Disruptive Change-Disrupt the Status Quo to Create the Future.

Thursday, 07 May 2009 09:15

Articles - Articles by Debbie

A Case Study on the Success Factors for Change – A Tale of Two Companies

It was the best of times; it was the worst of times. Two companies, one thriving and one fighting for its life. It was a time where change fails time and time again and the other experiences success after success. This is the story foretelling the secrets of Long Lasting Change.


How is it possible that two companies can deal with change so differently? One company can execute change effectively but others attempt change only to see the old ways creep back in? The following are two case studies outlining the differences we have seen. They outline the key factors that contribute to the differences between success and failure.


Case One: It was the worst of times but the best of times to change.

This is the story of an insurance company that was bought by a very well known conglomerate. The buyer soon realized it was a poorly researched acquisition. The company, in the Financial Services Sector soon, discovered that their book of business was under reserved by $100million. The business was in dire straits and was identified by the Conglomerate CEO as “The Disaster in Denver.”


The CEO of the Newly Acquired Division knew he had to become service -orientated and reduce costs to survive. He also knew that the business was really bad at doing both! He had to disrupt the order of the current system to save the business. The Division CEO called the business together to announce the reality of the situation. He announced that the business was positioned to lose $100million over the next few years and, to make matters worse, were losing customers fast. The business needed to focus on fixing two key processes: Authorizing Claims and Paying Claims. The need for change was felt by the entire business. He announced that they would use Lean Six Sigma and an Internal Business Improvement Team to stimulate the Organizational Change.


In this company, change was effective. Projects were tracked and completed, and it was those very same projects that changed the company. Project failure was permitted. Project managers were held accountable to deliver their project promises and there were consequences for failure to do so. A team failure was seen as a company failure. Project Leaders took pride in their work and Company Leaders supported them and rewarded them for their achievements. Successful projects spawned new projects, leaders coached new leaders. Eventually project managers churned back into operational roles and converted Lean Six Sigma into ‘the way things are done around here.


Through the following 8 years and many projects later, the company revolutionized itself. Lean Six Sigma became the central focus of the Leadership Team meetings. With this new language and through these acts, the company saved itself from disaster. Eight years later, the business reported an $8million profit. It was held up as bastion of successful change that stuck.


Case Two: It was the best of times, but the worst of times to change

This is the story of a highly profitable Fast Moving Consumer Goods Company. They had been in business for over 75 years and despite a significant amount of inefficiency in the business it was extremely successful. Stuck in its old ways, ruled by internal politics and steeped in a pecking order based on years of service, the leaders were afraid to disrupt the order of things.


In this company, change was difficult. Projects took too long, and the changes rarely stuck. Many projects failed and were resurrected up to as many as five times without consequence. This company set up a separate business improvement team and brought in the best of the best consultants. Their first attempt failed and the consultants were replaced. The second attempt didn’t work either and, once again, the consultants were replaced. By the end of the year most of the team had resigned. They felt they weren’t getting prioritized or well-scoped projects. The sponsors wanted the projects done but did not participate in helping to break down barriers. The team members were not trained, not held accountable and generally did not show up to meetings. Middle Management was not engaged and the project managers were overworked and unable to deliver.


Although the shortcomings are relatively obvious, let’s analyze the differences.

Jim Collins wrote in his book, Good to Great that “Good is the enemy of Great!” We see in these two cases that the road to Long Lasting Change starts with Disruptive Change. When leadership is in a comfortable place, they are less inclined to take bold steps to embrace change. Without disrupting the current order, change will not occur. In the first Case you see a highly visible CEO with a burning desire for disruptive change. He had identified the significant barriers that the company had to overcome. Then he enabled the change to take place by focusing on the following factors:

Factor #1: Shared Vision

The Division CEO called all employees together, announced the reality of the situation and explained the course of action needed to get the business out of trouble. He sent a strong message and the vision for change was internalized by the entire business.


Factor #2: Accountability

People in the business were held accountable for assisting the teams to achieve their goals. The leadership set and upheld a rule that if team members didn’t attend the initial training they were off the team. Resistance was identified and pro-actively managed. If they didn’t contribute, they were held accountable in their next performance review. Rewards and recognition were lavished on the teams who delivered.


Factor #3: Stakeholder Involvement

The Leadership Team backed the CEOs Strategy as well as the idea of the Business Improvement Team. The leader of this team reported to the CEO and sat on the Business Leadership team. They formed a powerful team to lead the changes in the business. Together they set the vision and handpicked the Lean Six Sigma practitioners and teams.


Factor #4: Equipping the Team with Tools and Skills

The teams, the process owners and the champions/sponsors received the training, skills and tools to do the job. They were challenged to create cutting-edge processes. The processes were measured and linked through from the business strategy.


Factor #5: Empowering Behavior

Each Lean Six Sigma team leader was empowered to disrupt the order of things in their quest to achieve their goals. They were given the freedom to leverage HR, Finance, Operations, IT and do whatever it took to fix the business.

The leaders reinforced the behavior needed by walking the talk. They attended training, Steering Committee meetings, Tollgate Reviews and even project reviews - and by doing so they were at the heart of the action to actively break down barriers for the team. In addition, team members were recognized for quick wins while the project was in progress, they were acknowledged publicly and awarded bonuses when the project was successfully completed.


