Transformational change extends to all parts of an organization and because of its overwhelming nature it can face high levels of resistance from the organization's divisions and business units. Many of these entities resist transformational change because it does not address their individualized needs or in many cases their businesses' culture. Based on APQC's recent research on transformational change, Transformational Change—Making It Last, organizations can leverage three best practices that balance standardization and flexibility to drive adoption of the organization's transformation.
Three best practices:
- Combine centralized governance with decentralized implementation.
- Provide a hybrid methodology to tailor the tactics and solutions to the people, processes, tools, and infrastructure components of transformational change.
- Build phased rollouts into the change plan.
This article is part one of a two part series and explores the first of the three best practices for ensuring the adoption of strategic, enterprise-wide projects.
Combine Centralized Governance with Decentralized Implementation
Research indicates only 30 percent of organizations consider their change management programs (from process improvements to transformational change) successful. This is typically attributed to challenges such as engaging diverse management styles, achieving consensus for cross-functional change, and helping employees make the changes part of their daily routines.
The key components to managing any project, especially one that encompasses an entire organization, are ensuring it has the necessary resources (including people with the right skills), leverages process management principles (such as those outlined in the Seven Tenets of Process Management), and can engage employees across the businesses. To accomplish this, best-practice organizations use a centralized team with project and change management skills to manage transformational change, and business unit implementation teams to execute the change (Figure 1).
This approach provides three key advantages:
- Centralized management provides strategic alignment, governance and accountability, and a consistent communication and implementation plan.
- Decentralized implementation teams allow for customization and create accountability within the business units for the adoption of new behaviors, processes, and responsibilities.
- PMO and change management representatives who are part of the core (or centralized) team ensure access to the necessary skill sets.
The rest of this article will look at each of these key benefits in more detail.
Transformational change is often a cross-functional, end-to-end process improvement effort that provides a distinct competitive advantage and directly affects the organization's culture. Due to the complexity and sheer number of stakeholders involved in the effort someone needs to be responsible for governing how the pieces fit together and coordinate the overall journey. The executive management team is too busy to provide the necessary day-to-day oversight, so the question becomes who is the best candidate for the job?
Best-practice organizations use a centralized management team, or core team, comprised of an executive steering committee (representatives from the functions affected by the change and executive sponsors) and a program management office (PMO). The roles and responsibilities of the two entities within the core team follow.
- Executive management drives the messaging and communication, builds enthusiasm, allocates resources, and provides the guiding principles.
- PMOs drive the transition and support the other group's execution of their responsibilities. They create the transformation plan, establish a replicable framework, and enable the implementation teams.
Centralization and the use of a core team ensure the transformation plan aligns with the strategic priorities of the organization. As noted the executive steering committee provides the guiding principles and empowers the PMO to govern the transformation and ensure it reflects their needs.
The PMO has to be proactively engaged in the transformation and take the guiding principles of the change effort and develop a process model that will provide a common language, set expectations, and serve as the foundation for implementation (which will be discussed in greater detail in the next article). The PMO does not conduct the implementation of the plan but ensures all the steps along the way are done correctly.
The core team relies on implementation teams within the business to carry out the transformation. These teams help generate buy-in through their role as change agents, work with the core team to tailor the implementation to meet their unique characteristics or culture, and integrate business-specific goals (such as market and P&L responsibilities) into the plan. In many of the best-practice organizations the decentralized teams were also comprised of two entities:
- Business leader—who is responsible for driving the change within their business unit and ensuring the implementation team is not over-committed.
- Implementation team—a group within the business which mirrors the core team's skillset (project management, functional or technical knowledge, and change management skills). The members of the implementation team are responsible for the execution of the program and serve as change agents within their business.
In some of the organizations a PMO representative or PMO team is part of the implementation team, because they are directly integrated in the business, and report into an enterprise PMO. For example, to support its goals of solidarity and standardization, the executive leadership at one of the best-practice organizations decided to create a centralized department, its enterprise engineering group, to develop and govern a standardized product development and management process. However, each business unit has its own product development team—aligned by product lines that manage and execute the day-to-day innovation processes—and a program manager and PMO that reports into the enterprise engineering group. In addition, each business segment is supported by a technology group and a PMO. Each PMO has membership to the Enterprise Project Management Office council that is chaired by the enterprise engineering team. The product line leaders, technology leaders, and PMOs manage the product development process and transformations within their business. This structure allows the best-practice organization to provide standardization and governance over its product development and management (PDM) process and transformational change projects while still maintaining accountability and technical expertise within the product lines and business segments.
Ensuring the Right Skillsets Are Available
As noted at the beginning of this article successful change efforts require program management skills—to coordinate, track, and govern the complex process—and change management skills—to engage and promote buy-in throughout the organization. To avoid a check list approach to change, best-practice organization's either provide training on change readiness for their business leaders and implementation teams or ensure both process and change management experts are involved in both the development of and implementation of the transformation plan.
For example, one of the best practices organization's core team is comprised of:
- A dedicated director—who provides direction, socializes proposed changes, and promotes the possibilities.
- Dedicated process managers—who are responsible for process governance and metrics and collaboratively work with stakeholders on potential process changes.
- Organizational change management (OCM) staff—who promote acceptance and adoption of changes to key stakeholders. The OCM is also responsible for ensuring all implementation plans include a change management plan based on the ADKAR model.
Overall by combing centralized governance with decentralized implementation teams organizations are able to establish a framework that ensures strategic alignment, establishes governance while providing the personalization necessary to overcome many of the causes of organizational resistance, such as a lack of buy-in or engagement.
The next article will explore how organizations can overcome other factors of organizational resistance through the use of standardized frameworks that allows for bottom-up monitoring while allowing implementation teams to customize the plan to meet their business's needs. It will also explore how to use phased roll-outs to address employees' capacity to change, engage employees within the businesses, capture lessons learned, and develop a continuous improvement process for the implementation.