Organizational Transformations – Enabling And Sustaining Change
Overview
Guiding organizations through transformational change is a daunting task. Major changes include downsizing, mergers, or adopting new enterprise software systems. Such changes typically generate workforce uncertainty, fear, and resistance, which reduce overall morale, focus, and performance.
Businesses and government agencies alike report high failure rates in navigating transformations, even after spending considerable sums on change management consultants. Diagnostic surveys reveal disturbingly low levels of employee trust in management, and chronic dissatisfaction with working conditions. Unless these underlying root causes are addressed directly, management interventions to anticipate and mitigate the disruptive effects of transformational change will continue to fail.
This paper describes an innovative methodology for enabling and sustaining change called CALM™ (for Change, Adaptation, and Learning Model). CALM was developed by Dr. David Koehn, an expert in leadership, change management, organizational development and psychology. Dr. Koehn collaborated with DecisionPath to embody CALM in software using their ForeTell® decision support platform.
CALM provides a low risk method for validating and refining change strategies. In essence, CALM enables you to “test drive” change strategies before rolling them out, allowing organizations to practice and learn from virtual rather than actual mistakes. Equally important, CALM allows organizations to monitor the execution of change strategies, and perform mid-course corrections as necessary. CALM thereby reduces risk and improves confidence and consistency in transformational strategies.
Why Change is so difficult: Old Habits Die Hard
Transformational change disrupts the status quo, forcing managers and workers out of their comfort zones and conflicting with established behavior patterns, processes, and cultural norms. Typical reactions amount to a body’s immune responses, as organizations and individuals resist change and act to maintain prior “equilibrium” conditions. Even if desired changes are instituted successfully, challenges remain in sustaining them: absent constant vigilance, organizations tend to revert back to older, familiar behaviors and attitudes. In short, change, once effected, must be institutionalized to endure.
Dr. John Kotter proposed the following eight step process model for guiding organizations successfully through major changes:
- Initiate change (by defining the business case for change)
- Build a coalition of change agents
- Formulate vision
- Communication and educate
- Empower others to act
- Create short-term wins
- Consolidate and further change
- Institutionalize change
Kotter derived this model by analyzing a multitude of change management efforts, with particular attention to failed ones. He argues compellingly that these eight activities are jointly necessary (but individually insufficient) to bring about and sustain change.
CALM’s Contribution: “Test Driving” Change Strategies
Our CALM methodology extends Kotter’s seminal work by adding a dynamic decision support methodology. The dynamics derive from ForeTell’s situational modeling and “what-if” simulation capabilities: rather than simply developing plans that encompass Kotter’s eight phases, CALM adds the following elements to the mix:
- A rich set of metrics designed to measure an organization’s readiness to change
- A model of the dominant internal and external forces influencing organizations while they attempt to change
- A model of prospective strategies – or transformation plans – comprised of initiatives that contribute to Kotter’s eight phases, complete with estimated schedules and costs
- Causal models that estimate the (qualitative) effects of situational forces and change initiatives on CALM’s organizational readiness metrics
CALM leverages these data and knowledge elements to drive the following process, based on facilitated meetings with teams of leaders, managers, and key employees:
- Model organizational structures, situational forces, and pending (or ongoing) changes.
- Apply Delphi techniques to estimate organizations’ current readiness, and define target readiness states, which, if achieved, would likely ensure successful change.
- Develop plausible scenarios of how current environmental forces, trends, and possible events might play out in the future
- Develop candidate transformation plans, leveraging pre-defined change initiatives from CALM’s library to improve organizational readiness to deal with major change. CALM’s readiness metrics are organized into three categories or “dimensions of change. These dimension measure organizational mindset, personal (or workforce) mindset, and infrastructure (business mechanics). Transformation plans that fail to address all of these “organic” psychological, social, and cultural factors are likely to fail. CALM also tracks conventional performance metrics such as cost effectiveness and customer satisfaction. Analysts can extend CALM’s baseline metrics with custom ones.
