Source Economist July 13th

COMPANIES, as every management consultant tells them, live in an era of incessant change. But some are clearly better at changing than others. Two new surveys suggest some reasons. One finds that only one in five change-management projects succeeds. The other shows that companies that are bad at change are far more likely to use outside consultants to handle it than those that are good at change.

When, late last year, A.T. Kearney (yes, a consultancy) asked senior executives in 294 medium and large European companies to rate their change programmes, only 20% were considered a success. An astonishing 63% had made some temporary improvement, but failed to sustain it. The remaining 17% had achieved no improvement at all.

This is an expensive outcome, given that 90% of respondents said that cost reductions were one of the main goals of change. A far smaller proportion (27%) gave increasing revenue as an important goal. Craig Baker, who leads A.T. Kearney’s European “enterprise transformation” practice, sees the outcome as part of a long succession of research results suggesting that organisational change is hard to achieve. He points out that two-thirds of re-engineering projects seem to fail; and, in Britain, less than half of all “total quality management” programmes show any demonstrable results at all.

Yet firms keep trying. The second survey, conducted late last year by Atticus, a British consultancy, claims that companies that are “able” at change show striking differences from those that are “inept”. Atticus contacted 3,000 companies around the world and got replies from some 400, marking themselves on a scorecard that measured their ability to change. The results showed that, for companies in the top 5%, top managers were more than twice as likely to be involved in change projects as they were in the bottom 10%. The top 5% were also three times as likely as the bottom 10% to have pro-active policies on communicating change.

Even more dramatic was the contrast in the use of external consultants. Asked to say whether “change expertise” was “embedded as a functional capability”, four out of five of the most “able” companies said yes, compared with one in five of the “inept”. But none of the “able” companies said they had handed the task to consultants, which a quarter of the “inept” businesses did.

A.T. Kearney’s findings chime with these. The largest gap between companies that were good and bad at change, says Mr Baker, arose because some learnt from change and institutionalised their knowledge, building it into their culture and performance assessment. Companies that are good at change are, he finds, more sophisticated in the way they use consultants, who are hired to work with senior managers rather than to supplant them. Because such companies learn, their changes are more likely to be sustainable.

At GTE, a telephone company based in Dallas, Texas, that is merging with Bell Atlantic and is near the top of the Atticus “able” table, Bruce Rosenstiel, the quality-service manager, describes one mechanism for continuous change. The company has a tradition of “quality-improvement teams” that design and implement changes. Employees get incentives to join a QIT: “You get a mug for the first one you are on, a clock for 11, an oil lamp for 41, a crystal star for 51,” he says, proudly. Last year, 90% of GTE’s employees participated in at least one such team.

QITs tend to drive bottom-up change. GTE also sets up lots of taskforces to manage top-down change. This network, says Mr Rosenstiel, means that “if we identify a new product, we can roll it out very fast.” As for outside consultants, “not since the late 1980s have we used them on managing a project.” They are for training and technical advice, not management.

Another company scoring well on change, Glaxo Wellcome, is also in the throes of a merger. Its British division emphasises the need for communication with staff through events dubbed “open lunches” and (for staff outside the office) “tea-time chats”, to explain changes before they take place. As for consultants, says Anne Prichard, personnel director of Glaxo UK, they are used mainly to develop specialist capabilities.

Even so, a company keen to do better at change might be unwise to ban consultants from its premises entirely. But once it was capable of doing the job with only limited outside help, it would know it had arrived in the “able” category and left the “inept”. That is certainly a change worth making

No big surprises their!!! Or What do you think?

Regards

------------------
Andy B

What DO you think about Change Management? I read an article recently which dealt with reorganization and it discussed how organizational change is an excuse where failures are at the fundamental systems level. I didn't bring it here because it addressed politics and the failure of govermental 'reorganizations' to effect 'real' change.

From the company perspective, do you believe reorganization - quite popular - effects serious company problems? Or is upper management blowing smoke?

Dear All:

Interestingly, I just read the following article on how to become the guy.gal who can make a change.

http://msn.careerbuilder.com/Custom/MSN/CareerAdvice/317.htm?siteid=cbmsnhp4301&sc_extcmp=JS_wi01_july06_home1&GT1=4530

Charmed :)

From the company perspective, do you believe reorganization - quite popular - effects serious company problems? Or is upper management blowing smoke?

