“The only constant in the universe is change” observed the Greek philosopher Heraclitus. For organizations, change is critical to staying competitive, adapting to an ever-changing environment, and acknowledging that they can always do better. But with change comes disruption, which in turn presents both opportunities and risks.

When it comes to changes, there are typically two types: those we encounter and those we invoke. Changes we encounter arise from factors such as the economy, regulations, competition, technology advancements, and customer demand. Managing such changes is largely a matter of normal, everyday adaptation. The degree of challenge involved depends on whether we have previously considered these potential changes, and whether we are prepared to adapt, defend, or capitalize on their implications.

On the other hand, changes we invoke are drastically different – we initiated the change, and how we plan, execute, and manage that change will determine its impact on our company, customers, and strategic partners. And this is where effective risk management plays a critical role.


HOW TO SUCCESSFULLY MANAGE CHANGE

Effectively managing change comes down to three considerations: benefit, cost, and risk. Each must be clearly defined, carefully evaluated, and then subjected to challenge by senior management and the board to determine if a proposed change aligns with the organization’s strategic plan and ability to execute – and whether the risk profile falls within defined risk appetite parameters. 

Evaluating change without this balanced analysis often leads to sub-optimal decisions and results. Looking at any proposed change through these three lenses ensures leaders clearly understand, and can challenge, the underlying assumptions that support any benefit, cost, and risk conclusions. 

When it comes to communicating change, “because we said so” has been an all too common and accepted justification. This does not mean it was an effective approach, as it often overlooked or downplayed the ‘why’ of a proposed change. When it comes to managing change and risk effectively, the ‘why’ truly matters. The change being considered could be strategic, such as a new product or market segment; infrastructure related, such as new technology or service providers; or it could simply be a process improvement. Regardless, the change is going to be disruptive for someone, and potentially to a significant degree. 

Often when implementing change there is a tendency to adopt a ‘need to know’ mentality, based on the old adage of too many cooks spoiling the soup. This is understandable – the last thing project managers need is 20 different opinions on how to do something, for instance. However, there is a very real and significant downside to limiting communication, one that can severely hinder, if not derail, a well-intentioned project. 


IMPOSING ORDER ON CHANGE

The truth is that people generally do not like change. We generally prefer order and familiarity – and disrupting that order can be unnerving, even threatening, for many people. This is simply human nature, as we instinctively want to protect the things that are important to us. That discomfort can be mitigated if people understand the change, and more specifically the purpose of the change. In theory, change that we invoke is intended to solve a perceived problem, opportunity, threat, or inefficiency. However, if individuals do not understand or recognize the problem to be solved, then they will see the change itself as the problem – and will often resist, inhibit, or even try to sabotage it to avoid disruption they do not understand or want. 

In the context of an organization, it is not just employees that are affected. Change can impact key business partners, customers, and even shareholders. The ripple effect of change is often much larger than people realize, and even marginal or peripheral impacts can mean the difference between a successful implementation and one characterized by never-ending bumps and hurdles. Assessing the full impact of change and developing communication strategies to engage and inform the broadest audience is accordingly recommended.

Helping individuals understand and appreciate the purpose and benefits of a proposed change accomplishes several things:

• It can increase support, making the difference between everyone rowing in the same direction versus pulling in all directions. Every person that sees value in the change will help evangelize that message to others, generating wider enthusiasm and buy-in.
  
• It serves to identify the more nuanced implications of the change, including those perhaps not considered or immediately apparent in early planning – but which could ultimately impact a successful implementation or fully achieving the intended results.
  
• It creates space for input from a broad stakeholder group, one that may even have prior experience attempting a similar change with cautionary notes from that experience. While the ‘too many cooks’ scenario remains relevant, in the end managing extra voices is always easier than fixing a problem that arose because an overlooked stakeholder never had a voice.
  
• Transparent and broad communications also allow for the possibility that someone may have a better solution for the problem in scope.

CONCLUSION

In the end, change should be approached with a clear understanding, and agreement, of the benefit, cost, and risk, all of which is part of the overall value proposition, use of resources, and risk management. Helping people understand not just the intended outcome but also the strategic purpose behind key changes will go a long way to achieving full engagement, cooperation, participation, risk mitigation, and ultimately success in the process. 

To find out how Capco can help you optimize the change management process is your organization, please contact us via the form below.