The importance of optics

Common wisdom tells us that if something looks like a duck, walks like a duck, and talks like a duck, then most likely, it is a duck. We all know, however, that this is not always true.

The idea of optics is captured perfectly in a scene from the movie “The Tuxedo.” Jackie Chan is working for a millionaire and in the scene the millionaire turns to Jackie and says, “It’s 90% the suit.”

What he is referring to is the optics of a situation–what perception the picture creates.

In Australian politics, the Federal Treasurer, Mr. Joe Hockey, was photographed smoking a cigar at the time when he was bringing down a tough budget in parliament. The imagery was all wrong and the press had a field day depicting Mr. Hockey as a fat cat, smoking cigars while the common man battled. The depiction was completely unfair and most people knew it, but it was an association Mr. Hockey was never able to fully shake.

Optics is the non-verbal, subliminal messaging that surrounds the actual message. When it comes to stakeholder management, optics is central to everything. It is the backbone to effective communications.

Optics are why politicians kiss a baby whenever there is a camera about. They are demonstrating their support for families and that they are in touch with the community. It is most certainly not because they like kissing babies.

A key feature of optics is that they are primarily associated with a person or a business and are not time sensitive. It is common for people to unconsciously develop a view of a person over a period of time simply by watching how they handle themselves in and around the office. This will include how they dress, the hours they work, or even their punctuality at meetings.

What this means is that, when it comes to stakeholder management, what you do and what you don’t do, and how and when you say something are as important as what you say, and possibly even more important.

The best example I have of this is a client I worked with a few years ago. He asked for me to analyse a significant body of data. This assignment was beyond my skillset and I invited a colleague to join the project to complete this piece of work. My colleague had a PhD in Physics and was undoubtedly the best person for the job. Unfortunately, he also had numerous tattoos and body piercings.  My client was unable to see past the earrings and tattoos and requested that he be removed from the project. I argued that he was a PhD and was highly professional. My client was unrepentant. He was unwilling to accept that a person who looked like my colleague could ever produce a creditable outcome. He was concerned that if the project outcome was suboptimal, then he would be blamed for giving the work to such a person.

The words “What were you thinking?” were already ringing in his ears.

Optics can extend beyond the person to the theatre in which the message is delivered. When Tony Abbott was shadow prime minister he spoke at a political rally. I don’t remember what he was talking about, but I clearly remember him standing in front of various signboards that said “ditch the witch” and similar slogans. The slogans all referred to the then Prime Minister Ms. Julia Gillard and while these slogans had nothing to do with Mr. Abbott, he did make the decision to stand in front of them. His poor choice of theatre gave Ms. Gillard significant political capital and she went on to portray Mr. Abbott as someone who disrespected woman and consistently brought up his apparent misogyny at every opportunity. There was not a lot Mr Abbott could do in response, as he had put himself in front of the signs. The message he delivered that day was lost, dwarfed by the poor choice of the theatre in which he chose to deliver the message. The optics of that day were just wrong.

Optics generally refer to the perception that a person creates by their behaviour, dress, and choice of presentation theatre. It can also subsequently extend to the spoken word. I say subsequently as the audience will already have formed an impression about the speaker long before the person starts to speak. I witnessed this firsthand when I was working with a senior IT executive. We had arranged for a supplier to showcase their solution. Unfortunately, the presenter was young and he pronounced the word “something” as “somethink.” He also said “yous” when referring to my client’s company. The combination of youth and pronunciation errors irritated my client so much he stopped listening to what the person saying and worried only about how he was saying it. The relationship with the supplier died in that meeting. My client felt disrespected and that his time had been wasted. It is worth noting that had my client wanted to buy expertise on social media, then the presenter’s youth probably would have been an asset.

The take out is that effective stakeholder management requires the speaker to look the part, sound the part, and to manage the theatre in which the message is delivered.

This can include everything from how a person dresses to how long they took to prepare a presentation. Consider a manager going out to a factory to address the staff. If they wear a suit and cuff links, the factory staff will find it difficult to see past the suit and hear the message. All they will see is a stuffed shirt coming from head office to give them news they assume they don’t want to hear.

Equally, if the manager arrived wearing factory uniform, the staff would question who the manager was trying to impress. They might reject the approach, and say “You are not one of us.” Once again, the message would be discounted.

There is no right answer. It really depends on the message. If it is bad news, I would counsel the manager not to stand behind a table or lectern or on a stage. Rather they should stand in front of the staff with no barriers and no ceremony. The manager will look sincere and will have a much better chance of being heard. After addressing the staff, the manager should leave through the same door as the staff, at the same time. All these cues will reinforce the subliminal message the manager respects the staff and sees them as equals.

The opposite can hold true when addressing a senior audience. In this case the manager should wear a tie, have polished shoes, and be on time. When the manager enters the room, the senior team will immediately make a judgement on the quality of the information they are about to hear. The quality of the presentation is important. It should look like the presenter took the time to do a good job. A great message poorly portrayed will have less traction with the stakeholders than a well-presented weaker message.

Managing the optics is especially important when a country suffers a natural disaster. An unfortunate but excellent example is how the U.S. federal government responded to Hurricane Katrina.

You will recall that in the days and weeks after Katrina flattened New Orleans and the surrounding countryside, the world’s press beamed live pictures of people who had lost everything. The commentary was: When is the help coming? Why weren’t we warned? Etc.

The optics were that the government was caught napping, was incompetent, and indifferent.

In the lessons learnt document published in the months following Katrina, the author notes:

On September 1, conflicting views of New Orleans emerged with positive statements by some Federal officials that contradicted a more desperate picture painted by reporters in the streets. The media, operating 24/7, gathered and aired uncorroborated information which interfered with ongoing emergency response efforts. http://library.stmarytx.edu/acadlib/edocs/katrinawh.pdf

The truth of the matter is that the local, state, and federal administrations had put substantial preparation and risk mitigation strategies into place prior to the storm. The media ignored this and only presented half the story.

