MANAGING RISK, A TRIGGER FOR CHANGE

Having spent considerable time on business transformation projects I can say with a high degree of confidence that the discipline of change management is becoming so watered down it is at risk of becoming more of a catch phrase than a serious discipline. The term is bandied about freely whenever a project is discussed without any real thought of what it will mean for the project. When project concerns are raised, the response is frequently along the lines of – that’s a change management issue or ‘we will ask the change manager to deal with that’.

The upshot is; for any given project, change management is treated as a ‘catch-all bucket’. Having said that, in many respects, this position is acceptable as the primary deliverable from almost every project is a change in behaviour at the individual and collective level.

The problem therefore becomes – for each project, how do you create a common understanding of what change management means for that specific project.

Recently I was asked to prepare a project initiation document (PID) for a client, working off their template. The template included all the standard headers such as objectives, scope, risk management, change management, budget and timeline.

This got me turning over an old chestnut of mine; what’s the difference between risk and change management.

My view is that the major reason to employ a change manager on any project is to mitigate risk and the biggest risks on any project are those represented by stakeholder behaviour. This includes scenarios where stakeholders:

  1. Do not embrace the need for the project
  2. Do not accept the deliverables of the project
  3. Cannot / will not work with the deliverables of the project.

Consider the last PID or Statement of Work (SOW) you prepared or read. It probably had a risk section with a structure and text similar to this one. The table (sanitised) is a mix of actual examples from various clients.

Risk table (4)

Column one describes the risk and column four details what can be done to avoid it becoming an issue. Columns 2 and 3 are used to rate the severity of the risk threat.

To mitigate these risks, change managers are engaged. Therefore by extension, change managers are risk managers.

Now compare the table to the following typical position description for a change manager:

This position reports to the xx manager or executive and will be instrumental in providing change management expertise in support of organisation-wide business transformation, process reengineering and resulting system developments. The primary focus will be creating and implementing change management plans to maximise employee engagement and proactively manage employee and client resistance. The change management specialist will act as a coach for senior leaders and executives in helping them fulfil the role of change sponsor and will support project teams in integrating change management activities into their project plans. The role will involve liaising at all levels across business units to analyse and effectively develop, deliver and embed change management solutions in line with commercial objectives.

Quite clearly, there are overlaps between the risk mitigation actions and the change management position description. This raises the following fundamental question:

Why do change managers not formally link their change management plans to the risk register.

By way of example here is a change management plan I chose at random from a Google search.

http://tiny.cc/n4nj1w

Change Management Plan

 

 

This is a typical example of a change management plan. At a concept level I immediately question why a change management plan needs to exist as a separate document from the PID. However, if it is to be a stand-alone document, then there is no heading I would delete.

At no stage in completing the template is the author expected to link the change management plan to project risks. In fact, the word ‘risk’ appears only once in the template where the author is expected to describe risks to the change management process.

Based on this template, how can the project sponsor build confidence that project risks are being mitigated or that the change management activities will have any relevance to the risks at all.

My observation is that a risk register is typically prepared at the start of a project and then is really only given lip service through the course of the project. If the project manager does happen to review the register, then it’s likely that the participants in the review meeting will readily explain how the risks are being managed and all is good. No panic required.

Equally and by contrast, my view is that change managers frequently start a project with a comparatively light definition of their project activities. Often with no more detail than the position description referred to above, supplemented with some reference to change activities such as weekly communications broadcasts, training plans, status reports, town hall meetings etc. Most likely they will have ‘copy & pasted’ the relevant parts of the PID into the change management plan, if one exists at all. Then when the projects gets going they generally make it up as they go, using best and last experience as a guide.

My recommendation is that change management plans are retired as a separate document, replaced by the PID or SOW and that the role of the risk register is redefined so that it becomes a change management plan.

Risk with change (4)

This will ensure that:

  1. Risk mitigation strategies are better thought through
  2. Change management is better aligned to the project
  3. Change managers understand their responsibilities more clearly
  4. Risks are continuously and actively managed, and
  5. Project managers will have a structured means of evaluating the effectiveness of the change management aspect of the project.

Let me have your thoughts.

GETTING THE MEASURE OF KPI’s

I was talking to a client about KPIs and they passed me a large bound booklet. It must have been 200 pages. The booklet was their operations report; a compendium of KPIs. I was asked if I could assist to determine new KPIs to address performance issues within the business. I flicked through the booklet. It was filled with red and green status indicators. Mostly red. I handed the booklet back to the client and apologised – I could not help him. I pointed out that the book already held more KPIs than I could possibly think of, and that the problem was not the absence of a specific KPI, but rather the absence of response to the existing KPIs.