Factor #6: Changing Measures and Processes

In any organizational transformation effort, Change Teams encounter seemingly insurmountable barriers to process change. Rigid IT systems, lack of resources, government regulation, corporate mandates, and departmental bureaucracy are all mere symptoms of underlying resistance. If the organizational leaders are unresponsive to the needs of the team, disruption will not occur and change will not take place


Consider the key factors that prevented change from happening in the second case:

Factor #1: No Shared Vision for Business Improvement

The Vision was merely one of saving money. Although this was linked to the overall business strategy, it was not an inspiring vision. The direction for the team was vague and the benefits were based on short term cost savings - they were not linked to delivering long term value by working end to end on a value stream and creating value in the processes. As a result of this lack of shared vision, the team struggled to get meaningful projects. The best projects were heavily guarded by people in the business who did not want anyone to take their glory or see how much waste they were hiding.


No Burning Platform or Need for Change. Things were so easy that people had no reason to disrupt the ways things had always been. Behavioral patterns were so entrenched that the vision was not strong enough to get people inspired and out of their comfort zone.


Factor #2: Lack of Accountability

Neither the Sponsor nor the Process Owner of the project fully understood the process the team was following. Hence they didn’t support the project nor did they break down barriers or give time to review and steer the project. This problem was not just with leadership but also with middle management, key stakeholders and team members. People did not attend meetings - and there were no consequences! The success of the project was not a key metric that they were scored on in their personal evaluation and bonus criteria.


Factor #3: The right stakeholders were not always involved

Leaders driving and supporting the change are critical and this was often missing. Project managers were being pushed for delivery and results, but the key stakeholders in the business were not available or interested. One of the critical factors in delivering effective projects is not only the involvement of leaders, but also involvement of the very busy, always-in-demand middle managers and process owners.


Factor #4: Not Equipping the Team with Tools and Skills

The team focused heavily on the tools and skills and did a great job of equipping the project managers with the tools and skills to manage the technical aspects of the project. But the team members, process owners and sponsors often bore the brunt of poor communication and were left in the dark.


Factor #5: Empowering Behavior

The Leaders encouraged the wrong behavior. The Project Managers were not enabled to disrupt the status quo to initiate the change. They could not change the processes, organization design or metrics to ensure that the change would last. . They were not rewarded or recognized. Phrases like “That won’t work here”, “that is not our culture”, “that is the way things have always been done” are common place attitudes that are reinforced by the behavior of the organization.


Factor #6: Changing Measures and Processes

The organization was organized into functional silos. This structure drives behavior of competitiveness of divisions that are supposed to be customers to each other. Instead, working in isolation, no internal communication and lack of metrics is felt by the customer. Metrics needed to reflect a set of end-to-end value streams that represented the customer experience.


So what could be done in Case 2? Sometimes it takes an external disruption to kick start change. It takes a strong leader to stand up and say enough is enough.


In this case, the economic tide had turned. The guaranteed billions were no longer there, the competition was getting stronger and leaner, the strategists had uncovered huge threats in the market share, a down turn in demand, and the need to take out waste. The issues went to their very core and if they wanted the secret to everlasting change they had to endure Disruptive Change!!!

1) Shared Vision: Focus on a shared vision and strategy that is communicated relentlessly throughout the business. A few critical projects need to be selected, where the need for change is clear and leaders are unanimously in support of them. Projects must be prioritized, supported and consequence for non-delivery felt.

2) Accountability: Hold sponsors, process owners, project managers and team members accountable to deadlines and deliverables. Set up the forums to manage these key initiatives and give them the right support and attention.

3) Right Stakeholders: Free up resources and ensure key stakeholders support the prioritized projects. Leaders and Sponsors must know and understand their role. They are available and committed. Middle Managers and Process Owners need to lift their heads up from their daily jobs and have reason to participate. The project success should be on their scorecards and they should be held accountable for its success.

4) Tools and Skills: Give project managers, process owners, sponsors and team members the same tools and understanding of the approach. Spend time educating people on the approach and the expectations. Build the capability and understanding within the business. Once a critical mass has been built, it is easier and less intimidating to be involved and engaged.

5) Empowering Behavior: Leaders need to walk the talk. They need to reinforce the right behavior, reward delivery, and implement consequence for non delivery or co-operation. Ignoring repeated project failure is an indication of negative reinforced and problems within the organization are not being addressed.

6) Processes and Metrics: Need to be aligned and changed to lock in the new improvements and institutionalize the change. If the team does all the work and suggests an approach that changes organization design, processes, job roles and ways that people are measured. This change should be supported and embraced. It is only when you lock the changes into existing systems and structures that change becomes permanent.

Disruptive Change and the secrets to everlasting improvements

Good is the enemy of Great. It is really difficult to be great when things are good and there is no need for change.

People rarely give up smoking until they have a major health issue. Companies rarely take business improvements seriously until it threatens their survival. It is therefore better to create the discomfort required to force change than to have it forced on you in a hostile manner.

Change happens when the environment is disruptive.


If we take a leaf out of Nature’s book, some of the most destructive and disruptive events have given birth to new life. Volcanoes destroy but over time they create new mountains, and landscapes.


For Change to happen you have to have disruption. There needs to be a point where enough is enough and people are so dissatisfied with the status quo they are prepared to endure the pain and stress of change and go through the process to enable change.

The disruption doesn’t stop there. Organizations need to become change ‘fit.’ Once the change is in place the organization needs to be disrupted again to ensure the change sticks. Old ways, patterns, processes, measures all need to change to lock in the new into the existing systems and structures.


Debbie McCarthy

Partner, Acuity Institute

Director, Training Leadership Consulting

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