This example reinforces the point that the optics created about you or your company can be created just as much by a third party as they can be by you. And no matter who creates them, or how accurate they are, they do need to be managed.

My mom taught me not to judge a book by its cover. I would love to say I don’t, but I know that I do. We all do. In business terms, when it comes to successfully managing stakeholders, it is essential that you are highly sensitive to your “cover” and that you manage the perception it creates. Fail to do this and your audience may never take the time to really listen to what you have to say.

The problem is that you can only do what you can do. The stereotypes, bigotry, baggage, biases, and cultural differences that your audience brings with them are largely beyond your control. I say largely because you can still mitigate for these hidden filters with some with consideration of who your stakeholders are and what they represent.

If you are talking to an older audience, you should expect them to be more conservative and unlikely to make a quick decision. If you are talking to women, then swearing is unlikely to be well received. Equally, a young underdressed female presenter is unlikely to get a warm reception from senior executives, male or female. Engineers are generally detail people. They will forgive a number faux pas if the presenter knows their topic in detail. By contrast, senior managers do not want detail. German audiences respect formal dress and titles and Japanese audiences respect the past. Younger audiences are more receptive to a technology demonstration and frequently less hung up on the formalities that senior audiences appreciate. Having said that, it would be a serious mistake not to take a young audience seriously.

For each one of these examples, there will be folks immediately quoting examples that contradict me. That’s to be expected because when it comes to stakeholder management, you have to deal with individuals and known groups. Stereotypes may not apply.

The take out is; always respect the theatre in which you work.

 

STAKEHOLDER IMPACT ANALYSIS

Consultants and other business advisors are frequently brought in by senior management to establish and lead a change program within the business. This brings to mind the old joke: How many consultants does it take to change a light bulb? Just one, but the light bulb has to want to change. An old joke for sure, but it reinforces the inescapable truth that a consultant cannot change a business. Only the business can change the business. If the business does not want to change, then there is nothing the consultant can do.

But who is the business? The business is a collection of people working together to achieve a common objective. For change to be successful, these same people need to band together to build a momentum for change that cannot be stopped. The organisation must push over the tipping point to make change inevitable.

The problem is that, in large organisations, whilst most staff support the overall business objectives, they don’t necessarily agree on the best way to achieve them. A characteristic of large organisations is the proliferation of subcultures throughout the business.  These subcultures are normally aligned to the different stakeholder communities or silos that make up the business. Depending on the specifics of each subculture, change will be met with a variety of mindsets ranging from “I have been here 15 years and seen it all before; it didn’t work then and it won’t work now” and “If it ain’t broke, don’t fix it,” to “We welcome the opportunity to change.”

For change to be successful, these individual communities need to be recognised, understood, and engaged as stakeholders in the change program. The trick is identifying each different stakeholder community and determining how change will individually and collectively impact each community and how each will respond to the proposed changes.

This paper will not discuss in detail how to identify individual stakeholder groups. Rather, it will examine how to evaluate the impact of a change program on stakeholder groups and how these same groups can impact the change program.

It is common practice to start an impact analysis with a stakeholder identification exercise, the rationale being that once you know who the stakeholders are, you can evaluate the impact change will have on them. My experience is that an effective stakeholder impact analysis must start with an analysis of the impact of change on the business. After all, how can you be confident that you have identified the complete and correct set of stakeholders, never mind the impact of change on these stakeholders, until you have fully understood the impact change will have on the business as a whole

I have found that while most change practitioners agree with the above, they also frequently attempt to complete both analyses at the same time. Inevitably, this will deliver a skewed and incomplete result. It is important to complete the studies sequentially.

To understand the business impact, it is easiest to use the traditional variables of people, process, and technology, with the addition of foundation items such as culture, strategy, policy, and rules. Collectively, these variables will provide the necessary width to complete a suitably comprehensive business impact analysis.

The objective of the study is to agree what will be different in the business as a result of the change. The following framework can assist.

Business impact table

The table is a summary of the impact of change on the business.

You will note that the framework breaks the headers of people, process, technology into their component parts. It is the component parts that are analysed, not the header itself.

A key part of any change program is effective communication in order to  ensure senior managers understand the need for change.  To be successful, it is vital that a senior stakeholder is able to quickly assimilate and understand the issues. It is not uncommon for an overly detailed analysis to be put in the “too hard basket,” causing the findings to be partially ignored or even lost entirely.

If the table is detailed, it can be supplemented with Harvey Balls to provide a quick summary of the extent of the change.

Dark (red) indicates a high degree of change.

Business impact table withHB

Using the Harvey Balls as a guide, it can be seen that the proposed changes will have a moderate impact on the business processes and a high impact on people, management practice, structure, and culture. There will be limited impact on strategy, policy, and business rules.

This summary is highly significant, as the common practice in business improvement programs is to map the business processes. In this case, understanding the business processes may be important, but it is not where the real game is. Rather, a strong focus on people and culture is more likely to deliver the desired business benefits. The detail in each cell describes the nature of the change.

Depending on its size, a change program will comprise multiple projects or work streams, each focusing on a different aspect of change such as Quality, HR, IT, or operational improvements.

The framework can be used for each project within the program. As before, Harvey Balls can be used to indicate the magnitude of the change within each project.

consolidated business impact table withHB

This type of analysis will provide a manager with a ready snapshot of the impact of each project’s specific changes on the business. While this view is valuable, it is incomplete.

What is required is a consolidated picture of change across all projects.

Project summary unclassified

The table provides a consolidated and immediate insight into how the projects will individually and collectively impact the business. You will note that the subcategories of “people” have been removed. This is to support the principle of “easy to understand.” Senior stakeholders will want to know how much change will impact their people. The fine detail is unlikely to be important at this time.

