2008 10 13 Mcw Full Findings Presentati

IBM Global Change Management Study Making Change Work Closing the Change Gap Full Storyline June 7, 2009

Executive summary – Key Findings Global Making Change Work Study | 2008 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Source: Global CEO Study, 2008 / Global Making Change Work Study, 2008; n = 1,532 practitioners

Contents ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Global Making Change Work Study | 2008

Today’s dynamic environment is causing organizations to re-frame the traditional view of what “normal” is Global Making Change Work Study | 2008 Continuous change is the new normal. Companies must abandon the notion of predictability in managing day-to-day operations Forces impacting today’s organizations GLOBALIZATION TECHNOLOGICAL ADVANCES ENABLING AND ACCELERATING CHANGE CROSS-COMPANY AND CROSS-NATIONAL PARTNERSHIPS COMPLEX MULTINATIONAL ORGANIZATIONS

How the Enterprise of the Future faces change Global Making Change Work Study | 2008 The IBM CEO Study 2008 found that outperforming companies are capable of changing quickly and successfully and they also shape and lead trends Source: IBM CEO Study, 2008; n = 1,100 + CEOs worldwide Core Traits of the Enterprise of the Future Hungry for change Innovative beyond customer imagination Globally integrated Disruptive by nature Genuine, not just generous 1 2 3 4 5 Making Change Work continues the Enterprise of the Future conversation, particularly regarding how companies face being hungry for change

The ability to manage change must become a core competency in the Enterprise of the Future ,[object Object],[object Object],[object Object],Global Making Change Work Study | 2008 The Change Gap has Tripled Source: IBM CEO Study, 2008; n = 1,100 + CEOs worldwide An inability to close the change gap can mean cost overruns and missed objectives, ultimately destroying business value EXPECT SUBSTANTIAL CHANGE CHANGED SUCCESSFULLY IN THE PAST 65% 57% 83% 61% EXPECT SUBSTANTIAL CHANGE CHANGED SUCCESSFULLY IN THE PAST 2006 2008 8 % CHANGE GAP 22 % CHANGE GAP

Market outperformers have less of a gap to close, however it is still significant Global Making Change Work Study | 2008 ,[object Object],[object Object],[object Object],[object Object],Change Success by Company Performance Source: IBM CEO Study, 2008; n = 1,100 + CEOs worldwide EXPECT SUBSTANTIAL CHANGE UNDERPERFORMERS OUTPERFORMERS CHANGED SUCCESS- FULLY IN THE PAST 85% 83% 66% 54% 29 % CHANGE GAP 19 % CHANGE GAP

Our Making Change Work study looks more closely at the enterprise trait, “Hungry for Change,” by polling practitioners ,[object Object],[object Object],[object Object],Global Making Change Work Study | 2008 Source: IBM CEO Study 2008, IBM Global Making Change Work Study, 2008 Exploring the ‘Hungry for Change’ trait

How our research was conducted : Sample and demographics Global Making Change Work Study | 2008 Source: IBM Global Making Change Work Study, 2008, (n = 1,532) Making Change Work Study 2008 Demographics Methodology The Making Change Work study investigated real-life experiences of practitioners worldwide from organizations of all sizes, across industries Job roles Geographic regions Organizational size Breakdown by industry SUBJECT MATTER EXPERT/REVIEWER 7% PROJECT TEAM MEMBER 7% CHANGE MANAGER 17% INITIATOR/PROJECT SPONSOR 25% OTHERS 6% PROJECT MANAGER 38% AMERICAS 29% EUROPE 34% ASIA PACIFIC 37% COMMUNICATIONS 17% DISTRIBUTION 13% FINANCIAL SERVICES 16% INDUSTRIAL 18% PROFESSIONAL SERVICES 8% PUBLIC 21% OTHERS 7% UP TO 100 7% 100-1,000 15% 1,000-10,000 32% 10,000-100,000 32% MORE THAN 100,000 14% ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Practitioners reported that on average only 41% of projects were considered successful ,[object Object],Global Making Change Work Study | 2008 Project Success Rates Source: IBM Global Making Change Work Study, 2008, (n = 1,532) PROJECTS THAT EITHER MISSED ALL GOALS OR WERE STOPPED 15% PROJECTS THAT DID NOT MEET EITHER TIME, BUDGET OR QUALITY GOALS 44% PROJECTS THAT FULLY MET THEIR OBJECTIVES 41%

The top 20%—the Change Masters —reported an 80% project success rate, nearly double the average Global Making Change Work Study | 2008 Share of Successful Projects ,[object Object],[object Object],Source: IBM Global Making Change Work Study, 2008, (n = 1,532) ‘ Success rate increase’ is the relative difference * ’Top’ and ‘bottom’ organizations of sample as defined by project success rates 95 % SUCCESS RATE INCREASE BOTTOM 20% CHANGE NOVICES 8% 41% 80% AVERAGE TOP 20% CHANGE MASTERS Share of successful projects

