Making Change Work. Presenter: Graham Kittle

1. Making Change Work
Graham Kittle
Managing Partner, Global Business Services
IBM Insight Forum 09 Make change work for you
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2. Agenda
g
1. Future perspectives from CEO’s
2.
2 Current climate driving us to be “smarter”
smarter
3. So how do we “Make Change Work”?
g
IBM Insight Forum 09 Make change work for you
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3. We spoke to 1,130 CEOs and conducted in-depth analysis to determine
the characteristics of the Enterprise of the Future
33% 36% 31%
Global 1,130 interviews
40 NATIONS •78% private sector
•22% public sector
32 DIFFERENT
INDUSTRIES
A/NZ 69 interviews
% •70% private sector
19 OF ORGANISATIONS HAVE
MORE THAN 50,000 EMPLOYEES •30% public sector
30%
% OF ORGANISATIONS HAVE FEWER
22 THAN 1,000 EMPLOYEES
Source: IBM Global CEO Study
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4. Analysis from the CEOs commentary has led
us to five core traits of the Enterprise of the Future
Core Traits of the Enterprise of the Future
1 2 3 4 5
Hungry for Innovative Globally Disruptive Genuine, not
change beyond integrated by nature just
customer generous
imagination
IBM Insight Forum 09 Make change work for you
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5. Although CEOs are more confident about managing change, the gap
between the capability and the challenge ahead is growing
The Change Gap* Triples
Gap
2006 2008
%
8 %
CHANGE
GAP*
22 CHANGE
GAP*
13% 12% 6% 19%
“We have seen more change in the
11%
22% 31% last ten years than in the previous 90.”
83% Ad J. Scheepbouwer, CEO, KPN Telecom
20%
65%
61%
57%
Change Needed Past Change Success
No/limited Change No/limited Success
Moderate Change Moderate Success
Substantial Change Successful
S f l
Change Needed Past Change Change Needed Past Change
Success Success
Source: IBM Global CEO Study 2008 * Difference or ‘gap’ between expected level of change needed and past success in managing change
IBM Insight Forum 09 Make change work for you
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6. CEOs say the gap is widening because
of the accelerating pace of change
“The rate of change has
The
“The k t
“Th key to successfulf l
increased dramatically.
transformation is changing our
Customers are demanding
mind-set. For large companies,
radical change in product
g p
it is easy to be complacent —
innovation. Our company will
we have to change this. Our
need to greatly increase its
company culture must have a
capabilities to deal with these
built-in
built in change mechanism.”
mechanism
demands.”
Masao Yamazaki, President and CEO,
Dennis Jönsson, CEO, Tetra Pak
West Japan Railway Company
“My organisation has not been
“Change in our organisation is
quick enough; change is hard. A
not happening fast enough…
few years ago we were a
the gap is opening up.”
national company, now we're a
CEO in Australia
global company.”
CEO in USA
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7. Companies that delivered higher revenue
