Abstract
Transformation seems to be the default condition of today's organization. Many forces drive organizational transformation, including the needs to achieve economies of scale, to innovate, and the constant push to work faster, better, or simply different. In this dynamic environment, concurrent with an emphasis on change management, we have witnessed the rise of project management as a strategic resource. By nature, projects create new products, processes, or experiences: and when the project is one with a transformational component, project management is the key to smooth implementation. Project and program managers who can successfully combine insights from organizational change management and project/program management give an organization the edge. Learn how to assess if your organization is ready for a major transformational initiative, how to identify and avoid common mistakes, and what practices are most important when leading a transformational project/program.
Today's Environment
These are turbulent times. Mergers and acquisitions are common, companies continue to re-organize to prepare for growth and scalability, competitors continue to re-invent themselves, creating stronger market pressures, and the pace of everything has to move at Olympic speed.
In my current role, I speak with companies from various industries on a daily basis. And, although each has unique challenges, inevitably the words transition and/or transformation are used to describe their environment. And that should come as no surprise, because change IS the status quo. So, the real question isn't what change is next, but rather, how can you help your organization prepare for whatever changes will inevitably come?
I always like to start with some basic level-setting of today's buzzwords.
- Transition — movement, passage, or change from one position, state, stage, subject, concept, etc., to another; change.
Retrieved from http://dictionary.reference.com/browse/transition - Transformation — A marked change, as in appearance or character, usually for the better.
Retrieved from http://www.thefreedictionary.com/transformation
There is one word common to both terms — change. Moving forward in this paper, the words transition, transformation, and change will be used to describe the types of initiatives or programs being executed within organizations.
Earlier in my career working for an IT outsource provider, the project management office (PMO) was retitled to Transition and Transformation (T&T). The team was made up of project and program managers who were responsible for transitioning new customers into the environment, expanding services of current clients and large internally focused strategic programs. Having a department solely focused on “change,” with a centralized pool of key project/program managers with consistently applied processes worked very well. Why was this model successful?
As with anything in life, the more you do it, the better you get at it. Let's take the activity of swimming. The more laps you swim, the better your strokes are, the faster you go. The same idea applies to change. The more experience an organization has with implementing change, the better they get at it. I believe what differentiated the T&T department from others was having a centralized pool of dedicated professionals, experienced at running these types of initiatives, who applied standard processes and integrated organizational change management all under the umbrella of strong leadership. With so many moving parts, how do you really make it happen?
Assessing Readiness for Change
When an organization would like to drastically change the way they are doing things, they normally define the vision along with the expected benefits and pitch the idea to the board and/or executive leadership. Once buy-in is achieved, the program is initiated.
The first recommended step is to assess the readiness of the organization. You should identify implementation strengths and weaknesses as they exist in the current organizational climate and culture. This process will enable you to measure potential resistance and probability of success. A formal structured approach should be taken with this assessment, but it doesn't need to take an extensive amount of time to evaluate. After all, the clock is ticking. Begin by asking questions through interviews and/or a survey process to understand the potential concerns in categories such as Sponsorship, Change Agents, Target Population, History, and Cultural Resistance. Simple questions to ask are:
- Are the sponsors willing to provide the resources (e.g., time, money, staff) to achieve the future state of the organization?
- Do the change agents have experience in the use of project management practices, processes, and tools?
- Does the target population believe support and resources are adequate to accomplishing the change?
- Has the company successfully implemented changes in the past?
- Is their concern, once the change is implemented, that job responsibilities will be reduced?
- Are employees fully engaged in the company strategy; do they understand and buy into it and see how their actions connect to the big picture?
- Does the company have clear communication processes and practices?
During the assessment, be sure to not only identify your current state but also understand the desired future state, and then document the gap in between. Once the data are collected, a spider diagram (Exhibit 1) can be plotted to visually demonstrate the results of the assessment. And, thus, a go/no-go decision should be made.
Exhibit 1 – Change Readiness Summary Example from PM Solutions' proprietary consulting toolkit.
The People
Transformation is all about the people. It takes people to initiate and execute. On the other end, it is people who will be impacted. Since people are an integral part of whether or not this change is successful, let's take a look at what we can do to gain buy-in. There are three main groups to focus on:
- Sponsors,
- Change agents, and
- Target population.