- Project the likely outcomes of prospective transformation plans in terms of changing readiness metrics across alternate scenarios
- Analyze and compare projected outcomes across scenarios and change plans to identify a robust change strategy
We define a “robust” strategy to be one that produces attractive results across alternate futures. No one can predict the future. The next best thing is to devise a strategy that carries a high likelihood of success regardless of which future obtains.
CALM accomplishes this by providing a methodology for systematically anticipating outcomes of prospective strategies. Organizations can assess the relative strengths and weaknesses of competing strategies, and combine attractive features from those plans to make stronger ones. In short, CALM allows you to validate and iteratively refine change strategies to increase robustness.
Put another way, CALM enables organizations to practice prospective change strategies in a low risk virtual environment. Organizations can then learn from simulated mistakes at minimal cost, rather from real “blood on the tracks” errors that result in problems such as worker mistrust or alienated customers.
CALM can also be applied after strategies have been adopted, to monitor their execution. In this mode, users periodically update scenarios to reflect current situational status. CALM then re-projects the chosen strategy against these updated scenarios. If outcomes continue to be positive (i.e., readiness metrics reach their target levels), the chosen strategy is re-validated. If not, CALM acts as an Early Warning System, helping to uncover emerging problems promptly; diagnose them; and define and validate mid-course corrections. In this post-decision “sense and respond” mode, CALM helps organizations carry out and sustain change strategies across their extended “lifecycles.”
Why CALM Works: Rocket Science (well, almost!)
Enabling and sustaining transformational change is an extended and fluid process. As organizations carry out change initiatives, internal and external stakeholders invariably respond, adapting their behaviors to advance their personal and group interests. Attitudes and behaviors of individuals and groups tend to evolve in complex, often non-linear patterns. For example, trust, morale, and acceptance typically don’t build or decay continuously and smoothly; rather, they tend to jerk, stick, and accelerate or decelerate. Finally, environments continue to evolve, driven by situational forces and events. In short, the target audience and the “ground” under the organization’s “feet” shift continually and in ways that are difficult to anticipate.
CALM improves how transformational plans are developed, validated, and executed because it recognizes and embraces these complex dynamics of change. It applies “new science” theories such as system dynamics and complex adaptive systems, which were designed expressly to model phenomena such as personal and social behavior patterns.
Finally, it provides an iterative and interactive process for modeling and analyzing change and change strategies using these “organic” dynamic modeling techniques.
A simple analogy will help to explain Kotter’s and CALM’s contributions. Enabling and sustaining transformation change is similar to launching a rocket and propelling it into a stable orbit. Launching a rocket into orbit involves a process of generating sufficient impulse (or propulsive forces exerted over time) to achieve two objectives:
- Develop sufficient thrust to lift the rocket’s mass
- ApplyAccelerate the rocket to “escape” velocity for insertion into orbit
Launching a rocket requires generating thrust to overcome the rocket’s inertia and gravity, which acts as a constant drag on the rocket as it climbs. Analogously, sustainable transformational change can only be achieved by overcoming persistent conservative forces such as personal and group inertia and old behavior patterns.
At any point in the launch process, if insufficient thrust is generated and maintained, gravity will take over and the rocket will fall back to earth. In multi-stage rockets, the ignition of and firing durations of successive booster sectionsbmust be timed precisely to produce sufficient thrust and acceleration.
Analogously, change strategies that stall or simply lose momentum run risks of unraveling or outright failure. As in launch profiles, the sequencing and durations of change activities must be carefully coordinated to prevent the loss of momentum and perceptions of stalled progress.
This analogy is admittedly imperfect. Designing rocket engines and launch trajectories is a well-established engineering discipline. Newtonian laws of motion strictly determine the mechanical interactions of a handful of key parameters and forces. Solutions can be computed from widely available textbooks or software programs. The same equations apply uniformly to all launch situations and they never change over time.
