Does a change capability matter?

Good change is good for business

McKinseyQiconI think the heading answers the question! A recent survey reported by McKinsey entitled ‘Why Implementation Matters‘ reports on the effect that strategy implementation has on a company. Strategy implementation is quite clearly stated as the ability to implement major change programmes. As you would expect with McKinsey they looked for the ability to deliver sustainable financial benefits from change aligned with strategy.

The results are based on a survey of 2230 senior executives across a wide geography and industry base carried out early in 2014. The results are startling, Comparing companies in the bottom quartile of change performance with those in the top they find:

  • Companies in the top quartile are 4.7 times as likely to report a successful change initiative.
  • Companies in the top quartile score 30% higher on a series of financial measures.

Looking at the whole process of doing change and realising benefits McKinsey found that good implementers (top quartile) consistently achieve higher value than their bottom quartile colleagues. Value leaks at each stage of the process as opportunities are not realised and circumstances change. However, at each stage, having a superior change capability enabled those companies in the top quartile to seize more value than bottom quartile companies, leading a double the financial benefits being realised. As shown in this diagram.

Stages of valueWhat makes a difference?

Being good researchers, the McKinsey authors also asked respondents about their implementation (change) capability. They found that top quartile companies significantly outperformed bottom quartile companies on all seven of their capabilities (which says more about the selection of capabilities as a means of identifying key performance indicators). However, the researchers identified three areas that respondents reported as being the most important:

Ownership and commitment

This is consistent with the Prosci research on top success factors in change which identifies senior management support as the top factor by a wide margin. This is about senior managers showing their commitment in practical hands-on ways, especially giving time and attention to the change when needed. Followed by the senior managers leading by example with the new behaviours.

Prioritisation and planning

Using tools, such as value-driver trees, senior and middle managers focus on those activities which provide the best value to stakeholders. This means balancing the demands of business as usual as well as prioritising different change initiatives using a portfolio approach. This recognises that one of the most precious resources in many organisations is people’s time and where they focus their attention.

Accountability

Using effective performance monitoring, managers continuously track performance against targets for individuals and teams. This makes the implementation of prioritisation and planning essential and leads to accountability for decisions about allocation of time and attention.

A Conclusion

McKinsey say that whilst many executives lament the capability of their organisation to deliver change; there are many companies that are doing better and there are good routes to improvement.

What are you waiting for?

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