In the example, project 3 is anticipated to have the biggest impact across the entire business, and management practice, access to information, and culture will be most heavily impacted across all projects.

Project summary

This table now becomes the basis for determining the real stakeholder groups. Given that process flows are not a top three priority, it is unlikely that the process operators are going to be a primary stakeholder. Conversely, their managers are identified as a primary stakeholder. This is reinforced when you consider management’s impact on culture and access to information.

With this insight, that change program can set its priorities and tailor the messaging appropriately.

To understand how the change program will impact a specific stakeholder group requires the application of a consistent numerical scale. Such a scale could be:

  1. No impact
  2. Low impact
  3. Moderate impact
  4. High impact
  5. Maximum impact

Each stakeholder group is then evaluated according to this scale and the results are tabulated as follows. The stakeholders are listed down the page. The types of change the stakeholders will go through are listed across the top of the table. Once again the variables of people, process, and Technology are used to guide the analysis. It is unlikely that the detail will be a mirror of the business impact table, but is expected that the business impact table will inform the variables used in this study.

Stakeholder summary table

The table is completed once the totals column is complete. To really make sense of the table, graph it and rank it from highest impact to lowest.  It is clear that the first six stakeholder groups will be most impacted by the program and the last four stakeholder groups will be least impacted.

The primary difference between the stakeholders on the left hand side of the graph and those on the right is that those on the left will typically be operational staff and those on the right will be senior managers and executives. The seniority of these managers means that they are unlikely to be substantially impacted by the technical aspects of the change program.

stakeholder graph with circles

This type of stakeholder analysis is common practice and in the normal course of events, the change program would target the top six with specific interventions and deal with the bottom four with general interventions. The stakeholders in between would gradually move from specific to general.

By general activity, I refer to interventions aimed at groups, rather than individuals. It would be brilliant if a company had the time and resources to work with each person in the company individually. This luxury is seldom, if ever, open to large companies and so change is addressed with general activities.

My critique is that this is a one-way study, in that it only evaluates how the change program impacts the stakeholders.

In my opinion, a far more critical analysis is an evaluation of how the same set of stakeholders could impact the success of the change program through their actions, be they positive or negative, or simply through inaction.

The point of this second study is to determine which individual stakeholder groups could substantially impact the success of the project if they wanted to. Consider: if the executive team chose to, they could terminate a specific project or even the entire program, a particularly substantial impact. If the service desk became disenchanted, they could reduce the quality of the customer service they provide. This would dilute all the good work done on the rest of the project. It would not stop the project, but it would have a detrimental effect on customer satisfaction.

To complete this study, the scoring can again be on a simple low to high scale, as the evaluation is more subjective than objective.

  1. No impact
  2. Low impact
  3. Medium impact
  4. High impact

 

When completing the analysis to determine how stakeholders could impact the change program, it is important to use the same stakeholders that were evaluated in the first study.

Stakeholder impact on project

As before, the scores are graphed. It is important that the stakeholder sequence is kept constant as per the first graph.

reverse stakeholder graph

It can be seen that, unlike the initial study that produced a smooth graph, this study produces a saw-toothed result, indicating that there are stakeholders across the full spectrum that can significantly impact the project.

Of particular interest are the stakeholders on the right. In the first graph these stakeholders were scored very low as they were deemed to be senior or executive managers and therefore largely unaffected by the technical aspects of change. But in this second graph, they have a very high score as they have the positon and power to substantially impact the project.

The full strength of the analysis is evident when the two graphs are compared.

stakeholder graph comparison

As expected, there is a strong two-way impact across the first four stakeholder groups. These are the primary stakeholders impacted by the project and, if the change program does not fully enlist them in the change program, then it will be almost impossible to achieve sustainable business improvements.

Equally, when looking only at the first graph, it is unlikely that stakeholder groups 8 and 9 would have been considered particularly important stakeholder groups. But when combined with the second graph, they become high priority stakeholders.

The first graph is an analysis of the technical aspects of the change program. It evaluates which stakeholders will be impacted by the change and the data behind the graph will tell you why they are impacted. In many respects, change will happen to these stakeholders whether they want it or not. This does not diminish the responsibility of the change manager to minimize their resistance to change as much as possible.

By comparison, the second graph reflects the political aspects of the change. While these stakeholders may or may not be directly impacted by the technical changes, they will be acutely aware of how the change program could impact the business financially and their own reputations within the business and the market place. These two considerations make them a particularly important set of stakeholders. This is particularly true as you move towards the right. The change manager needs to work very closely with these stakeholders as they are not directly impacted by the change program, “whether they want it or not” and can choose their own level of involvement.

This dual analysis is of critical importance when it comes to communicating with each stakeholder group. The primary stakeholders in the first analysis will need to be sold on how important the change program is to the business and how important they are to its success. At the other extreme are the priority stakeholders identified in the second analysis. As per the first group, these stakeholders will also need to be convinced that the change program is strategically important to the business. But they will also need to be convinced that the business improvement program is being well managed and that it is unlikely to have a detrimental impact on the reputation, operations or finances of the business. If any of these tests fail, then the program runs into the very real risk of being cancelled.

There is a further relationship between the two graphs. The senior stakeholders on the right will frequently have the organisational position and authority to instruct the stakeholders on the left. This makes these senior stakeholders even more important when it comes to designing the initial communications and prioritizing which stakeholders need to be engaged with first.

There is one other stakeholder group that needs to be considered as part of the impact analysis, namely the business improvement team. This is the group of people who are working full-time or close to it on delivering the business improvement project. They may or may not be part of the program office and frequently this team will be a blend of full-time employees and contractor staff.

For me, this is one of the most important stakeholder groups on the project. This team is a catalyst for change in the sense that they create change, but are not themselves changed. They are also a temporary group, constituted for the life of the program. For these reasons, they are seldom, if ever, evaluated as part of the impact study.