p g
growth managed change more successfully
Underperformers** Outperformers**
%
29 4%
CHANGE
GAP* 19 %
CHANGE
GAP*
24% 5% 17%
13% 10% CEOs of organisations with
outperforming revenue growth are
85% 17%
83% more confident about their ability to
22% implement change
66%
54%
Change Needed Past Change Success
No/limited Change No/limited Success
Moderate Change Moderate Success
Substantial Change Successful
S f l
Change Needed Past Change Change Needed Past Change
Success Success
** Performance based on industry comparisons within survey
y p y
* Diff
Difference or ‘
‘gap’ b t
’ between expected l
t d level of change needed and past success i managing change
l f h d d d t in i h
sample of revenue CAGR 2003 to 2006
Source: IBM Global CEO Study 2008
IBM Insight Forum 09 Make change work for you
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8. Agenda
1. Future perspectives from CEOs
2. Current climate driving us to be “smarter”
3. So how do we “Make Change Work”?
IBM Insight Forum 09 Make change work for you
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9. Today we face a different kind of downturn
– traditional responses will not suffice
ad o a espo ses o su ce
Unprecedented constraints on
Long and
L d
access to credit and capital;
Difficult Typical cost
unwinding of over-leverage
management will
Falling demand increased price
demand, NOT be enough
sensitivity as consumers and
enterprises cut back Firms must examine
Disruptions in supply chains, working capital &
ki it l
partner and customer investment -
arrangements identifying
opportunities
opport nities to
Transformative Restructuring of industries - restructure, reduce,
firms fail, sold off overnight and preserve capital
as well as streamline
New regulatory regimes operations
Stress on global inter-
dependencies
IBM Insight Forum 09 Make change work for you
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10. Yet some broader forces are at work
Our
O world has become…
ld h b
Smaller & Pervasive connections and communications
Flatter
Fl tt Emerging markets
Open trade
Systems-level complexity
Riskier
Viral spread of information
Widening g p between information available, and
g gap ,
information effectively managed
Interconnected
Smarter Instrumented
Intelligent
g
IBM Insight Forum 09 Make change work for you
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11. In 2005 there were 1 3 billion RFID
1.3
tags in circulation…
… by 2010 there will be 33 billion.
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12. An estimated 2 billion people will be on the Web
by 2011 ...
… and a trillion connected objects – cars,
j
appliances, cameras, roadways, pipelines –
comprising the "Internet of Things."
IBM Insight Forum 09 Make change work for you
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13. Organisations must consider four critical questions
“My infrastructure is “Our resources
“Data is exploding “New business &
inflexible and costly
costly” are limited”
and it’ i silos”
d it’s in il ” process demands
demands”
I Need to Work I need to respond I Need
I Need Insight quickly Efficiency
Smart
How can we take How do we drive
How can we work How do we create
advantage of the greater efficiencies,
smarter supported an infrastructure
wealth of compete more
by flexible and that d i
th t drives ddown
information effectively, and
dynamic cost, is intelligent
available in real respond more quickly
processes and secure, and is
time from a by taking action now
modeled for the just as dynamic as
multitude of on energy, the
new way people today’s business
sources to make environment, and
buy, live & work? climate ?
more intelligent sustainability?
choices?
Smart Dynamic Green &
New Beyond
Intelligence Work Infrastructure
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14. Enterprise data is projected to explode at 60% growth annually through
2010
Managers spend 2 h
M d hours a d searching f i f
day hi for information –
ti
50% of what they find does not meet their needs
•Information management
•Predictive capability
New
Intelligence •Engaging the value chain
•Business optimisation
B i ti i ti
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15. 70% of CEOs plan major business model changes
Gap between CEOs who expect change and those who have the
ability to handle change has widened sharply – nearly 3 times
•Agile business model
•Connected customers
Smart Work
•Dynamic business
p
processes
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16. While 83% of CEOs expect substantial change within their enterprises, only
61% feel confident in their ability to manage it
This “change gap” challenges CIOs to transform highly distributed,
fragmented, labor-intensive infrastructures and assets
•Reduce costs
Dynamic •Improve
Infrastructure service
i
•Manage risk
Manage
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17. 80% of CEOs view sustainability as i
f CEO i t i bilit impacting b d value
ti brand l
Information technology energy use will double in the next 2 to 4 years
•Finding the value in green
Green & •Smart systems
Beyond
•Societal shifts and corporate
and social responsibility
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18. An analysis of early winners points to strategies for success
Top performers during 2008…
f ..exhibited three strategies
Average Stock Price Change
2008
30%
24%
1. Focus on Value
52 Week % Change
20%
10%
C
0
-10%
2. Exploit Opportunities
+64%
-20%
-30%
3. Act with Speed
-40%
-40%
Overall Top Performers
S&P 500 (n=61)
Criteria for Top Performers:
Market Cap >$1.4B
52 week stock price change >5 0%
k t k i h >5.0%
Source: Google Finance, IBM S&C analysis, Performance period is 12/27/07 to 12/18/08
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19. Organisations need to do three things
Exploit
Focus on Value Act with Speed
Opportunities
Do more with less Capture share Manage change
Cash/capital focus Disrupt weak competitors Clearly communicate simple
Flexibility Acquisitions goals
Seek and leverage
Focus on the core Build future capabilities experience
Businesses Protect & acquire talent
Initiatives Develop required assets Leadership
Get the information to act
Re-align relationships Change your industry Set the agenda
Financial solidity of Bold moves
suppliers, partners and Position globally Risk & Transparency
customers Business performance
Revisit/renegotiate management & analytics
Risk management
IBM Insight Forum 09 Make change work for you
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20. Agenda
1.
