What Is Change Management and Why Is it Important?
Organizational change management involves any systematic approach with the sole purpose of successfully enhancing your organization’s goals, procedures, and strategies from an undesirable present state to a better-performing future state. At the same time, it entails allowing and helping the people at the organization to accept and adapt to this transition.
Change management focuses on the human factor of organizational change by helping the people in your company embrace the transformation effectively and adapt to their new environment quickly — all without resistance and repercussions to productivity.
Why is it important to follow a fixed method to enact change?
See, at least two out of three organizations have to face four significant changes over the course of five years. If this sounds like your company, it means you have to come up with an improvised change plan almost every year.
These plans cost money, time, and people. Plus, there’s a serious risk of failing in the process because poorly managed change can result in negative consequences like:
- Valuable employees leaving the organization due to bad management
- A decline in productivity for an extended period of time
- Lower-quality products and services coming from the production lines, affecting your customer’s experience
- Stress, fatigue, confusion, and burnout in the work environment
Now, if you focus on developing the right change management approach for your company, you’ll be more likely to meet your goals:
It turns out that you have a 96% chance of meeting or surpassing your goals if your change management program is above excellent. This means your efforts are six times more likely to succeed than those that have poor change management effectiveness.
And, judging by the numbers, we all can agree that focusing on the human side of change management leads to better results and meeting goals successfully.
When Is the Best Time to Apply Change Management?
Organizational change management is required whenever the company needs to change one or more of its main processes in order to improve effectiveness.
Some of the most common situations include:
- The implementation of new technologies to optimize production
- Upgrading procedures or policies to improve and optimize processes
- Producing a new product or service feature
- Change of leadership and management
- Work culture and program implementations
- Company merging or acquisitions
- Unexpected crisis due to economic/socio-political problems
In short, whenever your company has to change the way it works — and requires people to do their job differently — is the appropriate time to apply change management.
How to Implement a Change Management Model
Every organizational change management initiative starts with good communication between departments and management teams. You can’t enact a successful change management initiative if you aren’t aware of the problem.
So, if there’s a requirement to implement change management, it would be having a smooth communication system that allows you to keep your company informed about every single aspect of the transformation.
Now that you have a better idea of change management, let’s dive into three well-known change management models you can start incorporating to your company.
This model is a globally accepted method that has helped many companies achieve their change goals over the last two-plus decades.
Created in 1994, John Kotter’s Model still features the same eight steps (although their details have been constantly updated over the years).
These eight steps are as follows:
- Create a sense of urgency. You first need to spot the “big opportunity.” This is a window of opportunity that is open today but may close tomorrow, and it should be strong enough to align people together and motivate them to start moving to change. The key here is to identify the right opportunity, articulate it, and communicate it with the rest of your company. Creating the sense of “urgency” that supports the change is crucial.
- Build a guiding coalition. Once the urgency is in place, you have to build a diverse group of professionals committed to implementing the change successfully. This group should have the ability and willingness to work across all levels and functions of the organization when necessary, and account for every phase of the change.
- Form a strategic vision and initiatives. Build a strategy around a specific vision. The important aspect of this vision is that it should be feasible, easy to communicate, simple, imaginable, and achievable. And you should be able to create a number of steps so your company can transition from the present state to the future better state.
- Enlist a volunteer army. At this point, you have to communicate the vision and, through strong leadership, motivate all the people in your company to take action as soon as possible. Your employees shouldn’t just have to change. They should want to change. This is a crucial step so you can get an army of people committed to making the change happen.
- Enable action by removing barriers. Most managers agree that they become too bureaucratic when it comes to management processes. So, in order to make a change successfully, you need to remove every legal process, silo, rule, and policy that’s preventing your army from taking their actions effectively.
- Generate short-term wins. Little wins build big results. You must be ready to identify these wins, measure them, and celebrate them with your team to build more hype. These wins should be tangible, unambiguous, and replicable so you can end up with a body of validated, quantifiable, and qualifiable data that can later tell the story of your transformation.
