Making change a strategic capability
I have been working on a capability model for change recently and then preparing to teach a course on strategy as part of a management qualification. Putting the two together brings me to a conclusion that the one thing an organisation has to be able to do to survive is to be good at change. Michael Porter points out that operational excellence is necessary to have a profitable business but not sufficient. A strategy is necessary to fit the business into its competitive framework. However, having a strategy is no good if you can’t execute it effectively.
An existing organisation not only has to be able to change faster and better than the competition, it has to have changed to be ready to take on new entrants who arrive already set up with the optimal resources to compete in their market. This is especially true in markets where technology is key to success. A change in technology can (and often does) give the new entrant a significant advantage that the existing companies rarely overcome. As shown by Clayton Christensen, very few incumbents have survived a breakthrough in technology.
Building a change capability
Building a capability model shows just how hard it is for an organisation to become good at doing change. To be really excellent at it will take some time and would reflect the ability of the whole organisation to manage itself effectively. Essentially these are the steps an organisation needs to go through to achieve a capability to change that would make change a strategic advantage:
- First the organisation (and that mostly means the senior managers) has to realise that a change capability is a strategic asset and that they don’t have that capability. This means the organisation is probably doing change without any thought, coordination, or concept that it isn’t working. This first step is equivalent to moving from unconscious incompetence to conscious incompetence.
- Moving through conscious incompetence to conscious competence takes 3 more steps. The first step involves parts of the organisation seeking competence, usually driven by a few heroic individuals. These individuals help to uncover the depth of the incompetence and raise awareness at the senior level to drive the whole organisation to do something.
- The next level is to align the whole organisation onto a single standard set of processes, tools and information management for change (lets call it a method, though it is often more than that). The method has to be agreed on, rolled out, and taken on board by everyone. Inevitably this will take some time, there will be pockets of resistance, and results will be patchy. This is where training will be essential to the alignment.
- Improvement in the use of the method can only occur if the organisation measures results from change, tracks the results, and strives to deliver the results to agreed targets (objectives). This step is almost impossible to do unless the whole organisation has an established performance management culture. Hence many organisations without such a level of management capability are unlikely to be good at change. Without measurement and performance management it will be impossible to achieve the consistency of change capability that enables the whole organisation to step up to delivering a strategy.
- An excellent change capability arises when the method itself is subject to performance management which enables continuous improvement. At this level of competence staff are self aware and reflective on their own as well as organisation performance with a view to improvement. On reaching this step the change capability is embedded, unconscious competence, and becomes self sustaining as a strategic advantage.
Only at this last stage will an organisation have a sufficient change capability to match new entrants with new technology. No wonder so few companies actually survive a technology innovation. And, of course, moving through these steps is itself a strategic change!
If you would like to know how to discover where you and your organisation are on this journey, and what you can do about about getting better at change then try our organisational change capability questionnaire or contact us.