1 Future perspectives from CEOs
2. Current climate driving us to be “smarter”
3. So how do we “Make Change Work”?
IBM Insight Forum 09 Make change work for you
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21. Making Change Work
Closing th Ch
Cl i the Change Gap
G
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22. Sample and demographics - A/NZ participation
The Making Change Work study investigated real-life experiences of practitioners worldwide from
organizations of all sizes, across industries
Making Change Work Study 2008
Demographics Methodology
Job roles Organizational size
OTHERS
UP TO 100
6% MORE THAN 7%
SUBJECT MATTER
EXPERT/REVIEWER 100,000
100 000 Key attributes of the sample
7% PROJECT 14%
MANAGER 100-1,000
PROJECT TEAM
MEMBER
38% 15% - 1,532 experienced
7% project practitioners
CHANGE 10,000-
MANAGER 100,000
100 000 - 15 countries worldwide
17% 32% 1,000-10,000
32%
INITIATOR/PROJECT
- 21 different industries
SPONSOR
25%
- Companies of all sizes
Geographic regions Breakdown by industry
y y
OTHERS
7% COMMUNICATIONS
AMERICAS
29%
17% Methods
EUROPE PUBLIC
34% 21% DISTRIBUTION - Face-to-face interviews
13%
A/NZ
participation PROFESSIONAL - Survey
SERVICES
12% 8% FINANCIAL
ASIA PACIFIC SERVICES
(n=183) 37% INDUSTRIAL 16%
18%
Source: IBM Global Making Change Work Study, 2008, (n = 1,532)
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23. On average, only 41% of projects were considered successful. But the
top 20% th Change M t
t 20%—the Ch Masters—reported an 80% success rate.
t d t
Average Project Success Rates Change Masters vs. Change Novices
PROJECTS THAT EITHER
MISSED ALL GOALS OR
WERE STOPPED Share of successful projects
15%
80%
A/NZ
PROJECTS THAT FULLY
17%
MET THEIR OBJECTIVES
41%
PROJECTS THAT DID NOT
A/NZ
Average = 35%
41%
95 % SUCCESS RATE
INCREASE
MEET EITHER TIME,
BUDGET OR QUALITY
GOALS 8%
A/NZ
44% 48% Only 11%
BOTTOM 20% AVERAGE TOP 20% Change
CHANGE CHANGE
Masters in
NOVICES MASTERS
44% of all projects failed to meet either time, A/NZ
budget or quality goals, while 15 % either stopped The top* 20% of organizations reported
p g p
or failed to meet all objectives
an average project success rate of 80%,
reflecting a 95% increase above the
Source: IBM Global Making Change Work Study, 2008, (n = 1,532) average share of successful projects
‘Success rate increase’ is the relative difference
* ’Top’ and ‘bottom’ organizations of sample as defined by project success rates
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24. The critical barriers to change involve people
- what is generally considered the “soft stuff” is hard
Major Change Challenges
Soft Factors Hard Factors
Changing mindsets and attitudes 58% Key barriers are changing
Corporate culture 49% mindsets & attitudes,
Complexity is underestimated
corporate culture, and
35%
A/NZ underestimated complexity
Shortage of resources 33% 43%
Lack of commitment of higher management 32% These “soft factors” are rated
Lack of change know how 20% more important than resource
A/NZ
Lack of transparency because of missing or
18% 34% constraints, illustrating they
wrong information
are inherently hard to manage
16%
Lack of motivation of involved employees and measure even with
Change of process 15% sufficient resources
Change of IT systems
g y 12%
Technology barriers 8% “Leaders are unrealistic about how change is going
to happen. They move ahead anyway and get into
problems.”