To elaborate this point I turned to a page at random. The three monthly trend showed three months of ‘red’. This was largely the same for all the indicators on the page. The KPI’s had been indicating an out of tolerance position for months and nothing had been done about it.

The conversation then moved to discussing the purpose of KPIs and how to make them effective in the business.

Frequently when first implementing KPI’s, the mindset is to measure everything that moves; if it doesn’t move, kick it until it does and then measure it. Unfortunately, within a couple of months, many KPIs will be found to offer so little value that they are ignored. This sends a message to managers – that it’s all talk and no action – and the slide to indifference starts.

There is only one reason to implement KPIs and that is to manage behaviour. Equally there is only one type of behaviour in an organisation and that is human behaviour. Companies don’t behave, technology does not behave, plant and equipment does not behave. People behave. But what do KPIs measure. They measure customer satisfaction, mileage on trucks, lost sales, revenues, costs, throughput, quality and productivity. The list is endless.

The underlying principle of a KPI is – if you are going to manage it, then measure it, otherwise ignore it. There is no point in measuring something you are not going to manage. To address an indicator that is out of tolerance somebody somewhere in the organisation has to do something differently. Different to what they did last time because last time they created an out of tolerance result.

The difficulty arises when the KPIs are too broad in their definition. For example; sales are down so salespeople are told to ‘get out there’ and work harder. But does the salesperson know what to do differently to improve their sales figures. Clearly their current approach is not working. They need to ask themselves – what must I do differently to ensure I get a different result – or in other words how must I change my behaviour.

The astute sales manager will know exactly what behaviours are required to make even an inept salesperson successful and they will implement KPIs that evaluate this behaviour at the micro level. The focus will be on things that the manager can actually change. This could be number of calls made, length of calls, number of times the salesperson gets through to the decision maker, appointments set and the number of times a salespersons telephone rings.

The misconception is that sales managers are in sales, or more broadly, that managers of a function are in that function. Truth is they are not. They are in a separate function called management and managers behave differently to workers (staff). Therefore the KPIs that measure a managers’ behaviour must be different to those that measure staff behaviour – even if they appear to be in the same function.

The seniority between managers introduces additional complexities.

Consider the following four relationships.

The first relationship is between first line management and staff. A key feature of this relationship is that the two roles are different. Broadly, staff deliver technical output while managers deliver an administrative output. This requires that the manager use KPIs that measure ‘technical behaviour‘.

Mgt to Staff

The second relationship is between a manager who manages workers and his/her manager. 

Mgt to Senior Mgt

 The next level is the relationship between two levels of management where neither level is managing workers.

Senior Mgt to Exec Mgt

The key feature of the previous two levels is that management is managing management. This requires the use of KPI’s that measure ‘management behaviour‘. The KPIs for each level can largely be the same, separated by the degree of aggregation applied to the more senior of the roles.

The fourth level is the relationship between directors and managers. In many respects this relationship is similar to the first level of management. From a directors point of view, business management is ‘technical delivery’ whilst directors take more of a deterministic/directive role in the organisation in that they determine strategy, the governance model, the organisational risk appetite etc.

Exec Mgt to Directors

For each relationship set, what is the role of the senior manager. This is a complex question and not easily answered in a short paragraph. But in the spirit of this article I will say; it is to ensure that direct reports are behaving in a manner that maximises the likelihood of them achieving their KPIs.

Based on this definition, for each relationship, it is mandatory that the senior of the two managers knows what behaviour is required to maximise the business benefit possible from the subordinate management function, and what behavioural changes are required when the expected business benefit is not realised.

If the relationship between the KPI and behaviour is not understood or if a KPI cannot be manipulated through changes in a managers behaviour then it is likely that the wrong KPI is been used.

WHY ENTREPRENEURS NEED TO BATH

Entrepreneurship – the act and art of being an entrepreneur  (Source:Wikipedia).

When I was growing up my dad told me a lot of things. Most of it passed me by as I already ‘knew’ everything there was to know on the subject or because it was father telling me. There were however, two messages that stuck and have remained front of mind throughout my professional life.

The first was the story of how he came to run his own business. Basically it went like this….

I used to come home at night and lie in the bath and think about the problems I was dealing with at work. One day I  realised that it was my bath and if I was to worry about anyone’s problems while I was in my own bath, then they should be mine. While I am worrying about my company’s problems I am not worrying about my own”.

Based on this realisation he quit his job.

