2020 Business Transformation Success Factors: Is your Change Management ready for the decade to come?
What are the most significant factors in the last 10 years impacting an organizations’ ability to deliver successful change in 2020?
And how does your organization stack up?
Below is our method and ranking of the leading factors going into 2020.
I-Context:
First a frame for organizational change:
The size, complexity and speed of organizational change in the last 10 years – and how we have adapted in consequence to deal with it – is unparalleled in organizational history.
That is both a truism for every decade in the last 10, but the acceleration of change in the current digital era together with the population of the planet has connected us more intricately than ever before. Metaphorically we digest the equivalent of a hundred years of experience in 10 years. We speak, not disbelievingly today, of automating the entire accounting task of auditing in a matter of years.
Second, in economic terms, the last 10 years were fueled by an unparalleled zero-interest rate environment. We emerged from the dot-com crash only to be followed by the 2008 global financial crisis. At no time in the history of the developed world have zero interest rate environments existed – and certainly not on this scale. This past decade, quantitative easing policies flooded money into the economy, driving down interest rates, providing an almost zero-cost environment to raise debt. This has hyper-charged unparalleled transaction volume and value of M&A activity in organizations, a major economic boom, and created a whole new class of digital era billionaires.
Third, in this past decade China became the second largest economy in the world and is now home to the second-highest number of billionaires. It’s a one-way economy – no one outside China succeeds in China. They are a competitor built of stealth, secrecy and unparalleled labor market and political power. It is a tectonic shift away from the existing hegemony and established economies of the world, and its impact is just beginning to be felt.
That’s the context. Here are the leading factors over the last 10 years – and implications for organizations wanting to continue to implement change successfully going forward.
II-The leading factors impacting change implementation success 2020:
VUCA
Although it has been in the military lexicon since the cold war, VUCA in the business vocabulary became commonplace in the 2010’s(Note1). Framing organizational markets in the context of VUCA environments brought with it a seismic shift away from the dominance of the traditional planning model to becoming better at adapting to conditions since by its nature, planning for VUCA is too costly. VUCA requires the entity undergoing the threat to respond – to adapt – rapidly determining mitigating actions. It suggests that local resources are best placed to deal with the situation and that staying in communication with the central organizing entity enables strategic and tactical capabilities to combine in order to develop appropriate solutions to fit the situation.
The shift has resulted in organizations scrambling to build adaptation capabilities by deploying sensing mechanisms to rapidly detect changes in relevant conditions. As a result, the value of local data goes from zero to very high under VUCA conditions.
Implications for successful change implementation are that teams need to shift significantly to decision-making enhanced by real-time local data in order to optimize the threat identification and response gap and reduce downtime.
DIGITAL Transformation
Without naming all the categories that contribute to it, digital transformation emerged in the last decade as the driving theme for organizational change. 2010 is the decade when the world’s leading owners of real asset inventory – i.e. (books, Cd's, etc.), hotel operators, rental car agencies and others were replaced by companies owning none of the physical assets – but all of those company’s customers. Amazon, Priceline, eBay, Uber, AirBnB – these all became household names in sectors where 100+ year old incumbents fell to the wayside. Human genetics, the Internet of Things, blockchain & crypto-currencies, driver-less cars… disruption became above all a digital phenomenon in 2010 – and drives transformation in 2020.
In terms of change, digital transformation drove organizations to revisit what it takes to run successful transformation. The heavy influence of IT digitalizing nearly every aspect of organizational work brought with it a cultural revolution as “the way things work around here” got re-written everywhere. In many cases, this included eliminating humans entirely from the process as machine learning fed the development of automated and robotics applications. You can order at McDonald’s today without dealing with a human.
In consequence, change management is itself digitalizing – updating methodologies for agile environments, digitalizing cumbersome manual processes, shifting to virtual service delivery models and integrating into project management systems.
The POWER law
Drawing on economic theory from the late 1800’s, Italian economist Vilfredo Pareto (“Pareto principle”) created the most famous example of the power law. The law describes a phenomenon in nature which demonstrates an 80-20 relationship(Note2) between factors and outputs. In Pareto’s case, he noted that 80% of the pea pods were produced by 20% of the pea plants. He went on to notice that in Italy, 80% of the land was owned by 20% of the people. In business it suggests that 80% of a typical department’s output is produced by 20% of it’s labor pool.
Nature does not follow a normal distribution. It does tend to demonstrate evidence of the power law – which organizations have seemingly been trying to deny (think of pay scales, top performers and bonus pools) – to their peril. Take a look at M&A returns over the last 10 years(Note3). For the winners, the spoils are unevenly balanced, as much as 3x – to their benefit.
Without a doubt, the age of the Internet has enabled a shift away from the century-old assembly-line manufacturing environment to a service-driven economy. This shift – where human activity is untethered from the production process – has brought with it the ubiquity of the power law – the non-linear relationship between output and units of labor. How many apps do you have to get you from A to B? Or how many times do you use a different browser?
With respect to Change implementation, the power law raises the following question: is the oft-cited, oft-quoted “70-30 failure rate” actually an example of the power law at play? Said another way: might it be the case that 20% of change implementation efforts succeed – because that is exactly what the power law suggests we would observe?
