Change is an important and necessary fact of life for all organizations. But change is often unsuccessful because the people within organizations are resistant to change. Change management is a systematic approach to managing the transformation of organizational goals, values, technologies, or processes.
|Apple||Transition from Steve Jobs to Tim Cook||Leadership continuity and development, maintaining innovation||Continued success with new product launches and sustained growth|
|Microsoft||Shift to Cloud Services and Subscription Model||Development of cloud-based products and services||Azure cloud platform’s rapid growth, Office 365 subscription model success|
|Alphabet Restructuring||Realignment of subsidiaries under Alphabet holding company||Improved focus on core businesses (Google, Waymo, etc.) and increased transparency|
|Amazon||Acquisition of Whole Foods||Integration of supply chain, technology, and operational systems||Enhanced in-store customer experience and online grocery sales growth|
|Facebook (Meta)||Meta Rebranding and Metaverse Focus||Shift in corporate identity and development of metaverse vision||New corporate identity and focus on metaverse-related technologies|
|Tesla||Rapid Scaling of Electric Vehicle Production||Expansion of manufacturing facilities and production lines||Increased electric vehicle production and market share|
|Netflix||Shift from DVD Rentals to Streaming||Pivot to streaming content, investment in original programming||Dominance in the streaming industry, global subscriber base growth|
|Introduction of Twitter Spaces (audio chat rooms)||Development and launch of new feature to compete with rivals||Enhanced user engagement and diversification of content|
|Adobe||Transition to Subscription-Based Creative Cloud||Migration from perpetual licenses to subscription model||Stable revenue streams, improved customer retention, and regular updates|
|IBM||Focus on Artificial Intelligence (AI)||Investment in AI research and development, acquisitions||Successful integration of AI in products and services, leading in AI technology|
|Intel||Shift from PC-Centric to Data-Centric Business||Development of data-centric technologies and products||Diversified revenue sources, growth in data center and IoT businesses|
|HP||Split into HP Inc. and Hewlett Packard Enterprise||Division of the company into two separate entities||Greater agility and focus in product development and customer service|
|Cisco||Transformation to Software-Driven Networking||Shift from hardware-centric to software-centric focus||Improved flexibility, agility, and innovation in networking solutions|
|Oracle||Cloud Transition and Acquisitions||Acquisition of cloud infrastructure companies, Oracle Cloud||Expanded cloud offerings and revenue growth|
|Qualcomm||5G Technology Focus||Investment in 5G technology development and standards||Leading in 5G technology, partnerships with major mobile carriers|
|Uber||Expansion Beyond Ride-Sharing Services||Introduction of food delivery (Uber Eats) and other services||Diversified revenue streams and global presence|
|Airbnb||Expansion into Experiences and Longer Stays||Launch of Experiences and Airbnb Plus for diversified services||Enhanced customer offerings and revenue growth|
|Slack (Salesforce)||Acquisition by Salesforce||Integration of Slack with Salesforce’s CRM and cloud platform||Enhanced collaboration tools and integration with Salesforce solutions|
|Zoom Video||Rapid Growth During COVID-19 Pandemic||Scaling up server infrastructure and enhancing security||Increased adoption of Zoom for remote work and virtual meetings|
Understanding change management
Indeed, research has found that just 38% of individuals like to leave their comfort zone regularly. For the remaining 62%, change in a workplace setting is met with apprehension. Thoughts may turn to job security or whether they might be required to take on new roles or responsibilities.
Through a range of strategies, change management smooths the transition process for all employees. It is also important in ensuring that businesses remain financially viable long after the change has been implemented.
Change management is useful in a variety of scenarios, including:
- Mergers and acquisitions.
- Crisis management.
- Change in leadership or leadership style.
- Improving company culture.
- Technology implementation.
The four principles of change management
To navigate successful change, a business must focus on four core principles:
- Understand change. Decision-makers must first understand the reasons for change before promoting change to subordinates. Benefits of change to the employee and the business should be communicated first and foremost. But it’s also important to stress the costs or negative outcomes of not changing. Ultimately, employees need to feel confident a change initiative is worth the effort.