He went on to say

“Nothing gets you focused on your own problems like having two young kids and no income. Now when I lie in my bath at night I worry about my problems and how I am building a life for my family”

He tried real estate sales and a couple of other ventures. Then he met a chap who had some great software but no sales. Together they built a successful software services business and he retired with peace of mind that he had looked after his family.

Over the years, there were a few variations of the story and each time he would conclude with the assertion – when you lie in your bath at night, make sure you know whose problems you are thinking of.

The second message he left me with was that the word “creative” lacked a second “C”. That it really should be called creaCtive – a mix between the words ‘active’ and creative. There is no point in being creative if you do not act on your thoughts.

I consider these two bits of wisdom to be some of the best I have ever received.

The message is simple for would be self employed entrepreneurs – worry about your own problems and do something about them.

For the internal entrepreneur it gets a bit more complex. Bath time becomes the time when the manager steps back from the desk and actively considers how the function they are managing contributes to the overall business. Bath time is the time needed to reflect and look for the insights that other people are not seeing.  Looking at problems from different angles.

It is very easy and somewhat lazy to let the routine of day to day business suck you in and to allow yourself to be controlled by your diary. When I ask managers to show me the documents they use to manage their business process, they frequently refer me to their dairy. A dairy manages time, not the business. How often do you say or hear – “I don’t have time to think”. Does this mean that you don’t have time to actively evaluate your contribution to the business?

Without making time to work on the business a manager can find themselves moving from meeting to meeting, having significant discussions but not necessarily achieving much. This is where creactivity must meet entrepreneurialism. You cannot be entrepreneurial without action. You cannot be entrepreneurial and stay in the crowd.

 As an employee, acting on your ideas is difficult.  It is likely that a manager does not have the mandate to implement big ideas (as opposed to incremental change) and ‘making it happen’ will require an enormous amount of creactivity. Change management becomes vital for success. In this instance I define change management as the internal socialisation and lobbying of the idea. As a self-employed manager, you are entitled to implement whatever decision you choose. As an employed manager, you need the support of the senior executives or directors.

To be successful as an internal entrepreneur requires that the manager is very clear on the answer to the question – ‘am I addressing a symptom or a primary issue’?

But how do you know. If you are not part of the senior leadership team you may not be privy to the more fundamental issues facing the company.  In this case you need to be equally clear on the following change management questions:

  • who will support the idea for implementation
  • will take responsibility for the activity
  • what does success look like
  • who will gain from the experience
  • who will own the risk?

Being clear on the answers to these questions will significantly improve the way you communicate and market the idea within the company. You may ask yourself – why should I bother; I have a good idea and if the company is not interested then that’s the company’s problem, not mine.

Being and entrepreneur is not easy. If you are happy being a good employee, then turn up every day and do a professional job. Write your ideas down on an email and move on. If you want more, if you want to make a big contribution to the growth of the company,  then you need to look at the business as if it were your own and take time to think about the big picture. Bath time is a good time to do this. So is mowing lawn or any other time when you can be alone with your thoughts.

How do you start – draw a picture, write up a mock marketing brochure. Not a PowerPoint slide pack, but a proper A4 brochure that describes your idea. Keep it to one page. It is not a technical document. It’s a marketing document. If you can express your idea on one page and include a picture, then you are well on your way to making a great start to commercialising your idea.

IT’S ONLY KINKY THE FIRST TIME

Everybody on this planet knows that cutlery goes in the top draw. You can walk into any kitchen anywhere and know that if you need cutlery, then one of the top draws will have it. But not in my house. My wife looked at the dust, crumbs etc that kept falling off the counter into the cutlery draw and watched the family behaviour. She noticed that a person would open the draw, take out an item and frequently not fully close the draw. This meant that anything falling off the counter got caught in the draw.

Her solution was to move the cutlery to the second draw down so it could be closed with the upper leg or hip. The action would be unconscious. Your mind is focussed on what is happening on the counter and with unconscious multitasking you also close the draw. If for no other reason an open draw is in the way.

The solution works brilliantly. The draw is substantially cleaner. The problem is that I have over 40 years of training behind me that says cutlery goes in the top draw. It took me a week to accept that cutlery could live in the second draw. I also realise that despite all my consulting in and experience in change management I was resistant to change. My wife implemented the change, not through consultation and facilitated workshops but through active execution of strategy. On my part while I was not happy for a few days, I soon realised that the roof of my house had not fallen down and the quality of my days did not diminish. If anything my life span has probably extended through having cleaner cutlery.