There can be no true "Yes" or "No" response to this...it depends. It depends on the problem. Sometimes, leadership (or the lack thereof) is truly the problem. If I want or am told to implement a Six Sigma programme at work, but leadership refuses to send me away on the proper training, how can I effectively accomplish my task? Give me a leader who understands what the resources required are and is willing to give them to me and now, suddenly, we have a Six Sigma programme in full swing.

At the same time, if the problem and corresponding root cause are not communicated back up to the leader, how can s/he take the appropriate actions? Changing the leader in this case is meaningless and simply frustrates those of us in the trenches (suddenly we have to "train" a new boss :) ).

I do believe that most of the time a reorganization is done because (a) Management wants to wake us up in trenches and they feel we care about what goes on up in the clouds of Corporate heaven or (b) they are trying to hide the fact that we have the "wrong people in the wrong seats and on the wrong bus." (Jim Collins, Good to Great).

What DO you think about Change Management? I read an article recently which dealt with reorganization and it discussed how organizational change is an excuse where failures are at the fundamental systems level. I didn't bring it here because it addressed politics and the failure of govermental 'reorganizations' to effect 'real' change.

From the company perspective, do you believe reorganization - quite popular - effects serious company problems? Or is upper management blowing smoke?I do a lot of presentations on the topic "Change Management"

Mostly, I dwell on the cultural change which is almost more important than any of the mechanical changes (forms, processes, etc.) because ultimately, it is the people, from the top down, who perform the processes and complete the forms. Often, I find the mechanicals need just a little "tweaking" while the culture needs massive change.

http://elsmar.com/Forums/images/smilies/offtopic-d2.gif Whether the word "reorganization" has an appropriate meaning or not, in the USA, the term is reserved for a legal process that is part of Chapter 11 Bankruptcy. "Re-engineering" was a good term that got loaded with baggage and has fallen out of favor. Practitioners and "change agents" are currently stuck with "major change" to identify the kind of change you mean, but which is not connected with bankruptcy.

Wow, what a coincidence that the side bar >> directs us to "Change Management" sites. :rolleyes:

I agree with Wes, in that the poll question, "Does reorganization [Change Management] address root causes of problems?", is a "tail wagging the dog" question.

If there are problems, proper root cause analysis will first uncover them (without any predetermined guesses as to what IT is). Oftentimes it IS a cultural / organizational failure. That MAY result in structural changes that are made under the principles taught in "Change Management" theory.

You don't start with reengineering and see what problems go away, IMO.

Good Points.
I do believe that change is used as a "wake up and smell the cat food" example. Many times due to callused eyes (can't see the forest for the trees) and the need for "new vision". Or because the old ways don't work anymore and the people being used to drive change can't get it done.

I feel the second use is what Wes is speaking of. There needs to be a change in "Corporate Culture" in order to improve. The "old boy" network needs replaced and new avenues of information flow must be put into operation.

One thing I have seen is that "Change Management" is often confused with "Crisis Management" so it becomes something to stay away from.

Change Management is nothing more than the old "Win their hearts and minds" program. One of the best analagies of managing change is a book titled "Bury My Heart at Wounded Knee". Another good one would be "Street Without Joy".

Kinda in response to Rox, take out the politics and all the other gibberish and look at the present "Management of Change" in the former "Chaldean or Babylonian Empire". The leadership changed, but has the change provided a redirection for the "organization" according to the plan? Was the problem in the organization actually one of leadership or maybe leaderships flawed goal-setting practices? Could a change in how organizational goals were defined and achieved prevented the necessary change in leadership which has resulted in lower level personalities establishing their own short term goals at the cost of long term organization benifit?

I think the Management of Change process has to be "managed" in such a way as it is win (+)-win (+), because any loss(-) on either side of the equation will tend to unbalance and destabilize the entire process.

Did I go :topic: ?

Does Reorganization Address Root Causes of Problems?