- Plan change. Transformation does not happen overnight, nor does it happen by chance. Change strategies should identify the personnel most suited to supporting and mobilizing support for change. The business must also define what successful change looks like by setting appropriate goals. Popular planning tools for change include SIPOC diagrams and the Burke-Litwin Change Model.
- Implement change. Change measures should be implemented with a sense of urgency incorporating small, achievable wins to build momentum and employee motivation. Each employee should understand what is required of them and be offered support if they are having difficulty in transitioning. Some businesses choose to appoint staff whose primary role is to model new behaviors or actions.
- Communicate change. Change should be communicated so that it aligns with the company’s mission statement or vision. This “bigger picture” thinking inspires employees to act purposefully, safe in the knowledge that they are contributing to the success of the organization. The ADKAR model provides a helpful framework for communicating change at the individual level.
Consequences of poor change management practices
Businesses that fail to recognize the importance of people in successful change are likely to experience a raft of negative consequences.
Some of the more high-impact consequences are outlined below:
- Poor project management. A lack of suitable change management can result in projects running over budget with missed deadlines. In extreme cases, projects fail to deliver and can be abandoned entirely. This is invariably caused by employees with low morale and low productivity because of poorly defined goals or change measures.
- Employee resignation. Valuable members of staff who experience poor change management at the project and organizational level are more likely to resign. The cost of losing experienced employees is obviously high, but mass departures also create a cultural legacy of failed change which becomes hard to reverse.
- Incomplete implementation. Change management that ignores people as a key driver is less likely to deliver results or meet outcomes. Goals may include reducing expenses, increasing productivity, capturing market share, or meeting certain regulations. In this scenario, the business is left with a change management plan not fully realized. Without direction, the business is unlikely to recoup costs and move forward without significant difficulty.
Change Management Best Practices
But, for all the videos and Instagram moments around us, we are not very good at seeing what needs to be seen in organizational change management.
To manage the change — from inside and outside, you must understand the nature of change, discover the most fitting business model for change, and build in a fluid, flexible change management strategy.
Organizations are natural and organic
Stakeholders create and develop organizations. Survival depends on their ability to grow, and growth means change.
Organizational change is not transformational if it is mainly transactional, so you must learn to draw new models to capture rapidly evolving value propositions.
The pulls of Artificial Intelligence, transhumanism, robotics, and more demand more fluid, dynamic, and integrated pictures.
Legacy approaches to next-generation innovation and expectations just cannot do the job anymore.
Change can mean running in place
There is a physics to business change. All organizations have a degree of potential energy that may or may not become kinetic.
All things being equal (as they never are), the energy will express itself according to certain laws of force, velocity, and inertia. Each and all are functions of weight. density, and gravity.
Theorists work most comfortably when these assumptions are firm: “If A, B, and C are true under conditions D, E, and F, then ….” Having set up such parameters, they proceed to drape a skin upon the bones.
The Aristotelian logic appeals to accountants, actuaries, and auditors. With business so attached to its financing and P&L, this binary approach plays a continuing prominent role in management thinking.
But it also constrains the ability to envision business futures and manage change.
Traditional logic does provide a common vocabulary and process to set up standards of operation, best practices, and reporting metrics. As a discipline and universal standard, the logic is healthy.
As a record of past-to-recent transactions, it is handy. But it remains descriptive, not prescriptive.
The data may indicate trends, but if the trends were sacred, you could bet Wall Street on them.
Classic logic cannot see around corners where lies much shaping, informing, and threatening change.
Straightening change out
The strong trust in the logic-defining “old math” spurs makers and shakers to roll things out with most business strategies illustrated as horizontal lines. Resources pass-through procurement and processing to delivery.
An occasional line inclines up and to the right; the arrows always point right. And, sometimes they are segmented by downs markers or graph grids.
You learn this from board games. Checkers move forward — or not. The Game of Life takes you through pre-ordained rites of passage to victory if you play “fair.”
Monopoly introduces some strategy for those smart enough to die rich. And, success in Sorry depends on the odds and your willingness to betray your friends and family.
Figure 1 forms a typical legacy business model where everything drives right on some bias that right is positive.
Figure 1: Typical Legacy Business Model
The horizontal mindset is governing, traceable, and lends itself to SmartArt, Excel, Gantt Charts, calendars, and flowcharting software.
