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How to Improve your Organisation’s Resilience and Capability for Change

I recently asked a senior director in a large multi-national corporation whether he was satisfied that they were building the resilience and the capability to handle the increasing pace of change and rising complexity of the challenges that his organisation faces today and in the future?

And he had to admit that they weren’t.

This is a question that all executives face, but most will (privately) agree that the answer is a resounding NO.

But those that fail to do so will not survive.

A recent IBM survey of 1,500 CEOs across the world confirmed that complexity is the single biggest issue for businesses and more than half doubted their ability to manage it.

In this blog, I want to explore how you can benchmark and improve your organisation’s capability to respond quickly, effectively and sustainably to these challenges – your Capability for Change.

In the past, this meant understanding your customers, knowing what your competitors were up to and putting in place the appropriate strategies to meet the challenges as they arose. You relied on your managers to run the operation, keep costs under control and implement the strategies (often in addition to their day jobs).

In fact, most organisations performed poorly in responding to the challenges that they faced. The need for change was often recognised too late and managers found themselves unable to galvanise their lumbering, bureaucratic organisation to respond quickly or effectively. However, the relatively slower pace of change allowed some degree of catch-up and the huge financial investment and sometimes sheer waste of skilled resources that were sacrificed because of the ‘too little too late’ response were rarely chronicled.

It is clear that the margin for catch-up and profligate spending and waste is far narrower in today’s more demanding competitive and economic climate. The organisation needs to build resilience into its core values and its infrastructure.

But how?

First you need to benchmark your organisation’s Capability for Change.

I am not talking about the capability of your programme and project management teams. It almost doesn’t matter how well-managed they manage the projects and programmes, if the people affected by the project do not have the capability to learn and embed the new ways of working. I am talking about the capability of the organisation as a whole to cope with the huge task of making change happen. And then do it again, and again.

Typically, CEOs underestimate the complexity of change and overestimate the capabiity of the organisation to cope with change. It’s the gap between these two variables that you need to understand.

How can you tell how wide a gap there is in your organisation?

A quick way is to look at how the organisation deals with overload. Are your managers working effectively? That means they are probably loaded beyond their ability to do everything in the day, but not so overloaded that nothing gets done properly or well. Or are they struggling to cope?

That probably means that change initiatives have been passed down for them to cope with on top of their day job. Sometimes this is disguised by redefining the day job to include the initiative, but the key question is: did you allow them to stop doing other stuff to make the time for the extra work? If not, the initiative won’t succeed.

Research over the past few months suggests that there is a tipping point, beyond which initiatives, however good they may be, cannot ‘stick’.

Conclusion: Unless one of the first things you do in planning a change project is working out how to allow key people to stop doing other stuff (‘the day job’), they won’t be able to give the initiative the time and attention it needs, so it will fail. That usually comes down to budgets and resourcing decisions, which are under serious pressure in today’s competitive and economic climate. So the only way an organisation is going to be motivated to build sufficient resource into supporting their projects so that people can pass routine work across in order to concentrate on a change initiative, is by making this a core value for the organisation. And the only argument for making it a core value is if you can clearly quantify the financial benefits of doing it this way – and the financial consequences of not doing so.

So when we talk about the gap between the level of complexity of the project and the capability of the organisation, that gap has to be quantifiable and its impact on the bottom line profits of the organisation has to be demonstrable.

That’s where the Change Equation tools can help.

By applying the Change Equation models and tools in a Change Readiness Assessment (CRA) process, we can:

  • Calculate the complexity of the project and understand the level of organisational capability needed for the project to succeed
  • Assess the actual cultural and process management capability in the part of the organisation affected by the project
  • Measure the gap and quantify its impact on the project’s ROI

The CRA takes very little time, but delivers significant benefits. If you undertook a CRA as part of the initial planning for all your projects, you would achieve a consistent improvement in project outcomes, raise your return on time and resources invested and see the financial benefits on the bottom line.

 But that’s just the beginning… Now improve your organisational resilience!

You can do something even more important with these tools. By carrying out an audit of a selection of past projects across the organisation, you can begin to define the common barriers to change inherent in the your culture, systems and processes.

Analysis of these barriers allows you to develop an enterprise-wide transformation programme that focuses on bridging the gaps, building capability into how you undertake projects, building resilience into the core values and infrastructure of your organisation.

So a large corporation – or public sector organisation – could integrate the Change Equation methodology into its standard practices at two levels:
  1. At Project level – build the CRA into your project planning processes to ensure Change Readiness and deliver consistent improvement in change project outcomes
  2. At Programme level – use the Change Equation principles, Route Maps and Action Plans to provide the framework and content to deliver organisational Capability for Change as a core value.