Source: IBM Global Making Change Work Study, 2008, (n = 1,532) — Change Manager, Energy and Utilities company
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25. Top management sponsorship, employee engagement and honest and
p g p p, p y g g
timely communication are critical for successful change
Factors for Successful Change
Soft Factors Hard Factors
Top management sponsorship 92% Change Masters have realized
Employee involvement 72% that behavioral and cultural
Honest and timely communication 70% change are crucial to project
Corporate culture that motivates and
65% success and are considerably
promotes change
55%
tougher to address than the
Change agents (pioneers of change)
so-called “hard” factors, such
Change supported by culture 48%
as structure, performance
Efficient training programs 38%
measures and incentives
Adjustment of performance measures 36%
Efficient organization structure 33% Practitioners place a key
Monetary and non-monetary incentives 19% responsibility for successful
change right at top
management’s dt’ door
“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)
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26. Making Change Work is covered in four broad categories
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27. REAL INSIGHTS
REAL ACTIONS
A realistic awareness of the change challenge
and project success are strongly correlated
Challenge and Complexity Awareness
Lack of early insight leads to a
Percentage of successful p j
g projects
high risk that complexity will be
underestimated or even
52%
overlooked
43%
35%
In particular, the complexity of
particular
behavioral and cultural change is
25%
often underestimated in the early
project planning and scoping
stages
YES TENDING TENDING NO
TOWARD YES TOWARD NO Project success rates drop as
“Within your organization, do you think there is sufficient awareness of organizations’ awareness levels
the challenges associated with implementing and sustaining change?”
change? decrease
Source: IBM Global Making Change Work Study, 2008, (n = 1,532)
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28. SOLID METHODS
SOLID BENEFITS
Formal change management methods
F l h t th d
improve project success when applied consistently
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
Formal change management approach Informal change management approaches
There are specific and formal change management
52%
procedures which are always followed
Although there are specific and formal change
Alth h th ifi df l h 39%
management procedures, they are often not followed
I know someone I can ask 38%
Actions are improvised according to the situation 36%
“Following a good solid methodology that integrates
with the project really helps to make a quicker start
Source: IBM Global Making Change Work Study, 2008, (n = 1,532) on the change journey”
g j y
— Change Management, Australia, Government
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29. The Methods Gap: The difference between the perceived level of SOLID METHODS
SOLID BENEFITS
formal methods required and the actual level being applied
Despite almost 90% of practitioners recognizing th value i using f
D it l t f titi i i the l in i formal changel h
management methods, in practice the consistent use of a systematic approach is low
There is a wide gap between what is thought to be required and what is actually being applied.
