Strategies and Approaches for Managing Change Doug Webster, Ph.D. May 3, 2006

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Strategies and ApproachesforManaging
ChangeDoug Webster, Ph.D.May 3, 2006
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Outline

• Facing a Common Challenge Change
• Defining the Challenge
• Designing an Integrated Change Framework
• Applying the Integrated Change Framework

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Facing a Common Challenge Change
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Why We Are Here

• Similarities
• Everyone here is present because they face change
• Every speaker has talked about facing change
• Differences
• Change may be forcing itself upon you, or you may
  be proactively getting in front of coming change
• You may be leading efforts to change, advising
  others on how to change, or working as a team
  member to implement change
• The "Bottom Line"
• In any case, Change is a common denominator among
  all of us.

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How is the Public Sector ChangingA 1996
perspective

• The Organization for Economic Cooperation and
  Development's (OECD) first ministerial-level
  meeting on public management held in 1996
• In her summary report, the meeting chair stated
  that most of the 24 member governments were
  facing the same fundamental pressures for change,
  including
• Global economy
• Dissatisfied citizens
• Fiscal crisis

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A 1995 Perspective (continued)

• And that most governments were responding in
  similar ways
• Decentralization of authority and delegation of
  responsibilities to lower levels of government
• Questioning what government should both do and
  pay for, what it should pay for but not do, and
  what it should neither do nor pay for
• Downsizing public service and privatization of
  activities
• Consideration of more cost-effective ways of
  delivering services, such as contracting out and
  user charges
• Customer orientation quality standards for
  public services
• Benchmarking and measuring performance, and
• Reforms designed to simplify regulation and
  reduce its costs

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What Has Changed in Ten Years?

• What have we learned in the past two days?

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The Challenge of Change

• While we all face change, the track record of
  successfully implementing change is poor
• Various sources claim from 70-90 of project
  "fail" to meet expectations
• Personal experience of most people supports this
  claim

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The International Challenge

• An evaluation of World Bank support for Public
  Sector Reforms since 1980 found
• Only about one-third of the Banks projects had
  satisfactory outcomes
• Even when satisfactory outcomes were achieved, it
  appeared unlikely in most cases that they would
  be sustained.
• Civil Service Reform. A Review of World Bank
  Experience. (Operations Evaluation Department,
  Report No. 19599)
• Understanding the underlying challenges facing
  change is key to improving success

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Defining the Challenge
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The Dilemma of "Change"

• Some claim you cannot manage change, while others
  claim you must do so
• "Change" that cannot be managed is the change in
  the environment that goes on around us every day.
• Physical Environment
• Demographics
• Customer needs/desires
• Advancing Technology
• Regulatory Environment
• Resources/inputs/suppliers
• Process innovation
• New entrants (products, services, or providers)

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Environment versus Response

• Such change indeed cannot be managed. Often,
  once unleashed, there is no going back.
  Generally, an organization can have little
  influence over evolving external change.
• However, we all chose how we will respond to
  external change. We

• Identify
• Evaluate
• Prioritize

• Resource
• Implement
• Monitor

Therefore, we Manage our response
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How do People React to Change?

• Instability
• Upheaval
• Unpredictability
• Threat
• Disorientation

• Opportunity
• Rejuvenation
• Progress
• Innovation
• Growth

• Inability to adapt to change has been the
  downfall of many an organization, but
• An ability to learn and change has been a key
  competitive advantage for other organizations
• What differentiates these groups?

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Obstacles versus Opportunities

• How you view change depends on
• Attitude
• Which is driven by
• Understanding
• Capacity to respond

Change can be viewed as a threat or opportunity.
Your attitude will determine whether the path
ahead is built with stepping stones or stumbling
blocks.
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A Century of Change

• Over the past century there has been a
  convergence of thought between two approaches to
  change
• "Engineers" (a mechanical focus on change)
• "Behaviorists" (human focus on change)

Engineers
Behaviorists
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"Engineering" Change

• Since the late 19th century, managers have sought
  to improve the mechanical aspects of
  organizations.
• This approach focuses on observable, measurable
  elements that can be changed or improved,
  including strategy, processes, systems,
  organizational structures and job roles.
• Organizations embracing a mechanical approach to
  improvement typically did not embrace change
  management concepts until their projects
  encountered resistance or faced serious problems
  during implementation.
• Even after this realization, many organizations'
  approach to change management was ad hoc and
  lacked a solid framework for actively managing
  change through the process.