Now that you have a clear change strategy, you need skilled people to help you work through the change process. I have just read Marcella Bremer’s new book: Organizational Culture Change: Unleashing your organization’s potential in circles of 10 and can recommend the OCAI Online team.

 

July 5, 2011 Posted by | analysis, business, business change management, change capability, project and programme management | Leave a comment

Managing in Complexity – convergence of ideas

Do you believe in synergy and synchronicity?  I do.

Over the past few weeks I have been seeing a real convergence of ideas from companies, experts and people I meet, suggesting that there are some fundamental deep-seated differences between organisations that manage complexity and change successfully and those that don’t – and that we should be able to identify and measure these, for the benefit of our clients.

Those of you who follow my blogs will know that I have been saying for some time that complexity is not linear and managing complex projects successfully demands a move away from ‘command and control’ style project management to one that supports and nurtures emergent behaviour and new forms of organisation. (I took my original cue from the work of Eve Mitleton-Kelly who runs the Complexity Group at LSE).

It is encouraging that the recent IBM study (‘Capitalizing on Complexity’) takes a similar view of business complexity, suggesting that the ever-increasing scale of complexity in business places new demands on CEOs to be more creative. One CEO in the IBM study concludes that “The complexity our organization will have to master over the next five years is off the charts — a 100 on your scale from 1 to 5.”

And today’s Sunday Times actually has an article (Complexity may be inevitable but it must be managed) about the need for companies to simplify in the face of complexity. It also identifies the non-linearality of complexity and accepts that levels of complexity are rising.

So complexity is the ‘space’ within which I want to be able to offer help and support to clients, whether it’s project (narrow focus) or business (wider focus) complexity.

Convergence of ideas

In addition to the IBM study and the Sunday Times article, here are some of the other ideas that are converging:

1st and 2nd Order Project Management

Michael Cavanagh (http://mcavanagh.com/) has identified that managing complex programmes demands a different approach to that required to deliver simpler programmes – what he calls “2nd order PM”, focusing on some of the soft aspects of change, where 1st order PM focuses just on the project outputs.

Michael refers to “Bureaucracy – when you know what to expect” and “Adhocracy – when you don’t”. I have for some time used a similar distinction, first encountered when reading Thomas Docker’s white paper on project complexity (he is Chairman of CITI):

  • Complicated = not simple, but ultimately knowable (such as installing a new comms network)
  • Complex = not simple and never fully knowable (such as restructuring and merging two departments)

(Interestingly, a discussion about complexity on BBC Word Service Radio this morning with Nassim Nicholas Taleb (The Forum: 12/03/2011), used exactly those terms…more synchronicity!)

Michael’s 2nd order PM includes the use of “adhocratic” leadership, system thinking, outcome management and experiential learning – “learning in the experience, not from the experience” – a great distinction which fits well with David Snowden’s “Probe > Sense > Respond” approach to complexity, in his Cynefin framework. i.e. act in the uncertainty.

Overload tipping point

In the capability assessment that forms part of the Project Readiness Healthcheck, we assess the capability of the organisation to cope with change by looking at its culture and process management capability. But clearly another factor must be the sheer number of change initiatives being loaded onto the shoulders of the poor managers. I suspect that there is a tipping point, beyond which nothing new gets through.

A recent report from the Economist Intelligence Unit, “Leaders of change – Companies prepare for a stronger future” says that change programmes are “consuming ever more corporate resources” but adds that on average only 56% of change initiatives are successful. The report suggests that the limit of how many initiatives a company can absorb is, on average, just 3.6 changes annually. That average doesn’t tell us very much, unfortunately. It would be useful to know on what variables it was based – and to be able to assess an organisation’s overload factor as an indication of how well it would cope with further change.

What is the tipping point? 100% overloaded? 200%?

The strategy is obviously to get managers to STOP doing stuff…which fits with the idea that one answer to complexity is to simplify the customer and employee experience, i.e. simplify your processes… but that needs a strong, well-supported argument, based on research. Some work on overload was done by Rebecca Henderson at Harvard way back in 1981, but the details of this are not available and I haven’t seen anything since.  Time we focused on it again!