This is the question that has been posed. I will have to side a little with Wes on this one, in light of my favourite teaching presentation, that I like to call the 'Wet Apes'

http://elsmar.com/Forums/attachment.php?attachmentid=709

As you will see in the apes, the cage is totally reorganised (all of the apes are chnaged) but still the culture remains the same. The ROOT CAUSE is not addressed in the Apes excercise but it does show that without communication things will NOT change. The slide show asks 'Why is this so?' and answers 'because that is the way it has always been done around here' but the real reason is because the Apes cannot 'Communicate' and Change cannot take place because of the underlying culture. Change MUST be accompanied by a change in culture. This can only be accomplished thru the normal stepping-stones of change.


Think it through first
Create a common vision that defines the change exactly
Communicate, Communicate, Communicate
Address People's concerns
Develop a clear action plan
Hold a ceremony
Create a climate of certainty
Follow Up
from Cole. Kris 'Supervision- The Theory and Practice of Front Line Management' 2nd Edition, 2001

I hope this is somewhat clear I am in a bit of a hurry to get to a meeting...You guessed it...about change.

Dear All:

I am returning to this thread again. To quote the last paragraph of Andy B's original post.

Even so, a company keen to do better at change might be unwise to ban consultants from its premises entirely. But once it was capable of doing the job with only limited outside help, it would know it had arrived in the “able” category and left the “inept”. That is certainly a change worth making

Why do companies want to go through this "change"? Why do they hire consultants to bring about change?

If you think about it, the reason why a company, or its management, starts talking about "change" is when it is finally gripped with the fear of the bottom line. Sooner or later, every company and its CEO, CFO and top management must look at the bottom line and see how the company is doing. Savings = (Income - Expenses). None of us, on an individual basis, can escape this. The money left in the checking account (what I am calling savings here) is the difference of deposits made (income) and withdrawals (expenses). We must obey this law. Likewise, for a company Profits = (Revenues - Costs). No company can escape this.

However, unlike individuals, companies can get by, at least for a while, if Revenues exceed Costs, and Profits are negative. Just recently, I came across a company, founded in 2000, that has just started reporting a profit. When I looked at their financial statements, I found that they had posted a loss for 7 out of 9 quarters for which data was readily available on their website. No bank would permit us, individually, to operate in this fashion. One overdraft and they charge you $15 or $20 just to move your own money from your savings to your checking account!

However, sooner or later, every company must face the bottomline. Profits = (Revenues - Costs). Applies for every company, large or small, operating in every sector of the economy and in every country in the world. Hence, the so-called "Change Movement".

It starts from the top because only the upper management deals with the company's finances. Most of the employees of a company (like kids in a household) are oblivious to the financial implications of what they are doing in the company. I have spent most of my professional career in the R & D environment, in academic, government and industrial labs. I too was guilty of being oblivious to the fact that what I was doing, directly or indirectly, was affecting the bottom line. I couldn't just keep collecting a pay check month after month!

Fortunately, for me, the idea of "Change" and the need to "change" and my own role in this matter, finally hit home when I was working at one of the largest industrial R & D labs in the world. My company was then fighting for its survival (and still is). Upper management had even threatened to close down the entire R & D center. The VP of the R & D Center took action and tried to show upper management that R & D could actually make a major impact on the bottom line. Each one of the R & D employees actually become the center for "Change".

This is what he did. With the help of the department heads, the R & D Center identified a handful of R & D projects (for which the company already had secured patents) that could be implemented with great cost savings to the company. Every one in the R & D lab was soon working for one of these "leverage" projects as they came to be called.

The next VP took this idea a step further. He wanted all of us to stop what we were doing, for a week, and brainstorm and come up with projects that he called would qualify as "Game Changers". He wanted the R & D lab to spearhead the implementation of technologies that make a "revolutionary" change in the way we do things.

Yes, the company, especially the R & D management, was operating in a "Crisis" mode and trying to manage "Change" only after the writing on the wall was loud and clear. I suspect this is because in many large organizations we never have to balance the checkbook! It is always somebody else's job. (I have known some people whose job it was to balance the company's check book!). And, so we resist change, since it makes us uncomfortable. Would we do that if it was our own checkbook? I am sure no one would.

But, please don't take any of this to heart as any kind of a personal criticism. Many of my colleagues in the R & D Center did not like what the VPs wanted us to do. Some felt R & D was putting out "fires" that the divisions were supposed to be putting out. It was not the R & D person's job to fix manufacturing problems. And so on.