By employing formal change management methods and using them more consistently,
organizations can close this methods gap and increase the chances of project success
The M th d G
Th Methods Gap
Percent answering “yes”
87%
Need Formal
63 %
Methods
METHODS
Use Formal GAP
Methods
24%
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30. BETTER SKILLS
BETTER CHANGE
Change Managers improve the rate of project success
Deploying experienced and skilled change managers on projects helps to increase the
chances of project success
The impact of dedicated change managers
Share of successful projects
36%
No Professional
19
%
Change Managers
SUCCESS RATE
INCREASE
Professional
Change Managers
43%
‘Success rate increase’ is the relative difference
Source: IBM Global Making Change Work Study, 2008, (n = 1,532)
IBM Insight Forum 09 Make change work for you
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31. RIGHT INVESTMENT
RIGHT IMPACT
We f
found project success rates were higher when
moderate investment is made in the change effort
Top organizations invested only slightly more in change than others but were rewarded
others,
with significantly higher project success
Our study found that project success rates were 23% higher when the amount invested
in h
i change was greater th 11% of th project b d t
t than f the j t budget
Investing for Change—A little goes a long way
Share of successful projects
39%
23 %
Investment <=11%
SUCCESS RATE
INCREASE
Investment >11%
46%
“The ability to demonstrate the benefits of a change
program was key in the shift in thinking”
‘Success rate increase’ is the relative difference
Source: IBM Global Making Change Work Study, 2008, (n = 1,532) — Project Manager, Canada, Life Sciences and
Pharmaceuticals
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32. Mastering Change: Greater focus on the four facets of the
Change Diamond drives project success
By concentrating and acting on all four facets of the Change Diamond, Change Masters
achieve project success rates of nearly twice the average
Change Masters: Greater focus leads to project success
80%
The Change Masters
g
consistently utilized the
success factors markedly
95 %SUCCESS RATE
INCREASE
41%
better than the average
organization and were
g
able to report much higher 8%
success rates. Bottom 20% Average Top 20%
Change Novices Change Masters
46% 61% 79% Real Insights - Percentage of organizations
The Change Novices in having a clear understanding of the change
contrast consistently challenge
12% 24% 37%
under-utilized the four Solid Methods - Percentage of organizations
using formal methods consistently
facets driving change 73% 79% 84% Better Skills - Percentage of organizations using
success and had to report change managers for change projects
an 8% success rate. Right Investment - Percentage of project budget
10% 11% 13%
invested in change management
Source: IBM Global Making Change Work Study, 2008
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33. The Change Diamond
- Greater than the sum of its parts
Although action on individual facets brings benefit, only in combination do they result in an
outstanding increase in project success
success.
The individual vs. joint effect of the four facets
19 %
80%
Project success rate of Increase in project success Increase due
individual facets due to synergy effect of all to synergy
four facets together
52% 52% Sum of the four
individual facets
43% 43%
41%
Average
project
success When they combined the
rate facets, Change Masters
attained an 80% project
%
success rate, a marked
Real Insights: Solid Methods: Better Skills: Right Investment:
Change increase over the sum of
Champions:
Awareness of Consistent use of Professional >11% Change
Combining All their individual effects
Change Challenge Formal Methods Change Managers Budget
Four Facets
F F t
Source: IBM Global Making Change Work Study, 2008, (n = 1,532)
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34. Lessons from the Change Masters
– Filling the diamond with life
Consider money spent on change Hook into the history
management as an investment Provide change leaders with access to
Understand which types of focused historical data, people surveys, culture
spending can offer the best return, in terms assessments and “war stories,” and
of greater project success and use these people involved in previous projects, if
investments to minimize the risk of troubled possible.
projects.
Get the right skills – everywhere
Enable rapid development of internal Drive consistency
skills to keep pace with changes in the Develop and promote a standard change
external environment. Consider the method that can be applied
establishment of a sustainable change consistently. Communicate this widely
management capability within the and monitor its adoption.
organization.
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35. Is Your Organisation a Change Master or a
Change Novice ?
