In 1998 Daimler-Benz AG from Germany and Chrysler Corporation from the United States of America announced a merger, which was said to be a ‘merger of equals’. By the end of 2007, Daimler-Benz sold all its shares in the Chrysler division.
What went wrong?
The shortest answer would be, they failed to manage the change.
A lot of analysis has been done to find what went wrong, and the answers have been plenty.
- Incorrect projection of intent: the “merger of equals”, according to the then CEO Jurgen Schrempp, was, in reality, a ‘PR device’ and the intention of Daimler was always an outright acquisition.
- Cultural mismatch: Mark Herndon, in his article, describes this the best: “the new executive team ripped apart the recently installed smoke detectors on the executive floor at Chrysler headquarters in Detroit so they could smoke cigars with their red wine in the evenings.” Wow!
- Leadership ambiguity: the teams needed direction and guidance which was delayed and at best ambiguous.
- It would not be a miss if we don’t mention the fact that top talent left both companies. Typically what happens in an M&A scenario.
Here’s another story.
The New Coke.
Rings a bell?
Launched in April of 1985, it didn’t take more than a couple of months for consumer opinion to turn bad. It forced the Coca-Cola Company to bring back the famous original formula.
It’s not like Coke didn’t conduct research on its part before taking such a big step.
In the 80s the ‘sweet’ as a favored taste was catching on in consumer food trends. The sweeter flavor of New Coke did pass thousands of taste tests.
Then what went wrong?
Coke missed the unstated requirements consumers felt with the brand. And thus they went about a change completely wrong way.
No wonder that just 34% of change initiatives succeed in reality!
Content covered:
- What is Change Management?
- Where does change come from?
- Who is involved in implementing change from a project’s perspective?
- How is change managed?
- Summary
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What is change management?
Change management, simply put, is the process of planning, managing, and implementing organizational change that helps it achieve the business strategy. It is a well-structured approach for organizations to transition from an unfavorable current state to a favorable desired state.
The primary goal of Change Management is to make sure that the process of implementing change is well-planned, well-communicated, and flawlessly implemented.
Change management is an implicit responsibility of a project manager, and is a topic that is not often given enough importance when it comes to defining the role and responsibilities of a project manager.
Where does change come from?
This is important to understand as a project manager.
Change is inevitable. In any growing environment, change is the only constant there is.
Organizations that manage change effectively alone stand a chance to adapt and grow as the environment changes. Sometimes the changes are voluntary, and sometimes they are forced.
PMI[1] outlines 3 categories of change in an organization:
- Changes from within. These are the result of changes of different types, sizes, and impacts from all the projects being implemented in the organization. Projects are agents of change because by their innate nature projects change something for the better.
- Changes that are triggered by events in the environment. For instance, a new environmental policy about disposing of waste material may necessitate a new waste management process in a fertilizer company. The changes can trigger by various sources such as social and political, legislation, changing economic scenarios, or even decisions of competitors.
- Intended changes. These are the result of planning, execution, and control by the organization to bring in a new change.
Irrespective of where the change is triggered, the impact of it on projects must be managed by the project manager.
When the changes are intended and planned, the implementation can be systematic and well-managed, but when the change is forced by external events, the implementation can be chaotic.
Who is involved in implementing change from a project’s perspective?
This is what’s important to understand, as a project manager. There are a few important roles.
But before diving into each, we need to understand this:
Who or what is the biggest blocker to change management?
The answer is, people.
People by their nature resist change. Thus any change implementation efforts meet success only when people are sold on the reason for the change and the benefits that the change brings to the organization, and most importantly, to them!
Now, who do you think is responsible for change management in the context of a project?
I can almost bet that your first answer was Project Sponsor. More so if you have been studying for the PMP exam! 🙂
And you would be absolutely right.
Sponsor’s responsibility does not end when she authorizes a project, assigns a project manager via a project charter, and arranges for funding.
A sponsor needs to take the important responsibility of guiding the project manager in implementing change in the project. She should be able to contribute towards bringing desired change outcomes by actively participating throughout, building coalitions, and communicating with the right people.