You can suggest some parallel movement of functions by adding cells below these titles to integrate their roles.
They can be fitted with resources, inventory, prices, counts, receivables, and other numbers. The resulting vertical silos and matrices are, then, useful — given what they are.
However, each increment assumes it carries the preceding forward. In his paper on “Mission, Vision, Strategy: Discernment in Catholic Business Schools” (2012), Wolfgang Grassl wrote, “Planning is by its nature directed at a goal or purpose. In a sequential process, every stage captures a fraction of what the previous stage required. Ultimate success is then a multiplicative function of successive stages.”
This multiplicative assumption that things follow-through is woefully naïve considering the accelerating dynamic of contemporary innovation.
It has no room for the outcome of our research, reported in Best Practices in Leadership Development and Organizational Change (2015), that found “A majority of our world’s best organizations describe leadership development and organization changes as ‘the real work of the organization’.”
Contemporary business management change
Twelve-column spreadsheets cannot capture the fluid dynamic of innovation.
Legacy business models treat progress as accumulation and aggregation. They prioritize quantification; even quality control is a tick on a checklist.
Despite the angular layout of the Business Model Canvas created by Alexander Osterwalder and Yves Pigneur (2004), the components surround the Value Proposition, that unique something that separates your product or service from the competition.
It has proven a flexible launch vehicle creating business models for innovative futures.
Traditional business models have sought to produce outputs efficiently and economically. Economic exchange at any level is about creating value for money. Writing for The European Journal of Management (2008), Stephen L. Vargo and colleagues noted, “that value is fundamentally derived and determined in use – the integration and application of resources in a specific context – rather than in exchange – embedded in firm output and captured by price.” Value for money increases when the change is fit for purpose, for time, and for purpose.
Vargo went on to observe that values then derive from an understanding that “(1) service, the application of competencies (such as knowledge and skills) by one party for the benefit of another, is the underlying basis of exchange; (2) the proper unit of analysis for service-for-service exchange is the service system, which is a configuration of resources (including people, information, and technology) connected to other systems by value propositions; and (3) service science is the study of service systems and of the co-creation of value within complex configurations of resources.”
To reach such understanding means seeing business change as biochemical, hormonal, and emotional as well as categorical, transactional, and reductive — emotional connectedness being the key.
Fortunately, you now see software able to draw flows, tides, and feedback — the strategic change management tools organizations can build dreams upon.
Design Thinking for Advocacy
Discern, deliberate, and decide
Change prompts resistance from people, policies, and processes. Walter Earl Fluker, Executive Director at Morehouse College, feels “To discern, deliberate, and decide effectively, leaders at the intersection must reexamine their core values and assumptions about identity (character); clarify relationships with others in their environment who are involved in and will influence their discernment, deliberation, and decision making (civility); and maintain strong ties with their primary network of discourse and practice (community).”
It is here, for example, we were able to help a major regional healthcare provider better serve its “community of caring.”
Brainstorming, discovery, and data drove a discerning decision on forging new relationships with medical providers across the region setting a course to create collaborative arrangements with hospitals so they all could survive in a hyper-competitive healthcare/clinical landscape where small hospitals were getting eaten up.
Change management strategy starts with this discernment, the asking of “What’s going on?” That differs from examining the “why” and “how” — both of which are retro focused.
Change must anticipate the rise and risk of intersections where core assumptions and values must center thought and action.
Where change confuses invention and innovation
The ill-fated launch of Google “Explorer” Glasses provides positive lessons in business modeling and effective change management.
Google co-founder Sergey Brin had launched an empowering initiative to spur innovation. In at least one case, it triggered a rush to market.
It produced an inventive technology putting the power of a full computer into the arm of nerdy spectacles. Steven Levy, writing for Wired.com (2017) noted, “
The original Glass designers had starry-eyed visions of masses blissfully living their lives in tandem with a wraparound frame and a tiny computer screen hovering over their eye.”
Asking $1,500 a pair, Google marketed what was an unproven prototype. It promised facial recognition, social media access, and unlimited Android applications.
With the tech media overexcited about its production and promise, somebody failed to consider tech defects and the universal fear of its invasion of privacy issues.
