Enterprise Change Management

How to Prepare Your Organization for Continuous Change

David Miller, Audra Proctor

• Publisher: Kogan Page
• Year: 2016
• ISBN:
  9780749473020
• Edition: 1
• Topic: Business
• Subtopic: Organisational Behaviour
• Index: Business

One of the biggest challenges facing organizations today is the ability to deliver the necessary change to sustain competitive advantage and adapt to economic and market environments. However, the gap between what organizations would like to deliver and their capabilities to do so is getting increasingly wide. Enterprise Change Management provides a practical roadmap for bridging this gap to help organizations build the sustainable capabilities to implement a portfolio of changes. Based on research on change performance from over 300 organizations and 400, 000 data points over a 21-year period, Enterprise Change Management will help diagnose the root causes of the organizational change gap, manage demand for change and create the context for successful continuous change in the organization. This book introduces five core capabilities - adaptive leadership; executing single changes effectively; managing the demand for change; hiring resilient people and creating the context for successful change. Frameworks, processes and tools help readers assess change capabilities and then create a strategy to close the change gap and improve performance in their organization.

Part I

Context and framework

01

Compelling case for building change capabilities

After 20 years of working in the field of building organizational change management capabilities, it appears to us that a majority of organizations believe that they need to change more quickly and more comprehensively than ever before. In his insightful book, The End of Power (2013) Moisés Naím identifies that there are many aspects of the world that are undergoing fundamental change and that well-established elites are being seriously challenged.1 Some of these challenges are greater than have been seen before. He refers to entities such as big governments being threatened by the rise of small parties and street protests, the rise of the BRICs beginning to shift power away from North America and Europe, religious affiliations undergoing significant shifts from the long-established religions to newer more evangelical faiths, and of course big businesses coming under the constant threat of disruption from new, smaller and more agile competitors. Naim points out that these new competitors are not encumbered by the past and can move quickly and nimbly.

Additionally, in an October 2015 Harvard Business Review article, the authors identified the following factors as major contributors to the increased pace and level of change in our organizations:2

• deregulation of well entrenched industries;
• extensive privatization of government assets;
• substantially more people living in cities around the world;
• extensive growth of the global consumer class.

TABLE 1.1 Shifting centre of power

Date	Sales by region as % of world total
	North America and Europe	Emerging markets
1980	65%	21%
2013	47%	41%

They also talk about how emerging markets have become a major source of corporate revenues. The numbers demonstrate the growing importance to the global economy of organizations in emerging markets over the last 33 years; see Table 1.1.

Impact on organizations

In a 2014 Financial Times report, the newspaper identified seven major industries that have been significantly disrupted in the last few years:3 technology, retail, transport, banks, real estate, media and telecoms. All of these businesses have a substantial need to change and to change quickly. Because of this, words and phrases like ‘disruption’, ‘innovation’ and ‘continuous change’ are becoming very much part of the lexicon of modern management.

It appears that long-established and entrenched ways of working can be quickly disrupted; for example the way in which Uber is threatening the traditional taxi industry. This extract from a January 2015 article in the Washington Post by columnist Barry Ritholtz explains the impact of Uber and the factors behind the rise of the company.4

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Consider Uber. How are the cabs in your city? In Manhattan, where I work, they are rather awful. They are uncomfortable and not especially safe (who wants to slam his face into a plexi-glass wall covered with metal projections?) As bad as they are, they are typically unavailable when you need one. The second it begins to rain, it is nearly impossible to find one. And what idiot decided to do shift changes at 5 pm – right at the start of rush hour, when swarms of riders need cars, all of whom are unavailable as they are returning to the outer boroughs for their daily change of drivers?

But the biggest inefficiency is the limit on the total number of cabs, as mandated by Taxi and Limousine Commission rules. Hence, that monopoly supply limitation thwarted competition, reduced the available number of cars and allowed the value of medallions to skyrocket.

We can credit (or blame) a number of factors [for the rise of Uber]. Companies like Uber and Lyft are more convenient, they are cost-competitive (especially low-cost Uber X) and the cars are nicer (especially Uber Black Car). But the biggest factor is that these firms have identified economic inefficiencies in major markets. They are bringing new efficiencies to underserved consumers… the existing companies have become fat and lazy. That’s what the term ‘entrenched incumbents’ means – they are here already, and they usually have some moat around their business to prevent true competition. In New York, the former lack of real competition allowed taxis to extract excessive charges, regardless of the poor service. Uber broke that monopoly. In doing so, it brought true competition to the market for car services. That is why Uber is worth a fortune.

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Who would have thought that the taxi industry could be so disrupted or predicted the consequent upheaval it has caused as traditional operators push back? In September 2015 we arrived at Brussels railway station from London to be told that the taxi drivers were on strike ‘because of Uber’.

Companies like Uber, Amazon and Apple are disrupting long-established industries. They are what Clayton M Christensen called disruptive ‘innovation’.5 A disruptive innovation is an innovation that helps create a new market and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market.

Even long-standing incumbents are facing change. Take the US beverage industry. In May 2015 a Fortune magazine report, ‘The war on big food’ found that the top 25 US food and beverage companies have lost an equivalent of $18 billion in market share since 2009.6 This drop is driven almost entirely by changing customer eating and drinking habits. Consumers are expressing a desire for simpler and purer ingredients as part of trying to live healthier lives.

How organizational life changed

If you were born in the 1950s and worked in a corporation in the 1970s and 1980s it would have very been hard to envisage change at this speed and intensity. In those years it was far more common to have three or maybe four competitors in an industry and for those competitors to stay in business for decades. Barriers of entry were high in many industries and so it was hard for newcomers to break into the rather more ‘cosy’ world that existed then. Employees tended to stay in the same company for decades and then retire. The financial markets encouraged thrift and security and, some would argue, small returns for investors. Then the 1980s arrived and businesses began to change faster. The competitive landscape had changed and organizations felt that they needed to change quickly. This was encouraged by the quarterly earnings culture that had emerged in the 1980s and suddenly CEOs needed to start thinking short term. Employees began to think about careers that meant more than one company, investors began to want to take more risk in the markets and this resulted in the start of the business world that we see now. This ‘new dawn’ began to generate a lot of change, so much so that when we look back to ...

Table of contents

• Cover
• Praise for Enterprise Change Management
• Title Page
• Contents
• Acknowledgements
• PART I    Context and framework
• PART II    The five capabilities
• PART III    How organizations learn to change
• Index
• Copyright