A key responsibility of this team is executing an effective communications strategy. They will decide on what messaging is communicated to which stakeholder group, on what frequency and format. The importance of getting this strategy right cannot be underestimated as it will directly influence how the business perceives the change program.

It is therefore vital that the health and competence of the team is measured and managed. If this team becomes disillusioned or suffers from poor morale, the consequences for the success of the program would be significant. Equally if this team does not have a common understanding of the objectives of the program or how the various projects fit together, then they will be prone to delivering mixed messages to the business and undermining the very change they are trying to create.

DEVELOPING HUMAN CAPITAL

It’s the difference between know how and know why. It’s the difference between, say, being trained as a pilot to fly a plane and being educated as an aeronautical engineer and knowing why the plane flies, and then being able to improve its design so that it will fly better. Clearly both are necessary, so this is not putting down the Know-How person; if I am flying from here to there I want to be in the plane with a trained pilot (though if the pilot knows the Why as well, then all the better, particularly in an emergency).

The difference, also, is fundamentally that Know How is learning to Think Other People’s Thoughts, which indeed is also the first stage in education—in contrast to learning to Think Your Own Thoughts, which is why Know Why is the final state of education. Indeed, both Know How and Know Why are essential at one moment or another, and they interact all the time; but at the same time, the centre of gravity of education is and must be in the Know Why.

The Phi Kappa Phi Journal, Spring 2000, p. 46. (author unknown).

……

Recently I was chatting with a colleague about some of the strangest things we had been involved in over the years as business consultants. I told him a story about the time I was asked to deliver education to a group of miners in Africa. The objective of the course was to improve their supervisory skills. What made the class interesting was that the miners spoke little or no English and I did not speak their language. Furthermore, the class was to take place about a kilometre underground in what could only be described as a cave. It had no electricity, no chairs, no tables, no flipchart, and no whiteboard. It was just a hole, in a hole, deep underground. The class had to be underground as the miners were only allowed a short time away from the working face.

To deliver the class, I prepared a storyboard on a large and long strip of brown paper, rolled it up, and went down the hole. In the cave I hung the storyboard with some wire I found hanging from the roof. When the participants came in, the only lights we had were the headlamps miners wear underground. This meant that for them to see the material they all had to switch on their lamps and stare at the storyboard. This actually provided a good way of knowing when their attention drifted, as they would turn away and the light would go out. I worked with an interpreter and we delivered a successful course.

The students had been identified as potential supervisors and the underground course was part of a program aimed at building the overall basket of skills they would need to become productive supervisors. The program was delivered in two phases. The first phase was education and focused on creating an awareness of the concepts and vocabulary typically employed by a supervisor. The second phase was training. The focus was experiential learning in a live environment; the active transfer of skills. To This end I spent hours working “on-the-floor” with each of the supervisors, supporting them individually as they learnt their new roles.

The outcome was that mutual respect between the miners and the new supervisors was quickly established. Collectively they soon became an effective team and the client received an excellent financial return.

For me, what made this project different is that it went against the norm. Frequently when staff are promoted from the floor to the supervisory or managerial positions, they are not educated or trained in how to operate in their new roles. This invariably means that the organisation loses a good worker and gains a poor supervisor. Educating and training the miners on how to supervise ensured that the mine not only gained a team of supervisors who had a first-hand understanding of the daily working environment faced by the staff, but also a team who  understood what was required to effectively supervise the staff.

The experience really taught me that staff (human capital) should always be developed through a holistic program that combines education and active training. Education provides the framework and context. It explains why something is important—the sessions in the cave. Training develops technique, skills, and tactics as evidenced by working “on the floor” with the supervisors. The term “on the floor” means exactly that – working with the employees, including managers, in the live environment. Relying on generic training exercises in the classroom as a substitute for on the floor experience is a far cry from working with each student directly on the job as they actively learn to address real operational issues.

From a big picture point of view and as illustrated in the graphic, business objectives are delivered through the capabilities of the organisation. Capabilities are themselves created from a blend of the enablers of finance, technology, and the human capital.

Business-Praymid-11

When it comes to building human capital there really is only one objective—to cause a change in behaviour. A change in behaviour means doing things differently because of new skills or because you see the world differently.  When constructing a program to develop human capital, it is important to be clear on which business capabilities need to be created or augmented and how the new behaviours will support the business capabilities.

No matter whether the intent is a skill or a knowledge transfer, there is an important hierarchy that needs to be acknowledged—organisational learning “sits” above individual learning.

Business-Praymid (8)

Equally important is the difference between the learning attributes of the organisation and those of the individual. Organisations can be educated, in the sense that they can have memory and retain knowledge. Organisations cannot be skilled. Individuals can be educated and skilled.

Acknowledging the hierarchy and the learning attributes of each part is vital as they directly inform which stakeholders need to be engaged as part of any human capital development program.

Consider the following scenario. As part of normal business practice, the sales and marketing team meets clients and receives orders which they then pass onto the production department. The production department translates the request into finished goods. The production manager seldom, if ever, meets the customer.

To keep up with best practice, the production department sends an engineer on a training course as a refresher on the latest production techniques. This is effectively a reskilling of the engineer.

It is easy to see how the separation of duties could result in the production department not considering it relevant to inform the sales and marketing team of the engineer’s refresher training.

If the sales and marketing team does not know that the engineer has an increased skill set, they will not change what they sell or how they sell it and the business will not make a meaningful return on its investment in the engineer’s development.

To mitigate this risk, the process of arranging training for the engineer should include an organisational education component to drive organisational learning.

This raises the question—which stakeholders need to be educated to meet any given organisational learning objective? The following table can assist.