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"Behaviorist" Change

• In parallel with the "engineer" approach to
  change is the view of behaviorists, who are
  concerned with how humans react to their
  environment.
• The fields of psychology and organizational
  development have often focused on how individuals
  think and behave in a particular situation.
  Because humans are often exposed to change,
  psychologists and behaviorists can study how
  humans react to change, both individually and in
  organizations.
• How can these very different points of view be
  integrated to help manage change?

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Colliding Theories

• Unfortunately, conflicting theories and
  prescriptions for change management abound
• While some theories focus on the mechanical
  aspects of change, others focus on the "soft"
  side of human and organizational change
• What has been lacking is an overall integrative
  framework that explains the relationship between
  the mechanical and behavioral aspects of change

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Designing an Integrated Change Framework
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Phases of Change

• Change can be considered from three perspectives
  or phases
• Strategic Management Phase
• Project Management Phase
• Change Management Phase

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The Strategic Management Phase
Customer needs environmental demands
Environment
Products Services Outcomes
1st Order Change Gap
Today's Organization
Desired Organization

• Strategic planning requires environmental
  scanning, and evaluation of the demands the
  shifting environment places on the organization
• The change in the demands of the environment
  creates a 1st Order Change Gap

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The Strategic Management Phase (continued)
Environment
Customer needs environmental demands
Products Services Outcomes
1st Order Change Gap
Today's Organization
Desired Organization
2nd Order Change

• Organizations can determine to close all or some
  of the gap
• Partial Change
• Complete Change
• Organizations can even elect to proactively lead
  change to close the gap to a future predicted
  environmental state

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The Project Management Phase
Environment
Products Services Outcomes
Projected 1st Order Change Gap
Today's Organization
Future Desired Organization
2nd Order Change
2nd Order Change Dimensions

• Organizations initiate projects to execute change
• Projects must consider multiple dimensions of
  change

Project Plan
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The Change Management Phase
Environment
Projected 1st Order Change Gap
Today's Organization
Future Desired Organization
2nd Order Change
Readiness for Change
2nd Order Change Gaps

• This is what most organizational change plans
  look like
• But organizations are typically not prepared to
  address change equally in all dimensions

Project Plan
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The Change Management Phase
Environment
Projected 1st Order Change Gap
Today's Organization
Future Desired Organization
2nd Order Change
Readiness for Change
2nd Order Change Gaps
Change Plan
Personal
Organizational

• Dimensions of change should be assessed to
  identify gaps in change readiness

Project Plan
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Points to Consider from the Integrated Change
Framework (ICF)

• We cannot manage 1st order change we must manage
  2nd order change
• Most organizations face a gap in being able to
  implement 2nd order change, resulting in high
  failure rates
• A Change Plan for closing the change readiness
  gap is essential to success
• May be formal or informal
• May be stand alone or part of a project plan

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Change Management and the Change Readiness Gap

• Change Management
• is the process, tools and techniques to manage
  the human side of organizational change needed to
  achieve desired outcomes
• When part of a Change Plan, Change Management is
  key to closing the change readiness gap and
  achieving long-term success

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Applying an Integrated Change Framework
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• Sources of Resistance
• Changing Attitudes and Building Change Capacity

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Understanding Sources of Change Resistance

• Developing a capacity for change involves
• Overcoming resistance to change
• Developing the requisite understanding
• Saying "people resist change" sheds no light on
  how to overcome change
• Resistance to change stems from
• Factors that encourage people to resist changing
  existing behavior in any context (regardless of
  being in an organization)
• Ways that organizations influence members to be
  more likely to resist changing the way they do
  their job
• Factors related to bureaucratic organizations
• Factors related to government organizations
• Factors related to developing nations

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Factors that encourage people to resist changing
existing behavior in any context

