Inspiring Business Performance

In format ive gu ides on indust ry best pract ice

Effective Change ManagementThe formula for success

D × V × FS > R

THE OL IVER WIGHT – WHITE PAPER SER IES

Introduction

We all know the importance of being agile and flexible in business nowadays; companies

that fail to adapt to market needs and consumer demands, quite simply, won’t

survive. Continual change has become an accepted part of everyday business, yet

more often than not, change initiatives fall at the first hurdle. In striving for change, the

importance of getting the basics right is sometimes forgotten. Change can be difficult

and painful for individuals and companies alike. Nonetheless there are well-established

ways of minimising the grief and managing the process effectively. Successful change

management revolves around these six key steps:

1. Create dissatisfaction

2. Establish a clear vision

3. Ensure the first steps are easy, and easily understood

4. Design and implement your programme

5. Measure your success

6. Continue to drive improvement

Crucially, the first three of these steps must be tackled before any change programme

can even be designed, never mind implemented, and it is this ‘preparation stage’ that

this paper addresses. All three steps revolve around people, since it is the individual

that remains the single most important aspect in determining success of any change

programme, regardless of its nature - and that includes the implementation of mission

critical software tools. Getting your whole organisation on-board is a fundamental

pre-requisite.

How? The answer lies in simple arithmetic.

By Andy Walker

Oliver Wight Partner

Dissatisfaction ResistanceFirst steps Vision

× × >

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The formula for change

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There is a well-established but not necessarily widely known, mathematical formula that is highly effective in initiating change in an organisation.

This ‘Formula for Change’, sometimes referred to as ‘Gleicher’s Formula’, not only ensures an organisation is ready for change, but also helps discover why an existing change initiative is failing.

The three factors D, V and FS, represent the first three steps in the preparation stage of the change programme. R represents the resistance to change:

D = Dissatisfaction (with the current state) V = Vision (of a better state)FS = First steps (towards the new vision)R = Resistance (to change)

The formula says that the product of the three variables D, V and R has to be greater than R for a company to be able to change. The multiplication in the formula determines that if any of these variables are missing or their value is near zero, an organisation will fail to change. In other words, the different variables do not compensate for one another - it’s no good being really disillusioned with the status quo without any idea of ‘what good looks like’, or having a clear vision of Nirvana with no clue of the first steps you need to take to get there.

Unless people are dissatisfied with their current situation (and this starts at the very top of the organisation), they have no reason or motivation to change; change is only welcomed where dissatisfaction exists. If dissatisfaction does not exist there is a need to create it, as without it no sustainable change will happen. Vision is key;

but it has to be a vision with tangible results. Without knowing the possibilities that lie ahead, why would you embark on a new path? Third and finally, people need to know what action is required to make change possible. As the Chinese proverb says ‘A journey of a thousand miles starts with the first step.’ Without knowing the first steps to change, the vision may be dismissed as just a dream.

A simple analogy is weight loss; the classic ‘before and after’ scenario. If you want to lose weight, you have to be dissatisfied with the way you look or feel; you need a vision of how you want to look, and you need to know what it takes to get there: i.e. eat less and exercise more. If you are not dissatisfied, your resistance to change will be too great and you will not lose weight. If you are struggling to make the change you want (e.g. weight loss), ask yourself which part of the formula is missing – e.g. am I not so dissatisfied with the way I look, or are the steps required to make that change too difficult. The multi-billion dollar weight loss industry is predicated on the fact people want to loose weight but don’t want to eat less and exercise more, and so look for easier alternatives.

D x V x FS > R

THE OL IVER WIGHT – WHITE PAPER SER IES

There is always an inclination for people to stay within their comfort zone and this is where the benefits of education are realised. Some people in the organisation will already be dissatisfied but unsure on how to go about change. For others, resistance is created through ignorance - they will be quite happy with the current state because they don’t know any better; in which case the role of education is to enlighten them on how things could be, thus creating dissatisfaction that previously didn’t exist.