- Sustain acceleration. Don’t settle for the little wins only. Now, you need to push further for greater success. You may have to revisit the sense of urgency and re-communicate what the “big opportunity” was in the first place so your people don’t lose sight of it. Also, try to expand your volunteer army and remove more barriers if necessary.
- Institute change. The last step of this process is to enact the new processes and keep them for the long term. Sustaining the new practices requires good communication and synchronization between the management crew and the rest of the hierarchy. And it also requires connecting the organization’s new successes with the new procedures so people can see it as “the new normal.”
This is a model that should be followed without losing momentum and valuable resources, so getting stuck isn’t an option here.
Chet Holmes, the author of The Ultimate Sales Machine, is a master at implementing organizational change. He’s a business growth expert with decades of experience in his area and shows how to approach change in his book.
This method is based on employee feedback and brainstorming. So if you work with a team that comes up with a lot of ideas, it’s very efficient.
Here’s the process summarized in seven steps:
- Make everyone feel the need for change. This can be done by talking with your coworkers about the current problems and challenges you’re facing. They have to be aware of these problems and understand why they’re a pain. That way, when you communicate your intentions for change, they will understand and accept it.
- Brainstorm ideas with your team. Once you’re all aware of the problems, you have to brainstorm possible solutions. Take three to five ideas per team member, rate them, and curate the best five or so ideas from the whole group. Evaluate and imagine how these changes should be applied and determine how the company can benefit from these changes and organize by priority level.
- Build a conceptual solution and share it. Take the most immediate change you want to implement and build a “conceptual” model of it. Whether it is a checklist, a script, or a code, you or a specialist have to make a draft and then show it to the rest of your coworkers and the management team. By doing so, they can be aware of how the new process will look like.
- Test with a small pilot and set a deadline. Get a small, top-performing team to test the conceptual solution and set a deadline. In this period, the pilot team has to test, give feedback, and improve the process. Once the deadline passes, take a look at the results and communicate them as transparently as possible so everyone can see what works, what doesn’t, and what can be improved.
- Optimize the process based on results and document it. After getting the results, analyze and optimize the new procedure based on the pilot experience. Put every step together and make sure the process is repeatable. Then document the process in a simple way that is as easy to digest as possible so that even new members can understand and follow it.
- Train your staff for change and put it into practice. Once you’ve got the optimized solution, you can start implementing it on a higher scale. Train your staff for this by doing simulations or role-playing exercises, and create a place for your employees to practice in a safe environment if required.
- Measure results and look for feedback. With the new solution up and running. You can start measuring its performance and keep improving. It is important, though, to get constant feedback from your employees in order to keep the process as optimized as possible. You can use pulse surveys to get direct feedback from your team in an anonymous fashion, making them the safest way to get honest opinions from your employees.
This model is best suited for making one change at a time. Implementing change is a complex process, and doing it properly ensures that you’ll get where you want to be as long as you take the right measurable steps.
3. ADKAR Model
Unlike other methods, Prosci’s ADKAR model is focused on an individual journey to change, as they claim that organizational change begins with the individuals.
ADKAR stands for the stages that an individual has to pass through in order to embrace change successfully. Each of these five stages represents a particular goal you’re trying to achieve with people:
- Awareness. Your employees have to be aware of the reasons why the organization has to change. And this only comes as a result of effective communication and access to information. Ensure that your employees are aware of the problems by communicating your change intentions clearly.
- Desire. People need to engage with the change and look forward to it. To do this, you need to break the resistance barrier by telling your employees about the positive impact the change will have on their lives so they can get motivated to participate in the project.
- Knowledge. This is the knowledge about how to change and what it’s needed in order to do it successfully. Effective training and communication are required to make people understand everything behind the change and what’s expected of them on the other side.
