What makes an organisation good at managing change?

In a recent McKinsey’s article, management consultants Scott Keller and Colin Price summarise their forthcoming book: ‘Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage’. The message is clear: organisational health is the “ultimate competitive advantage” and organisations need to build the capacity to learn and keep changing over time, if they want to achieve and sustain high levels of performance.

This confirms what we’ve been telling anyone who will listen for the past year: it’s what we call the organisation’s Capability for Change and it’s a crucial core value, if you want to survive in the face of the accelerating pace of change and rising levels of business complexity.

I took my definition of Capability for Change from Rebecca Henderson (Harvard Business School): “Attention and resources focused on people and processes, developing the organisation’s stock of capability and resilience”.

I also like this one:

Resilience: “The attitudes, skills and strengths, that enable individuals, and teams to thrive within organisational change” (The Taylor Clarke Partnership)

But like all aspects of an organisation’s culture and values, its resilience and capability for change requires continual investment and maintenance, or it will erode through natural entropy. In our opinion, any transformation programme needs these core values at the heart of its core deliverables, but in our experience, most don’t go there.

So, how do you know if your organisation has resilience and capability for change? How do you know whether it is good at managing change as a normal part of ‘how we do things around here’?

Try our ‘starter for ten’ list. Does your organisation have these characteristics?

1. Strong, visible, empowering, leadership
2. Clearly articulated and shared vision
3. Attention paid to supporting core values
4. High level of trust between managers and staff – decision-making devolved wherever possible
5. People allowed to stop doing stuff when taking on new initiatives – overload issue managed well
6. Innovation encouraged and well managed
7. Good communication between departments
8. Good communication/collaboration with customers and suppliers
9. Adherence to standard ways of doing things
10. HR benefits and rewards aligned to business objectives.

Yes? Then you are likely to have a good capability for managing change, i.e:

• High level of involvement and commitment
• Low resistance to change
• Resilience in the face of challenges
• Able to bring in changes rapidly and effectively in response to need.

No? Then you, like most organisations are probably on a ‘downward spiral to disaster’:

• Senior management is taking a short-term view and focusing on cutting costs and hitting revenue or output targets
• This may be succeeding in the short run, but it has diverted resources away from supporting your people and processes – your capability to manage change
• As a result, it is actually becoming more difficult for the organisation to sustain its revenue performance – everyone is under so much pressure that even normal routine stuff doesn’t get done any more

Only reinvesting in your core capability will correct this downward trend and give the organisation a fighting chance to successfully manage the accelerating pace of change and rising levels of business complexity.