Stakeholders

The impacted stakeholder columns capture which functions are directly and indirectly responsible for ensuring the business capability is created. The difference between the two is critical in that indirect stakeholders rely on the direct stakeholders to inform them of newly created capabilities and direct stakeholders rely on the indirect stakeholders to maximise the potential created by the enhanced capability.

In the above example, the production function is the directly impacted stakeholder and the sales and marketing team is the indirectly impacted stakeholder. Other indirect stakeholders could include the up and down stream functions in the value chain.

When it comes to realising a return on investment from the capabilities created by a human development program, perhaps the most important development activity is educating the business that the new capability exists.

Allied to this is the key question: is the direct stakeholder equipped to manage the up-skilled resource? All too frequently after a development program, I have heard managers telling their staff words to the effect of “this is the real world” and they “should forget that academic mumbo-jumbo and get on with the job.” Simply put, for the business to fully realise the benefits of the development program, it may be necessary to require the manager to attend a course on management techniques.

This highlights the importance of the business impact columns.

Frequently courses are measured in terms of attendance and student satisfaction. These are good measures of benefits to the students themselves, but they tell you nothing about the effectiveness of the course itself. The true benefit of the program should be measured through changes in key business indicators such as revenue, margins, yield, utilisation, productivity, quality, and scrap. Linking the measurement of course effectiveness to key business indicators requires a much deeper understanding of the impacted stakeholder community. This requires an understanding of the corporate scorecard and, by extension, the wider stakeholder (direct and indirect) community.

As discussed previously, a development program must align the learning outcomes to the business objectives, thereby providing context for the sessions.

I recommend using the following table.

LearningOutcomes (4)

The first two columns provide the context for the human capital development program and collectively they link the course outcomes to the business capabilities.

It is one thing to know why and what you need to do and another thing to know how to do it. This gap exists because while knowledge can be retained at the organisation or team level, skill can only be captured at the individual level. The problem is that individuals leave, taking their skills with them.

To mitigate this, all human capital development programs should include a component that will actively contribute towards infusing the organisation with knowledge, thus reducing the reliance on a specific individual. This reinforces why Organisational Knowledge sits above Individual Knowledge and Skill in the hierarchy.

Business-Praymid-13 (2)

The three learning outcomes will ensure this happens.

LearningOutcomes-3

The first column defines the specific skills an individual will acquire. The second column defines the knowledge the organisation can expect to gain as a result of the skills improvement program. It should include knowledge gained by direct and indirect stakeholders. In the event that there is no skills development program, then column two will be completed accordingly.

Column three is the most critical aspect of the entire development program. In many respects it is the sum of columns of one and two. Correctly completed, it will bring all the threads discussed in this article together. It:

  • Describes the tangible differences expected as a result of the program and will inform columns one and two.
  • Answers the question—how differently does the organisation need to behave in order for it to benefit from the investment in columns one and two? It should be tied to the business benefits.
  • Reinforces the universal point that no matter what the improvement initiative is, it will require an understanding of the wider stakeholder group and their interests.

BUSINESS PROCESS REENGINEERING

I  have  addressed many  of  the  principles around  business process reengineering (BPR) in the previous articles. What will make this article different is that it will describe how to prepare for, and run, a BPR workshop and program of improvement. It will repeat a few of the points covered in previous articles, as the concepts are inherently intertwined.

To run a successful BPR project requires context. The easiest way to build context is to establish a table that disaggregates  the business from the macro to the micro. Industry language describes this as going from level 1 to level 4. Level 4 is the generic term for the detailed process map, but in practice the disaggregation may drill down to level 5, 6, or 7.

There is no right or wrong, but it is worth considering that if you need to drill down to levels 6 or 7, then you may be narrowing the definition of process too much. This will make it very difficult to keep the process in context.

The disaggregation is represented  as follows:

Process stack and decomposition

To operationalise this picture prepare a table with the following or similar headers.

10

The description fields are important as they force the author to think critically about the separation between the processes they are intending to map. It may not be possible to complete all the fields in the first instance. It is recommended that you do not start mapping processes  until the data for that process is agreed. Ideally the table will be included in the statement of work.

For the process mapping workshop, you will need a decent size white board, a data projector, and a laptop. The workshop participants should be staff who are very familiar with the process. This may mean that you need more than one “subject matter expert” in the room to adequately cover all aspects of the process.

The following guidelines will add rigour to your process mapping.

1.   Model the process using roles not positions.

2.   Only one role can be responsible for an activity. Another role can contribute to the activity, but they are not responsible.

3.   The input from all trigger processes should be sufficiently consistent with the unit of measure being used in the process. A trigger process is a process that precedes the process you are working on. The output from that process is the input to the next process.

At the very least, the following data should be collected in the workshop, or as a result of the workshop:

•     Unit of measure—what is “processed.” It provides a means for calculating the annual volume.

•    Annual volume—can be broken down to weekly or monthly.

•    Process owner.

•    Process deliverables/product.

•    Distribution list for reports.

•    Trigger processes.

•    Hand-off processes.

•    Roles.

•    Indicative role costs.

•    Process activities.

•    Process sequence.

•    Decision points.

•    Percentage splits on each decision.

•    Work time for each process activity.

•    Cycle time for the process.

•    Technology used for each activity. Extended data requirements can include:

•    Information gathered at each step.

•    Status changes in the item being processed.

•    Descriptions of each activity. This may include work instructions.

It is important to establish early on whether you want to draw or model the process. It is almost impossible to adequately collect and evaluate the level of information described above if you do not use process-modelling software. If you use software that only captures the process as a flow sequence, such as Ms Visio, and different software applications such as Ms Word and Excel to capture the additional detail, then you are drawing. In this case you will not be able to complete the analysis described below.

Modelling  software allows you to capture the details of the process in the third dimension. That is, you can capture all supporting information in the application at the time of mapping the process. The concept is: write once, use many. There are a range of applications on the market that support this type of process modelling.