- Ability. This one is the ability to put the new processes into practice and make the change happen. And once your team is properly trained, you can start measuring performance and conduct some tests.
- Reinforcement. Here is when people are tied to the “change” by habit. For the best results, you need to monitor whether the new procedures are being implemented successfully, identify problems, correct them, and make sure that the change sticks with people.
If you want to find more about the ADKAR model, you can just download their guidelines and get into more detail about thisl approach.
6 Change Management Tips and Best Practices
Implementing a change management model is great. But following these best practices will ensure your best chances to implement change successfully.
1. Define specific goals
Defining clear goals will let you know whether you’re being successful or not.
With change management, you must know what exactly is going to change and what the change will look like.
Here’s where defining SMART goals becomes necessary. SMART goals are specific, measurable, achievable, relevant, and time-bound. These are the properties your goals should have so they can guide you to success.
Making sure that you’re evaluating whether your goals are SMART or not will give you some advantages. And if you’re following the best time management practices on top of that, your success will come sooner or later.
Trust me: Taking the time to set real objectives like this will give you the best chances to implement change successfully.
2. Communicate effectively and with transparency
Successful change starts with good communication.
If your team isn’t well informed about every aspect of the change and how it’s being developed, they’ll lose motivation over time and your chances to succeed will diminish.
The key to effective communication is to encourage healthy communication habits and combine that with the right tools. A good habit to start with is to open conversations in the workplace and listen to what your coworkers have to say about the change in question.
Software like Slack, Trello, or even Telegram will let you keep every announcement documented and properly targeted. Similarly, solutions like TINYpulse will let you know how your employees are feeling and thinking about the change through pulse surveys.
So, make an effort to improve the way you’re communicating with your team if you want to experience fantastic change management outcomes.
3. Provide required training
If a new process requires a new skill set from your employees, providing proper training will be necessary to implement the change effectively.
This training may take some time, so you need to provide an environment where your employees can practice safely to improve this part of the process.
In case your employees need more specialized training (e.g., a course), figure out how interested your team is in acquiring those specific skills and choose an effective training program that’s simple and has enough content.
This way, your organization will get ready to embrace change when it comes.
4. Bring effective leadership during change
People need reasons and motivations to desire change. And with the right leadership, you’ll be able to manage any kind of mental barrier that’s holding your employees back.
Besides building the vision of the change, setting the objective, and creating the plan, the leader must also deal with the people involved in the change and create a resistance management plan so everyone can embrace the transition as positively as possible.
To lead effectively, find any barrier and negative thought that’s keeping your employees from accepting the change, and remove it. For this, having periodical, insightful conversations with them plus conducting regular pulse surveys help you identify these obstacles.
5. Celebrate success with employees
Change can be a long process. But the motivation fades away quickly.
A way to keep the hype for change intact is to celebrate the little wins you’re getting during the project. Whether it is a new checklist or the implementation of new software, celebrating the good results will lead people to associate the change with success.
While building a change plan, separate every objective into different small milestones (or phases) so they can be easier for you to track — while also enabling you to celebrate wins more often.
Implementing an employee recognition system can help you with that while giving you the advantages of improving culture and employee engagement.
This practice will allow you to keep your team’s motivation high for the longest period of time, thereby increasing your chances of success.
6. Listen and get regular feedback from employees
Getting feedback is essential to optimize any new process. Specifically, you have to look for honest, actionable feedback you can use to improve the change project results.
So, when receiving feedback, you need to figure out what you can do in order to make the new processes better. Then you need to implement the best ideas and test what you think may work.
A positive side effect of listening to regular feedback is that employees will improve their performance when they feel like their ideas are being heard. In this light, implementing the best of the suggested solutions is a smart investment for team productivity.
6 Change Management Examples
At this point, you understand the benefits of change management, some of the more popular change management models, and some tips to keep in mind as you move your change management efforts forward.
