Article
In the past, running an organizational transformation was a bit like taking an international flight—challenging but familiar. We know that it will be long, but we also know approximately how long. We know what to pack, we know that delays are possible, and we have a clear vision of the beautiful city where we soon will arrive.
Today, running a change program is more like flying a spaceship to the moon. That’s because change is changing. Today, change is a journey to the unknown. It requires overcoming intense obstacles. We can’t just book a flight to the moon; we must prepare by developing the right technical and emotional skills as well as new ways of working in zero gravity. It’s daunting; it’s also exhilarating and important.
Business leaders today recognize the need for change. They know that their organizations must evolve and innovate more quickly—they must prepare for space travel, so to speak. And similar to commercial space travel in the era of Virgin Galactic and SpaceX, successful change programs are becoming more feasible. They do require a shift in mindset, however—a moving away from the idea of managing change and toward building change capacity and stamina.
Cultivating this new mindset starts with two critical steps:
- minimizing bureaucracy while empowering frontline innovation; and
- helping individuals and teams develop and use critical approaches and tools.
Step one: Minimizing bureaucracy, empowering innovation
The captain of the spacecraft needs to know that mission control can make fast decisions, acting with the best interests of the crew and spaceship in mind. Similarly, when running a large, complex change program, the most effective management structure is a flat organization in which team members can move quickly, without always having to ask for approval. They must have the power to make decisions, solve problems and escalate issues to managers when needed.
Eliminating bureaucracy does not mean that executives should take a hands-off approach to overseeing the change program. Executive involvement remains key, but there is a new model for this, too. Executives who effectively manage modern change programs do three things well:
- They empower their team members by giving them the authority to act quickly.
- They resolve any big impediments to progress at weekly check-ins.
- They track the value captured by the program and keep a close eye on program risks.
The importance of empowering the front line became clear recently when a retail company undertook a program to become more customer centric. From the outset, each business unit designed its own key initiatives and built its own case for making those changes. The leadership team supported the units but did not take over. Management empowered the owners of each initiative to execute and to run their teams as needed. While some initiatives got off to a slower start than they might have with a more traditional team, the executive team refrained from jumping in to micromanage, and, over the long term, there were strong benefits. The initiative owners in the businesses were not only responsible for results but also they had the power to implement the things they believed would directly influence success. Early results of the effort support this approach. The earnings before interest, taxes, depreciation and amortization margin, which was flat at the start of the work, is now forecast to reach 9% this fiscal year. While the company has yet to reach the moon, it has had a successful launch.
Step two: Building new capabilities
At NASA, astronauts must complete two full years of training. They learn flight safety and operations, land and water survival, and technical and stress training. On top of that comes mission-specific instruction that varies for each flight but that can include courses on space physiology, data management and climate.
In business, change efforts are increasingly about customer-led innovation, and that requires different capabilities. Agile ways of working push faster, better innovation across industries and functions. Traditional change management capabilities, such as engaging the organization and supporting changes in behavior, and classic performance improvement tools, such as complexity reduction and procurement optimization, are still important, but they are no longer sufficient to meet the demands of today’s more complex change agenda. Now, companies must quickly deploy tools such as customer immersion sessions, design thinking and rapid prototyping. A focus on innovation and a clear digital strategy are essential ingredients as well.
This can sound like a lot to manage, but recently, a healthcare company has hit the right balance. After a successful first phase addressing internal efficiency that reduced operating expenses by more than 15%, the company turned its transformation focus toward growth. With this shift, the nature of its change changed. The company had to run more projects. These projects were smaller, needed to be done faster, and required more input from both internal and external customers.
To do this, management emphasized four important change capabilities:
- deploying specialized internal coaches to help employees learn and understand the benefits of Agile;
- creating a customized Scrum playbook that could be used by teams implementing Agile ways of working;
- holding customer immersion sessions designed to understand customer needs and their desired solutions more deeply; and
- using one- to two-day business sprints and design thinking modules to guide rapid prototyping.
With these new tools and capabilities in place, the company has reported significant further improvement in the speed and quality of its customer-led innovation as well as a big increase in employee satisfaction among those working with these new tools.
Seeking customer input, working faster and better across functional silos, rapidly testing new solutions, quickly removing impediments, scaling solutions that work—these are the critical tasks that make change happen. Today’s moon mission will soon give way to tomorrow’s Mars expedition. Building the ability to change makes it possible to both keep up with the times and prepare for the future.
Pete Hultman is a partner with Bain & Company's Results Delivery® practice, and he is based in the San Francisco office. Leonora Lesesne is a Bain principal with the Results Delivery® practice, and she is based in Atlanta.
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Change management has been around for decades, but more than 70% of change efforts fail. Bain’s Results Delivery® insights help companies to predict, measure and manage risk, starting on day one.