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(originally published by Booz & Company)


Change Management: Who’s in Charge?

A new survey finds that transformations succeed when top executives pay attention.

Change or die. The evolutionary imperative of organisms is now equally applicable to organizations. Consider the case of a government agency in the U.K., serving a customer base of more than 10 million people, which is completing a transformation that would have seemed unimaginable to anyone even vaguely familiar with the organization. Over many decades, its predecessor agency had become the type of enterprise that people dealt with only out of necessity. There were myriad operating differences from one location to another. Customer support was inconsistent. And consumers were mostly in the dark about how the agency could really help.

But over the past five to seven years, this new agency has established itself as a streamlined, committed, and customer-focused operation that barely resembles its predecessor. It has dramatically expedited turnaround times for customer service requests (from six weeks to 20 minutes); improved the accessibility, speed, and quality of its processes; reduced direct and indirect running costs by more than 15 percent while increasing staff productivity; and enhanced customer knowledge of its products and services.

To achieve this feat, the organization had to overhaul its entire operating model; incremental adjustments would not have reversed the slide. So it undertook a wholesale transformation, redesigning employee processes, moving staff from the back office to customer-facing activities, cutting by more than half the number of processing centers, and replacing old legacy applications with new IT systems. Such a massive shift in focus and culture would have failed had senior management not spent significant time and resources addressing the people side of the change process. Agency executives identified critical skill and behavior gaps that would need to be bridged, specified the “learning journeys” that employees at every level would need to complete, and carefully measured and communicated progress against clearly stipulated transformation objectives.

This executive activism should not be downplayed or underestimated. Often in the past, senior managers have given the people side of business change short shrift. They have dismissed change management — the process of engaging people at all levels in the design and implementation of an organization’s transition to a desired future — as soft and quirky and have inevitably blamed the activity itself for implementation failures.

But today an increasing number of top teams in the C-suite understand the importance of change management and give it board-level attention. They recognize that no transformation gains traction without the buy-in and commitment of employees at all levels, particularly line managers. According to a recent Booz & Company survey of more than 350 senior executives who have led major transformation initiatives at large organizations around the world, four out of five transformation programs (82 percent) now have dedicated “people” work streams designed to engender changes to employees’ skills, behaviors, and attitudes. And 59 percent of supervising executives agree with this statement: “A successful transformation is due more to the people initiatives than to other elements of the program.”

Still, although change management has come a long way in practice, the executives who have led these programs acknowledge that there is room for further progress. Today, most organizations have adopted a programmatic approach: They execute change in a disciplined but sequential manner, treating people initiatives as a vital but separate work stream.

In the not-too-distant future, change management will evolve into transformation leadership as organizations move away from a mechanistic, step-by-step approach and adopt an ongoing change facility as a core capability. Change management will not be a separate work stream or function that is activated when a new transformation initiative is launched. It will be an integral part of the organization’s culture, the way the organization goes to work — which, in and of itself, will become more dynamic, adaptive, and simultaneous.

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  1. DeAnne Aguirre, Louisa Finn, and Ashley Harshak, “Ready, Willing, and Engaged: A Practical Guide for Sponsors of Change” (PDF), Booz & Company white paper, September 2007: Identifies the eight levers that engage people at all levels in the organization to assist in a transformation, whether on a large or small scale.
  2. DeAnne Aguirre, Christopher Hannegan, and Gary Neilson, “Navigating the Network: Communications That Create Lasting Change in Today’s Dynamic World” (PDF), Booz & Company white paper, August 2007: Companies facing the prospect of radical change often succeed in engineering the business aspect of the change, but fall short in genuinely engaging key stakeholders in understanding and embracing the change.
  3. Richard Rawlinson, Christopher Hannegan, Ashley Harshak, and David Suarez, “Change Management Graduates to the Boardroom: From Afterthought to Prerequisite” (PDF), Booz & Company white paper, June 2008: Results of the Booz & Company survey on change management (mentioned in this article) of 350 senior executives who have led major transformation initiatives at large organizations worldwide.
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