Organizational change clearly represents a more complex and open-ended phenomenon. It is not obvious what parameters to measure, much less what, if any “universal laws” govern situational dynamics. As a result, models such as CALM are qualitative rather than quantitative, and more exploratory than deterministic and predictive.
Dr. Kotter’s model prescribes a process for bringing about transformational change. As such, it provides valuable guidance. However, that guidance is largely static, passive, and broadly defined. The model offers no framework for thinking through the dynamics of change processes, or help in designing or selecting and assembling initiatives to implement the eight stages tailored to specific change challenges.
Most organizations need more detailed guidance. Enabling change is a complex undertaking. Mistakes are inevitable. They may also be irreversible. Initiatives that fail tend to undermine stakeholder trust and confidence: management cannot simply switch strategies and try again from the same initial state. Something must be added to help organizations design and test change strategies in advance.
Our rocket analogy, however, imperfect, provides this critical missing ingredient, namely, a model for anticipating how transformational change is likely to play out in terms of empirical metrics. CALM equates Kotter’s eight step model to a multi-stage rocket engine. CALM also defines an explicit causal model of how change initiatives (and situational forces) impact measurable organizational readiness factors. This causal model allows CALM to project how organizations, their employees, forces, and change initiatives will interact with one another and evolve over time.
Transformation plans can thereby be validated dynamically, much as a rocket design can be simulated to see if it generates the required launch and thrust profiles. For CALM, sufficient “thrust” over time equates to improvements in the key readiness metrics. Reaching escape velocity corresponds to achieving target readiness values. Failure to achieve those values means that the transformation plan is unlikely to succeed. This can be determined in advance (or, in sense and respond mode, on the fly, at execution time).
CALM’s dynamic model is admittedly qualitative and inexact. However, it offers a unique, systematic and repeatable basis for projecting (and comparing) the likely consequences of change strategies under diverse plausible scenarios. Such methods and tools are critical to increasing the likelihood of designing and implementing strategies to create and sustain transformational change. They are also indispensable for continuous improvement, and learning how to plan and execute change better in the future.
CALM – Dealing with Change Holistically and Dynamically
Overview
Most organizations face transformational changes with some frequency. Examples include downsizing; mergers; adopting new enterprise software systems or other technology platforms; and changing markets, business models, or missions. Such changes are “transformational” because they significantly impact an organization’s structure, processes, culture, relationships, personnel, and possibly its very existence.
Transformational changes typically generate uncertainty, fear, and resistance, which reduce workforce morale, focus, and performance. These particular disruptive effects are social and psychological in character. As such, they are ubiquitous across organizational types and industry sectors commercial, non-profit and academic, and government.
The field of Change Management has emerged over the last several decades to help organizations anticipate these disruptive dynamics and respond proactively to mitigate if not prevent them. Change consultants predict problems likely to arise for particular organizations and transformations, and then prescribe strategies to address them. Change strategies typically include elements such as include targeted communication initiatives, and modifications to recruiting, training, job definition, and compensation programs.
Regrettably, the laudable goals of such interventions to “manage” change are rarely achieved: businesses and government agencies report high failure rates in navigating organizational transformations, despite spending considerable sums on change management consultants.
This paper explores why traditional change management approaches fail. We then describe an alternative methodology that addresses these recurring problems called CALM™ (for Change, Adaptation, and Learning Model). CALM was developed by Dr. David Koehn, an expert in leadership, change management, organizational development and psychology. Dr. Koehn collaborated with DecisionPath to embody CALM in software using their ForeTell® decision support platform.
