How to Lead Change Management

15Sep16

by DeAnne Aguirre and Micah Alpern

Since the mid-2000s, organizational change management and transformation have become permanent features of the business landscape. Vast new markets and labor pools have opened up, innovative technologies have put once-powerful business models on the chopping block, and capital flows and investor demand have become less predictable. To meet these challenges, firms have become more sophisticated in the best practices for organizational change management. They are far more sensitive to and more keenly aware of the role that culture plays. They’ve also had to get much better on their follow-through.

Yet according to a 2013 Strategy&/Katzenbach Center survey of global senior executives on culture and change management, the success rate of major change initiatives is only 54 percent. This is far too low. The costs are high when change efforts go wrong—not only financially but in confusion, lost opportunity, wasted resources, and diminished morale. When employees who have endured real upheaval and put in significant extra hours for an initiative that was announced with great fanfare see it simply fizzle out, cynicism sets in.

DeAnne Aguirre, senior partner with Strategy&, discusses techniques that can help companies transform quickly and effectively.

Our experience with organizational change management suggests that there are three major hurdles to overcome. The first—no surprise—is “change fatigue,” the exhaustion that sets in when people feel pressured to make too many transitions at once. A full 65 percent of respondents to the Katzenbach Center survey reported this as a problem. The change initiatives they suffered through may have been poorly thought through, rolled out too fast, or put in place without sufficient preparation. Fatigue is a familiar problem in organizational change management, especially when splashy “whole new day” initiatives are driven from the top.

Change initiatives also flounder, according to 48 percent of the respondents, because companies lack the skills to ensure that change can be sustained over time. Leaders might set out eagerly to raise product quality, but when production schedules slow and the pipeline starts looking sparse, they lose heart. Lacking an effective way to deal with production line problems, they decide their targets were unrealistic, they blame the production technology, or they accuse their frontline people of not being up to the task. A much better way to solve the problem is to invest in operational improvements, such as process design and training, to instill new practical approaches and give people the knowledge and cultural support they need.

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