Change Novice Change Master
REAL INSIGHTS, REAL ACTIONS
• No reflection or understanding of the reasons past • Good anecdotal understanding of why projects have • Structured formal post implementation
projects have failed or succeeded failed or succeeded in the past assessments of change initiatives and consistent
• No focus or emphasis placed on the people or • Adhoc attention is given to the people & cultural integration of lessons learned into planning of
cultural aspects of change aspects of change with a strong focus on the process new change initiatives
• Change is viewed as a succession of individual and technology • Equal emphasis is given to the people, cultural,
separate projects • There is some alignment between the objectives of process and technological aspects of change
change projects underway
h j t d • Ch
Change i viewed as a l
is i d long-term transformation
t t f ti
SOLID METHODS, SOLID BENEFITS in support of strategy
• No change method is available or used on projects • Consistent, tried & accepted change method that is • Consistent, tried & accepted change method that
• No approved business case or identification of sometimes applied is always applied on projects
project benefits • Approved business case and adhoc measurement of • Approved business case and formal tracking of
• No formal change management workstreams are benefits project benefits (throughout project)
established on significant projects • Formal change management workstream established • Formal change management workstream on all
on some significant projects significant projects
BETTER SKILLS, BETTER CHANGE
• Don’t believe there’s a need to invest in developing • Skills are developed on individual projects on an ad hoc • Investment in the development of a change
change management skills within the org for use basis are are not necessarily used on future projects capability that is leveraged across the organisation
across projects
j t • S
Some evidence of T M
id f Top Management leadership of
t l d hi f • A ti
Active, involved and visible T M
i l d d i ibl Top Management t
• Passive, hands-off and invisible Top Management project leadership of projects
leadership of projects • Formal mechanisms (ie processes & technologies) are • Formal mechanisms (ie processes & technologies)
• There is little to no involvement or feedback sought used on an ad hoc basis to facilitate employee are always used to encourage employee
from people affected by the change involvement & feedback involvement & input
RIGHT INVESTMENT, RIGHT IMPACT
,
• There is no investment in well trained Change • Change Management responsibility is usually • Money spent on Change Management
Managers assigned to a Project role is viewed as an investment
• Change management expenditure is seen as a • Change mgmt budgets are often set as a % of the • Well trained Change Managers are utilised on
cost and is not separately budgeted for in projects total project budget, rather than relative to project projects
complexity & risk • Change management budgets are set relative to a
project s
project’s complexity & risk
IBM Insight Forum 09 Make change work for you
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36. IBM’s Better Change method supports
the four facets of the Change Diamond
Focus on Strategic
Execution
Program Leadership
and Governance
Program Organization
Strategy Design
and
Management Value
Realization
Stakeholder
Culture Engagement and
Transformation Communications
Skills &
Knowledge
Achieved by Focus on
People Change
IBM Insight Forum 09 Make change work for you
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37. Thank you
Questions?
IBM Insight Forum 09 Make change work for you
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38. REAL INSIGHTS
REAL ACTIONS
…However, b i merely aware of change complexity i
H being l f h l it is
insufficient
Does Awareness Lead to Action?
Within your organization, do you think there
is sufficient awareness of the challenges
associated with implementing change?
TENDING TOWARD NO
TENDING
TOWARD YES
26%
33%
Yes
Tending toward yes
NO Tending toward no
13% No
Does this awareness of the challenges of
implementing change normally lead to the YES
introduction of specific measures to 18%
8%
support the change?
30% 55% 13% 2%
Change Masters take advantage of
awareness and insights to better
guide actions
Source: IBM Global Making Change Work Study, 2008, (n = 1,532)
IBM Insight Forum 09 Make change work for you
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39. SOLID METHODS
SOLID BENEFITS
However, change management methods are
H h t th d
usually informal, ad hoc or improvised
Use of formal methods in Change Management vs Project Management
Formal methods used consistently Informal approach (formal methods not used consistently, ad-hoc or improvised)
24% 76%
Change
Management
Project
Management 51% 49%
Source: IBM Global Making Change Work Study, 2008, (n = 1,532)
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40. Each Better Change enabler supports a facet of
the Change Diamond
Value Realization – identifies benefits, tracks Stakeholder Engagement and Communication –
benefits and realizes benefits spanning the project identifies, classifies, aligns, engages, and effectively
lifecycle as costs, requirements, direction and communicates to stakeholders
benefits all change to a greater or lesser extent as Culture Transformation – aligns an organization’s
the project progresses culture to support the desired end state
Program Strategy & Management – sets the
change strategy and manages the implementation
Program Leadership & Governance – builds and Better Change - assembles discrete activities as
sustains support among executive leaders and needed for the particular change and provides
stakeholders and provides guidance and governance overarching enablers and modules that skilled
mechanisms t promote program success
h i to t practitioners, creatively using t h l
titi ti l i technology, craft t fit
ft to
Skills & Knowledge - provides a framework to assess the circumstances
and implement required skills and knowledge
Organization Design – aligns the organization with new
or existing business models and strategies to maximize
effectiveness
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