Conventional Approach
Traditional change theories generally frame the challenges of managing transformational change in terms of three dimensions:
- Business (structure, outputs, enabling technologies and systems)
- Process
- People
While this model appears plausible, the old adage “The devil is in the details” applies. Consider, for example, a transformational change such as deploying a major enterprise information technology (IT) system. Change strategies based on proposed model often look something like this, with each track specifying methods for taking action and assessing performance:
- Business (IT Program) level:
- Business process re-engineering level:
- People level
Develop (or acquire/adapt) relevant hardware and software systems; integrate with existing enterprise systems; deploy;
Requirements definition and architecture/design
Reviews
Execution & deployment (acquire/implement/integrate)
Time and resource scheduling, budget and performance management
Extend or replace existing processes to exploit new system capabilities
Process analysis/design/validation
Modeling, simulation, pilots…
Introduce the new approach and educate the system’s end-users
Communication, functional training (i.e., how to use the new system)
Conduct awareness surveys, test users on acquired skills / performance
What is wrong with this approach? It ignores critical issues relating to organizational readiness to respond effectively to the imminent change. In particular, the people level strategy does not appear to explicitly educate the workforce regarding how the overall business processes will work. Nor does it address how the new system, processes, and work roles and responsibilities relate to the existing organizational culture. For example, what is the workforce’s ability – and willingness – to accept and effectively adopt the new system and way of doing things? In short, the traditional model pays only token attention to people other than as another set of organizational resources.
We contend that these omissions reflect a mechanistic orientation that is often seen in organizations managed under command-and-control paradigms. Such organizations emphasize classic project and program management disciplines. While undeniably necessary, these disciplines are insufficient: evidence indicates that transformational changes tend to succeed or fail owing to social and psychological factors rather than failures in allocating resources, scheduling tasks, and tracking performance.
Winning the Battle and Yet Losing the War
This critical point can be illuminated by drawing an analogy to a similar problem in business the high rate of failures of corporate mergers and acquisitions. Although exact statistics vary, most studies estimate an alarming rate of 30 to 80%. One study that applied the standard of “failing to increase shareholder value” found an estimated failure rate of 83%.
And yet, there is certainly no shortage of service providers that perform due diligence reviews for executives and boards of directors. Investment bankers vet the financial soundness of prospective strategic transactions. Accountants certify that the parties to strategic transactions have kept their books in accordance with accepted practices. Corporate lawyers screen transactions for exposure to outstanding liabilities such as tort actions or environmental problems.
The good news is that such due diligence services are generally effective in uncovering and blocking transactions that are problematic due to legal or financial factors. The bad news is that M&A transactions fall victim to other problems: research shows that up to 65% of failed M&A transactions derive from “people issues” such as intercultural differences between companies that lead to communication breakdowns and poor productivity.
In short, mergers and acquisitions tend to fail because of “softer” non-mechanical factors. Professional service providers are unable or unwilling, due to potential liability issues to assess the critical factors that actually determine success or failure. The parallel to (other kinds of) organizational transformations is clear.
Address Transformational Change Holistically
CALM focuses on measuring and addressing organizational readiness to accept and respond successfully to transformational change. CALM posits three “dimensions” of change, but structures them quite differently from traditional approaches.
CALM defines metrics to assess readiness to change at the business and business process levels and aggregates them together into a dimension called Infrastructure. CALM then defines two additional dimensions, called Organizational Mindset and Personal Mindset. These dimensions are composed of metrics designed to gauge critical socio-political and workforce readiness factors that the “people” level has traditionally ignored. These factors, summarized in Table 1, are drawn from the literature on organizational and individual psychology pertaining to change.
Facilitated Delphi techniques are used to estimate values for CALM metrics, obtaining consensus from teams of leaders and senior workers drawn from all organizational levels. Metric values are estimated on a scale 1 to 100.[ Once CALM has been applied initially, organizations can choose to collect more accurate data, for example, by conducting custom surveys. However, we find that candid intuitive judgments represent a surprisingly accurate starting point.] Precise values are not critical. What matters more in CALM is helping organizations explicitly assess the true social, cultural, political, and psychological challenges that need to be addressed when undergoing major change. As part of this process, group facilitators record the justifications, examples, and caveats for all value assignments along with the estimates themselves. The resulting record, maintained by the CALM software, paints a vivid picture of organizational status.