To start the workshop, ask the participants to confirm the data collected in the process definition worksheet. Then ask one of the participants to talk you through the process. It is best to have a high-level schema of the process in your head before you start.

Using standard interview techniques, capture the flow sequence on screen in front of everyone. Pay special attention to the words the participants use. Take time to explore inconsistencies or the subtle differences between branches in the flow.

Process map

Once you have documented the process, go back through it and capture the required details for each activity. The most important data are the work time for each step, the percentage splits for each decision, and the role costs. With these three data points you can complete the primary process analysis. An additional data point to collect for each activity is the underlying technology and whether it is manual, batch manual or integrated processing.

Please note the following techniques are only possible if you are using modelling software.

For  the  first round  of analysis, use the  traditional R.A.C.I. (RACI) (Responsible, Accountable, Contributor, Informed) table.

•    The process owner is Accountable.

•    The roles are Responsible.

•     The distribution list for reports and process outputs helps define who are the Informed stakeholders.

•    You may or may not have a Contributor.

The following is an example of a RACI table.

50

The RACI table allows you to confirm you have gathered all the required information and applied it in the correct manner.

The next level of analysis is to confirm how the process fits into the wider business. That is, do the trigger and hand-off processes make sense? In the graphic below the downward arrows represent trigger processes and the upward arrows are hand-offs. Obviously a hand-off process is also a trigger for the next process. In this way process 1 is the trigger process for process 2 and process 2 is the trigger process for process 3 etc. Each process is measured with KPIs  and the relationship between them is measured by SLAs.

Shared Services 3

The third level of due diligence is to understand the process data itself. This is done through understanding the sequencing paths within the process. 

Consider the following process:

22 (2)

It is an amalgamation of four paths or processing sequences. The paths are shown as follows:

Path 1

12

Path 2

Process sequence3 (2)

Path 3

Sales Clerk1

Path 4

Process sequence1 (2)

This analysis will produce two key tables:

1.   The cost to serve.

2.   Full-time equivalents (FTE).

The cost to serve table is shown and provides the weighted average cost for one iteration of the process. This number can be multiplied by the annual volume to get the annual cost.

Cost to Serve

Column 1 references  each way the process can be transacted. In this example there are four paths.

Column 2 is a result of the percentages applied to each decision in the process. (These are not shown in the diagram.)

Column 3 is the activity-based cost of the sum of the activities within each path. The figure is based on the costs associated  with each role multiplied by the time associated with each process step in the path.

Column 4 is the product of columns 2 and 3 and represents the cost to serve of one iteration of the process.

The second table is a staffing analysis. It is a similar analysis as is the cost to serve, but is completed on staffing needs-based FTE requirements. The following is an example. It shows FTEs by path and total FTEs for the process for one iteration.

FTE numbers

The analysis is completed by applying the annual volume to the FTE table. In this case, the annualised staff requirement becomes 1.8 FTEs.

FTE numbers2

Due diligence is to ask: “Does the annualised FTE number make sense? Can the annual volume be completed with 1.8 FTEs?” If you add a productivity factor of 10% or 20% the FTE figure rises to 2 (rounded). If the answer is yes, then you know you have captured the process correctly. If not, then the process data needs to be revisited. The answer does not need to  be precise; rather a “substantially  correct” answer is accurate enough for decision-making.

Once  the  individual processes are agreed, they can be aggregated to provide a holistic view. It is the same table as shown in previous blogs.

 Path analyis table (2)

With this table, process improvement can be prioritised. Assuming the intent is to reduce costs, you read the right-hand column. It shows the relative contribution of the individual process costs to the sum of costs for all processes. It can be seen that the “purchasing” and “new user setup” are the two processes that contribute most to total costs.

To reduce the costs associated with a business process refer to the cost to serve table.

Cost to Serve

Path 1 is the most cost-effective  processing  sequence. The best outcome is to reengineer the process to maximise the volume flowing through this path. This will deliver a savings of $49 per process iteration. If the process is transacted 10000 times a year, then this is a savings of $490,000. If you cannot improve the process to get 100% through path 1, then the next best option is to maximise volume through path 1 and use path 2 for the overflow.

 Moving 100%  of  the  volume to  path  1  can  be  achieved through controlling the decision.

Typically this can be achieved through a change to the:

1.   Staff profile through skills improvement  or behavioural change.

2.   Processing sequence through policy or procedural changes.

3.   Underlying technology through workflows  and configuring the existing system.

A change in skills will require further analysis to be able to answer the questions illustrated below.

training

 

The approach is to complete this analysis for each step in the process and then aggregate  them into a consolidated table. This table can be cross-referenced to the RACI table to check for completeness. Once this data is collected, it can be cross-referenced to the skill profile of the staff working in the process and improvement strategies developed.

Option  3  is the  best option  as the  application of  technology or  a workflow removes the  option  for  the  process performer to  make a decision in the process. This concept is explored further in the chapter on Judgement Support and Decision-Making.

Recognising that   this  type  of  process change  is  frequently  quite substantial in  its nature, it  is better to  complete the  analysis for all processes as shown in the following table and then develop a business improvement program to meet the change requirements of all processes at once.

100 (3)

Before implementation commences it is important that the business case for change is validated. The above table identifies the entire program of required improvements and  these improvements are then  used to recalculate all tables described throughout  this chapter. The  expected benefits are then compared to the existing process metrics.

 image005 (2)

In  this example, a total benefit of more than  one million has been identified with an associated saving of 21 FTEs. The nature of these 21 FTEs can be identified through a comparison of the staff profile tables.