There are a lot of "gaps" in communication and upper management ultimately must be "effective" in communicating this "check book balancing" message very clearly to every employee. This is where, I think, a "real change" is needed. Just my thoughts for the day. Fire away. With my warmest regards.

Charmed :) :thanx: :thanx: :thanx:

What DO you think about Change Management? I read an article recently which dealt with reorganization and it discussed how organizational change is an excuse where failures are at the fundamental systems level. I didn't bring it here because it addressed politics and the failure of govermental 'reorganizations' to effect 'real' change.

From the company perspective, do you believe reorganization - quite popular - effects serious company problems? Or is upper management blowing smoke?

Marc is putting out another real teaser, with his questions.

Reorganization sometimes works; sometimes it does not. But, when I see a company undergoing constant reorganizations at short intervals, it does tend to suggest fundamental problems of top management and the board having little if any strategy or long term planning let alone resolve to make whatever "reorganization" or "reenginering" of the company work. Not infrequently, a constant state of flux is not a sign the company is "agile" or "flexible" - it is simply heading for the rocks.

As ever, top management is the key. If you are ever auditing a company, ask "how many reorganizations have you attempted or completed over the last XX years?" the answer can be telling, if you also try to find out who presided over each one. That may reveal an unhealthy turnover at the top - and, of course, each new broom must sweep clean.

If there has been reorganization, ask about the underlying rationale: it is frequently weak or absent. And, lastly, too much and too frequent reorganization tends to increase uncertainty into the firm. When that happens, it is often the product quality that suffers.

But, change management that addresses fundamental shifts in the marketplace, the technology being used/ needed for effective business control is esential - periodically. The matter being addressed by the change must be substantive, one might say of a "tectonic shift" nature.

One of the problems I continually see is continual reorganization. If you watch a company over a years time, how many 'significant' reorganizations occur? In some companies the organizational chart changed, often significantly, almost every month.

I do understand that organizations evolve and there is a certain amount of continuous change. But when I see a BIG reorganization it is usually in response to some significant failure mode and while it all sounds good, typically nothing changes at the necessary level - much as so many times we see corrective actions which do not find and address root cause. So - You have a show of reorganization yet the root cause of the problem isn't affected.

This is a three-year old thread and I found it interesting, so I decided to bring it back to the front line for any more inputs. There have been numerous "reorganizations" since 2004.

I voted for "No Opinion" because it can or cannot be a preventative action.

Sometimes the reorganization is brought to light because of Debt with suppliers, the economical situations, and various other reasons.

Any other current observations on this topic?

I agree with Marc.

Reorganizing is just changing the players. Unless the organization is robustly functional, reorganization doesn't necessarily address the problems that led to its decison to reorganize.

Arguably a robustly functional organization should not need reorganization, as it should recognize its own opportunities in a way that consistently addresses the Big Picture.

Too often that's not the case. Certain mature product/service lines and their departments will be allowed to swell over time, without a critical analysis of their effective contribution to changing customer needs and market opportunities. We saw some car makers do that. :2cents: When the situation reaches the pain point the handwringing starts.

But not all reorganizations originate from dysfunciton. Some could be based on a critical look at changing market conditions, and intend to gear up for a new strategy to meet them. That's okay as long as the organization's people on whole are not made to fear they will be discarded as obsolete.

Yes I agree that it is changing the players.

But, sometimes doesn't changing the players lead to new thoughts, direction, and changes within the organization? Could be considered Preventative Action.

Not all changes are beneficial to the Organization, but it should get the players thinking on "how" the organization should be running.

Most of the time what you wind up getting is a GMC truck made from a Chevy.

Basically the same with just some tweaking here and there.

I voted "no".

Why are you having to reorganize? If the management of the company was paying attention to things along the way, they would have been making decisions to support continuous improvement, without waiting until the last minute.

How many of you dust with a duster? OK, strange question I know. If you dust regularly using a duster, the dust is light and it comes off quite easily. If you don't dust for a couple of weeks or so, the dust builds up, and only comes off with force (using a rag).