Now, it’s time for the next piece of the puzzle: real-world examples of organizational change from companies that you already know and love.
1. Netflix’s online streaming
Only a few people can remember when Netflix was an offline movie rental business, sending customers their favorite movies by mail in the late ‘90s and early 2000s.
In 2007, Netflix decided to embrace digital transformation. This transformation involved a complete evolution in their offering by allowing people to watch their favorite TV shows and movies directly on their computers with the use of an app.
This transition required a massive investment in software and computing infrastructure in order to develop their app. Fast-forward to today, and the company boasts upwards of 182 million subscribers around the world.
Netflix’s secrets to success, according to CEO Reed Hastings, include:
- Targeting a specific niche: “When there’s an ache, you want to be like aspirin, not vitamins. Aspirin solves a very particular problem someone has, whereas vitamins are a general ‘nice-to-have’ market. [The Netflix idea] was certainly aspirin.”
- Staying flexible: “We named the company Netflix, not DVDs by Mail, because we knew that eventually we would deliver movies directly over the internet. DVDs will be around a long time, but we’re building for the day when they’re not.”
- Never underestimating the competition: “We erroneously concluded that Blockbuster probably wasn’t going to launch a competitive effort when they hadn’t by 2003. Then, in 2004, they did. We thought, ‘Well, they won’t put much money behind it.’ Over the past four years they’ve invested more than $500 million against us.”
- Not looking for shortcuts: “Occasionally, great wealth is created in a short amount of time, but it’s through a lot of luck in those situations. You just have to think of building an organization as a lot of work. It may or may not turn into great wealth.”
A change like this in Netflix’s business model meant a before and after for the company and people who work there. The company was forced to shift its focus away from DVDs to delivering content via the internet, and it was totally worth it.
2. Domino’s Pizza optimized delivery system
Domino’s Pizza was famous for its delivery. But it got old after several years of the same offer, while the competition started to get more tough.
It wasn’t until they embraced digital transformation that everything started to change.
With their transition to the digital world and the investment in IT technologies and development, they implemented their next-gen ordering platform called Domino AnyWare — which made it a lot easier for customers to order pizza.
Domino’s transition to an e-commerce model required Kelly Garcia (the SVP of e-commerce technologies and emerging technologies) and Dennis Maloney (Chief Digital Officer) to convince the entire directive board of the potential threats they had at the time. Arguing that in order to survive, they had to start thinking themselves as an e-commerce company that happens to sell pizza.
The pitch was enough to convince the CEO, and from there, the rest of the board was fully persuaded, and the transformation project was funded.
Now, you can order pizza from literally anywhere. Whether it is using Siri, text messages, SmartWatches, Google, Alexa, Twitter, or any kind of online platform, Domino’s can now deliver pizza to anyone who has internet access (assuming they live within a store’s delivery zone, that is).
This digital marketing strategy allowed Domino’s to transform their brand image and increase their stock prices drastically.
3. Toyota’s WWII just-in-time philosophy
This is an old example, as we’re talking about the post-World War II era where Japanese automobile manufacturers like Toyota were struggling to survive.
The company was faced with a small market, low demand, reduced manufacturing space, high costs on inventory, and, primarily, lots of waste.
Wasted resources, wasted time, and wasted inventory. Taiichi Ohno noticed this and he started to develop the just-in-time (JIT) philosophy.
With the JIT manufacturing approach, resources were used just as they were needed. So inventories were kept low, the transportation process was optimized to reduce wasted time and cost, and assembly lines were optimized in such a way that eliminated every kind of unnecessary cost.
This required the Toyota factories to:
- Change their layout to eliminate unnecessary transporting distance
- Introduce kanban, a system that allows them to order required materials effectively
- Automate the production system and reduce human intervention
- Test and train the material suppliers to assure quality and in-time delivery
- Provide proper training to their workers to embrace change in their processes
This approach allowed Toyota to survive the post-WWII crisis effectively and become the excellent organization that we know today.