The critical barriers to change involve people—what is generally considered the “soft stuff” is hard Global Making Change Work Study | 2008 Major Change Challenges ,[object Object],[object Object],“ Leaders are unrealistic about how change is going to happen. They move ahead anyway and get into problems.” — Change Manager, Energy and Utilities company Source: IBM Global Making Change Work Study, 2008, (n = 1,532) Changing mindsets and attitudes Corporate culture Complexity is underestimated Shortage of resources Lack of commitment of higher management Lack of change know how Lack of transparency because of missing or wrong information Lack of motivation of involved employees Change of process Change of IT systems Technology barriers 58% Soft Factors Hard Factors 49% 35% 33% 32% 20% 18% 16% 15% 12% 8%

Global Making Change Work Study | 2008 Factors for Successful Change ,[object Object],[object Object],“ If you don’t have leadership support, you’re doomed” — Project Manager, U.S., Media and Entertainment Source: IBM Global Making Change Work Study, 2008, (n = 1,532) Top management sponsorship, employee engagement and honest and timely communication are critical for successful change Change supported by culture Efficient training programs Adjustment of performance measures Efficient organization structure Monetary and non-monetary incentives Top management sponsorship Employee involvement Honest and timely communication Corporate culture that motivates and promotes change Change agents (pioneers of change) 92% Soft Factors Hard Factors 72% 70% 65% 55% 48% 38% 36% 33% 19%

Analysis identified four important focus areas that were highly correlated with project success—helping to close the change gap Global Making Change Work Study | 2008 ,[object Object],[object Object],[object Object],Why the Change Masters excel: The Change Diamond Source: IBM Global Making Change Work Study, 2008

We found a strong correlation between successful projects and a realistic awareness of the change challenge,… Global Making Change Work Study | 2008 Challenge and Complexity Awareness ,[object Object],[object Object],[object Object],Source: IBM Global Making Change Work Study, 2008, (n = 1,532) Percentage of successful projects YES TENDING TOWARD YES TENDING TOWARD NO NO 52% 43% 35% 25% “ Within your organization, do you think there is sufficient awareness of the challenges associated with implementing and sustaining change?” REAL INSIGHTS REAL ACTIONS

… However, being merely aware of change complexity is insufficient Global Making Change Work Study | 2008 Does Awareness Lead to Action Source: IBM Global Making Change Work Study, 2008, (n = 1,532) Change Masters take advantage of awareness and insights to better guide actions Within your organization, do you think there is sufficient awareness of the challenges associated with implementing change? ,[object Object],TENDING TOWARD NO 26% Yes Tending toward yes Tending toward no No NO 13% YES 18% TENDING TOWARD YES 33% 30% 55% 13% 2% REAL INSIGHTS REAL ACTIONS

Making change work: From Insights to Actions Global Making Change Work Study | 2008 Source: IBM Global Making Change Work Study, 2008 ,[object Object],[object Object],[object Object],[object Object],Practical steps from insights to actions: REAL INSIGHTS REAL ACTIONS

Formal change management methods improve project success when applied consistently Global Making Change Work Study | 2008 Having a structured approach to change management alone is insufficient if not applied consistently. When used regularly, the likelihood of project success increases to 52%, compared to less than 40% in other instances. Consistent application of solid methods vs less consistent or none at all There are specific and formal change management procedures which are always followed Although there are specific and formal change management procedures, they are often not followed I know someone I can ask Actions are improvised according to the situation 52% 39% 38% 36% Formal change management approach ,[object Object],SOLID METHODS SOLID BENEFITS Source: IBM Global Making Change Work Study, 2008, (n = 1,532)

However, change management methods are usually informal, ad hoc or improvised Global Making Change Work Study | 2008 Use of formal methods in Change Management vs Project Management “ Following a good solid methodology that integrates with the project really helps to make a quicker start on the change journey....“ --- Change Manager, Australia, Government ,[object Object],[object Object],76% Formal methods used consistently Informal approach (formal methods not used conssitently, ad-hoc or improvised) 24% 49% 51% Change Management Project Management SOLID METHODS SOLID BENEFITS Source: IBM Global Making Change Work Study, 2008, (n = 1,532)

The Methods Gap: The difference between the perceived level of formal methods required and the actual level being applied Global Making Change Work Study | 2008 ,[object Object],[object Object],The Methods Gap 63 % METHODS GAP 87% Percent answering “yes” 24% Need Formal Methods Use Formal Methods SOLID METHODS SOLID BENEFITS Source: IBM Global Making Change Work Study, 2008, (n = 1,532)

