1. Building your Capability for Change
THE CHANGE EQUATION
Building your Capability for Change
Peter Duschinsky
Managing Director, The Imaginist Company

2. The Purpose of this presentation
To:
Examine what makes an organisation good at managing change
Introduce the key models and tools in the Change Equation methodology
Develop the concepts of: Change Readiness and Capability for Change
Show how the Change Equation can be incorporated into your standard practices:
at project level - to deliver consistently improved project outcomes
at programme level – to deliver Capability for Change into the organisation as a key outcome

3. 70% of projects fail to deliver the planned benefits

4. Internal Change Programmes fare no better
The Harvard Business School tracked the impact of change efforts among the Fortune 100 and found that only 30% produced a positive bottom-line improvement…
A survey of change programmes in 400 European organisations quoted by Prof. John Oakland, Emeritus Professor, Leeds University Business School found that:
90% of change programmes faced major implementation problems
Only 30% delivered measurable business improvements
A CIPD survey of 800 executives found that reorganisations failed to deliver real improvement in performance in 40% of cases

5. What makes an organisation good at managing change?
Are there characteristics we can look out for?
Strong, visible, empowering, leadership
Clearly articulated and shared vision
Attention paid to supporting core values
High level of trust between managers and staff – decision-making devolved wherever possible
People able to give priority to new initiatives – overload issue managed well
Innovation encouraged and well managed
Good communication between departments
Collaboration with customers and suppliers
Adherence to standard ways of doing things
HR benefits and rewards aligned to business objectives

6. What makes an organisation good at managing change?
Does your organisation have these characteristics?
Then you are likely to have:
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
Capability for Change

7. Capability for Change
“Stock of capability - Attention and resources focused on people and processes, developing the organisation’s capability and resilience” (Rebecca Henderson, Harvard Business School)
Resilience: “The attitudes, skills and strengths, that enable individuals, and teams to thrive within organisational change” (The Taylor Clarke Partnership)
A Capability for Change is crucial if you want to respond to the accelerating pace of change and rising levels of business complexity
But it erodes through natural entropy and neglect, so requires continual investment and maintenance
Any Change / Transformation Programme needs this to be part of its core deliverables, but many don’t
The Change Equation provides the tools you need

8. The Principles behind the Change Equation
The Change Equation is based on 3 key contentions:
Projects fail when the complexity of the project exceeds the capability of the organisation to cope
The changes needed in a complex project cannot be achieved within its lifecycle
A conventional ’command & control’ approach to management of complex change projects will not achieve consistently successful outcomes
Let’s apply these…

9. Contention 1
“Projects fail when the complexity of the project exceeds the capability of the organisation to cope”
Management typically:
Underestimates the complexity of its projects
Overestimates the capability of their organisation
So if we want to be able to predict success or failure, we need to measure project complexity and organisational capability
We do this by undertaking a Change Readiness Assessment

10. Change Readiness Assessment
The Change Readiness Assessment (CRA) comprises:
Stakeholder interviews, review of project documentation, analysis, senior management team workshop, report & recommendations
It allows us to:
identify the underlying causes of low and negative ROI on projects
quantify the barriers to success
predict the success or failure of projects
deliver a Route Map and Action Plan to help clients gain ownership of the risks and improve performance
Undertaking a CRA at the planning stage will improve a project’s outcomes
Integrating CRA into your standard project planning process will deliver consistently improved project outcomes

11. Change Readiness Assessment
We use a number of key models and tools
We will come back to these…
Organisational Culture Evolution model
Process Management Capability Maturity model
Capability/Complexity Indicator
Exponential Complexity tool

12. Contention 2
“The changes needed in a complex project cannot be achieved within its lifecycle”
The actions needed to achieve and embed behaviour change usually have to be linked to a wider programme
Building these into a Change (or Transformation) Programme will enable the development of an organisation’s Capability for Change
The Change Equation principles provide the framework
The CRA Route Maps and Action Plans provide the content

13. Contention 3
“A conventional ’command & control’ approach to management of complex change projects will not achieve consistently successful outcomes”
Conventional change management interventions attempt to impose change…so people give up, fall back on ‘what’s in it for me’ and the change project fails  
In a complex project, newly emergent ways of working and new forms of organisation need to be recognised, nurtured and embedded
You need to employ project and programme managers with the right skill-sets to achieve this

