Turning change upside downHow new insights are changing old assumptions

By Warren Parry and Randy Wandmacher

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Without a doubt, change can derail

business. That’s because leaders have

thus far been managing it using faulty

assumptions and outdated mental

models. It’s time to turn that world

of organizational change upside down.

Today’s wealth of data and powerful

analytics capabilities now make it

possible to employ new, quantitative

approaches to managing organizational

change. Such approaches enable

leaders to manage change by using

predictable patterns to better navigate

around the dangerous pitfalls. Instead

of relying on business intuition and

executive judgment, which can often

be faulty, corporate leaders and

managers can now base their decisions

on hard data—namely, the experiences

of hundreds of thousands of people who

have undergone change initiatives—

telling us exactly what’s worked in

the past versus what hasn’t.

Using these new data-centric, insight-

driven approaches, organizations

can better understand and manage

the people issues that have plagued

many change programs. The failure

of change initiatives typically has

less to do with the hardware of

the organization than the software

of the organization. “Software” issues

include poor leadership, discontent

staff and lack of buy-in with the

corporate vision. In the past these

issues have been difficult to assess

and address. Today’s sophisticated

quantitative approaches are helping

to demystify the people side of

organizational change.

Many executives believe organizational change is an inherently messy, chaotic process.

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Misguided myths about changeOver the past 15 years, we have studied 250 major change initiatives1 at more than 150 organizations, including dozens of Fortune Global 500 corporations. Altogether, we have now collected data from over 850,000 employees, from front-line staffers through leadership at all levels, including team managers, divisional heads, and corporate executives. The resulting analysis of that dataset—representing the cumulative wisdom of experienced change travelers—has helped to dispel many conventional myths about organizational change.

Myth #1: Too much change, too fast, is destructive. Wrong! According to our data, the highest-performing organizations

actually thrive on change. They have more change taking place—30 to 50 percent more initially—and at a faster pace than their lower-performing counterparts. They have a strong capability to drive ongoing change and, as a result, they achieve far greater benefits from their change programs.

Myth #2: Change causes organizations to go off track. Many executives don’t truly understand why businesses falter

during organizational change. When we examined those groups with change programs that had gone off track, we found that 85 percent of them already had major underlying issues before implementing their initiative. In other words, the widespread assumption that change causes employees and organizations to go off track is not correct. People might blame a change initiative for their problems, but our research shows that a dysfunctional culture and behaviors—for example, poor management or a pervasive “silo” mentality that prevents different divisions from collaborating—are typically ingrained in the organization prior to the implementation of

change. Cracks then appear when a change program comes along exposing the dysfunctions that the organization had previously been able to handle. Change does not go off track, for example, when there’s a solid foundation of trust and confidence in leadership at all levels. Simply put, change does not cause organizational dysfunction. It merely exposes it.

Myth #3: Performance will dip during the early stages of change. Many traditional models that describe the

different stages of change assume that, in the beginning of an initiative, people’s inertia and resistance need to be overcome, and that’s why performance will typically dip before rising. But our results refute that. For high-performing groups, business performance—specifically, cost management, customer service levels, and effectiveness—rises continuously from the start of a change initiative to its end.

Myth #4: People need to understand changes before committing to them. According to the “commitment curve,”

which is one of the building blocks of many traditional change management strategies, people must first become aware of the need to change and have an intellectual understanding of it before they can embrace or commit to it. But our research shows that, although that progression is true for the lowest-performing groups, it is actually reversed for high performers, particularly in the early stages of change. For high-performing groups, trust in leadership is so high that people are essentially willing to get on the bus even before they know where it’s headed. They first commit emotionally and are happy to find out where they are going, as they move along. Organizations with trusted leaders can begin implementing and accelerating a change program without first having to educate employees about the specific details. Getting this right up front can be the difference between failure and success with quantifiable benefits.

