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Change management: from black magic to practical results

Supplier: Australasian Supply Chain Institute By: Scott Githens
22 June, 2012

In this brief article I will provide an overview of a simple yet effective approach to change management that anyone can apply - an approach that has been used with significant success at OneSteel.

What is change management and why is it important?

Change management is a component of overall business (or other organisational) efforts to move from a current state of operating to a future or desired state. It is the component that is primarily focussed on the people and behaviour components of that overall effort.

OneSteel defines change management as "…the development and implementation of strategies to deal with the organisational aspects of a change - the impact on people of changes to operations, processes and systems/technology. Successful execution accelerates the implementation of change and ensures that it is sustained."

Change management is important as a majority (approximately 70 per cent) of overall business (or wider organisational) efforts to move from a current state of operating to a future or desired state fail. When assessed, a vast majority of these failures are attributed to issues directly related to people and behaviour.

A well thought-out and effective approach to change management can help maximise the chances of success and move your project into that 30 per cent of efforts that meet their stated objectives.

Underpinning analytical model

While the approach I advocate is simple and pragmatic, it is based on a sound analytical model described by Bolton and Dwyer in "Achieving Supply Chain Alignment through Behaviour Change", in Gattorna, J. (Ed), The Gower Handbook of Supply Chain Management.

This model is centred on the identification and application of a set of 'change levers'. Each of these levers is driving and/or reinforcing the right behaviours, with a key aspect of the approach being to apply the levers in an integrated manner (Figure 1.).

Approach used at OneSteel

At OneSteel, we tweaked this approach to simplify it for our pragmatic culture and to make the levers more relevant to our situation. This led to the following set of levers forming 'our' version of the integrated change model: Leadership, Communications, Job and Organisational Alignment, KPI and Metrics, STIP (i.e. bonus), Training, Post-implementation Audit and Policies and Procedures.

In addition we simplified the application approach by not strictly adhering to the order and feedback loops implied in the Bolton and Dwyer model.

We then take the following approach to apply the lever framework:

1. We identify the key behavioural changes required to ensure success of the initiative we are managing.

The key principle here is to apply the 80:20 rule: focus on the significant changes and/or significant blockers to behavioural change, and focus on those that are most at risk of not occurring without some change management support. An easy approach to do this is to develop a high-level business process flow, and then under each process step identify the critical few key-behaviours.

For example when using this approach to improve a Demand Planning process one key behaviours identified was: "Only adjust the statistical forecast if you know something material and change is big enough to worry about" with another being "An appropriate focus on bias as well as accuracy is used to review the sales forecast".

In total we identified 16 key behaviours for the entire business process.

2. From the change lever framework list (Leadership, Communication etc.), identify which change levers will be applied to drive the required behaviours.

Key principle here is that not every lever needs to be applied to every required change. Use sufficient but necessary levers taking into account the degree of change resistance and the effectiveness of particular levers to your local situation and culture.

I find it easiest to use a simple matrix with change levers on one axis and required behaviours on the other to map the two together.

3. Note on your matrix exactly how each applicable change lever will be applied to support the behaviour that you have identified.

The principle here is to be specific – the action should be simple and clear, with an individual accountable and (as much as possible) a timeframe and/or milestone noted.

For example, to support the key behaviour of "An appropriate focus on bias as well as accuracy is used to review the sales forecast" we applied the Leadership lever by ensuring that the general manager actively asked about sales forecast bias in conversation with their sales director and team.

We also applied the KPI and Metric lever by including bias in existing metric dashboards.

4. Incorporate the actions noted on the matrix into the overall project plan.

The key principle here is that the change management actions are completely integrated into the overall project plan.

Do not have a separate 'change management plan' that is managed as a separate stream. To maximise success, change management needs to sit squarely in the project and be executed as such. Having a separate stream increases the risk of change management being seen as a parallel and, ultimately, 'nice-to-have' thing.

5. Execute the project plan, including the change management tasks.

As per standard project management activity, assess and adjust the project plan based on progress, including assessing and adjusting the change management tasks.

Wider application

I have used this approach a number of times in roles previous to joining OneSteel, as well as applying it at OneSteel. While no single approach or aspect of a project can guarantee 100 per cent success, this approach to change management has proved itself effective on numerous occasions.

The description above uses a supply chain example. The change management approach described can be applied in any situation, not just supply chain. I have used it in the support of changes to patient processes in hospitals as well as changes to customer relationship management in organisations.

Have a go

One of the key attractions of the change management approach described is that it is logical, intuitive, and capable of being applied by anyone.

In some cases you may find that certain change levers require specialist knowledge if the situation is very difficult (e.g. job and organisation redesign in a strongly unionised environment). However, in my experience, in most cases the approach has been applied successfully by persons other than change management experts. That is the beauty of the approach – it gives awareness and control of change management back to the people executing the change.

From a supply chain perspective the approach is very effective: it provides a logical and intuitive method of addressing change management that appeal to the analytical supply chain professional, thus allowing the supply chain professional to address the people side of supply chain success.

John Gattorna in his recent book Dynamic Supply Chains stated: "We must reinvigorate moribund supply chains by capturing the dynamism that people bring to the flow of goods and services. We can do this by embracing a new definition of supply chains that recognises they are living organisms made up of living, active and dynamic people."

I firmly believe this change management approach is a great tool to help support the re-emergence of people as the critical factor in supply chain success.