Investing in an organisation’s capability is key to longer-term success

That’s so obvious, it shouldn’t need saying, but how often do you come across organisations where they only really pay lip service to their Investing in People values? So it’s great when one comes across something that confirms the importance of consistently paying attention to developing and maintaining a strong set of core values and supporting people to trust, share and become empowered to ‘invent their own route to the future’. Following up the Overload work by Rebecca Henderson at Harvard produced this gold nugget:

When the CEO’s priority is to hit the revenue targets, performance seems to go up. So that becomes the strategy whenever the company comes under pressure. However, work done by Nelson P. Repenning and Rebecca M. Henderson at Harvard suggests that this apparent causality may lead to a “vicious cycle of accelerating decline”. Their (very technical) paper: ‘Making the Numbers? “Short Termism” & The Puzzle of Only Occasional Disaster’, suggests that the more the focus on revenue targets diverts attention and resources away from developing capability (i.e. their people and processes), the more the company risks disaster longer term. Again, there seems to be a critical “tipping threshold”.

So it seems that developing a strong, sustained cultural and process management capability enables an organisation to be flexible and achieve performance targets when the pressure is on, without detriment to its long-term survival.

That fits right in with our Change Equation principle that the management of change is not a subset of project management and cannot be achieved within the lifecycle of a change project – it has to start earlier, continue throughout and go on after the completion of the project. In other words it requires a separate, continuous thread of capability development to reflect, transmit, embed and maintain the organisation’s core values.  That is the recipe for sustained growth and survival.

So what do organisations who are good at managing change have in common?

They

  • Have strong, congruent values, embodied and disseminated from the top
  • Follow a ‘grow-your-own’ and ‘pick-the-best’ approach to talent and skills
  • Take care with their people – ‘they are our real assets’ (and mean it)
  • Involve their people in ‘creating their own route to the future’
  • Set performance targets from the ‘outside in’, taking a systemist and holistic view of the organisation, where individuals are recognised to wear multiple hats
  • Recognise the dangers of overload, manage out unnecessary processes and invest in change management
  • Understand how to cope with complexity, are able to simplify and build in flexibility and adeptness for change.

That’s my list, off the top of my head…what’s yours?

And what tools have you got to measure all this?

March 13, 2011 Posted by | business, business change management, complexity | | Leave a comment

The value of a really good bid-writer

I seem to be doing quite bit of bid writing for clients at the moment and that experience reminded me that the value of a really good bid-writer is not just in how he/she develops and presents the response document. It’s also about:

  • Getting under the skin of the tendering organisation – what is it that would make them sit up and take notice? After all, in these highly competitive times, your client’s bid will be lost amongst dozens of others unless you can deliver something special, in language the tendering organisation understands.
  • Asking difficult questions – probing the capability of the bidding organisation to delivery the contract is key. Unless you are satisfied that they have the skills, capacity, and have some benchmark of how good they are compared to their competitors, the bid won’t succeed and you are all wasting your time.
  • Project management – just getting people to contribute to the bid in time and with quality input can be like herding cats. The main culprits are usually the most senior managers!
  • Coaching the presentation team – making sure they are articulate and that they can go beyond the bid document in their slide presentation and verbal input.

Of course the final document has to be clear and well-written, conveying the key messages as effectively as possible. That’s a given.

But in the end, the reason for using a really good bid-writer is that you have a greater chance of winning the bid!

January 7, 2011 Posted by | business | Leave a comment

Deduction, induction and abduction – or how not to keep doing what you always did and getting what you always got

The saying ‘keep doing what you always did and you’ll get what you always got’ is a great way to make people stop and think. You learned one approach and it worked, so that’s what you always do. But was the outcome you got, the last few times, actually what you wanted? If not, wouldn’t it be good to do something else and get a different result? Depending on experience and what worked in the past may not be the best way to approach a problem.

I have been pondering this. Because it’s actually not even true that if you do what you always did, the results will be what you always got… The world is changing so fast that it’s probably truer to say that you won’t even get what you used to get – you’ll get something less satisfactory, less useful.

So what to do?

The problem is that just knowing that you need to change your approach doesn’t actually tell you what to do instead. So you are thrown back on your capability to work it out. And the first thing you’ll do, because you are a human being, with the same wiring in your brain and as everyone else, is to apply logic to the situation.

Let’s see… if A is happening, then I probably need to do B. Elementary, my dear Watson! It’s obvious! If your car runs out of petrol, it will stutter and stop. Every time! If you forget to turn off the tap, the bath will overflow. Count on it! If I see a problem I can usually see the cause – and that’s all I need to fix it!

That’s called Deductive reasoning.

Deduction

Using deduction is fine in a world where everything works logically and consistently, where causality is transparently clear and we can always understand what’s needed to be done. The trouble is, the world isn’t like that. Stuff happens and sometimes the obvious solutions don’t work. They can even make things worse.