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A smarter way to be “change smart” Many organizations have implemented specific change capability initiatives as part of their human capital strategy in order to make employees “change smart” before embarking on change. Even though such efforts are generally well-intentioned, they are often misguided, having little direct impact on the business outcomes the organization wants to achieve.

“Change smart” doesn’t necessarily mean rolling out stock standard solutions such as more communication, increased employee training, better team leadership, and improved accountability. These might be the favorite “go to” items on many organizations’ change agendas, but they are not the most critical drivers of successful change. Our research has shown that, although important, those factors play only relatively minor roles in the success of change programs. When it comes to improving business performance, the most critical drivers are strong business leadership, good systems and processes, clear vision and direction, and high passion and drive. Our research also clearly shows that different combinations of those drivers are needed to attain different organizational outcomes. Manage these well and you dramatically increase the odds of achieving improvements in business performance.

The challenge, though, is that many important factors like leadership and people’s emotions are intangible and difficult to measure. And that’s one of the reasons why many organizations tend to focus on more tangible areas like communication and employee training, which are relatively easy to measure and manage. In the future, though, sophisticated analytics and new digital approaches will help organizations bridge that gap. For example, automated text analyses of written survey responses, comments from a workshop, social media posts, and other sources will enable managers to determine the psychological state of employees on a team. Using such systems, businesses will be able to better identify and address potential issues before they become major problems. Armed with this kind of insight, “change smart” managers can take specific effective actions, efficiently utilizing precious resources only when and where they are needed.

Driver Strength

Business Leadership

Systems and Processes

Vision and Direction

Passion and Drive

Skills and Staffing

Teamwork

Fear and Frustration

Accountability

Communication

Team Leadership

What drives improvement in business performance?

When it comes to improving business performance, the most critical drivers are strong business leadership, good systems and processes, clear vision and direction, and high passion and drive.

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Developing a “fitness for change”The ultimate goal is to continually build change capability into the heart of the organization, leaving people in good shape to achieve and sustain high performance over the long haul. In our dataset, we found that just 10 percent of groups had that type of change capability, with strengths across all the drivers of change. Developing this “fitness for change” is similar to athletes training for a competition. Training in the right way—focusing on specific muscle groups for strength and flexibility, for example—will build up their conditioning, enabling them to withstand greater exertion without any drop in performance.

Just as world-class athletes now rely on cutting-edge digital technologies and analytics to train, organizations should take advantage of insight-driven approaches using sophisticated analytics to better manage their change programs. In the future, these advanced approaches will simply become part and parcel of the way that organizations do business. The days of “big ticket” discrete change programs, implemented one after the other, are long gone. Fitness for change is now simply a requirement to be in business—not something you pay attention to only when change comes along. The workforce of the future will need to manage numerous change initiatives simultaneously, and for that businesses would be wise to guide their efforts and systematically build their capabilities through the use of rigorous change analytics. Otherwise, they risk making bad decisions based on flawed assumptions and mistaken conventional wisdoms about what really drives successful organizational change.

Fitness for change is now simply a requirement to be in business—not something you pay attention to only when change comes along.

Contact the Authors:Warren ParrySydney, Australiawarren.parry@accenture.com

Randy WandmacherDetroit, Michiganrandall.r.wandmacher@accenture.com

Co-author:Tim GobranSan Diego, Californiatimothy.i.gobran@accenture.com

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Notes:1 These initiatives included restructurings,

acquisitions, technology implementations, cost reductions, downsizings, and new product entries. The organizations studied were across a wide range, spanning 50 industries and 25 countries.

About AccentureAccenture is a global management consulting, technology services and outsourcing company, with more than 336,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com

About Accenture StrategyAccenture Strategy operates at the intersection of business and technology. We bring together our capabilities in business, technology, operations and function strategy to help our clients envision and execute industry-specific strategies that support enterprise wide transformation. Our focus on issues related to digital disruption, competitiveness, global operating models, talent and leadership help drive both efficiencies and growth. For more information, follow @AccentureStrat or visit www.accenture.com/strategy

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