Sponsors are simply the executives who fund and lead the change. The change agents are normally the PMO and program managers who are performing the activities to implement the change and who are the keys to ensuring that effective communication occurs throughout. Change agents make it happen. The target population is the group affected by the change and usually exhibits fear; after all, they don't know how they personally will be affected. These three groups can make or break the success of the change effort. So, how do you ensure success?
Change Team
Create a change team made up of sponsors and change agents. This team should document their charter succinctly in terms of goals and metrics. The goals and their descriptions must not change during the change effort and there should only be a few of them. Milestones should be derived from the goals as intermediary steps achievable throughout the process. When choosing individuals for this team, look for experts and stakeholders, people with positions of authority who possess good management and communication skills and have the ability to focus on the change vision and objectives. It is also a good idea if the team members are analytical, creative, and open minded. Obvious resistors are rarely good candidates.
Confirm Sponsorship
Great leadership is required for the change to occur. Corporate leaders must provide this leadership by committing to the change and agreeing to fund it. They also should have a sufficient level of line authority within the organization to lead the change and/or have sufficient power to influence others outside of their direct line of authority to adopt the change. Ideally, the sponsors should communicate the corporate vision to others and empower people to act consistently with behaviors of change. Their active participation throughout the life cycle of the change will have a major impact on the acceptability of the change. There will inevitably be resources that resist the change. These individuals should be identified early in the process and the sponsors should make it their mission to turn them around. The sponsors' job will become one of rewarding desired behaviors and discouraging undesirable behavior.
Target Population
For people to buy into change they must see how it will benefit them. It's another way of saying they must have “skin in the game.” I have a customer who hired my company to assist his company with setting up a PMO and maturing their project management capabilities. He has communicated to us on numerous occasions the importance of this change because “his job is on line”; and he is the sponsor. It makes me wonder if the team members in his organization, who are going to be affected by this change, have jobs that are on the line as well. My guess is— probably not. Therefore, the sponsor and change agents tend to have more “skin in the game” and have to work much harder to convince the target population of the benefits of this change and clearly communicate what it will mean to them personally. After all, we live in a “what's in it for me” society.
Organization
Now that we have discussed individuals, let's look at the organization as a whole. How does the corporate culture fit into change? The culture of an organization is in some ways similar to the personality of a resource. It possesses a collective pattern of behaviors, values, and “unwritten rules” developed over time and is a driving force for how employees operate on a daily basis. Strategic changes that are consistent with an organization's culture have a high probability of success. Those strategic changes that buck the culture will have a higher number of resources who will resist, thus increasing the probability of failure. Don't forget, a change readiness assessment should be conducted prior to moving forward with a large transformational change. Normally, a sub-section of this assessment includes a cultural assessment intended to provide a gauge for the probability of resistance early on in the process. Items to cover during a cultural assessment include:
- Describe the size of the gap between the current state (guarded, slow, ineffective) and desired state (open, fast, effective) with respect to communications.
- Describe the size of the gap between the current state (reserved, singular, divergent) and future state (participatory, collaborative, census building) with respect to employee involvement.
- Describe the size of the gap between the current state (authoritarian, staff oriented, political) and future state (participative, line oriented, apolitical) with respect to management style.
- Describe the size of the gap between the current state (indifferent, distracted, afterthought) and future state (attentive, focused, forefront) with respect to customer relationships.
With any change initiative, there will be some level of resistance. Be prepared to assess target risk and keep in mind that everyone impacted by the change is a target. Identify, measure, and manage the sources of resistance to ensure mitigation plans are in place and executed if the need arises.
Program Management Best Practices
To successfully transform your organization, it takes planning and execution. It does not happen by osmosis (although we would like to think it does). The way to plan and execute successfully is by applying a cohesive project management approach to your transformation goal. It must become a program (sticking with the program versus the project, because for sake of this paper, a transformation implies a large multi-faceted initiative requiring multiple projects that are inter-related). Once it is identified and sanctioned as a program, common project management best practices must be applied. There are standard phases for the life cycle and activities within each phase. Picking up from the previous paragraph, once gaps are identified, it is imperative to identify activities and build a work plan/schedule to manage the program. There are four general areas I would like to highlight due to their correlation with achieving success — scope management, communications plan, integrated reporting, and risk.
Scope Management
What will the scope of this transformation include? The scope must be identified and documented based on the sponsors' vision. Once obtained, it must be communicated with the management and change agents. And it must be base-lined, thus coming under change control. There is that word again — change. With any project, we have all experienced the dreaded scope creep. A perfect program would have no change; however, the last time I checked, utopia does not exist. Change to scope is a reality we all need to deal with. That is why a standard practice must be applied by the assigned Transformational Manager to identify requested scope changes, document them, analyze the impact, and attain appropriate approvals for the requested change. Any time changes occur to scope, they must be communicated to all parties involved in and affected by the change.