If you can’t cope with change at home how do you cope with it at work. A quick scan of the job boards indicates multiple vacancies for change managers with job descriptions that variously include everything from process mapping and training to communications and stakeholder management depending on the definition being used. This got me thinking.

What needs to change for things to be different in an organisation?

I now take my cutlery out of the second draw at home, but I remain convinced that if I ever find myself living on my own, my cutlery will be in the top draw.

So my behaviour has changed but my mind hasn’t. My ‘boss’ told me to do things differently so I did. But given I am never the one to actually clean the cutlery draw I have not actively enjoyed the benefit.

To truly effect change in a business it is mandatory to engage the hearts and minds of the ‘changees’. Training staff to use a tool such as a newly implemented ERP solution gives them new skills, but does that not make them embrace change.

Popular literature often refers to the WIIFM – “what’s in it for me”. This is an important question. People change for two reasons; 1. The pain of maintaining the status quo is too high and 2. The pleasure foregone by not changing is too irresistible to forego. Any other point in this spectrum is unlikely to cause a person to want to change. The key word is ‘want’. They may have to change to keep their job, but that does not mean they want to. For change to be sustainable, people have to want to change. The old joke of – ‘how many consultants does it take to change a light bulb; Just one, but the light bulb has to want to change’ – is particularly relevant.

For most projects the pain and pleasure points are understood by the project sponsor and the senior managers. They have commissioned the project and understand the ROI. In the majority of cases, these managers are not directly impacted by the project. They receive the benefits but do not actively work in the business functions and processes that produce the benefits. Obviously it is not black and white, but in broad terms they consume benefit and do not generate benefit. For these managers it is very easy to embrace change. Quite possibly they don’t even have to change their behaviour at all.

For the staff who work in the business, it is a completely different story. They have to change and change means learning a brand new routine – learning a brand new set of habits. But the benefit of change to these staff is diluted. They sit towards the middle of the pleasure/pain spectrum and are unlikely to receive any tangible benefit from change so why bother changing. This brings us to the WIIFM question. An answer frequently heard is that you get to keep your job. Sure this is a nice outcome, but it is not one that is going to capture the hearts and minds of the staff.

To capture the hearts and minds you need to enlist the staff. Enlisting staff means creating an environment where they are willing to proactively break their comfort zone, to challenge their entrenched views and truly believe that things will be better as a result of the change. This may mean pushing them kicking and screaming over the edge so they realise that change was safe. Show them that it is only kinky the first time. The next time it is familiar – I have done it before and survived. Once you have done something once, you are more willing to do it again.

How do you enlist staff. The most important thing is to realise there is no such thing as ‘staff’ in the sense that ‘staff’ is a collective noun. There are people, individuals. Each person is different, with different agendas, hopes and fears and personal pressures. To treat them as a collective is to short cut the enlistment process. There really is no substitute for open communication, consultation and active engagement of the individuals.

I readily accept that it is frequently impossible to engage each person in a one on one environment. This does not defeat the point. Rather treat one on one as the benchmark and the process of getting there as a process of continuous improvement. Where you have a choice, err on the side of engaging with small groups.

I also readily accept that there will always be individuals who will not accept change under any circumstances. In this case, acknowledge it, move on and let the normal course of events for employee lifecycle management play out. As my mentor used to say; if you can’t change the people, change the people.

WHY CHANGE NEEDS POLITICALLY INCORRECT MANAGERS

Leadership of transformational change has to be one of the most difficult disciplines a manager can master. For mine, the biggest hurdle is the capacity of managers to be unreasonable for a sustained amount of time.

“If you argue with a fool, they will drag you down to their level and beat you with experience” – anon

Having worked in the discipline of change for over twenty years I have learnt a couple of things.

  1. 80% is frequently considered good enough
  2. Consultants need to forced out of their comfort zones
  3. Sponsorship is a misunderstood role
  4. A project is always stronger when there is a person who is willing to be politically incorrect.

As a consultant it is not difficult to lead the thinking at a client site. This is almost what you get paid for. But despite all the intellectual property a consulting firm has in the ‘cupboard’, the thought leadership provided by a consultant is frequently no better than the sum of their experiences. And because the client does not really know better, this leadership is treated as appropriate for the project at hand.

The frequently used consulting approach is to rely on experience and the deliverables previously prepared for somebody else on a different project. This material gets reworked, refreshed, re-presented and re-invoiced. Nothing fundamentally wrong with this as it is part of the value that consultants offer.

