Change is not an option. It's essential

The drivers pressing organisations into major change initiatives are particularly compelling right now. Challenging macro-economic conditions, fierce competition, new business models, innovative technology, regulation, cost pressures and globalisation are creating the need for businesses of all sizes to undertake more initiatives of unprecedented complexity – and with exceptional speed.

But organisations treating each change as a discrete project could be shooting themselves in the foot. One or two projects to deliver an operational shift simply will not embed the kind of agility and flexibility that every organisation needs in this environment. We’re not going back to business as usual, so you can’t assume your strategy is fine so long as execution can be tweaked here and there.

Apart from anything else, a startling number of change initiatives fail to deliver the expected value; never get implemented; or cost substantially more and take much longer than planned.

It’s like an orchestra: each section is playing its part, but the timing and co-ordination from the conductor – vital to the delivery of the symphony – is missing. Just as a conductor can’t work solely with the strings or the brass section and expect everything to improve, change has to happen across an organisation. Like a conductor, change agents can’t just work in rehearsals – they have to be part of the performance.

That’s one reason we looked at a more structured way of tackling change.

We realised that most traditional programme and project management techniques are becoming less effective. The nature of the change organisations are facing is more dramatic and the associated challenges becoming greater (see section 'Why change is more acute'). Three factors are driving the need for a new approach:

1. Complexity. Changes in organisations are more complex and interdependent.
2. Integration. Real business benefits now require cross-departmental or functional coordination of change – usually in processes, systems and structures, and quite often with suppliers and partners.
3. Innovation. Existing organisational structures, processes and systems do not support this type of working

They also mean the proportion of an organisation’s resources committed to change projects is increasing – it’s becoming relentless in many of them. Senior executives have to balance the management of existing “business as usual” activities with the resource and focus on change activities.

And that’s the problem. When organisations identify a process that ought to change, for example, they often assign a team to review and instigate new ways of working. Employees on the ground can quickly become jaded. The company’s strategy often doesn’t change. And if the change is unsustainable – perhaps because it’s not reflective of a broader shift in approach – the effort is wasted.

That led us to three conclusions. Change has to be strategic – it’s no longer something we do to “business as usual” practices, we must accept that change is the way we do business. Change has to be perpetual – because the operating environment is not going to become more fixed. And that means you have to create a different cultural mindset throughout an organisation – which is far from easy.

Our approach to those challenges is Enterprise Programme Management (EPM). In short, it’s a way of looking at change as a continuous process – helping you manage resources, knowledge and skills around multiple projects designed towards broad strategic aims. There are three core management processes, as shown in the illustration on the left:

• Strategic portfolio management – creating, managing and evaluating initiatives focused on delivering strategy. This is the conductor, calling on different sections of the orchestra as required and setting the pace of delivery.
• Programme delivery management – processes, tools and methods to enable the co-ordinated, efficient delivery of projects. This is the lead violin, guiding from within and providing a focal point for the other teams.
• Project management – even within a holistic approach, you must have temporary endeavours – pursued with the right knowledge and tools – to create a unique product or service. These are the musicians who deliver the change to the business.

Then there are two management disciplines critical to EPM:

• Programme architecture – support structures to allow leadership to provide a programme team with the skills, tools and support they need. This is the sound and lighting team, stagehands and backstage manager.
• Change architecture – the scope of the activities required to support change. Focused primarily on people change, these may include HR policy changes; structures and roles; communications mechanisms; training and development; recruitment; redeployment; redundancy; and rewards. This is the music score, giving the conductor a blueprint for the performance.

In other words, these are ways of ensuring that change is never an afterthought – that it’s woven directly into the fabric of the business in a coherent way.

The secret to making it all work – and the biggest benefit of taking this more holistic, integrated approach to change – is organisational agility. An agile organisation can quickly identify when change is required; articulate what that change should look like; and construct a programme to deliver it in a timely manner. Above all, agile businesses are structured at their core to welcome change – it’s the default, not the exception.

The key to making an organisation more agile is in understanding which capabilities are required and when to deploy them. Agile organisations categorise their capabilities as either:

1. Core business capabilities – what the organisation fundamentally does, whether it’s very specific (such as printing or retail distribution) or more conceptual (like “content handling” or “customer management”).
2. Change capabilities – that help create and deploy specific change initiatives. Examples include investment decision-making and prioritisation, programme management, leadership, human resource management and change enablement. 

