The challenge of creating successful and lasting organisational change
7 out of 10 organisational change projects will fail
In a world of ever changing technology, regulation, customer behaviour and economic uncertainty, virtually all organisations are facing the ongoing challenge of change. From small businesses with a plan to rapidly expand in a short space of time, to multi national goliaths facing fierce competition and shrinking markets, the need for change is paramount.
But change and transformation isn’t easy.
According to a recent McKinsey Transformation Executive Survey, 70% of all organisational transformation projects will fail. And when it comes to tracking long term success – examining where an organisation has arrived at 3-5 years into its transformation journey - the numbers begin to look even bleaker.
Countless reports and studies have been conducted in to the reasons behind this issue. Compelling arguments have been made about poor communication, a natural human instinct to ‘revert back to type’, the difference between ‘thinking it’ and actually ‘doing it’ – along with hundreds of other challenges and blockages that organisations continue to face.
So what is the secret to successful change?
Successful change isn’t about buying the best technology, having the most innovative company structure, the best financial modelling or even the most forward thinking company strategy. Even though all of these things are crucial ingredients of success, many organisations still fail when it comes to their effective implementation.
Its the people element that secures real success.
And the fundamentals that drive the people element are actually quite straight forward. On paper at least.
The most successful organisations have:
- Stakeholder engagement - with senior leaders creating the environment for success to develop and thrive from within (from the top down)
- Front line colleagues who are effectively involved and empowered in driving the change agenda (from the bottom upwards)
- Effective management of behaviour at all levels – from top to bottom. Good people management is, in essence, the ‘glue’ which binds points 1 and 2 together. It is also one of the biggest reasons why the two become unstuck and transformations fail.
Creating the environment – ‘top down’ driven success
Senior stakeholder engagement is, arguably, the most important factor of any successful transformation project. Without it, even the best intended, most brilliantly crafted plans will never meet their full potential and - more often than not - will actually derail.
It’s crucial that effective leadership achieves the following:
- Articulating a clear vision of what the journey of change looks like and providing an answer to the all-important question of 'Why' (View an exceptional Ted Talks feature on this subject by the brilliant Simon Sinek here)
- Getting directly involved, supporting and encouraging examples of the desired change at all levels - as well as challenging and overcoming negative pockets of resistance
- Keeping change on the agenda – and sticking with it. That doesn’t mean a transformation plan can’t evolve and continually adapt to changing circumstances, but nothing kills lasting momentum more than regular changes in direction; the ship never leaves the port, never mind setting out into the ocean to find new lands
The power of empowerment – ‘bottom line’ created success
Behavioural studies (see David MacLeod and Aubrey Daniels) have shown that most people buy into change - and are more likely to change their own habits for the long term - when they feel they have had a hand in shaping what that change is, as opposed to having it done to them.
Directly involving front line colleagues at all levels of experience in change activity can be hugely effective in driving both enhanced employee engagement and performance. Some of the most innovative ideas for change that have gone on to underpin long term improvements have been identified at the front line.
Which isn’t surprising given that this massive pool of talent operates at the coalface of operations each and every day – yet is often completely underlooked.
Managing behavior - the link between the top and the bottom
As demonstrated by the comprehensive MacLeod report from 2008, Engaging for Success , engaged people deliver 43% higher performance than colleagues that are not engaged. Possibly the most crucial enabler of engagement and lasting ‘cultural change’ is in how behaviour is managed on a day by day basis.
But the effective management of behaviour (what people are actually doing) is an area which often gets overlooked. As Aubrey Daniels highlights, there is a big difference between merely setting people tasks (where 80% of most management time is focused) and actually influencing the behaviours that will mean that the task gets completed effectively and new habits formed.
Getting this aspect right is possibly the biggest part of the transformation challenge as most people who manage other people do not intrinsically know how to manage behaviour.
The implications for procurement
Procurement is increasingly becoming a key component of organisational transformation. Recent changes underpinning a need for transformation include:
- Supporting growth by developing scale-able and future-proof procurement functions, ‘fit for purpose’ and ready to support much larger businesses
- Addressing market conditions, economic uncertainty and relentless pressure on margins
- Creating a group approach to procurement, particularly where sub divisions had previously acted autonomously
- Providing an effective response to a world of ever increasing regulation
- Being the best – using procurement excellence to create competitive differentiation
Consequently, organisations throughout the world are increasingly regarding enhanced procurement capability as a crucial component of change and transformation.
Senior stakeholder engagement is unquestionably a key enabler of effective procurement transformation. Large organisations that have project sponsorship at CFO and senior operational levels are much more likely to create lasting success. For smaller businesses, the backing should be at the CEO / Managing Director level.
Front line procurement teams and colleagues with buying responsibility also tend to be much more supportive of transformation initiatives when they can help to shape them and – even better - become upskilledin the process.
Finally, the effective management of behaviour – both internally across all levels of stakeholders and externally with supplier contacts – is a crucial enabler of lasting change.
Points to consider
- Many organisational change programmes do not achieve their full potential
- The people element of change is the key to unlocking this potential
- Effective leadership, front line empowerment and people management are three key enablers of success
- Procurement transformation is playing an increasingly key role in organisational change and provides an excellent basis from which to build from