I  close with the  following comments. Business process reengineering is reasonably straightforward to do at the “surface” level, and somewhat more difficult to do at the detailed level. A schematic of a process is just that—a schematic. It is a representation of the routines staff follow on  a daily basis and  to  reengineer the  process requires a change in these routines. To gain the trust of the affected staff requires a rigorous analysis of the processes  combined with a focused program of change management. It is equally important to remember that processes do not exist in isolation and to change a process without understanding how the process interfaces with the rest of the business is likely to reduce the overall benefits received.

STAKEHOLDER MOTIVATION

I am frequently asked to write on the mechanics of change management, a level of detail I have tried hard to avoid until now. The reason is simple—change management is complex, it is difficult, and it should not be reduced to a series of “cookie cutter” activities. I will never understand why large business improvement programs frequently refuse to pay a decent wage for the change manager’s role. On less than successful programs, it is common to hear statements to the effect of “the change management work stream failed” or “we would have delivered a better program if we had started the change piece earlier” or other words similar in nature. These statements assume that the business improvement program had any change management at all. Frequently, this is not the case.

No doubt, each unsuccessful program would have involved the completion of a stakeholder analysis, the delivery of training, and the publishing of communications. But I doubt all of this was delivered in a cohesive, integrated broadside to the organisation. I use the word “broadside” deliberately. Treating them as activities is why business improvement programs fail to deliver the required changes in organisational behaviour. Activities tend to get completed sequentially and then signed off as complete when delivered. In this case, the business improvement program has at best, a change coordinator. “We have done the stakeholder analysis.”—tick.

When it comes to change, the most fundamental question to ask is: so what? What has been learnt from a change activity? What is the business going to do with the information?

Note that the question does not ask what the program team is going to do with the information. That is of lesser importance than what the business is going to do with it. This distinction is vital, as the program team cannot change the business. Only the business (line management) can change the business. The program team will do all the heavy lifting required to meet the agreed deliverables. It just won’t change the business. If the business does not want to change, then the program office, despite its best efforts, will deliver a sub-optimal result and the senior management team will once again wonder what went wrong. By the time they realise that they had abdicated their responsibility for achieving a successful outcome, it will be too late to make corrections without the need to invest significantly more money into the program than what was budgeted for. Effective stakeholder management substantially reduces this risk.

Effective stakeholder management starts with the program sponsor. The sponsor is accountable for achieving the business benefits and this, by necessity, must include accountability for the change management work stream. Consider: if the business was serious about improvement, then it would hardly make sense to make a support function (change manager) accountable for achieving the structural and cultural change necessary to deliver the desired business benefits. The change manager’s role then becomes one of a subject matter expert designated to guide the sponsor through the difficulties associated with change. This would not exempt the change manager from their responsibility to prepare traditional deliverables such as impact studies, training packs, communications, etc.

A primary variable in any change program is people’s behaviour, as individuals and as groups, and the key objective of the change program is to establish predictability of behaviour. Predictability cuts both ways. The change program must provide predictability to those staff impacted by the change so they know what to expect, and equally the change manager, working through the sponsor, must provide management with predictability of how those staff will respond to the change and what is required from them as a senior leadership group. When people know what to expect, then they will be more accepting of the change when it happens, even if the change has a negative impact on them.

In practice, predictability and stakeholder management are synonymous terms and this means stakeholder management moves from being a discrete task in a change management plan to being the backbone of all the change management activities. To further illustrate this point, consider the following typical change management plan.

Change plan

To actively manage stakeholders requires agreement on who the stakeholders are. A stakeholder impact analysis workshop will help to identify the extended set of stakeholders. Stakeholders can be individuals or groups. For example, the CFO is part of the executive team, a key stakeholder group, and yet the CFO is important enough for the role to be identified as its own stakeholder group. In this way the CFO is referenced twice in the stakeholder management plan.

The impact analysis is a determination of how widely the “ripples” of the business improvement program will be felt. Ripples are typically operational, financial, or reputational. I define these terms in the broadest possible way.

The above methodology table indicates that the impact analysis is completed prior to the stakeholder management workshop. In practice, the two activities are iterative as each informs the other.

Once the stakeholder groups are identified, then the next step is to determine the best means to engage with each group, to bring them into the change program and cause them to actively participate. Basic psychology says that this is best achieved by engaging them on topics that interest them, in a manner that interests them. To this end a simple 2×2 matrix that cross references Power (the capability to influence the direction or outcome of the program) to Interest (the desire to influence the direction or outcome of the program) is a frequently used methodology.

Power interest matrix

This type of analysis is only valuable if the terms Power and Interest are understood.

In her article posted on the American Express OPEN forum, (https://www.americanexpress.com/us/small-business/openforum/s/?query=Nicole%20Lipkin%20) psychologist Nicole Lipkin discusses seven types of power, namely:

Legitimate Power is where a person in a higher position has control over people in a lower position in an organisation.

“If you have this power, it’s essential that you understand that this power was given to you (and can be taken away), so don’t abuse it,” Lipkin says. ”If Diane rises to the position of CEO and her employees believe she deserves this position, they will respond favourably when she exercises her legitimate power. On the other hand, if Diane rises to the position of CEO, but people don’t believe that she deserves this power, it will be a bad move for the company as a whole.”

Coercive Power is where a person leads by threats and force. It is unlikely to win respect and loyalty from employees for long.

“There is not a time of day when you should use it,” Lipkin tells us. “Ultimately, you can’t build credibility with coercive influence—you can think of it like bullying in the workplace.”

Expert Power is the result of the perception that one possesses superior skills or knowledge.

“If Diane holds an MBA and a PhD in statistical analysis, her colleagues and reports are more inclined to accede to her expertise,” Lipkin says.

In order to keep their status and influence, however, experts need to continue learning and improving.

Informational Power is where a person possesses needed or wanted information. This is a short-term power that doesn’t necessarily influence or build credibility.

For example, a program manager may have all the information for a specific program, and that will give her “informational power.” But it’s hard for a person to keep this power for long, and eventually this information will be released. This should not be a long-term strategy.