Agile organisations try to strike the optimal balance between operational management of the core business, and creation and deployment of critical change initiatives. Importantly, there is no one solution to find the right balance – the relative effort placed upon each will vary depending on business context, and will change over time.

However, one thing is certain: as the number and complexity of change initiatives increase, so too does the level of effort and capability directed towards them. That’s where EPM – a talented conductor – is really effective. It ensures, for example, that change is facilitated by people who can embed the new approaches as part of the core activities when they move back into their “normal” business roles.

Agility can also be developed and deployed through effective deployment of EPM. Because it’s a structured approach, it captures a number of key change competencies such as: translating strategy or policy into actionable changes; leadership of change programmes; cross-organisational decision-making, communications and working programme and project management; flexible resourcing; and risk identification and management.

Whether it’s EPM or any other way of making change part of the business, the leadership team needs to be armed with a clear framework from which to select the ‘score’; your teams must have the ‘instruments’ they need to deliver; and your organisation will be an audience to success.

We’ve seen this holistic approach work well from global organisations with hundreds of programmes and projects to manage – in large scale capital and infrastructure programmes or major international events such as Crossrail and the London 2012 Olympic Games and Paralympic Games – to much smaller organisations with their own complex portfolio of change.

That’s convinced us that it’s worth any business pursuing EPM. The simple truth is that at a time when the environment is changing so radically, the only sensible approach is to have a clear agenda from the board and a distinct organisational culture that embraces well-planned and executed change as the norm.

Company X is a large insurer working across several global markets. Its UK finance function is a by-product of merger integrations, and was struggling to efficiently meet the needs of the business and ever-increasing regulatory requirements.

How could they transform it? EPM set a clear vision to achieve the target. A strategic initiative laid out a number of performance “outcomes” including: increased speed and flexibility of finance reporting; improved quality of controls and data; cost efficiency through increased productivity; increased value-add to the business; and a positive working climate within finance.

Clear outcomes – but the scope and mechanisms to achieve them were not. So programme and change architectures provided by EPM ensured significant budget was provisioned, board-level sponsorship secured and the delivery timescales set.

The EPM approach also defined and delivered end-to-end capabilities including those related to programme leadership, operating model design, process re-engineering, human resource management, audit and actuarial advice, technology specification design and offshore IT build. Result? “Business as usual” and programme capabilities were brought together to deliver the required outcomes.

Company X built a new operating model with significantly reduced headcount and increased offshoring; Sarbanes-Oxley compliant/efficient processes; improved audit ratings; a leading edge actuarial modelling and financial reporting technology solution (sized to 12 terabytes), greatly reduced cost base, and improved employee and customer satisfaction.

Change management is nothing new. But the sheer pace of change – from the regulatory environment to the speed of global business – means organisations that try to do it piecemeal are, at best, going to draw resources away from running their business and, at worst, could leave themselves horribly uncompetitive. So what are the drivers of change that demand this joined-up approach?

1. Create an integrated approach to delivering business changes. 
   That means continuous delivery, not just a method or technique for controlling individual activities. Your organisation’s vision should link directly to your programmes and projects in a regular review cycle. 
2. Build core organisational capability. 
   Aim to be agile in response to your environment or markets. Consider rotating resources through the change programme to share skills, keep your workforce fresh and provide training for through delivery.
3. Develop and implement. 
   You will need new processes, structures and systems, as well as the skills and abilities of people. These have to be designed from the outset using a clear programme architecture. 
4. Create dynamic links between your strategy and portfolio.
   Strategy should inform the selection, prioritisation, sequencing and management of initiatives. Have a clear set of outcomes which are owned by the business, then regularly revisit them to ensure they continue to be desirable and support your strategy.
5. Integrate your change and operational mechanisms. 
   The mechanisms for delivering change must be integrated with the operational structures, process and systems. Existing business reporting and governance can often be used to support programme control – sharing messages across the business and keeping your senior leadership team informed. 
6. Manage your people. 
   This is often the key determinant of whether benefits are delivered. Integrate people change at all levels. Consider using marketing and communications teams to provide dedicated support, not only to internal programme comms but also to give an industry wide perspective.

• Change is not an option. It's essential
  Finance & Management Magazine, December 2012, p.16-19

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