultimately, the general maturity of the organizational change management capability, as well as the success of each individual change management effort, should be judged by the organization’s universally accepted measures of business outcomes, business impact, and business value.