Communications Plan
In keeping on the subject of communication, a communications plan is THE roadmap for getting your message across to your audience. The plan is an essential tool to ensure that all parties are identified and resources who need to know specific information throughout the life of the program are documented. Communications management is the process by which program information is created, collected, disseminated, and archived in a timely and efficient manner. A communications matrix is recommended within the plan where each communication need is documented. In addition, a marketing plan should be developed and internal media identified. These items may be added directly into the communications plan or kept as separate documents. I will describe them as subsets for ease of explanation. The marketing plan will help “sell” the transformation and promote awareness. It also provides guidance on how the change will be promoted and statused to the organization. There are many stakeholders involved with a transformation: executive management, reinforcing sponsors, PMO staff, program/project managers, resource managers, project team members, and so forth. Everyone wants to know what is going on and each group has different needs in terms of just how much detail should be shared. Don't take the internal media plan for granted. It is best to think outside of the box to reach the largest audience — utilize an internal website, send out broadcasts, create a newsletter, provide targeted email updates, and/or hold town hall meetings or brown bag lunch sessions that are more intimate and allow people to ask questions in a smaller environment. You can also have material created to increase awareness — develop posters to hang around the office, have coffee cups made, distribute company shirts, and even run contests. This creates excitement and awareness and resources feel a part of the transformation rather than something being done to them.
Integrated Reporting
With any well-managed project, tracking of related metrics is the key to ensuring that what was planned and scheduled is moving forward as expected. I like to think of performance tracking in two ways: strategic and tactical. Simply put, it is a culmination of integrated activities enabling companies to make better decisions, drive strategy and goals, and optimally lead their organizations. Where do you start?
Let's start at the top. Companies want to maximize shareholder return by initiating the successful execution of corporate strategy. As strategy and goals are communicated downward throughout the organization, progress toward attainment has to be communicated back up the chain of command. A pre-requisite to accomplishing this is building a foundation to support the integrated feedback loop required. Integrated reporting can be described in four levels:
Project, Program, Portfolio, and Analysis (Exhibit 2).
Exhibit 2 – Integrated Reporting Roll-up. Analysis happens overall and at each level.
Key performance indicators (KPIs) should be identified, collected, and reported on at each level. Consistent tracking of performance and value metrics at each level provides insight into the success of each initiative. Will the initiative come in on time, within budget, in scope? Project data will feed up into a program and then can be elevated to the portfolio level. On a portfolio level, the culmination of project and program data gives the bigger picture. Are most projects in green status or is there high risk across the board? Most companies have a centralized organization either called an EPMO or a similar name. Whether you have a centralized function or you assign this responsibility to an individual, identified KPIs should be monitored, tracked, and distributed on a regular basis. The first three levels are the foundation. Level four is where the value-add is realized. What is level four? Analysis. Analysis is the key to influencing the decision-making process. Types of common analyses include productivity, resource capacity, customer satisfaction, financial evaluations, classification and categorization comparisons, ROI, and more. Advanced analyses provide insight for investment planning and development of operating plans at a business unit or departmental level. It is my belief that executives who use integrated reporting as an input to their strategic decision making have a higher probability of transformational success. Choose the metrics that will be most meaningful to your organization. To the extent possible, pull information already available from other reports with the balance being generated from primary data sources, and then aggregate that information into one overall report.
Risk
As mentioned earlier, targeted risk should be assessed. With any properly run project, there should be a risk plan. A risk plan identifies uncertain events or conditions that, if they occur, would have some negative effect on the project (the positive effects are called opportunities). Risk management begins with risk identification and progresses to analysis and then to contingency planning to fully understand the probabilities of the risks occurring and their impact. Risks must be addressed. Too often I see program managers complete their risk register and that is it. Filling out a piece of paper to say you have a risk register is not risk management. You must identify responses to the risks and assign them to team members. If the risk occurs, the assigned team member can quickly execute the mitigation plan to reduce overall impact to the program.
