Why is it so difficult for some organizations to change?
We just read about another enterprise company that didn’t seem able to make necessary process changes, despite persistent public relations problems. (So persistent, in fact, that the company’s repeated service face-plants have inspired memes.)
The point here is to bring attention to the often-overlooked concept of Organizational Change Management. How is it that companies can spend money on change management, without affecting much real change of any lasting impact?
The question of why change can be difficult for many organizations was the subject of recent research conducted by McKinsey & Company, which shows that the failure rate for organizational change projects has ranged at an astounding 60 to 70 percent since the 1970s.<
The answer to why change is so tough is partially revealed when we examine what’s involved. Change is a redirection of mental, physical, and psychological resources to do some things differently. Processes that already work must be modified, assessed, and refined. Some may need to be abandoned altogether or reimplemented from scratch.
Change Isn’t Cheap
Talk about change may be cheap, but actual change is never free. Gartner Research recently found that only 5 percent (on avg.) of the overall system implementation budget of a project actually goes to change management. Gartner recommends setting aside 15 percent at a minimum (on average), according to a survey of 169 SAP implementations in North America.
Gartner recommends allocating 15% (minimum) of overall system implementation budget to change management.
The necessary ingredients for organizational change include communication, training, systems development and implementation, as well as the evaluation and adjustment of processes throughout the company. All require significant investment.
The price rises once you factor in what is needed to change hearts and minds and alter patterns of behavior and thinking throughout the organization.
How to Make Lasting Change
To overcome organizational inertia and produce enduring results, follow these four critical steps to deal with issues of cost, transparency, and accountability.
- Make Change Manageable
- In order to work, change must be designed to solve real, visible problems, and must be made incrementally.
- Change can be made manageable when it works with existing processes that everyone already uses.
- Finally, change must acknowledge existing organizational strengths in order to build on them, not tear them down.
- Reinforce Feedback
- You encourage transparency and accountability by setting small improvement goals and celebrating each success.
- Create a culture of iteration so analysis becomes part of the learning process.
- Set realistic short-term goals, achieve them, celebrate, and communicate the value to everyone in the organization.
- Formalize Wins
- Make every win in your effort to implement change into a building block of your collective identity.
- Don’t be the organization that quickly forgets failures, while failing to learn from successes. Take lessons from both and apply them to make process improvements.
- Help everyone in the organization own and celebrate each accomplishment by clearly communicating the value to all.
- Apply the Change
- Successful change management takes constant practice and reinforcement.
- To make the change part of your organizational DNA, it needs to be applied in virtually every area.
Don’t be the type that invests in change management, then fails budget for system implementations. IT system implementation may not be sexy or easy to visualize at first, but the benefits quickly become apparent once the change is successfully completed.
On the other hand, those that fail to manage change by preparing sufficiently for growth may not see the results until they hit the news—for all the wrong reasons.