14. Integrating the Change Equation into standard practice
Audit
Undertake CRAs on selected projects
Stakeholder face-to-face interviews
Analyse
Identify and quantify key common barriers
Adapt methodology, terminology
Integrate
CRA into standard project management practice
Change Equation principles into programme architecture
Implement
Employ project and programme managers with right skill-sets
Consistent improvement in project outcomes
Capability for Change

15. Change Readiness Assessment: Models and tools
Organisational Culture Evolution model
Process Management Capability Maturity model
Capability/Complexity Indicator
Exponential Complexity tool

16. Change Readiness Assessment: Models and tools
Process Management Capability Maturity model
Capability/Complexity Indicator
Exponential Complexity tool
Organisational Culture Evolution model

17. Assessing an Organisation’s Culture1 2 3 4 5 6 7 8 9
Levels of organisational culture
ORGANISATION
‘External’ Focus:
The organisation’s needs and direction
Systems and processes
Efficiency
THE INDIVIDUAL
‘Internal’ Focus:
Culture
People’s perceptions, attitudes, motivations, aspirations
Effectiveness
Point of balance

18. Organisational Culture Evolution Model
EXTERNAL
INTERNAL
Structuralist 2
1 Pragmatist/Anarchic 3
Dialectic
Aligned 4
5 Pragmatist/Aligned 6
Empiricist
Imaginist 7
9 Pragmatist/Empowered 8
Systemist

19. Organisational Culture Evolution Model
EXTERNAL
INTERNAL 8
Systemist
Imaginist 7 6
Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
1 Pragmatist/Anarchic
Structuralist 2 3
Dialectic
Aligned 4

20. Organisational Culture Evolution Model
EXTERNAL
INTERNAL 8
Systemist
Imaginist 7 6
Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered 3
Dialectic
Aligned 4
1 Pragmatist/Anarchic
Structuralist 2

21. Organisational Culture Evolution Model
EXTERNAL
INTERNAL 8
Systemist
Imaginist 7 6
Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
Structuralist 2
Aligned 4
1 Pragmatist/Anarchic 3
Dialectic
3 Rationalist

22. Organisational Culture Evolution Model
EXTERNAL
INTERNAL 8
Systemist
Imaginist 7 6
Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
Structuralist 2
Aligned 4
1 Pragmatist/Anarchic 3
Dialectic

23. Organisational Culture Evolution Model
EXTERNAL
INTERNAL 8
Systemist
Imaginist 7 6
Empiricist
5 Pragmatist/Aligned
9 Pragmatist/Empowered
Structuralist 2
1 Pragmatist/Anarchic 3
Dialectic 4
Aligned

24. Organisational Culture Evolution Model
Where are you now?
Organisational Culture Evolution Model
EXTERNAL
INTERNAL 8
Systemist
Imaginist 7 6
Empiricist
9 Pragmatist/Empowered
Structuralist 2
1 Pragmatist/Anarchic 3
Dialectic
Aligned 4
5 Pragmatist/Aligned

25. Where do you need to be? Where are you now? 8 7 Systemist Imaginist 4
EXTERNAL
INTERNAL
Structuralist 2
1 Pragmatist/Anarchic 3
Dialectic
Aligned 4
5 Pragmatist/Aligned 6
Empiricist
Imaginist 7
9 Pragmatist/Empowered 8
Systemist

26. Assessing an Organisation’s Process Management Capability
Where are you?
1. Initial
Ad hoc process
Chaotic
2. Managed
Repeatable process
Controlled environment
3. Defined
Standard process
Consistent Execution
4. Quantitatively Managed
Measured process
Quality and Productive Improvement
5. Optimising
Effective process
Continuing Improvement
Software Engineering Institute
Where do you need to be?
What’s stopping you?

27. The Organisational Capability Indicator

28. How should we measure complexity?
LOW Complexity HIGH
‘Developmental’
Apply management improvement techniques to “make it work better”
‘Transitional’
Replace one system or process with another
‘Transformational ’
Scrap whole operation/business and start again
e.g.
‘Transformational’
Scrap whole operation/business and start again
Major impact on people
‘Transitional’
Replace one system or process with another
Some impact on people
‘Developmental’
Apply management improvement techniques to “make it work better”
Little impact on people
Complicated = not simple, but outcomes are ultimately knowable
Complex = not simple and outcomes are never fully knowable

29. Terminal 5
Over 28,000 lost bags, 700 cancelled planes and more than 150,000 disrupted passengers
“The Terminal 5 debacle is a national disgrace” Daily Mail, 14 April 2008