The Role of the EPMO
How do organizations control and monitor a major transformation? Utilizing a centralized body (EPMO, T&T, and Project Services are examples of names used, but from here on I will generically refer to it as EPMO). The name of the organization is not important; the function it performs is the key. Utilizing an EPMO is a smart move to make. Normally, the resources who work within an EPMO are inherently change agents. They have strong skills in implementing methodology and process, are already tasked with metric reporting, and are keen to mentor, coach, and train people within the organization. These are the core functions of an EPMO. It would behoove executives to utilize this talent to shepherd large change initiatives. This point is being recognized and embraced by many organizations already. For example, at a recent project management conference, practitioners and speakers during a panel discussion converged on one topic: that organizational change management is a primary future role for the PMO. Additionally, PM Solutions' 2012 State of the PMO research found that 41% of PMOs already perform some functions under the organizational change management umbrella. EPMOs can be particularly beneficial with the management of integrated reporting and with implementing the change reinforcement strategy because they are responsible for the oversight of the portfolio and have the inherent skill to getting the job done right.
Reporting Management
To evaluate the success of the transformation, a set of specific indicators should be identified and agreed upon up front. When identifying what metrics make sense to collect and report on, think about the audience. There are three main constituencies who will have interest: the steering committee (sponsors and change agents), management, and staff. The steering committee will be interested in the progress being made and if there are any issues they need to resolve related to the initiative. Sample KPIs for this group are the number of issues (both resolved and unresolved) and whether planned dates are on track. The management needs to understand the benefits to the organization, status of progress, and what is required of them for each phase. It is expected that there would be numerous briefing sessions conducted for the management providing survey results that show employees understand the initiative and are prepared for the upcoming changes. Whatever you do, don't forget about the staff. Due to the fear factor, they need to understand how the transformation will affect them, clearly understand what the benefits are for them, and when they should expect the changes to occur. The communications plan should define the workshops/town halls/webinar sessions, and so forth, held to provide general information and status. Also, there may be resources who require training if their current roles or the processes change.
Reinforcement Management
The reinforcement strategy emphasizes the alignment between the present reinforcement system and the types of reinforcements that are essential to motivate new, desired behaviors. Certain behaviors are to be expected based on process changes, new system implementation, new organizational structure, and so forth. It is very easy, even after much communication and training, to regress to doing things the way they have always been done. For example, it may seem to be easier to use a spreadsheet template rather than enter activities into a new online tool. Or it may seem easier to go to a person to get something done, rather than enter a request into the system, when they sit one aisle over and can do the task in a couple of minutes. The problem with bypassing the new processes is that the goals and benefits will not be realized unless the new way of doing things is embraced. The PMO can incorporate this overview of process into its regular activities. Many PMOs have coaches/mentors who work with teams on a regular basis, who can consistently reinforce the new processes and standards. For many employees, the sense of doing a good job does drive performance. Sustained improvement may be gained by supplementing personal intrinsic motivations with specifically, carefully targeted reinforcements including monetary, career advancement, and team-based rewards.
Ten Common Leadership Mistakes
Commonly quoted industry estimates suggest that the failure rate for a change initiative can be as high as 70%. Change is inevitable, so you cannot avoid it; you must embrace and plan for it. So, why not learn from others' mistakes. During my research for this paper, I found numerous lists focused on top leadership mistakes. But I have my own, based on personal experience and observations throughout my career. So, here are my Top Ten Common Leadership Mistakes Associated with Transformation.
- Allowing the vision to fade
- Changing priorities
- Assigning responsibility without authority
- Placing results ahead of people
- Inadequate recognition
- Not making time for your team
- Being too “hands off”
- Not “walking the walk”
- Not delegating
- Misunderstanding your role
You may agree with these and have other items to add. But what's important is that we recognize the most common missteps, keeping them top-of-mind so as to avoid falling prey to them when the opportunity to lead or participate in a transformation arises. This will help keep the initiative moving along with the highest probability of success. And don't we all want the best odds of success?
Conclusion
On a regular basis I tell my staff and clients to take a step back, simplify, and apply the basics. How many times have we said during a lessons learned session — it is project management 101. If we only would have applied disciplined project management, we could have avoided many of the pitfalls that prevent an initiative from succeeding. With a large transformation, it is not just about applying rigorous project management practices; it's about realizing the importance of the human factor and ensuring organizational change management practices are integrated into the process. I cannot stress enough that without taking people into consideration when integrating organizational change management, there is low probability for success. I leave you with a synopsis of the advice provided throughout this paper: Leverage the EPMO to oversee change initiatives, communicate regularly with the various constituents involved, report on and analyze how you are progressing, be mindful of the risks and who will handle mitigation, and recognize that change needs reinforcement to take hold long-term.