"The Art of Making Change Initiatives Stick"

Michael Roberto and Lynne Levesque

MIT Sloan Management Review

Summer 2005, pp. 53-60

This article focuses on identifying the antecedents and enabling processes that must be in place for change initiatives to succeed.

The four key antecedent conditions are:

• Chartering—This is defined as "the process by which the organization defines the initiative's purpose, its scope and the way people will work with one another on the program." Boundary setting is important to define the scope of the initiative, and team design provides the roles, responsibilities, norms, and ground rules for teamwork.
• Learning—This is defined as "how managers develop, test and refine ideas through experimentation before full-scale rollout." Primary methods of learning include discovery (through data and information gathering) and experimentation.
• Mobilizing—This is defined as "the use of symbolism, metaphors and compelling stories to engage hearts as well as minds in order to build commitment to the project." Storytelling makes the need for change concrete, and symbolic action reinforces the credibility and legitimacy of the message.
• Realigning—This is defined as "a series of activities aimed at reshaping the organizational context, including a redefinition of roles and reporting relationships as well as new approaches to monitoring, measurement and compensation." Performance management systems and job redesign are two important elements here.

The chartering, learning, mobilizing, and realigning processes enable employees to take ownership of the new procedures, as well as integrating and applying the key principles of the initiative. The enabling conditions take place in the following three contexts:

• Structural context—reporting relationships, monitoring and control systems, and reward and punishment systems. The structural context affects the behavioral choices made by employees.
• Procedural context—perceptions of procedural fairness and legitimacy as the new processes and systems are introduced. The procedural context affects the likelihood of accepting and adopting the change.
• Emotional context—fears must be allayed while enthusiasm is aroused. The emotional context affects how people come to grips with their new roles and responsibilities.

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"Manage Your Human Sigma"

John Fleming, Curt Coffman, and James Harter

Harvard Business Review

July-August 2005, pp. 107-114

The authors of this article argue that the employee-customer encounter is the key dimension of non-manufacturing success, and it is the "factory floor of sales and service." The Six Sigma approach has been very useful in manufacturing settings, but the authors say a modification is necessary for the employee-customer encounter with its less predictable human dimensions. Four core principles are identified in what the authors term the Human Sigma approach to managing and improving the employee-customer encounter:

• Emotions are very important in the employee-customer encounter-They affect judgments more than rationality does;
• Because of large variation at the individual and work-group level, the employee-customer encounter must be measured and managed locally;
• A single measure of effectiveness for the employee-customer encounter can be created, and it will correlate highly with financial performance;
• The organizational structure must often be adjusted, and the company must address hiring and promotion, as well as coaching.

In a study that examined 1,979 business units in 10 "best practice" employee-customer encounter companies, the companies studied outperformed their five largest peers by 26% in gross margin and 85% in sales growth.

The authors (all of whom work for the Gallup Organization) have developed a measure of customer engagement that combines customer loyalty metrics with items that assess the emotional nature (confidence, integrity, pride, and passion) of their customer commitment. Organizations that fall within the top 15-20% on this measure of customer engagement receive a 23% premium in profitability and revenue over the average customer.

Highly-engaged employees are also reported to "have higher levels of productivity and profitability, better safety and attendance records, and higher levels of retention...they're also more effective at engaging the customers they serve."

The authors claim that performance metrics must acknowledge the importance of engagement on the part of both customers and employees. However, the employee-customer encounter must be measured locally: Local business units that score high on both types of engagement metrics are 3.4 times more effective than low-engagement units in terms of total sales and revenue, performance to target and other measures. They are also about twice as effective as units that score high on one of the engagement measures but not the other.

The article concludes with three key points:

• Responsibility for Human Sigma must be centralized in a single organizational structure, with an executive champion
• The local manager is the single most important factor in local group performance
• Some companies will need to overhaul their HR practices

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"In Good Company"

Jill Jusko

Industry Week

July 2005, p. 16

Industry Week magazine has announced the 25 finalists for its 2005 "Best Plants" awards:

1. Blue Bird North Body Co. (Lafayette, GA)
2. Canadian Blue Bird Coach Ltd. (Brantford, ON)
3. Boston Scientific Corp. (Wayne, NJ)
4. Bowater, Inc. (Catawba, SC)
5. Camcraft Inc. (Hanover Park, IL)
6. Delphi Steering Systems, Plant 7 (Saginaw, MI)
7. dj Orthopedics LLC (Vista, CA)
8. Gardner Bender Inc. (Alexandria, MN)
9. General Cable (Indianapolis, IN)
10. General Cable de Latinoamerica, S.A. de C.V. (Tetla, Tiaxcala, MX)
11. General Cable Corp. (Moose Jaw, Saskatchewan)
12. The HON Co. (Cedartown, GA)
13. Lear Corp. (Sileo Guanajuato. MX)
14. Lear Corp. (Liberty, MO)
15. Lockheed Martin Missiles and Fire Control (Archbald, PA)
16. Magee Rieter Automotive Systems (Bloomsburg, PA)
17. Maytag-Amana Refrigeration Products (Amana, IA)
18. Maytag Cleveland Cooking Products, Plant 2 (Cleveland, TN)
19. National Gypsum Co. (Gibsonton, FL)
20. Plastipak Packaging (Medina, OH)
21. Raytheon, Forest Consolidated Manufacturing Center (Forest, MS)
22. Solectron (Columbia, SC)
23. Storage Technology (Bermuda) Ltd. (Ponce, Puerto Rico)
24. Thomas & Betts Corp. (Athens, TN)
25. TRW OSS Mexican Operations (Reynosa, Tamaulipas, MX)