The failure in the process (if not in ethics) proved a major embarrassment for Google — not enough to damage the tech behemoth but embarrassing, nonetheless.
The value proposition of the first launch appears to have offered a unique device to a public at large already committed to buying on Amazon.
Google wanted to capture a segment of the IoT market before Apple or others had developed the product.
Instead, they pushed a faulted high-dollar item to an audience addicted to new devices.
So, Google went back to its drawing board to create, prototype, test, and improve its technology, lower its price, and focus its marketing.
Google’s Glass Enterprise Edition 2 launched in 2019, a $999.99 utility device sold to businesses that manage the device’s proprietary software.
Its website features videos of use among farmers, doctors, technicians, and factory workers completing work with the aid of remote advice or documents. The content addresses discernment.
In the words of Ian Altman in Forbes (2015), the new approach admits that “Companies often forgot (or don’t know) what questions customers really ask during the decision-making process.”
The Google Enterprise’s new strategy serves major business clients in manufacturing (GE), logistics (DHL), healthcare (Sutter Health), and others to use a more attractive and versatile pair of glasses with a faster-charging longer-lasting battery addressing original objections about performance glitches.
And, user businesses have readily accessible transparency to the device’s specs and testing results.
Enterprise addresses a market of specific customized work functions. The Guardian’s John Naughton remarked, “It’s what technology is for: supplementing rather than replacing human intelligence.”
In this case, there are at least three useful applications according to Mark Sullivan of FastCompany.com (2019) paraphrased here:
- Coaching: Employees have access to training manuals, standard operating procedures, and dos and don’ts about product assembly, maintenance, and repair.
- Supervision: Supervisors or mentors can observe work and offer direction, advice, and correction.
- Inspection: Worker wearers can record and file work for quality purposes.
By understating the glasses’ capability, limiting the internet reach, and narrowing the camera’s purpose, Google’s Enterprise has effectively eliminated privacy issues.
And, unless Apple meets Google head-on, Google will have recovered from its early decision-making failures.
Where to go from here
An effective and transforming roadmap for change management must respect some facts:
- Binary linear logic may manage process, but it provides no strategy for transformational change.
- While change is certain, nothing about it is certain.
- Uncertainty presents queries — not confusion. It is leadership’s opportunity to discern direction aligned with the organization’s evolving vision and mission.
Innovation proceeds from the future, not the past. It awaits discovery, so organization requires readiness more than satisfaction, an opportunity rather than chance, and confidence before engineering.
Michelangelo believed his statue was living in the marble; all he had to do was chip away “the superfluous material.” Henry James set out to find a “figure in the carpet.” A mind open to fluidity, dynamism, and flexibility will find its roadmap rather than build and impose a framework that only
Best practices of Change Management is a contribution by Louis Carter.
Change management examples
Let’s conclude by describing a notable example of change management from the well-known company British Airways.
When John King was appointed Chairman of British Airways in 1981, he observed that the company was inefficient and wasting valuable resources.
The airline employed 58,000 staff – almost twice as many as the nearest competitor – but there were nevertheless long queues at Heathrow Airport with passengers herded like cattle.
What’s more, British Airways flights were only 60% of capacity on average while other airlines in Europe flew routes at near capacity.
To rectify the problem, King decided to restructure the business with a change management plan.
One of the first orders of business was to hire Colin Marshall, a change management expert who had worked for the Orient Steam Line and turned around Avis Car Rental.
Marshall himself then appointed a Director of Human Resources and a former secret service psychologist known as Mike Levin.
Other notable appointments included management training firm Forum Corporation, executive compensation firm Hay Group, and Israeli performance management consultancy Pilat.
The change team at British Airways made several startling discoveries:
- Executives at the company were compensated for the length of their service and not for profit or customer service levels. Performance appraisal systems were also based on the length of service.
- No employee had the words “customer service” in their job description.
- There were no established emergency policies in airport terminals. At Heathrow, for example, there was no system of loading the aircraft in fog – even though this weather phenomenon was responsible for many delayed departures.
- Employees were unaware (or had no knowledge) of the competencies required to run a customer service business.
Based on these observations, the change team created a simple but effective visualization of the new British Airways.
At the very least, the airline would have to be customer friendly, profitable, and an attractive place to work.
