BOSTON, MA--(Marketwired - Jul 20, 2015) - For many businesses today, one of the only certainties is an accelerated pace of change in an increasingly complex world. In fact, the pace of change today is greater than at any time in the last century, and perhaps at any point in history. As a result, the sources of traditional competitive advantage -- relative position, margins, and scale -- are disappearing. Therefore, the ability to successfully deliver bold change is increasingly what sets winning companies apart.
But most companies don't get it right. According to The Boston Consulting Group (BCG), determining the changes that need to be made is just "step one," and most companies don't even share a definition of what successful change management looks like. And it is well documented that between half and three-quarters of change initiatives, depending upon complexity, fall short of their targets, or fail outright.
"Most senior leaders say that their organizations struggle to bridge the gap between formulating change programs and successfully executing them, but we've identified some best practices for the effective execution of change," says Perry Keenan, senior partner and managing director at BCG. "Among the key priorities are setting clear objectives that track success and ensuring that things stay simple. Initiatives that add new bureaucracy are less likely to hit their targets."
There are five key ingredients of a successful change initiative…
1. Establishing Clear Milestones that Lead to Specific Impacts and Can Help Spotlight Potential Issues Early
Companies should work to set explicit timeframes, milestones with associated financial and operational objectives and specific leading indicators -- early check-ins that make it easy to measure progress and mitigate risks at critical milestones in the change program. They should also be clear about who is accountable for what, and remember to track the most important metrics instead of every single detail of the initiative. BCG research has found that typically less than 20% of a change program can account for more than 80% of its impact, and companies will be well served to focus on the most impactful elements.
"A rigorous approach to defining milestones and accompanying metrics can set a winning cadence for the entire change program," says Keenan. "For example, a North American insurance company had an overall goal to improve effectiveness and efficiency, in part by reducing overall costs by $500 million. The company focused efforts on the initiatives with the greatest impact and made the owners of those initiatives directly accountable for delivering their portion of the total savings, with goals for each initiative and forward-looking performance indicators to track progress and identify shortcomings in order to correct them."
2. Not Adding Unnecessary Burden
Effective change initiatives have evaluation components built into them. But those steps must subtract, not add, onerous routines, needless meetings and excessively long reports. The evaluation components should be minimally sufficient to help initiative owners and sponsors keep their programs on track without creating new bureaucracy.
For example, when two pharmaceutical companies merged, they focused on changes that offered the highest value for the least amount of organizational burden. They strove for simplicity and accountability by focusing on the 9% of initiatives that accounted for more than 80% of value of the overall change effort, according to Keenan.
3. Keeping Senior Leadership Involved where it Counts
Change starts as a vision at the top of a company, and engagement by the executive team can make or break an implementation effort. People need their leaders to be visible, especially during difficult times. The most effective leaders during change initiatives walk around, are accessible and answer questions openly -- even if they don't have all the answers. Very importantly they also work with the next tier of leadership -- the extended leadership team -- upfront to engage them as leaders solicit their ideas and ensure their active involvement in implementing the various change initiatives.
"Most companies point to executive involvement as the number-one factor leading to the success of a change program -- but companies need to find ways to involve leaders meaningfully," says Keenan. At one financial services company, the CEO and his entire management team went around to every office, sat on stools in a town hall format, listened to employees' concerns and answered questions honestly. "The fact that the whole team -- leadership included -- was there boosted employee confidence," he says.
4. Changing Individual Behavior to Effect Organizational Change
To drive change on an individual level, i.e., individual behavior, companies need to figure out what their people do -- and create the context that will drive the behavior they want. Keenan points to a company that wants to drive profitability by compelling its sales force to sell on margin instead of volume. "Just telling those salespeople to change isn't enough. Additional to leadership championing the change, the sales force needs to be empowered with the right skills and training so that they are both willing and able to change their behavior on an individual level. And, if correctly orchestrated with other initiatives, that individual change will lead to change throughout the organization," he says.
5. Building Internal Capabilities That Make Change Fluid
To manage change initiatives more effectively, companies should build the infrastructure and institutionalize the capabilities that enable change, its planning and its execution. Companies should not have to start from scratch with each change effort. At many companies, a key part of this capability set is an "activist" program management office, which supports the business units and functions as they implement the company's transformation initiatives. "A well-developed program management office can add value by helping leaders make change a part of an organization's DNA," adds Keenan.
For more information, or to arrange an interview with Perry Keenan, please contact Frank Lentini, Sommerfield Communications at +1 (212) 255-8386 / Lentini@sommerfield.com.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 81 offices in 45 countries. For more information, please visit bcg.com.
Contact Information:
Contact:
Frank Lentini
Sommerfield Communications, Inc.
(212) 255-8386
lentini@sommerfield.com