4. General Electric’s Six-Sigma implementation
GE found massive success after implementing the famous six-sigma method with the administration of the iconic former CEO Jack Welch.
Jack Welch faced the challenge of leading GE to the next level. And he rose to the occasion by implementing the six-sigma approach.
Originally created by Motorola, this method of production ensures that at least six times the standard deviation of the products met the quality standard (i.e., 3.4 defects per million products), thereby optimizing productivity to top levels.
Implementing this change to the company’s manufacturing system required:
- A 13-day, 100-hour training sessions for their employees to adopt the new methodology
- Full-time mentoring from six-sigma master black belts (SMBBs) to help employees master their new methods
- Strong, supportive leadership from Welch, who invested most of his time answering questions in the training sessions, visiting the workplace to observe the six-sigma implementation, and making weekly reports with the mentoring team to keep control of the project
The results they got after this change management initiative speak for themselves, as this led the company to win over $2.5 billion within five years of implementation.
5. Coca-Cola Open Ears to the Public
When Asa Griggs Candler founded The Coca-Cola Company in the late 1800s, there was no way he knew his company would one day be valued at upwards of $200 billion. That’s a lot of money for a business that sells soft drinks.
But Coca-Cola didn’t become the powerful force it is today by pure luck.
In the 1980s, Coke’s biggest rival — Pepsi — was aggressively targeting it. This caused Coca-Cola to reevaluate its offerings. Ultimately, the company decided to release a new sweeter soda called New Coke.
Unfortunately, the public didn’t take too kindly to the new beverage. Thankfully, Coke’s executives didn’t let the mishap derail their success.
Quickly, management decided to pull New Coke and replace it with the older, established formula. And then, Coca-Cola Classic was born, and Coke maintained its market dominance.
The takeaway here is that just as quickly as Coke changed to accommodate its customers’ sweeter palates, it changed direction again when it realized it made the wrong move — because they listened to their customers.
But that’s not the only instance where Coca-Cola listened to its customers and enacted change. Again, how is a company primarily known for selling sugary drinks valued at $200 billion?
It turns out that Coke doesn’t only sell sweetened carbonated beverages. In fact, the beverage king sells more than 500 brands to customers in over 200 countries.
Today, many of its offerings — including DASANI, Vitaminwater, and Evian — are even considered healthy drinks.
In other words, Coca-Cola has consistently strived to diversify its product portfolio and expand into new markets — helping Coke succeed as a brand on a truly massive scale.
6. Amazon’s constant optimization culture
Considering that Amazon started out as an online bookseller, we could say that they are now the masters of change.
After expanding their offering from books to CDs and DVDs, Jeff Bezos has never been satisfied. And he has always been looking for ways to expand his business more and more.
From its inception in 1995 until now, we’ve seen lots of massive changes that the company has implemented including:
- Amazon Web Services (AWS) cloud computing service
- Buying Whole Foods and integrating it with Amazon Prime, offering delivery services for foods.
- Warehousing automation, using robots to collect and transport all their products
- The creation of retail grocery stores called Amazon Go
- Being an online pharmacy
- Competing against FedEx and UPS
- Launching Amazon Prime Video to compete against Netflix
The list goes on and on.
Amazon is the ultimate proof that effective change management can lead to massive success. How else could modest bookseller company transform into an unbeatable e-commerce behemoth?
Never Stop Changing
Change management is a requirement if you don’t want your company to get eaten by the competition and the evolution of the market.
And change isn’t just a one-time thing, either. You need to be constantly adapting to the new environments and monitor what’s happening outside and inside your company. Otherwise, you can become stagnant and fail.
Even if you find yourself in a comfortable situation, keep looking for ways to get better. Otherwise, you’ll get easily surprised by bad luck.
On the flipside, if you strive to climb higher and higher, you’ll be rewarded. But to do this, you need to implement change effectively. Good luck!