And sometimes we think there is a causal connection, but it turns out, there isn’t. The sales figures are down again this month. It must be the sales director’s fault. So he is sacked and a new sales director comes in – and the figures continue to slide. Turns out it wasn’t the sales director’s fault – there’s a new competitor who is taking away your customers. You should have spent a bit more time finding out what was really going on, analysing the situation, digging around in the undergrowth to uncover the root causes and then working out how the pattern fits together.

And that’s called Inductive reasoning.

Induction

If my research suggests that B happened because of A, I can make the hypothesis that if you do A again, you’ll get B again. That’s called learning from experience and that’s how we function. We analyse the past, work out the ‘why’, try it out and repeat what worked. If B was an undesirable occurrence, like a train crash, the enquiry will identify the cause and recommend strategies to stop it happening again.

Which is fine if your research identified a true causal link and didn’t confuse the symptom with the underlying cause. And if the world around you doesn’t keep changing, so that what caused B last time won’t make it happen again this time.

We see this when social workers fail to stop a baby being abused and a government enquiry makes recommendations for more controls and improvements in the management procedures to prevent it happening again. But it does – again and again. The underlying causes of the failure will be complex and may not have been fully understood. They will be context-specific and, as circumstances changed, new contributory factors will influence the outcome. And the very act of increasing controls may actually make the social workers’ job more difficult, adding to the problem rather than reducing the risks.

We can use inductive reasoning to make sense of the world, provided we don’t forget that it’s reductionist in nature – we simplify in order to reduce the data to something we can understand and use. And provided we recognise that it’s only based on what happened in the past. Retrospective analysis will often uncover useful insights – patterns which look causal and suggest worthwhile conclusions, but these patterns won’t necessarily repeat themselves in future. In fact they are almost certain not to do so.

So if we can’t count on inductive reasoning, based on experience, logical enquiry and analysis, how are we to decide what to do differently to get an improved outcome?

There is always intuition, of course… leaps of faith… gut feeling…

The technical term for this is Abduction

Abduction

This is where we make a connection between two occurrences which are not causally connected. We are all very good at doing this. That’s how conspiracy theories arise. We put 2 and 2 together, and make 5. We see order where there is none. We assign meaning to coincidences.

Sometimes this is a good talent to have. It can help us gain a sense of purpose and create a feeling that we are in control, and not subject to random chance and the chaos of the world around us. It allows us to be creative, imaginative. But mostly it leads us into false assumptions and invalid conclusions.

The trouble is, the more uncertain the situation we face, the more we appear to depend on our abductive reasoning powers. The less we know, the more we convince ourselves that our view is right. This is the territory of prejudice, born out of ignorance and our overwhelming need to be able to come up with an answer that means we feel in control.

Unsurprisingly, until recently, scientists and disciples of management theory derided the abductive process and confined themselves to deductive and inductive methods of enquiry and decision-making. Occasionally discoveries and successes came from ‘accidents’ and ‘luck’ – but these were not capable of being repeated, so as a methodology, it was of little value.

But there are well-known problems with the scientific and empirical use of inductive and deductive reasoning, too.

Ask someone a question and, as any researcher worth his salt will tell you, you have immediately bounded the answer within your own frame of reference. So the answer will not be the ‘truth’ you sought, but just a version of the truth, biased by you in the very act of asking the question.

It gets worse: ask the question of someone and the answer you get will also reflect: how they feel about you at the time, how they think you want them to answer the question, their own mood and well-being at that moment… etc.

Of course, a well-managed research project will always work to reduce these influences, but they can never be eliminated. And by imposing confidence limits and statistical averaging on the data, you devalue the exercise – many potentially interesting opportunities to make useful connections are lost.

And remember, analysis of what has happened in the past can only tell us something about the past – often quite a long time past. By the time we have collected enough data, analysed it, drawn conclusions and decided what needs to change, the occurrences could be months or years old.

If we want to get the result we want or to prevent something happening in the future, we need a method of enquiry that doesn’t have this built-in time lag. Is that possible? Is there such a method?

Some work that is going on in the use of unstructured story-telling in research promises to overcome these fundamental problems and offers a new way to gain early and unbiased feedback and insights into what is happening around us in real time.

Sensemaker®

As we saw, traditional research and analysis methods tend to be limited by their dependence on the ‘expert’s role in framing the questions and interpreting the results. These issues are specifically addressed by SenseMaker®, which has been developed by Cognitive Edge (http://www.cognitive-edge.com), a firm founded by Wiltshire-based Dr David Snowden, the former Director of Knowledge Management at IBM.