Making change work: From Methods to Benefits Global Making Change Work Study | 2008 Source: IBM Global Making Change Work Study, 2008 ,[object Object],[object Object],[object Object],[object Object],Practical ideas for closing the methods gap SOLID METHODS SOLID BENEFITS

Change managers improve the rate of project success Global Making Change Work Study | 2008 ,[object Object],The impact of dedicated change managers 19 % SUCCESS RATE INCREASE 36% Share of successful projects 43% No Professional Change Managers Professional Change Managers BETTER SKILLS BETTER CHANGE ‘ Success rate increase’ is the relative difference Source: IBM Global Making Change Work Study, 2008, (n = 1,532)

Cascade change leadership responsibility to all levels of the organization ,[object Object],Global Making Change Work Study | 2008 Employee involvement and empowerment makes success more likely “ Facilitate involvement of employees and allow them to exercise influence over the change process" --- Project Sponsor, Canada, Life Sciences and Pharmaceuticals 18 % SUCCESS RATE INCREASE 39% Share of successful projects 46% After consulting their subordinates, managers decide on their own Managers delegate their decision process to their subordinates BETTER SKILLS BETTER CHANGE ‘ Success rate increase’ is the relative difference Source: IBM Global Making Change Work Study, 2008, (n = 1,532)

Making change work: From Skills to Change Global Making Change Work Study | 2008 Source: IBM Global Making Change Work Study, 2008 ,[object Object],[object Object],[object Object],Practical ideas for closing the skills gap BETTER SKILLS BETTER CHANGE

Change Masters consider money spent on change management as an investment, not an expenditure Global Making Change Work Study | 2008 ,[object Object],[object Object],Source: IBM Global Making Change Work Study, 2008, (n = 1,532) Investing for Change—Future Allocations INVEST MORE 72% INVEST LESS 2% INVEST ABOUT THE SAME 26% ,[object Object],RIGHT INVESTMENT RIGHT IMPACT

We found project success rates were higher when moderate investment is made in the change effort Global Making Change Work Study | 2008 ,[object Object],[object Object],“ The ability to demonstrate the benefits of a change program was key in the shift in thinking” — Project Manager, Canada, Life Sciences and Pharmaceuticals Investing for Change—A little goes a long way 23 % SUCCESS RATE INCREASE 39% Share of successful projects 46% Investment <=11% Investment >11% RIGHT INVESTMENT RIGHT IMPACT ‘ Success rate increase’ is the relative difference Source: IBM Global Making Change Work Study, 2008, (n = 1,532)

Making Change Work: From Investment to Impact Global Making Change Work Study | 2008 ,[object Object],[object Object],[object Object],Practical ideas for investing in change RIGHT INVESTMENT RIGHT IMPACT Source: IBM Global Making Change Work Study, 2008

Mastering Change: Greater focus on the four facets of the Change Diamond drives project success ,[object Object],Global Making Change Work Study | 2008 Change Masters: Greater focus leads to project success ,[object Object],[object Object],Real Insights - Percentage of organizations having a clear understanding of the change challenge Solid Methods - Percentage of organizations using formal methods consistently Better Skills - Percentage of organizations using change managers for change projects Right Investment - Percentage of project budget invested in change management 46% 61% 79% 12% 24% 37% 73% 79% 84% 10% 11% 13% Bottom 20% Change Novices Average Top 20% Change Masters 8% 41% 80% 95 % SUCCESS RATE INCREASE ‘ Success rate increase’ is the relative difference Source: IBM Global Making Change Work Study, 2008, (n = 1,532)

The Change Diamond: Greater than the sum of its parts ,[object Object],Global Making Change Work Study | 2008 The individual vs. joint effect of the four facets ,[object Object],Real Insights: Awareness of Change Challenge 52% 19 % Solid Methods: Consistent use of Formal Methods Better Skills: Professional Change Managers Right Investment: >11% Change Budget Change Champions: Combining All Four Facets 52% 43% 43% 80% 41% Average project success rate Project success rate of individual facets ,[object Object],[object Object],[object Object],Source: IBM Global Making Change Work Study, 2008, (n = 1,532)

Practitioners achieved significantly higher rates of success when focusing on the four facets of the Change Diamond Global Making Change Work Study | 2008 Allocate the right amount for change management by understanding which types of investments can offer the best return, in terms of greater project success Use a systematic approach to change that is focused on outcomes and closely aligned with formal project management methodology Source: IBM Global Making Change Work Study, 2008) Strive for a full, realistic understanding of the upcoming challenges and complexities, then follow with actions to address them Leverage resources appropriately, including effective top management sponsorship, assigning dedicated change managers to projects and empowering employees to enact change

Conclusions ,[object Object],[object Object],[object Object],[object Object],Global Making Change Work Study | 2008

2008 10 13 Mcw Full Findings Presentati

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2008 10 13 Mcw Full Findings Presentati