• Change may make people worse off
• At a minimum, change requires learning something
  new
• Behavioral consistency often seen as a virtue
• Mere exposure creates commitment to a previously
  undertaken course of action (i.e., the status
  quo)
• Behaviors can become embedded
• People misjudge the gap between their performance
  and "good" performance

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Organizational Influence

• Inherent tension between organizing and
  innovating
• Organizations recruit for and reward current
  practice
• Organizations create member commitment to current
  practices
• Change affects power relationships
• Knowledge structures created by organizations
  (i.e., paradigms) make it hard for people to
  notice signals that change is needed
• Change can impact job security

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Bureaucratic Influence
Bureaucracy
Management or administration marked by
hierarchical authority among numerous offices and
by fixed procedures

• Rules, hierarchy and specializationthe
  foundation of bureaucraciestypically work
  against change and innovation
• Strict bureaucracies restrict workers to
  following rules or pass decisions up the channel
  creativity of thought is discouraged, or at least
  not generally exercised
• Rules provide a defense in the face of criticism

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Government Organizations

• Private sector survival depends on profitability
  government organizations can generally be more
  forgiving of poor performance
• "Foot dragging" at lower levels is easier because
  executive levels often turn over more frequently
• Government is more likely to have more people
  with long tenure at working levels (higher
  percentage of "career" people), and such people
  may be more likely to resist change

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Government Organizations (continued)

• The environment punishes error more than it
  rewards excellence, making government
  organizations conservative and inclined to the
  status quo
• "The dirty little secret is that innovation
  requires failure. The corollary is that unless
  an organization toleratesfailure, it is unlikely
  to get much innovation."
• Government is more likely to have vague and
  multiple goals, both of which encourage further
  bureaucracy.
• Rules and hierarchy have particular legitimacy in
  government as tools of democracy and "equal
  treatment"

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Challenges in Developing Countries

• Change in developing countries has its own
  challenges
• Corruption and influence peddling can be
  widespread
• Patronage is often the norm many get jobs
  because of connections rather than qualifications
• The public sector is often the employer of last
  resort for the unemployed
• Courts and police may not be fully independent of
  political control, so prosecution of corruption
  is difficult

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Challenges in Developing Countries (cont.)

• In such situations, the general guidance on
  change management remains valid, but must include
  additional considerations
• Does the sponsor for change truly want change and
  all that it implies, or is the change initiative
  "for show" only?
• How dependent is the change program on
  information systems (to track funds, performance,
  accountability, etc) that may not exist?

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Building a Capacity for "Change"

• Mobilize Pull together the guiding team, and
  build commitment through Joint Identification of
  organization problems and challenges
• Strategize Develop a Shared Vision and strategy
  for change
• Communicate Build a broad foundation of
  understanding and buy-in
• Plan Build project and change plans that
  recognize capabilities and limitations

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Building a Capacity for "Change" (continued)

• Implement Integrate project and change
  management planning and execution
• Focus on results, not activities
• Use pilots and achieve quick wins
• Institutionalize success with formal policies and
  systems
• Monitor Develop a "performance budget" laying
  out expected improvements across the project
  lifetime, and check for variances
• Adjust Adjust implementation approach and
  strategies in response to problems in the change
  process or to a shifting environment

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The Culture of Change

• Cultural attitudes to change differ
• Change is random,
• Change is cyclical, and one expects circumstances
  to recur
• Change is essentially determined by the
  consequences of the actions of mankind and
  environment
• Change is driven by predetermined events and is
  outside of mankind's control

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The Culture of Change (continued)

• One's cultural values and beliefs affects the way
  one looks at and responds to change
• Changing wide-spread cultural values is neither
  simple nor quick, and may be impractical in some
  cases
• Recognize change limitations and integrate into
  the change plan
• Seek to make people accountable for what is
  inside their control, while driving out fear of
  what is outside their control

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Closing Thoughts

• There are many prescriptions for implementing
  Change Management, and little time to discuss
  them
• Today's intent was to
• Explain the importance of Change Management
• Provide a logical model to help understand the
  role and importance of Change Management
• Questions
• What are your experiences?
• What might you do differently to incorporate
  Change Management?

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Questions?