SenseMaker® applies the principles of unstructured, fragmented data, disintermediation (avoiding expert bias) and network intelligence (the wisdom but not the stupidity of crowds). It offers an innovative means of gathering and analysing feedback, which is quite different from conventional methodologies, such as surveys, focus groups or interviews.

Expert bias is minimised through the use of stakeholder-derived ‘signifiers’, which enable the respondents themselves to add layers of meaning to their own narratives.  That enables the findings and conclusions to be defined, not through the interpretation of an intermediary expert, but directly by the users themselves.

A significant advantage of the use of SenseMaker® is its ability to identify “weak signals”. These occur when small clusters of narratives emerge, sharing particular patterns of response.  These weak signals may indicate emergent trends towards beneficial or adverse patterns of activity; their early identification enables you to take early, small‑scale action either to dampen down negative effects or to encourage the development of beneficial outcomes. No built-in time lag.

So SenseMaker® supports abductive reasoning – identifying relationships between factors that would not normally be considered linked, or where relationships are counter-intuitive. And it provides a method of enquiry that can respond quickly to current and ongoing situations.

In summary

Wouldn’t it be good to do something different and get a different result? Well, now you can. Rather than just depending on analysis of what worked in the past, you can gather information in the form of stories, which will point to new and sometimes surprising approaches to a problem.

Here’s a great story to sum up:

A drunk, scrabbling about on the pavement under a streetlight, is approached by a policeman. “What are you doing?” “I’m looking for my keys. I lost them somewhere over there in the dark”. “Well, why are you looking for them here, under the streetlight?” ”I can see better over here.”

We all tend to look where our experience and methods provide the best approach – but they won’t necessarily provide the solutions we need.

December 16, 2010 Posted by | analysis, business, business change management, problem-solving, storytelling | 1 Comment

How do the “soft” elements (people, culture, innovation, etc.) impact the success of M&As?

I recently came across this question in a LinkedIn discussion and thought it worthy of a blog. Because we all agree that the ‘soft’ elements (people, culture, innovation etc.) represent the critical factor in the success or failure of a merger, don’t we?

The problem, as many of the contributions to the discussion pointed out, is how to convince senior management that the ‘just do it’ approach has a significant chance of failing. The secret, I have found, is to develop a quantified analysis and business case for time and resources to tackle these issues and to communicate this in a language that the Board understands – impact on the ROI of the project.

But how to turn ‘soft’ issues into hard financials?

I came up against this challenge when trying to argue the case for taking a more people-focused approach to change projects. It became clear to me in working with public sector organisations that most projects failed to deliver the planned benefits because the complexity of what they were trying to achieve was not within the capability of the organisation to cope with yet another change initiative. But senior management were not interested.

So I came up with a Change Readiness Healthcheck methodology to:

1. Map the predominant culture (or cultures – depending on the size of the organisation, there’s probably more than one) of the two organisations. For example, the level of knowledge sharing, silo working, alignment…

2. Assess the maturity of their capability to manage process – weakness here can spell disaster when it comes to bringing in new systems

3. Measure the level of distrust and lack of respect in relationships between people – the higher the high level of distrust, the harder it will be to achieve integration and the more time and effort you will need to overcome the barriers.

4. Establish where the project lies on an Exponential Complexity scale, from ‘Simple’ to ‘Too Complex’, where the components include the scope, number of stakeholders and timescales.

The resulting findings provide a ‘dashboard’ of indicators which accurately predict the potential for success and can be expressed in terms of quantified impact on the project business plan’s projected ROI.

With a merger, the first three factors are the critical ones. Map the organisational cultures of the two organisations, assess their process management capability and establish the relative levels of distrust. If these are very different between the organisations, or if they show significant weaknesses in both organisations, you are in for a bumpy ride and, at the very least, need to allocate a skilled and experienced manager to handling the transition and integration. Worst case, you have the ammunition to oppose the merger.

The most important stage in the merger is before you start. With the right insights, you stand a chance of investing wisely. Going in blind makes no sense. Companies understand this when it comes to balance sheets and financials, but don’t seem to have grasped the need for a parallel due diligence analysis of ‘capability’.

I advocate the use of the Change Readiness Healthcheck as a due diligence tool when planning a merger or acquisition, to supplement whatever other methods are used. There are no other methodologies around that I have found as useful, to help you to assess and benchmark these ‘soft’ aspects, quickly and objectively.

We can offer a rapid assessment for a specific M&A or help you build this into your standard due diligence process.

Peter Duschinsky

Tel: 07801802571

email: peterd@imaginist.co.uk

September 10, 2010 Posted by | business, business change management, M&A, mergers and acquisitions, project and programme management, Project Readiness Healthcheck | , , , , , | Leave a comment