I find very few people with any positive comments when they hear the word: reorganization. Most of the time they translate it to: Wonder how many workers are losing their jobs, and how many managers will get pay raises.

Chapter 11 reorganization is another matter, and involves legal considerations.

I am glad to see that I sparked some interest in this question.

I voted "no".

Why are you having to reorganize? If the management of the company was paying attention to things along the way, they would have been making decisions to support continuous improvement, without waiting until the last minute.

This is a valid point. But, who says that management wasn't paying attention during the way? There were issues that arose that required a Change or reorganization. This could have been economically required. Take for example Delta Airlines. I believe they have reorganized at least twice, I think. Couldn't the continuous improvement process been addressed during the business's life/history and still require "reorganization?"

How many of you dust with a duster? OK, strange question I know. If you dust regularly using a duster, the dust is light and it comes off quite easily. If you don't dust for a couple of weeks or so, the dust builds up, and only comes off with force (using a rag).

We don't use a duster, and it really isn't a strange question to ask. That is "old" tools philosophy and there have been improvements with the various products that took the lead on dusting.

I find very few people with any positive comments when they hear the word: reorganization. Most of the time they translate it to: Wonder how many workers are losing their jobs, and how many managers will get pay raises.

Chapter 11 reorganization is another matter, and involves legal considerations.

I totally agree. This word has generate many negative feelings on the "why." I have been caught up in this Business decision in my career, but I also understand that sometimes this decision cannot be avoided.

Chapter 11 is a whole different ball game and I agree.

Yes I agree that it is changing the players.

But, sometimes doesn't changing the players lead to new thoughts, direction, and changes within the organization? Could be considered Preventative Action.

Not all changes are beneficial to the Organization, but it should get the players thinking on "how" the organization should be running. New thoughts, direction and organizational changes aren't preventive action. Analyzing a problem for its failure modes and eliminating/controlling their causes is preventive action. An organization doesn't need re-org to do that unless the people are unable, or unwilling to do fact based preventive action.

I am certain that the re-org will indeed get the players thinking about how the organization should be running. However, I submit they will be thinking about how the organization should be running with them in it. In a crisis situation like re-org, affected people's thinking will prioritize self preservation first, preventive action second.

Now all of this doesn't mean charismatic and successful people should not be shared. But that can happen without the jarring shuffle that a re-org is known to bring.

New thoughts, direction and organizational changes aren't preventive action. Analyzing a problem for its failure modes and eliminating/controlling their causes is preventive action. An organization doesn't need re-org to do that unless the people are unable, or unwilling to do fact based preventive action.

I am certain that the re-org will indeed get the players thinking about how the organization should be running. However, I submit they will be thinking about how the organization should be running with them in it. In a crisis situation like re-org, affected people's thinking will prioritize self preservation first, preventive action second.

Now all of this doesn't mean charismatic and successful people should not be shared. But that can happen without the jarring shuffle that a re-org is known to bring.

I agree Jennifer. After reading this reply, it would fall more under "Corrective than Preventative."

I guess that is why I brought this question to the front line and I voted "No Opinion." Because depending on the specific reason (s) for the reorganization, it may or may not be a "Preventative" step.

Well thanks Coury, but I am not even convinced it's a corrective action.

Corrective action is using facts to determine the causes of a known problem and controlling/eliminating them. While I do agree that fresh people with first-time-viewer perspectives can sometimes see problems that familiar people don't, I wonder why a good audit program could not have done the same thing?

And if there is a good audit program, where has top management been napping when they should have been working to optimize their resources--people being high on the list--toward maximizing customer satisfaction?

No, I am not in favor of re-orgs to achieve change. To me that's like getting my teeth pulled and implants put in, where braces and whitening would do. :tg:

To me that's like getting my teeth pulled and implants put in, where braces and whitening would do. :tg:

:topic:

Ouch...like scratching a chalkboard with your finger nails. :mg:

Some great response so far.

I think the true objective and not the perceived or announced objectives are important to the success of any reorganization effort.

Delayering or flattening of structure are usually carried out to improve efficiency, for faster response to market or customers needs and get a better feel of the market. Such efforts usually yield results because the objective address the 'reason' why one is in existence.

Other efforts aimed at window dressing or to please the shareholders may yield temporary results but are doomed to failure over time.