The British Airways three-legged stool
The team then called the change model the “three-legged stool” to represent three separate but equal streams of change initiatives:
- Executive compensation – instead of compensation based on length of service, executives were shifted to a salary and bonus system where 40% of the total remuneration was “at risk” and reliant on the individual achieving certain goals. These were based on metrics such as profit, market share, and even feedback from peers.
- Performance appraisal – much work was also done on crafting new employee job descriptions centered around customer satisfaction. A digital performance appraisal system was also introduced that was able to adjust for individual bias.
- Leadership and service education and training – this stream developed numerous programs to address obvious skill and knowledge deficiencies throughout British Airways. Process improvements occurred in customer service, organizational design, and several HR practices. New people-focused roles were created with redundant staff offered a severance package or the chance to retrain.
Like any good change management plan, streams started with formal training which continued in practical contexts until each was embodied and integrated into daily operations.
Superiors in particular were subject to rigorous training, with 2000 of the company’s top leaders taking part in a one-week course with days lasting from 7 am to 11 pm.
From this cohort of 2000 individuals, around 40 of the most passionate were selected as company change agents.
Each change agent was trained on how to advocate for change across the organization and how to deal with colleagues who were refusing to embody the airline’s new core values.
- ERP Implementation:
- Change Management Role: Change management ensures that employees understand the reasons for implementing the ERP system and are prepared to adapt to new processes and software.
- Decision Shaping: Change management helps in identifying key stakeholders, developing training programs, and communicating the benefits of the ERP system, which influences the decision to move forward with the implementation.
- Organizational Restructuring:
- Change Management Role: Change management focuses on preparing employees for new roles, providing training, and managing communication to minimize uncertainty and resistance.
- Decision Shaping: By addressing employee concerns, providing support, and managing the transition effectively, change management influences the decision to restructure the organization to enhance efficiency.
- New Product Launch:
- Change Management Role: Change management ensures that teams understand the changes in manufacturing, distribution, and marketing strategies required for the new product launch.
- Decision Shaping: By facilitating cross-functional collaboration and communication, change management influences the decision to proceed with the product launch and aligns teams with the new strategy.
- Lean Six Sigma Initiatives:
- Change Management Role: Change management helps employees embrace Lean Six Sigma principles, which may involve changes in processes, roles, and workflows.
- Decision Shaping: By providing training, highlighting the benefits of process improvement, and addressing concerns, change management shapes the decision to adopt Lean Six Sigma practices.
- Digital Transformation:
- Change Management Role: Change management focuses on preparing employees for the shift from traditional to digital operations, including training and skill development.
- Decision Shaping: By emphasizing the advantages of digital transformation and addressing fears of technology adoption, change management influences the decision to embark on digital initiatives.
- Quality Improvement Programs:
- Change Management Role: Change management promotes a culture of quality, emphasizing its importance and training employees on quality improvement methods.
- Decision Shaping: By fostering a quality-focused mindset and aligning employees with quality goals, change management shapes the decision to implement quality improvement programs.
- CRM Adoption:
- Change Management Role: Change management helps employees transition to using CRM systems by providing training and support.
- Decision Shaping: By ensuring smooth user adoption and demonstrating the benefits of CRM, change management influences the decision to invest in CRM technology.
- Outsourcing or Offshoring:
- Change Management Role: Change management assists employees affected by outsourcing or offshoring by helping them adapt to new roles or changes in responsibilities.
- Decision Shaping: By addressing employee concerns, providing training for new tasks, and ensuring a smooth transition, change management shapes the decision to pursue outsourcing or offshoring.
- Cost Reduction Strategies:
- Change Management Role: Change management addresses employee concerns and maintains morale during cost-cutting measures.
- Decision Shaping: By focusing on effective communication and providing support, change management influences the decision to implement cost reduction strategies while minimizing negative impacts.
- Introduction of New Policies:
- Change Management Role: Change management helps employees understand and comply with new policies through effective communication and training.
- Decision Shaping: By ensuring policy awareness and adherence, change management shapes the decision to introduce new workplace policies.
- Global Expansion:
- Change Management Role: Change management assists in cultural adaptation, compliance with international regulations, and skill development for global operations.
