This post originally appeared on the Harvard Business Review blog on June 2, 2010. It has been reposted with the expressed consent of the author.
Why can some companies take advantage of any change the market brings (Apple), while others struggle with the even the smallest internal or market-necessitated modification (GM)? Chances are your company has successfully executed a planned change initiative, but been unable to take advantage of a change brought on by market demands. Or vice versa. The reasons why will differ for each organization, but the question is definitely worth asking – especially in light of the fact that the pace of change is accelerating at the fastest rate in recorded history.
In our experience, the companies most likely to be successful in making change work to their advantage are the ones that no longer view change as a discrete event to be managed, but as a constant opportunity to evolve the business. GE, Hewlett-Packard and Nissan are three companies who are starting to treat change as a constant event; not as an initiative that needs to be managed. In these organizations, change readiness is the new change management.
Change readiness is the ability to continuously initiate and respond to change in ways that create advantage, minimize risk, and sustain performance. The age-old challenge: balancing the tension between the internal and external focus required to do all three equally.
This continuous and integrated approach to change requires the coordinated participation of everyone in the company, not just a few change agents or change leaders. Jeffrey Immelt, CEO of GE, articulated this in the company’s 2007 annual report when he explained that his new senior management team training, Leadership, Innovation and Growth (LIG), was to “embed growth into the DNA of our company.”
In a Harvard Business Review article “How GE Teaches Teams to Lead Change,” Immelt explains what he meant by that statement.
“… getting the teams leading the businesses to think about organic growth day in and day out – to be constantly on the lookout for opportuities and to create inspirational strategic visions that would enlist their troops in the cause… to weave innovation and growth into every aspect of their businesses… their behavior, their roles, how they spent their time.”
The need for this organic, constant approach to change is acknowledged in a Center for Creative Leadership White Paper, Transforming your Organization in which the authors conclude that organizations “need a new kind of leadership capacity to reframe dilemmas, reinterpret options, and reform operations – and to do so continuously.”
This is pretty ground breaking considering that our understanding of organizational change has has remained fundamentally intact since the innovative work of Lewin in the 1940s. Likewise, the concept of change management as a process of reorganizing, restructuring and reengineering (PDF link), which evolved incrementally over two decades.
Leaders know these theories no longer work, and even seem crazy considering how much the marketplace and corporate environments have changed in the same time period. Product lifecycle has never been so compressed, nor the need to innovate so fierce.
Consider BP and the oil still spewing from the company’s deepwater rig in the Gulf of Mexico more than a month after the initial explosion. No 10-step change management process is going to help BP’s management. The company must simultaneously react and innovate – all while maintaining their daily business. The BP situation may be extraordinary, but it does illustrate the need for change readiness vs. change management.
The discrepancy in the accelerated rate of change and the outdated change management practices still employed today unarguably have much to do with the 70% failure rate of change initiatives – a dismal statistic validated by study after study. Failure rates this high demand a new mindset and new actions, but before you can improve your change readiness, you must first assess current change awareness, agility, reactions and mechanisms.
Change Awareness. Change Awareness is a company’s ability to redefine itself as necessary. This contextual focus is critical to innovation – the right product at the right time. Good change awareness practices include scanning the environment for opportunities, focusing on emerging trends and planning for the future. Does your company have people responsible for regularly assessing the market for new opportunities and market changes? Does your company proactively search for opportunities for brand renewal and product innovation?
Change Agility. Change agility represents your company’s ability to engage people in pending changes. This is an internal focus that is critical to the company’s ability to effectively implement identified innovations. A great idea won’t matter if you can’t muster the capacity and commitment to carry it through. An organization with good change agility has the capacity to stretch when necessary and quickly shift resources to the place they will make the most difference. Leadership should inspire confidence and trust, and consistently. How agile is your company? How effective are your managers at engaging and delivering the changes envisioned by your decision makers? How well does your company actually facilitate and execute on change when it is needed?
Change Reaction. Change reaction is the ability to appropriately analyze problems, assess risks, and manage the reactions of employees. This internal focus ensures your company can sustain the day-to-day business while reacting in a timely and appropriate manner to self-initiated and market-dictated change. How effectively do you and other leaders at your company assess risk and manage unplanned change? How well does your organization react and respond to crisis?
Change Mechanisms. Change Mechanisms should encourage clear goal alignment across functions, the ability to integrate a change into existing systems, accountability for results, and reward systems that reinforce desired change behaviors. This contextual focus is critical to the ability to implement desired change with no interruption to daily operation. Are your structures and systems flexible enough to adapt and support the implementation of change? Does your organization have the structures and systems in place to support the successful implementation of change?
We have found that managers at companies like the ones mentioned here are asking themselves questions like these in the effort to build a capacity for change readiness instead of change management.
How are you working to increase your company’s change readiness?