1. Create dissatisfaction

Creating a vision of ‘a better state’ is usually the best way to make people discontent with the status quo and for acceptance and movement to occur. Here, we can look to marketers, whose role is often to make consumers dissatisfied with their current product to encourage them to buy the latest model. For example, when a new iPhone is introduced, the role of the Apple marketing team is to make the consumer discontent with their existing phone. They do this by creating a vision of what they could do with the new one, because of all the features and functionality the new model has and the old one doesn’t have. The principle is the same for change management programmes: creating a vision of what people could have, brings dissatisfaction with the current state of the business and a sense of urgency that change needs to happen.

Another obvious example is cars. We might be unhappy with the old family runabout and in an ideal world would prefer a Ferrari or a Porsche, but for most of us, the price tag provides sufficient resistance to stop us from owning one.

Overcoming resistance and increasing the value of each of the three variables in the equation, hinges very much on education. Education is fundamental not only in creating dissatisfaction with the status quo throughout the organisation, but also in realising the vision

and understanding what the first steps will be.

So how can this formula help your business? By tackling each of these variables systematically and pragmatically, you will get your entire organisation aligned behind your change programme; essential in making it a success. Furthermore, by referring to the formula throughout the change initiative, you can ensure none of these key variables are overlooked and that you don’t slip back to your previous position.

Di

ssatisfaction3

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Sustainable change depends on top-down, as well as bottom-up, ownership and commitment. In order to accept and implement change, people have to buy in to the vision; that means the vision has to be crystal clear. Any ambiguity will cause confusion and encourage resistance. The vision should be articulated in a way that is very easy for everyone in the organisation to understand, using language that makes sense to them. Critically, the vision must be achievable and the benefits measurable. Employees will not buy in to something they see as pure fantasy.

A compelling vision will get employees on-board. You need to excite them, through a systematic programme of education on what the planned change will bring for the business, its customers and above all, its employees - how it will create a very much better place for them to work.

As well as getting everyone pulling in the same direction, creating the vision of a better state will also play a fundamental role throughout the change programme once it is rolling. Bear in mind you are asking staff to support something that may not produce results for months; you have to keep them believing throughout that period, the picture you’ve painted really will come true and that it will be worthwhile for everyone. If you don’t keep the vision at the forefront of their minds, the change programme will fail.

Of course, individuals respond very differently to change. Some are inherently conservative, some are very pragmatic, and others are originators, very open to change. In Oliver Wight workshops, when the question is asked, ‘who likes change?’ at least 50% of delegates raise their hands. But when asked ‘how many of you like change when you are not in control of that change?’ hands soon drop. People don’t like change being done to them; even those most receptive to change like to have some control

2. Establish a clear vision

over it. It seems logical, but it’s something that very often gets forgotten in change initiatives. In fact, 75% of change programmes fail because they don’t engage people.

If you want people across the organisation to get on board you have to engage them in the process. Education is part of the engagement process but you must also consult with them, listen to their feedback and ensure they recognise they will have real input to the change programme.

People need not only to be aware of the overall business aims and strategy, they also need to know the role they are expected to play during the change programme and thereafter. They need to know how it will personally affect them and what they will need to do differently. The more people are aware of which processes they are responsible for, what is required of them, and the impact they can make, the more likely they are to feel empowered and inclined to embrace change.

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before - there is a tendency here for staff to shrug it off as ‘just another initiative’. To avoid this happening, the change programme has to be given the importance it deserves. Where organisations can sometimes struggle is when there are numerous ‘strategic’ change initiatives occurring at the same time. It isn’t unusual for organisations to have multiple ongoing change programmes, all of which are ‘priority number one’. But that just can’t work. Author, Jim Collins once said ‘if you have more than three priorities, you don’t have any,’ and that’s absolutely right. The resources just don’t exist to be able to prioritise multiple projects. The change programme needs to be prioritised relative to everything else going on, and that then needs to be clearly communicated.