AGILE development
It is now 19 years since the Snowbird, Utah Agile Manifesto. It’s only 10 years since the update to project management techniques to support it. But Agile as a way of implementing software development efforts has asserted itself as the norm(Note4).
The issue is, have organizations figured out how to implement change using Agile? And do they need to? Does Agile need to incorporate change management into it’s Scrum or Kanban process? Or does change management need to be updated for Agile development? It’s probably worth reviewing Agile development principles. When you read them(Note5) they appear very similar to cyclical feedback loops used in team development interventions and value aspects consistent with the Gestalt consulting approach (working in the ‘here and now’). Those also happen to be standard change management capabilities.
Agile also has a number of caveats that are worth noting, including its lack of success in large organization applications and the fact that burnout is a frequent feature of Agile when the method is not managed with appropriate boundaries on time and resources.
Last, the major philosophical difference of Agile has to do with it being about developing a product as it’s end goal vs a project. Hence it is usually contained and well defined. In large organizations, where Agile methods are not always as easily applicable, projects and programs predominate, and consequently require a re-think of when Agile is appropriate and under what conditions to apply its principles.
In 2020 Agile is still relatively young in its lifecycle as a methodology, but it is definitely here and it is impacting design, development and installation phases in change implementation. Change managers need to understand how to integrate Agile into the overall change approach – and resist applying change management to Agile processes.
SOCIAL media
In the last decade, Social Media has taken center stage in it’s ability to impact organizations. From the various cultural “Spring’s” (Tunisia, Egypt; recently Hong Kong) to the MeToo movement, to the US elections, social media and the role of social media companies in shaping mindsets, politics, policies – nearly every facet of life in the last decade is worth a special mention.
Organizationally, basic communication technologies have morphed significantly beyond email and Glassdoor.com to include a myriad of rating applications, feedback sites and sub-group Reddits that can now be accessed easily from smart phones. A whole generation of younger people are leveraging these technologies to self-organize. The combination has changed the debate on organization culture from hidden just a few short years ago to right out in the prime-time spotlight.
With respect to implementation, social media is a new capability requirement for change leaders – understanding it’s role, boundaries and etiquette. The consequences of not being in the know impact directly on credibility.
“REALLY difficult” change
Without question 2010 again saw an increase in what are considered “incredibly large, complex problems”. In any decade there have been major implementation challenges that the world had never previously taken on ever in its history. The US Military’s successfully execution of it’s WWII agenda or implementing the Post-Berlin wall conversion of former East Germany into a unified Germany in the 90’s. Or implementation of any of the 20+ $100Bn+ merger and acquisitions that have occurred since the turn of the century.
But organizations and the wider world face huge implementation challenges going forward, as example, how to deal with the climate crisis. It is worthy of note because organizations tomorrow will increasingly either be impacted by climate change as example, in supply and delivery chains not to mention energy consumption. Business as we know it is at a crossroad, and it will occur in this decade.
The implication for change implementation is the increasing importance of being able to implement complex change in organizations. Not only is the rate of technological change increasing, but the nature of the problems organizations will need to solve are themselves becoming increasingly complex. It’s a confluence of new and never-before seen difficult change.
III-Implications going into 2020:
As always, it’s not about the rate of exogenous change only. Even if it is true that change is increasing in scale, rate and complexity every decade, the key is whether organization’s own rate of change is sufficient to manage it.
Here are three implications to ensure your organization takes advantage of the factors impacting change implementation in 2020.
Adoption (Realization) vs Installation focus – With the above factors driving change, it seems clear that ensuring benefits are clearly articulated between installation and adoption or realization is paramount. The factors collectively put pressure on implementation teams to deliver – which implies having minimum viable products not interim processes. Having a realization focus will enable organizations to ensure the focus is on delivering outcomes early in the implementation process – increasing significantly the probability of success.
Pressure on the Middles – Building from the collective impact of the factors, organizations will continue to flatten. The trend to tighter labor pools will increase and concentration of power means execution results will depend on enabling the middles to enroll key operational leaders in change implementation. Again, having change-ready and capable middles will significantly improve success chances in implementation.
The Age of Data. Expertise for the next decade shifts from the right change methodology and tools to the ability to react rapidly and accurately. That requires better data collection systems feeding real-time dashboards connecting teams in the field with HQ. Reaping the benefits of this shift means realizing the value of local data. Local data – i.e. bringing in the views of those implementing the change – begins to significantly outweigh the usefulness of the plan. Change delivery will require tracking in order to support agile applications. This will require data and put the emphasis on local systems vs external experts and methodology.
How do you measure up? This decade will tell!
For more information on setting yourself up for successful change implementation in 2020, contact us at ChangeVU.
References:
Note1: https://hbr.org/2014/01/what-vuca-really-means-for-you
Note2: Several links on the Power Law:
https://dash.harvard.edu/bitstream/handle/1/34651705/68262294.pdf?sequence=1&isAllowed=y
Note4: https://www.imaworldwide.com/blog/5-implications-for-change-management-in-an-agile-world
Note5: https://en.wikipedia.org/wiki/Agile_software_development#Criticism
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