At this point in the project the client is impressed. They have a concept deliverable they can review and critique. The relationship is working well. But here’s the problem. The clients thinking becomes constrained by the tabled deliverable. They start to critique what’s there. The far more powerful critique of ‘whats not there’ is often missed.

Then the client is faced with a problem. How do they tell the consultant what they have produced is just rubbish. Not only is it rubbish, but they don’t want to pay for it either. Managers tend to be diplomatic and in the intimacy of a consulting engagement they don’t want to fracture the relationship. So they ask the consultant for changes and refinements and so start down the journey of accepting 80% of what they really wanted in the first place.

When the consultant runs up against a client who knows their own mind and who has a clear picture of the deliverable, then the consultant is forced to lift their game. No longer can they provide clever ideas on PowerPoint that could mean more than one thing depending on how the conversation goes.

But to find a client who knows their own mind is rare. Sure, every manager will say – I am my own person. This is true at a private or small group level, but less so in the public forum of meetings and written communications. In these arenas the manager become diplomatic and couches the message. This happens for a few reasons. 1. They are unsure of what the answer should be. They know what the consultant provided is wrong, but cannot easily explain why. 2. Their colleagues seem to be happy, so the manager starts to believe they don’t get it. They must be missing something. 3. If they speak out and cause the project to change and then it turns out they were wrong, it could be embarrassing or career limiting. 4. The project brief was given by more senior managers and the manager does not believe they have the authority or insight required to change the course of the project. If the project was off track, surely the senior manager would have done something about it.

It is unlikely that these 4 points can ever be fully mitigated and a certain diplomacy is needed otherwise the project will never deliver anything. But the primary mitigation is to ensure the sponsor is strong and willing to be unreasonable. As long as they are willing to tell the project team that the deliverables are unacceptable and to minimise any compromise from this position, then the project will remain healthy.

I quite like the advertisement for Nissan. It shows the product development team presenting the latest features to the senior executive. They are excited about what they have produced. He just looks at them and says “more”. No discussion. Just do better. Eventually they produce an output that works for the executive. They present the price. He says “less”.

It’s a great example of being unreasonable. Drive the team to get what you want. Anything less is to accept a deliverable that is “80%” complete.

I once listen to a long presentation by senior manager. At the end he asked if I agree. I said with 98%. His response was excellent. Basically it went – to hell with the 98% – the 2% is the bit of value.

This incident has stuck with me for nearly 20 years. The 2% is the only bit of value. The same applies to projects. It is not hard to get 80% complete, it is very hard to get 100% complete but because 80% looks like a lot, it is accepted and the last 20% – the bit with the real value, the bit that changes the project from adequate to exceptional – is poorly delivered.

The hard reality is that it will take almost the same effort to realise the value in the last 20% as it did producing the first 80%. Finishing anything always takes longer than expected and projects are no different. The sponsor is now also up against change fatigue, boredom and indifference from the project team and the subject matter experts who have been involved in the project. By now these people are ‘over it’ and they just want it to finish. They will have 100 reasons why close enough is good enough.

This is where the sponsor needs to be very strong and uncompromising. Drive the value out from this last 20%.

From the consultants’ point of view, they have spent their time chasing the 80% and the budget is almost fully consumed. They realise that delivering the 20% could lead to free consulting. They need to avoid this so they start to push a narrative that says the 80% was in fact the scope of the project and the 20% is extra. Chances are they even have a scope document that supports this position. The problem is that they articulated the 100% vision to the client but sold the 80% deliverable. They sold the augmented business benefit – the benefit the client could get if they did 5 other things to improve their business over and above buying the consultants solution. It is not an easy game. The client would not have bought the solution if they knew they needed to do the other 5 things as well. The consultant knows that their solution will deliver value to the client and that the client just doesn’t get it yet. They are confident that by the end of the project the client will see the see the value and be glad of the project. So the consultant sells the client what they are willing to buy and figures that they will work out the details later. This is all good until the project budget runs out. This brings us around a full circle – the sponsor needs to be very strong and uncompromising. Hold the consultancy to account. “Give me the value you promised”.

A feature of the last 20% is that it is likely to comprise the intangible deliverables of the project. It represents the answer to the – so what – question. The 80% project delivered an ERP solution – so what. The 80% delivered re-engineered processes – so what. Can the sponsor bank the benefit?

The role of the sponsor is to define the project and accept the deliverables and in my opinion to be absolutely dogmatic on ensuring the deliverables produce the bankable outcomes and benefits described at the start. But if it was easy, everybody would be doing it.

Is this post cynical – absolutely. Does it apply universally to all clients and consultants – absolutely not. But there is a little bit of it in all of us.