30. So what went wrong? Shortage of staff car parking spaces
Only one employee security checkpoint operating
Some staff unable to log on to the computer system
Hand-held communication software running slow
No managers on the ground to re-allocate work
Shortage of bar-reading storage bins
Baggage handling staff late in arriving
60 staff queue to get into terminal
6am: 3 planes leave without bags
Bags pile up, unattended
By midday 20 flights cancelled
4pm: baggage conveyor belt grinds to a halt, BA suspends all baggage check-in

31. “The Perfect Storm”
In 2004, HP's project managers knew all of the things that could go wrong with their ERP centralisation programme. But they just didn't plan for so many of them to happen at once.
The project eventually cost HP $160 million in order backlogs and lost revenue—more than five times the project's estimated cost.
Gilles Bouchard, then-CIO of HP's global operations, says: "We had a series of small problems, none of which individually would have been too much to handle. But together they created the perfect storm.”
Complexity is exponential!

32. Complexity is Exponential
”We live in a world that can change exponentially – but we have brains that are hardwired to plot things out linearly - the software in our brains compels us to think about progressions as being simple arithmetic ones
So as a species, and a society, we deal poorly with uncertainty in non-linear domains.” Prof Albert Bartlett, University of Colorado
That’s one good reason why management typically under- estimates the complexity of projects!

33. How should we measure complexity?
‘Transformational’
Scrap whole operation/business and start again
Major impact on people
‘Transitional’
Replace one system or process with another
Some impact on people
‘Developmental’
Apply management improvement techniques to “make it work better”
Little impact on people
LOW Complexity HIGH
Apply management improvement techniques to “make it work better”
‘Transformational ’
e.g.
Complexity Factor
Not simple - needs some project management
A complicated project – needs an experienced project manager
Your project is too complex – break it down into separate projects and employ a programme manager
Simple project
A complex project – needs a dedicated project team
Exponential Complexity Model
Complexity Factor
Exponential Complexity Model

34. The Exponential Complexity Tool
Which 3 factors? They must be:
Common to all projects
Quantifiable by stakeholders
Good predictors of the complexity of a project
The Exponential Complexity Tool uses the following 3 factors:
Number of people or Stakeholders involved
(More people = more complex = higher risk)
Number of business activities or Processes affected
(More ambitious = more complex = higher risk)
Elapsed Time to implement (in months)
(Longer to implement = more complex = higher risk)

35. The Exponential Complexity Tool
Think about a project you are familiar with
Where on the scale do you think you are?
Now do the numbers: Stakeholders x Processes x Time
Think about a project you are familiar with
Where on the scale do you think you are? 20
200
18 mths
Complexity Factor
Not simple - needs some project management
A complicated project – needs an experienced project manager
Your project is too complex – break it down into separate projects and employ a programme manager
Simple project
A complex project – needs a dedicated project team
Exponential Complexity Model
72,000

36. Combining Capability and Complexity

37. Deliverables: Action Plan
Organisation
Component
Implication
Action required
Management
Culture
The lack of information-sharing, alignment and empowerment will jeopardise the success of the project. At the very least it will mean poor take-up and a lower than planned level of benefits.
A programme of interaction and dialogue across the organisation is urgently needed to improve the management culture. This needs to include increasing trust, see below.
Process
Capability
The organisation’s process capability is poor. This means that any projects which seek to standardise and improve processes to achieve greater efficiency will be very difficult to achieve.
Consider carrying out a programme to raise the levels of process capability ahead of implementing the project or using the project itself to inject the necessary disciplines. In this case it is crucial for the Board to make compliance to the new processes mandatory.

38. Deliverables: Route Map
INTERNAL
(Individual)
Structuralist 2
1 Pragmatist/Anarchic 3
Dialectic
Aligned 4
5 Pragmatist/Aligned 6
Empiricist
Imaginist 7
9 Pragmatist/Empowered 8
Systemist
EXTERNAL
(Organisation)
You are here
You need to be here

39. Summary
The Change Equation methodology is designed to be integrated into standard practice:
at Project level – CRA ensures Change Readiness and deliver consistent improvement in change project outcomes
at Programme level – Change Equation principles, Route Maps and Action Plans provides framework and content to deliver organisational Capability for Change as a key outcome
(NB this needs to be coupled with strong, visible, creative leadership – we hope you agree that’s a given…)
If you think this approach might be of value to your organisation, please contact us

40. Peter Duschinsky Managing Director The Imaginist Company
Tel:
Mob:
Web:
‘The Change Equation’ is available from Amazon.co.uk