- Decision Shaping: By preparing teams for global expansion and addressing cross-cultural challenges, change management influences the decision to expand internationally.
- Agile Transformation:
- Change Management Role: Change management supports teams in adopting Agile practices through training and coaching.
- Decision Shaping: By demonstrating the benefits of Agile, facilitating collaboration, and addressing resistance, change management shapes the decision to transition to an Agile framework.
Real World Applications
- IBM’s Transformation into a Services Company:
- Change: IBM, known for its hardware products, decided to shift its focus toward becoming a global IT services company.
- Change Management: IBM implemented extensive change management programs, emphasizing employee retraining and skill development.
- Result: IBM successfully transformed into a services-oriented company, with a significant portion of its revenue coming from services rather than hardware.
- Procter & Gamble (P&G) and Innovation:
- Change: P&G, a consumer goods company, aimed to become more innovation-driven.
- Change Management: P&G implemented a structured innovation process and encouraged a culture of experimentation and learning.
- Result: P&G introduced successful new products and innovations, including the Swiffer and Febreze, and significantly improved its competitive position.
- Microsoft’s Cultural Shift:
- Change: Microsoft underwent a cultural shift under CEO Satya Nadella, moving from a “know-it-all” culture to a “learn-it-all” culture.
- Change Management: Change management efforts focused on fostering a growth mindset, promoting collaboration, and embracing change as a constant.
- Result: Microsoft’s cultural shift led to increased innovation, better collaboration, and the successful launch of products like Microsoft Teams and Azure.
- General Electric (GE) and Lean Six Sigma:
- Change: GE adopted Lean Six Sigma principles to improve operational efficiency and quality.
- Change Management: GE invested in extensive training and development programs to ensure that employees at all levels embraced Lean Six Sigma methodologies.
- Result: GE saw significant improvements in productivity, quality, and cost reduction across its diverse business units.
- Google’s Alphabet Restructuring:
- Change: Google restructured itself under a new parent company, Alphabet, to better manage its various subsidiaries.
- Change Management: The change management approach focused on communicating the benefits of the restructuring, aligning employees with new roles, and maintaining innovation.
- Result: Google’s restructuring allowed its subsidiaries, such as Waymo and Verily, to operate more independently and focus on innovation in their respective fields.
- Change management is a systematic, people-centric approach to handling change within an organization.
- Change management is useful in scenarios where people are less likely to leave their comfort zones. These scenarios include crisis management and a change in leadership change or company culture.
- The costs of poor change management are high. Businesses are likely to lose experienced employees to other organizations and not be able to recoup project costs if they do not maintain a focus on people.
- Change management is a systematic approach to managing organizational transformation, involving goals, values, technologies, or processes. It’s crucial to handle change effectively due to resistance and apprehension among employees.
- Effective change management is important in scenarios like mergers and acquisitions, crisis management, leadership changes, improving company culture, and technology implementation.
- Four key principles of change management:
- Understand Change: Decision-makers need to grasp reasons for change and communicate benefits, potential costs, and negative outcomes.
- Plan Change: Develop strategies identifying suitable personnel, set clear goals, and use planning tools like SIPOC diagrams and the Burke-Litwin Change Model.
- Implement Change: Execute change with urgency, focus on small wins, provide clear instructions to employees, and offer support during transition.
- Communicate Change: Align change with the company’s mission, inspire purposeful action, and employ communication frameworks like the ADKAR model.
- Poor change management practices can lead to poor project management, employee resignations, and incomplete implementation of change initiatives, causing low morale and productivity.
- Change management best practices include a strong, clear vision, understanding the nature of change, and flexibility in strategy to accommodate evolving value propositions.
- The British Airways example demonstrates successful change management under Chairman John King. It involved a three-legged stool approach with streams focusing on executive compensation, performance appraisal, and leadership and service education and training.
- Successful change management requires understanding, planning, implementation, and communication. It involves aligning change with an organization’s vision, understanding the dynamics of change, and prioritizing emotional connection and adaptability.
- Modern business dynamics call for innovative, flexible approaches to change management that prioritize emotional connectedness and adaptability over rigid, traditional methods.
Connected Management Frameworks
Read Next: Change Management.
Main Case Studies: