A significant plan that can change an organization

Perhaps the most asked but least answered question in business today is What can we do to make our business change, survive and grow? The world is rapidly changing into something too hard to easily predict, with a hundred opportunities and pitfalls passing by every moment. To add to this confusion, there are hundreds, if not thousands of techniques, solutions and methods that claim to help business improve productivity, quality and customer satisfaction. A company President, CEO or business owner has so many choices in these buzzwords, whether they be called Total Quality Management, Customer Satisfaction, Reengineering or Teambuilding.

In response to this confusion, many do nothing, often afraid of making the wrong choices. Others change the techniques they use every few months, using the program dujeur method of organizational change. Neither of these responses help the organization in the long run. Changing nothing will produce nothing. Implementing a different buzzword (Total Quality, Just in Time, Re-engineering, etc.) every few months often creates a whipsaw effect that causes mass confusion among your employees. These buzzwords are often a hammer in search of a nail, techniques applied with no clear focus as to the why, expected results or return on investment. Organizations need to move beyond the buzzwords into deciding what actions they need to perform that will help them grow and develop. In response to this problem, this article will provide you a framework for coping with organizational change independent of buzzwords or the latest management fad. Organizations must first decide on the framework their organizational change long before they choose a buzzword to implement.

The major decisions Instead of grasping for the latest technique, I suggest instead that organizations should go through a formal decision-making process that has four major components:

Levels, goals and strategies Measurement system Sequence of steps Implementation and organizational change

1. The levels of organizational change

Perhaps the most difficult decision to make is at what "level" to start. There are four levels of organizational change: shaping and anticipating the future (level 1) defining what business(es) to be in and their "core competencies (level 2) reengineering processes (level 3) incrementally improving processes (level 4) First let's describe these levels, and then under what circumstances a business should use them.
Level 1- shaping and anticipating the future

At this level, organizations start out with few assumptions about the business itself, what it is "good" at, and what the future will be like. Management generates alternate "scenarios" of the future, defines opportunities based on these possible futures, assesses its strengths and weaknesses in these scenarios changes its mission, measurement system etc. More information on this is in the next article, "Moving from the Future to your Strategy."

Level 2 - defining what business (as) to be in and their "Core Competencies

Many attempts at strategic planning start at this level, either assuming that 1) the future will be like the past or at least predictable; 2) the future is embodied in the CEO's "vision for the future"; or 3) management doesn't know where else to start; 4) management is too afraid to start at level 1 because of the changes needed to really meet future requirements; or 5) the only mandate they have is to refine what mission already exists. After a mission has been defined and a SWOT (strengths, weaknesses, opportunities and threats) analysis is completed, an organization can then define its measures, goals, strategies, etc.

Level 3 - Reengineering (Structurally Changing) Your Processes

Either as an aftermath or consequence of level one or two work or as an independent action, level three works focuses on fundamentally changing how work is accomplished. Rather than focus on modest improvements, reengineering focuses on making major structural changes to everyday with the goal of substantially improving productivity, efficiency, quality or customer satisfaction. To read more about level 3 organizational changes, please see "A Tale of Three Villages."
Level 4 - Incrementally Changing your Processes

Level 4 organizational changes are focusing in making many small changes to existing work processes. Oftentimes organizations put in considerable effort into getting every employee focused on making these small changes, often with considerable effect. Unfortunately, making improvements on how a buggy whip for horse-drawn carriages is made will rarely come up with the idea that buggy whips are no longer necessary because cars have been invented.
2. What level do I choose?/sequence

These levels have much of the same goals: increasing customer satisfaction, doing things rights the first time, greater employee productivity, etc.

Levels one through three, on one hand, focuses on "big picture" elements such as analysis of the marketplace, out-sourcing, purchase/sale of subsidiaries, truly out-of-the box" thinking and substantial change in the management and support systems of the company . In my experience, companies that use these methods tend to have a high need for change, risk-tolerant management. Types of industries include those whose environment requires rapid adaptation to fast-moving events: electronics, information systems and telecommunication industries, for example. Companies using mostly incremental tools (level 4) have management that perceives only a modest need for change, is relatively risk-avoidant, has many constraints on its actions and only has a modest consensus among them on what to do. Instead of focusing on new opportunities, they wish to hone and clarify what they already do. Types of industries that often use these methods include the military, aerospace, and until recently, health care organizations. Those organizations whose strategic planning solely focuses on refining an existing mission statement and communicating the paragraph also fall into using incremental (level 4) methods.

If management is mostly filling training slots with disinterested workers and forming a few process improvement teams, they are using level three methods. If they are considering changes in business lines, re-organizing by customer instead of by function, or making major changes in how the everyday employee is being paid, they are using level 3 methods.

So this decision is very important. IBM in the mid 1980s felt that the future would be much like the past and a result didn't have to change much. They did not realize how much microcomputers would replace the functions of their bread-and-butter business, the mainframe. The net result was tens of thousands of people were laid off, with the company suffering the first losses in its history.
Goals

Based on whatever level work you are doing, the opportunities that are found need to be evaluated in terms of improvement in your measures of success. In addition, goals need to have the resources and management determination to see to their success. Goals also need to be SMART, that is: Specific - concrete action, step-by-step actions needed to make the goal succeed Measurable - observable results from the goal's accomplishment Attainable - The goal is both possible and is done at the right time with sufficient attention and resources Realistic- The probability of success is good, given the resources and attention given it. Time-bound- The goal is achieved within a specified period of time in a way that takes advantage of the opportunity before it passes you by.

Some examples include: We will expand into the polystyrene market within the next five years and achieve 20% market share We will decrease the time from research to customer delivery by 50% within two years We will increase the quality of our largest product by 20% in three years.

Strategies

Where goals focus on what, strategies focus on how. Some examples include: We will re-engineer our research and development process We will evaluate and improve our sales and marketing department We will conduct a SWOT analysis and then define our core competencies Additional examples of strategies are included in the "Moving from the Future to your Strategy" chapter. Wait a second. Aren't goals and strategies really the same. They are in one sense as they both need to be SMART. As what you might guess, the goals of a level are achieved by creating strategies at the lower levels.

3. The Measurement System

Without measures of success, the organization does not know if it has succeeded in its efforts. Someone once said, What gets measured gets improved. Someone else said, If you dont know where you are going, any road will get you there. For more information on measurement systems and their place in organizational change, please see the "Balanced Scorecard" article, along with a number of articles where employee surveys are used.

4. Implementation and Organizational Change

The success of any organizational change effort can be summed into an equation: Success = Measurement X Method X Control X Focused Persistence X Consensus Like any equation with multiplication, a high value of one variable can compensate for lower levels on other variables. Also like any equation with multiplication, if one variable equals 0, the result is zero.

On employee involvement
Some organizations involve employees right from the start, where they have significant influence in the strategic plan of the organization. This kind of involvement tends to reduce employees conflict, which is always a very important factor in the success of any organizational change. Such organizations as Eaton, Eastman Chemical and Rohm and Haas have used such an approach.

Focused persistence, good project management and the sequence of implementation

The sequence of implementation is also an important factor. There are four basic options, with many variations of them. The first involves the entire organization from the start, with the whole organization intensively working at once on making the change. Ford Motor Company is currently restructuring its entire organization, moving from planning to implementation in nine months. Another option is a more relaxed approach, in which divisions or business units of the organization go at their own pace. A third option is similar to the previous one, with the focus being on individual business units doing the implementation. A fourth option is to create a pilot project in one division or business unit, learn from its mistakes, and then apply those lessons to the rest of the organization.

Thus I believe an organization can change to a mentionable extent by following the above mentioned plan.