Is Your Company Ready for Deep Change? Part II
The Challenge of Disruptive Innovation
Respect for company culture should not imply a tolerance for cultural inertia that prevents innovation. The cause of inertia is often myopia — failing to see important changes occurring in your own or other industries and considering how such changes might impact your business model.
Harvard Business School professor Clayton Christensen describes fundamental industry
changes as "disruptive innovation." He believes that executives often fail to recognize emerging trends because their own successes blind them to the transformational potential of new business models. To be ready for deep change, company leaders must understand this phenomenon and develop methods to offset its impact.
Key Attributes of Optimized Change Readiness
Outlined here are areas of examination to help you determine whether your company is ready for deep change. If your organization needs improvement, then you may use these descriptions as a checklist to consider the path to optimized readiness:
- Industry awareness: The organization is aware of changes in its industry and adjacent industries. Leaders are familiar with new and emerging business models. Interaction with and exposure to other companies, industries and geographies are key aspects of leadership development and accountabilities. External advisors may be used strategically to introduce and expand insights from outside the company.
- Shared accountabilities: Accountabilities for change leadership are shared between the corporate center and the business units. Such an arrangement provides checks and balances, enhances transparency and enables both a deep focus and broad perspective. (This structure can be difficult to frame and negotiate. An outside perspective can often aid in negotiating a shared accountabilities framework.)
- Objectivity: Leaders are inclined to explore all options, and there are mechanisms to do this efficiently and objectively. Processes exist for examining alternatives and providing for a certain degree of experimentation. The processes may include a requirement for a certain number of more controversial proposals to ensure that uncomfortable topics are not taboo. Consultants may provide a safe perspective for the objective exploration of options. Tradeoffs among different alternatives are delved into and syndicated across the enterprise.
- Experience: The organization has experienced some degree of change and is relatively comfortable with transitions. There is a broad understanding of the opportunities and challenges that change presents as well as the consequences of failure to change. This experience is often achieved in small steps to build confidence. In change-ready organizations, there is a general awareness that change frequently benefits those who remain open and adaptable to it. Reward mechanisms, visible career paths and support for those who demonstrate innovation and adaptability foster organizational acceptance. Other indicators of change readiness are a track record of making tools available for employees to continuously update their skills and implementing well-designed programs to soften the landing of affected employees.
- Disciplined communication: There is a formal change management competency, including processes, tools and experienced professionals capable of working at all levels in the organization. Employee engagement is measured and tracked to areas responsible for implementing change. Communications channels are well developed and include mechanisms to ensure consistent feedback and gauge passive objections. Advisors who have developed similar competencies in other organizations may help accelerate the communications process and avoid certain pitfalls.
- Risk management: There is a standard enterprise-wide process for risk management. Risk is assessed, scored and tracked using a common methodology that includes: a) mechanisms for estimating impact and likelihood; b) development of strategies for mitigation; and c) a process for disposition and ongoing management of residual risk.
- Shared reporting: Dashboards are shared among senior management in a common forum focusing on change objectives. The organization is enabled for agility through coordination and transparency of key performance indicators and an increased utilization of data integrated with experience and intuition. Participation in the change management forum is prioritized and includes the socialization and propagation of innovations and best practices.
Risks of Not Being Change Ready
Organizations that fail to develop change readiness can experience a number of significant risks and challenges. These include:
- Lack of vision: Strategic alternatives may not be considered, resulting in serious consideration of only modest enhancements.
- Incomplete execution: Strategic initiatives may fall short and achieve only incremental operational improvements.
- Loss of engagement: Management may lose credibility with employees and stakeholders compromising its ability to deliver on subsequent projects.
- Operational losses: Operational risks may not be appropriately managed, resulting in significant costs and lost revenue to the company.
Indications of a Lack of Readiness for Change
A number of symptoms indicate a lack of readiness for change. These include continued decision making in business unit or departmental silos, unresolved conflicts of interest between different functional areas, and incomplete buy-in from senior leadership.
Other red flags may include a lack of visible challenges, including progressing too quietly and the pervasiveness of the rumor mill versus the factual basis of change decisions. It is critical to remain vigilant to these symptoms throughout the life of a change initiative.
"Change" inevitably involves seeing things from a new or different perspective. Companies only make changes because of altered circumstances or specific experiences that require them to do something differently from the status quo. Those companies who wish to build and sustain a competitive advantage in their markets must assess and reinforce their change readiness. This will provide the capacity to gain insights that support the need for change as well as mechanisms to build and sustain consensus around the solution.
Change readiness is a significant differentiator for companies that wish to build and sustain a competitive advantage in their markets. While gaining buy-in for the need for change can be difficult, it can be even tougher to gain broad acceptance for a solution. Both tasks are made that much harder if there is limited vision of what the future may look like.
External advisors who bring broad external experience and insights can maximize the potential for successful change initiatives by helping to impart vision. Further, they can assist in selling the vision internally, supported by external data that validates the reasons for change. And finally, they can help speed implementation through proven methodologies.