How to Develop an Efficient, Change-Ready Organization

May 15, 2018 Jin Park

Disruption is Business-as-Usual: 3 Key Milestones for Change Management

One major hurdle that many business leaders encounter is overcoming people’s resistance to change. Whether it’s deploying an HR policy, implementing a new technology, or activating a sustainability or energy initiative, managing change successfully can be a barrier to business progress. There are many examples from history that can help frame what it means for today’s businesses to navigate an ever-changing environment.

To understand how to most effectively manage organizational change today and in the future, it is helpful to first consider the past.

The emergence of change management models in business  

The first change management model was published in 1982: a time when academics first began to understand how human systems experience change. Business, and life in general, have changed rapidly since then. Just remember, the meteoric rise of video rental stores, like Blockbuster, in the 80’s and their equally spectacular fall 20 years later.

change management is key for achieving intended business outcomesThen, during the 90’s, globalization, geopolitical changes, technological leaps, and more liberated employee-employer relationships created the drive to establish the concept of change management as a part of mainstream management.

Not always successfully though, as studies show that roughly 70 percent of change efforts fail to meet their intended outcomes – a statistic that has stayed constant from the 70’s until today. When a change effort fails, it not only results in financial losses, but also in decreased employee morale, lost opportunities and wasted resources.

Consider the example of a global food and beverage company that contracted a consultant to find 15 percent energy savings by conducting more than 40 single audits. The cost for the consultant was around $800 USD, and the audits identified recommendations for an exceptional $35 million USD in savings. However, after an entire year of work, the company had accomplished zero energy savings, simply because the internal process to act on the recommendations was not planned accordingly. For this company, a strategy that could have resulted in an extremely high-ROI, fell flat due to poor change management.

Understanding this example, it becomes clear that defining the action plan following the company’s energy & sustainability needs was not enough; effectively managing organizational change is a (at least) four-step process.

  1. Recognizing the changes in the broader business environment
  2. Developing the necessary adjustments for their company’s needs
  3. Training their employees on the appropriate changes
  4. Winning the support of the employees

Applying change management when disruption is ‘business-as-usual’

Today we live in a world of continuous disruption. Global warming, the omnipresence of the internet, emerging technologies, the largest financial crisis ever, social media, cryptocurrencies, renewable energy, and others are causing business models and companies to rise and fall in a matter of months. Disruption is the new business-as-usual. Managing the multi-dimensional nature of change impacts almost all aspects of business and society, and has become a business imperative.

There are, of course, risks and opportunities in change. When managed effectively, change can bring about positive business outcomes. Take the example of a global supermarket chain with a store network of more than 1,500 sites across 17 countries. eCommerce has continued to be a massive disruptor for traditional brick-and-mortar retailers, causing flat or declining sales –not to mention, large, costly storefront to upkeep. As a result, these businesses have more motivation than ever to make changes that help them remain competitive.

WATCH: Proving the Bottom-Line Impact of Efficiency [WEBINAR]

With energy being one of the largest in-store operating costs, decreasing its use was critical to protect the already-low business margins typical to the industry. For a grocery store, saving 20 percent on energy costs can have the same bottom line impact as a 5 percent sales increase. Because of this, the company decided to make energy efficiency a priority project supported by all areas of the company. More than 400 stores in 8 countries collaborated in the global efficiency program, resulting in more than €20 million in cumulative savings after 4 years.

change management of energy and sustainability initiativesWhat did the supermarket chain do differently than the earlier example?

By taking a closer look at what attributed to the supermarket chain’s success, we find a strong focus on change management and an intentional effort to foster knowledge-sharing and collaboration, including processes that require constant cross-silo involvement of teams in each participating country.  Not only did this company’s investment strategy yield significant cost savings, but it also freed up capital to be reinvested in future-proofing the customer buying experience.

Companies that invest in effectively managing organizational change today, will be better prepared to respond quickly and more strategically and holistically to the next disruptive change.

Establish change-ready organizations

Change management is a journey that requires on-going attention and nurturing to make change truly transformational.  And when disruption is business-as-usual, then change management must become second nature within organization.  To establish a change-ready organization, here are three key milestones to work towards:

  1. Accelerate decision-making: Start with a clear vision of success (what are you trying to achieve and by when?), and a centralized board of governance to charter the course of change management. Once the corporate vision and strategy is in place, build out a roadmap of the necessary steps in a collaborative workshop with your key stakeholders.  Having all your decision makers / influencers in the same room allows you to gain buy-in and establish accountability for actions as they are being mapped out.  In this way, you are able to accelerate the decision-making process and move from planning to action faster.
  2. Drive meaningful action: As part of building your roadmap, predetermine what metrics will be used to measure progress and impact. Make sure to present data that is meaningful for a stakeholder; this goes back to accelerating the decision-making process.  Make sure all stakeholders understand “why” we are taking a particular action and provide tangible evidence of the value and impact it will yield so decisions are aligned and strategic. While we are unlikely to change a person’s decision-making process, we can influence the conditions under which their decisions are made.
  3. Embed change management: A shared platform for visibility and knowledge-sharing on best practices allows you to replicate success more quickly across the organization’s portfolio of sites. An enterprise platform also enables you to continuously refine and optimize change management efforts.  And eventually, the organization accepts this change, making it an embedded element that has the potential to power transformative innovation and growth.

It’s no coincidence that much of this can be applied to successfully driving the convergence of efficiency and sustainability silos.  After all, convergence of traditional silos is a disruptive event: with shared goals, metrics and joint funding strategies, the efficient-sustainability convergence will undoubtedly bring new questions and conflicts.

To learn more about change management supporting efficiency and sustainability ambitions, download our eBook or engage with one of our experts.

 

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