Address Transformational Change Dynamically
Building on its assessment of organizational readiness, CALM provides a powerful framework for formulating, validating and executing strategies to enable transformational change. The overall approach is simple, and can be summarized as follows:
- Estimate your organization’s initial readiness to respond to change
- Identify a target readiness state likely to ensure a successful transformation
- Simulate progress from the initial state towards that goal state under different scenarios about future conditions and alternate change strategies
The details of how CALM carries out this approach are beyond the scope of this introduction. Suffice it to say here that the CALM software provides a set of modeling, “what-if” simulation, and analysis capabilities. This software models the primary environmental forces acting on the organization as it attempts to change. Examples include (external) economic conditions and internal leadership support and sufficiency of resources (internal factors).
CALM also provides a framework for defining prospective strategies for enabling change. Each such initiative consists of one or more phases with scheduled start and stop dates, estimated costs, and projected impacts on organizational readiness metrics. The CALM simulator then projects the likely outcomes of these strategies on organizational readiness. Finally, analytic reports and graphic plots summarize what happened and why.
In essence, CALM enables organizations to practice and compare alternate change strategies. These dry runs or “test drives” enable you to identify gaps in your plans and learn from errors at minimal cost: Mistakes in CALM exercises are virtual: they cause no actual blood, sweat, tears, or failures. Once potential problems are uncovered, organizations can refine prospective change strategies to improve their likely effectiveness.
Once robust change strategies are developed, they must still be executed successfully. CALM can be applied not only before one initiates a change but also while you execute it. This kind of sense and respond capability is critical, because while you execute your transformation and change strategies, your environment invariably continues to evolve, and your stakeholders respond and adapt to those changes and to your strategy. In monitoring mode, CALM acts as an Early Warning System, helping organizations to detect problems promptly, diagnose them, and make effective mid-course corrections to ensure success.
In summary, CALM helps organizations plan, validate, and execute strategies to respond more effectively to transformational changes and the disruptions they invariably cause. CALM focuses on the intangible factors that tend to drive success or failure in carrying out transformational change – namely social, political, cultural, and psychological factors. Anticipated benefits of using CALM include reducing risk of workforce resistance and productivity drops, and improved confidence, consistency and alignment in change enablement strategies.
IS THE ANGEL UNAWARE, UNAWARE?
By Dr. David J. Koehn
I woke up one morning, one which did not appear any different than usual, except my father and mother surprised us by saying that we were going to have a new baby come into our family very soon. How happy I was! Before I went to bed that night I said a little prayer for the new baby to be. I prayed:
“Jesus, friend of all little children, bless them and keep them healthy, especially our new baby to be”.I said this prayer every night right up to the day the baby was born. What an exciting event, everything went well, we could not have been happier. The babies name was Kevin.
Life went on and little seemed wrong, but as the months passed, Kevin did not seem to respond to noises like the other five of us did. My mother and dad thought there might be a problem so they took Kevin to the medical center.
Mom and Dad came home and were crying. We were in the kitchen when they told us that Kevin was retarded. I was shocked and began to cry for Kevin because he somehow seemed helpless and yet he had been struck with some rare disease. After crying for a while, I thought about all those nights praying to Jesus and wondered why He had done such a thing to my brother. Then, I looked at Kevin and he smiled almost as if to say, “Yeah, It’s Okay, I’m still me”. After that Kevin truly became the backbone of courage for us all.
I watched him begin to walk, scamper in and out of the cupboards, find the most unusual things to get into and begin to talk. Much time was spent watching, responding and tending to his needs. The sacrifices were not great because of the twinkle, glitter, love and warmness that is in his personality.
Throughout his years of being a child, youth, teenager, young adult and now middle-aged adult, I have seen Kevin be a comfort, a source of strength, a guru, an uncle, a brother and a friend to us all. His belief in himself and his model of life surely makes this angel unaware, one who was never unaware.
In memory of you and your future, Kevin…