Reward Power is where a person motivates others by offering raises, promotions, and awards.

“When you start talking financial livelihood, power takes on a whole new meaning,” Lipkin says. For example, “both Diane and Bob hold a certain amount of reward power if they administer performance reviews that determine raises and bonuses for their people.”

Connection Power is where a person attains influence by gaining favour or simply acquaintance with a powerful person. This power is all about networking.

“If I have a connection with someone that you want to get to, that’s going to give me power. That’s politics in a way,” Lipkin says. “People employing this power build important coalitions with others … Diane’s natural ability to forge such connections with individuals and assemble them into coalitions gives her strong connection power.”

Referent Power is the ability to convey a sense of personal acceptance or approval. It is held by people with charisma, integrity, and other positive qualities. It is the most valuable type of power.

The most frequently used definition of power is legitimate power and using this definition alone is short-sighted. Staff who have relatively low legitimate power can have very high power when it comes to influencing the success of the program. This is especially true for subject matter experts who have expert power.

Once you consider all seven types of power, then it is likely that the set of identified stakeholder groups will be refined and expanded.

Equally, Interest can have multiple variables. I recommend using the same as those used to determine the “ripples” in the impact analysis, namely:

Operational Interest is a primary focus on structure, strategy, environment, and implementation; a desire to improve the operational effectiveness and efficiency of the business.

Financial Interest is a primary focus on the ROI and the impact on the balance sheet.

Reputational Interest is a primary focus on the company’s reputation in the market or the individual stakeholder’s own brand value.

Typically, all three variables will apply to each stakeholder group, but each group will have a leaning to one or another of them. For example, a middle manager will have a high interest in the operational benefits of the program and a lower interest in the financial aspects. They get their salary no matter what, so financially the program may not change their situation much, but operationally, the program could materially impact their work environment.

Then there is a forth variable to interest—self-interest.

Self-Interest is a primary focus on oneself. The WIIFM question or “what’s in it for me?” How will the program impact an individual’s personal circumstances?

This analysis gets interesting when it is used to evaluate how the nature of a stakeholder group’s interest will change depending on the health of the program.

To fully consider the relationship between the power and interest variables, it makes more sense to use a table rather than a simple 2×2 grid.

Slide-21-A

In this example, “Executive Management” has legitimate power with a primary interest in the financial results of the program. They are focused on ensuring the program is on budget and is delivering the promised ROI. They will also want to be sure that the change program is enhancing or has a neutral impact on the reputation of the company. As they are senior managers, they are less interested in the day-to-day operations and should be least worried about their “Self-Interest.” Obviously, depending on the specific circumstances of any given change program, the priority between the four interest types will change.

The above prioritisation should remain true while the business improvement program is going well. It will change if the health of the program declines and starts to have an adverse impact on business operations. When this happens, executive management will want to ensure that the business can still run and consequently, they will become less worried about delivering the program on budget. Their primary interest will switch from “Financial” to “Operational” and they will start to release additional funds. “Financial Interest” is reprioritised to second place and “Reputation” moves to third.

If the program health declines further, they may switch their primary interest to “Reputation” and start to take action to ensure reputational damage is minimised and operations are stabilised. “Financial Interest” moves to third priority.

In these examples, I have left “Self-Interest” at priority four, assuming that the executives are all professionals. It is realistic, however, to believe that individual executives will start to reprioritise self-interest higher up the scale depending on their exposure to the consequences of a failed program.

By comparison, the stakeholder group “Subject Matter Expert” is characterised by technically competent staff who are experts in their field. This group will typically have a high “Operational Interest” in the program, especially if it relies on their expertise and enhances their reputation (“Reputational Interest”). They will also want the business reputation to grow as it helps their CV. These staff may never rise to the senior levels of management and are less interested in “Financials.” Stereotypically, as long as the company keeps funding their budget they are happy. With a healthy program, interest in their “Self-Interest” is the lowest priority.

If the program health declines, then their Self-Interest will very quickly get reprioritised to the top of the list, as a subject matter expert typically does not want to be associated with a failed program, particularly in their area of speciality.

As the program health changes, so should the mode of the interaction the program has with each stakeholder group.

The 2×2 matrix can now be used as a guide to determine the best means of interacting with a specific stakeholder group with the caveat that Power is changed to Power type and Interest is changed to Interest type and the message is tailored to suit.

The quadrant into which a stakeholder falls, dictates the suite of preferred interaction styles that could be used to engage with that stakeholder. Interaction types include:

  • One-to-one interactions
  • One-to-few
  • One-to-many
  • Email
  • Town-hall meetings
  • Theatre
  • Website updates
  • Intranet forums (chat rooms)
  • Awareness education
  • Workshops
  • Delegations of authority*
  • Technical training
  • Posters, brochures, and other marketing collateral.

* Delegations of authority refers to the degree to which a position or role can make a decision that will bind the company. Pushing delegation levels lower into the company should result in higher levels of involvement in the program as the applicable manager responds to the fact that they can make a meaningful and sustainable difference to the change program.

It should be noted that all types of interaction are relevant. What changes is the importance and reliance that should be placed on a specific type as a means to effectively engage a specific stakeholder group, with a realisation that the most effective mode will change with the health of the program.

Subject matter experts will probably respond to detailed website updates and awareness education sessions far better than to face-to-face meetings. Executives, on the other hand, will most likely respond better to succinct emails and face-to-face briefings. Tied to this, is the content of the interaction. As a stakeholder’s interest changes with the health of the program, so should the content covered in each interaction.

The matrix now looks as follows:

Power interest matrix with comm type

I close with a reinforcement of the principle that only the business can change itself and that the change manager must ensure that their activities do not absolve the sponsor and other key stakeholders from their accountability to make the program successful.