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"Making R&D Lean"

Donald Reinertsen and Leland Schaeffer

Research-Technology Management

July/August 2005, pp. 51-56

While there are some similarities between manufacturing and R&D, the authors note four main differences to be taken into account when creating lean R&D:

• All variability is bad in manufacturing, and reducing variability improves the process. R&D cannot eliminate all variability in its function without reducing all value-added.
• Manufacturing adds value to physical objects, that can only be in one place at a time. R&D adds value to information, which can be in multiple places at the same time.
• R&D must constantly adapt to emerging information, while manufacturing has more fixed requirements.
• Taking risks is crucial in R&D, so mistakes are more easily tolerated.

Given these differences, the authors consider ten lean principles and propose adaptations for R&D:

• Reduce batch sizes—In R&D, smaller batch size means that information is released more frequently;
• Make the process tolerate all necessary variability—R&D tries to capture the value of "good" variability, while minimizing the cost;
• Focus on maintaining flow instead of perfect planning—R&D must respond flexibly to emerging information.
• Pull, don't push—"Daily assignments of goals and resources are made in response to the current status of work."
• Create fast, powerful, feedback loops—"Researchers feel more in control, are more willing to take risks, and are more inclined to use initiative when unproductive paths can be quickly truncated."
• Requirements are seldom required—"In R&D we must be willing and able to modify our goals in the presence of compelling new information."
• Invest in flexibility—"Preparation involves broadening skill sets before they are needed."
• Achieve adequate failure rates—"Lean R&D manages risk by accepting higher 'efficient' failure rates and limiting the downside consequences of these failures."
• Understand the economics of waste—"...the relative economic importance of wasted cycle time, compared to wasted expenses, can be over 200 times greater in R&D than manufacturing."
• Control the right parameter—Understand the critical path and control the parameters that may interfere with the path.

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"Why Major Lean Transformations Have Not Been Sustained"

John Lucey, Nicola Bateman, and Peter Hines

Management Services

Summer 2005, pp. 9-13

This article reviews studies on failed change efforts.

One study interviewed successful change consultants, academics with considerable experience working in manufacturing, and international business authors. They were asked to identify the reasons that change initiatives fail.

The primary reasons for failure in the "Unfreeze" (Plan and prepare) phase were:

• Lack of clear executive vision and leadership
• Lack of effective communication strategy
• Failure to create a sense of urgency
• Poor consultation with all stakeholders
• Failure to recognize company history and culture
• Change ambition outstripping reality

The primary reasons for failure in the "Change" (Transact the change) phase were:

• Absence of dedicated and fully resourced implementation team
• Lack of structured methodology and project management
• Failure to plan and manage quick wins
• Failure to fully mobilize change champions
• Lack of sympathetic HR policies
• Using an outsider to transact the change

The primary reasons for failure in the "Refreeze" (Embed the ownership) phase were:

• Failure to monitor and evaluate the outcome
• Failure to continually recognize and celebrate success
• Failure to engage employees

Though the article concludes that the above reasons are the culprits in Lean initiative failures, it does not provide clear evidence that these results also apply to Lean transformation failures.

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People and Change

John McNeil, GP Deltapoint
 

Three of this month's articles directly address the human aspects of change. Lucey et al. list ways in which we can anticipate that our initiatives may fail. Unfortunately, I'm sure that we all recognize many of these patterns in programs we have been involved in recently. The conclusion we draw is that we must act consciously to develop clear executive visions, an effective communication strategy, a sense of urgency etc. Of course. But how? Fleming et al. show us that service organizations live or die at the local customer-employee interface and that loyal customers and productive employees are created when both are engaged in their work and in their interactions. The conclusion we draw is that we must engage employees deeply. Of course. But how? Roberto and Levesque point out that we should work before we begin an initiative to define how people will work with one another during our effort, how we will experiment and learn, how we will tell stories about our initiative, and how we will restructure to accommodate the new reality. They also point out that we must work after we think the work is over, to structure, monitor and reward in new ways, to establish legitimacy and allay fears. The conclusion we draw is that this finally confronts us with the magnitude of work involved. It also directs us to the how.

Another way that GP Deltapoint has found useful for driving people change is Thomas Gilbert's Behavior Engineering Model. His six-part model provides us with a way to systematically and systemically identify barriers to individual and organizational performance and then remove them. Much as Roberto and Levesque propose, the environmental must support information, resources and incentives for behavior change. This must be done before the initiative is launched, and in that order. Balancing this must be the individual's motives, capacity and knowledge. These will be developed over the course of the change and then refined as the initiative is standardized and sustained.

Gilbert's model is not trivial or easy to implement, but it gives us pointers on how to avoid poorly sustained initiatives, how to engage employees and how to make change stick.

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