At Oliver Wight, we have an established methodology, which we use for sustained cultural change: the ‘Proven Path’ helps in defining the first steps to take. It provides clear guidance through the change process, from engaging the leadership team; educating the design teams in the business; undertaking the design or redesign of the process; implementation; and finally, sustainability.

As has already been stated, education is the key aspect of change management in creating

As the old proverb says ‘a vision without a plan, is just a dream.’ That’s not to say the whole change programme needs to be mapped out in detail, but it is essential you have a clear idea of the direction you intend to take and the initial actions required.

The first steps must not be too difficult otherwise people will resist. Returning to the weight loss analogy, if the proposed first step is to stop eating for two weeks, most people will conclude that weight loss is not for them. By having a first step of, say, walking up the stairs at work rather than taking the lift, many would say ‘I can do that’ and so their journey to weight loss begins.

It is not uncommon for organisations to start talking about change before they are ready to implement, and this is often where improvement programmes falter. Talking about change does not count as a first step. You have to initiate change through action and set out a clear path so people can see where you are heading and how the vision is going to be achieved.

Naturally, employees will be asking ‘what’s in it for me?’ The reason for change to occur needs to clearly communicated, especially in those organisations that have tried change

3. Ensure the first steps are easy, and easily understood

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D × V × FS > R6

dissatisfaction and/or establishing a clear vision of what can be, as well as in helping to explore what the first steps of change will be. If after education, resistance (R) is still greater than D x V x FS, you have to analyse which part of the equation you’ve missed or where people haven’t understood. Consider: Do they really understand why change is needed? Have you not sold the vision effectively enough? Are your first steps still unclear? Or do they simply think the journey is just too difficult to make?

Inevitably, you may reach a point where the majority of the organisation is on-board, there is widespread belief that change needs to occur and there are substantial benefits in doing so - and equally significant risks in not doing so. But you may still have some individuals who are resisting for the sake of resisting change. At this point, if you have repeated the equation and are confident each variable has been sufficiently considered, some difficult decisions need to be made. Bluntly, if people are not willing to join you on the journey you are taking, they are choosing not be part of your future organisation.

Following these three fundamental steps for change management and underpinning them with the ‘Formula for Change’ will allow you to see exactly what is needed and where, in preparation for successfully initiating and embedding change in your business.

Before any improvement activity can begin, you need to build the case for change and the key to making change successful is to get your entire organisation on-board. Creating dissatisfaction with the status quo and

Summary

establishing a clear vision are fundamental; and before widespread commitment to change can be finally secured, you will have to explain clearly how change will be achieved, and what the role of the individual will be in bringing about that change. Only then can you turn your attention to implementing a sustainable change programme. Get the basics right; get your people on board and you can look forward to your organisation becoming the business it needs to be to survive and thrive; whatever lies ahead.

Inspiring Business Performance

About Oliver Wight

Oliver Wight has a 40 year track record of delivering business improvement to some

of the world’s best-known organisations. We believe that sustainable improvement can

only be made through your own people. So unlike other consultancy firms, we transfer

our knowledge to you, which means you can achieve performance levels and financial

results that last.

At the leading edge of management thinking and practice, our Integrated Business Planning (IBP) model lies at the heart of our clients’ journey to outstanding business performance. Oliver Wight originated Sales and Operations Planning in the 1980s and IBP can most simply be described as advanced S&OP; evolving from its production planning roots over 40 years into

the fully integrated management and supply chain collaboration process it is today. IBP allows the senior executive to plan and manage the entire organisation over a 24 month horizon, aligning tactical and strategic plans each month and allocating critical resources to satisfy customers in the most profitable way.

The information contained is proprietary to Oliver Wight International and may not be modified, reproduced, distributed or utilized in any manner in whole or in part, without the express prior written permission of Oliver Wight International.

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