Figure: Change management roles in an organization. Image courtesy prosci.com
The project manager has the responsibility of communicating the change initiatives to the team in a way that makes them enthusiastic participants in implementing the changes successfully. It could be outlining the changes to current processes, policies, and even project and team charters.
The team itself is responsible. There is a general tendency of wait-and-watch in such situations and this has to be managed proactively.
Resource managers are responsible for providing the necessary resources to projects and teams. They need to be flexible in the policies that enable them to help the projects implement the changes smoothly.
PMO, the parent body of projects in an organization has the additional responsibility to ensure the projects align with the new working paradigm without impacting their own objectives as well as quality or delivery timelines.
Finally, the Change agent(s)/Change practitioner(s). This can be any role or people identified for the sake of change management. Their job is to explain to people why change is necessary, how it impacts them, how the change is being implemented, how they can contribute, and what will it look like when the change is implemented successfully. They also work with the key stakeholders to help them manage the implementation part within their sphere of control.
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How is change managed?
This is the million-dollar question, really.
Change management can be hard.
The best way to lead a change is with the focus on communicating the question WIIFM (What’s in it for me) for every person in the organization that is impacted by the change or needs to implement the change effectively.
There are different change management methods or approaches proposed such as the following:
1. The Five-Stage Model
Also known as the Kübler-Ross Model, this was developed by Elisabeth Kübler-Ross. The idea here is that people inherently resist change. And when they have to change, they go through 5 distinct stages. These are, Denial, Anger, Bargaining, Depression, and Acceptance.
Figure: Kuebler Ross model of the emotional impact of change (courtesy, researchgate)
2. The ADKAR Model
This model is developed by Prosci, and is a goal-oriented change management model focusing on the 5 building blocks for successful change: Awareness, Desire, Knowledge, Ability, and Reinforcement.
Figure: ADKAR change model (courtesy, online visual paradigm)
3. John Kotter’s Eight-Step Approach to Change
John Kotter proposed this change management approach in 1996. This is simple and popular. According to this, the desired change is conducted in eight steps.
Figure: Kotter’s 8-step model of change management. (Courtesy: management study guide)
4. The Change Curve
Kurt Lewin is the creator of this change management model. Kurt Lewin is an organizational psychologist and change management specialist. The change curve is a 3-stage model explaining the phases people go through during the change process: Unfreezing, Moving or Changing, and Refreezing.
Figure: Kurt Lewin Change Model (Image courtesy, mbaknol)
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Summary
In this article, we covered what is change management, what are the triggers, who can implement change in an organization, and what are some of the standard proven models to do so.
There are plenty of examples of successful change implementations as well.
Netflix is one such example.
It is one of the few companies that completely pivoted its business model to adjust to the change in technology, market conditions, and customer preferences.
Netflix launched in 1997, mainly as an alternative to brick-and-mortar video rental stores. They played on price and convenience to capture the audience.
Instead of walking into a video rental store, you could order a DVD (a form of tape cassette if you missed it 🙂 ) through Netflix for a certain period. Once you watched it simply (physically) mail it back to them. Then came the stream invention. And Netflix caught the wind of changing direction. They saw the need for a major change!
In 2007, Netflix launched its streaming service online.
They could catch the train early by seeing that the future of entertainment is online streaming. If they didn’t they probably would have met the same fate as Kodak.
By quickly implementing a change of business model and implementing it throughout the organization (internal and external), Netflix topped the chart, literally, of the subscription entertainment business.
Change management is a structured approach to managing and implementing organizational-wide change. The change management process involves a series of steps that help to ensure that the change is implemented successfully with all stakeholders’ support to meet the stated business objectives.
A project manager’s role in change management is often an understated need of the job profile, but a crucial one.
This article would have given you some glimpses of your approach, as a project manager, to the next change in your organization.
Which aspect of change management is something you would like to know?
Let me know in Comments below.
Good luck!
Shiv Shenoy, PMP
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References –
[1] – Graham, J. (2005). Organizational change management and projects. Paper presented at PMI® Global Congress 2005—North America, Toronto, Ontario, Canada. Newtown Square, PA: Project Management Institute.
Photo by Javier Allegue Barros on Unsplash.
