Question

In order to manage change and implement change strategies, it is important to avoid implementing irrelevant or random methods and try to focus on a suitable plan of action. Change management is an ongoing process that takes time, expertise, dedication and efforts to implement and run. It requires the involvement of people or staff of the company and may also result in these people being affected by the changes too. Before adopting one of the many effective and popular change management approaches and models, an organization must first figure out why it needs the changes and how will the changes benefit it.

Q.1 Demonstrate the most important major approaches, models, cost and risks of change management

((No copy-paste, please))

Answer 1

Ans : For your business to survive it will need to evolve. For it to evolve, you need to make changes. Without a change management model, the success of those changes is up to nothing more than hope and dumb luck.

What is Change Management?

Change management is a proven methodology used to help organizations successfully implement a substantial transformation or set of changes. It is a comprehensive and integrated discipline to help individuals, teams, and enterprises as a whole to adjust, adapt, and thrive in a future state that is an exponential leap from the current state.

The change is typically transformational and broadly encompasses capabilities, structure, operating model, processes, and people.

Major Approaches & Models of Change Management

While there are many change management models, however we need to know about the Major Approaches & Models of Change Management.

The following are some of the best strategies and approaches to implement change management.

1. Lewin’s Change Model

2. McKinsey 7 S Model

3. Kotter’s change management theory

4. Nudge Theory

5. ADKAR model

6. Bridges’ Transition Model

7. Kübler-Ross Five Stage Model

While there are many change management models, most companies will choose at least one of the following three models to operate under:

1. Lewin’s Change Management Model
2. McKinsey 7-S Model
3. Kotter’s 8 Step Change Model

1. Lewin's Change Management Model is one of the most popular andeffective models that make it possible for us to understand organizational and structured change.

This change management model was created in the 1950s by psychologist Kurt Lewin. Lewin noted that the majority of people tend to prefer and operate within certain zones of safety.

His model consists of three main stages of change which are: unfreeze, change and refreeze.

1. Unfreeze - Most people make an active effort to resist change. In order to overcome this tendency, a period of thawing or unfreezing must be initiated through motivation.

2. Transition - Once change is initiated, the company moves into a transition period, which may last for some time. Adequate leadership and reassurance is necessary for the process to be successful.

3. Refreeze - After change has been accepted and successfully implemented, the company becomes stable again, and staff refreezes as they operate under the new guidelines.

While this change management model remains widely used today, it is takes time to implement. Of course, since it is easy to use, most companies tend to prefer this model to enact major changes.

2. McKinsey 7-S model

The McKinsey 7-S model offers a holistic approach to organization. This model is created by Robert Waterman, Tom Peters, Richard Pascale, and Anthony Athos during a meeting in 1978, has 7 factors that operate as collective agent of change:

1. Shared values

2. Strategy

3. Structure

4. Systems

5. Style

6. Staff

7. Skills

The advantages of the McKinsey 7-S Model are:

- It offers an effective method to diagnose and understand an organization.

- It provides guidance in organizational change.

- It combines rational and emotional components.

- All parts are integral and must be addressed in a unified manner.

The disadvantages of the McKinsey 7-S Model are:

- When one part changes, all parts change, because all factors are interrelated.

- Differences are ignored.

- The model is complex.

- Companies using this model have been known to have a higher incidence of failure.

3. Kotter’s 8 Step Change Model

This model was created by Harvard University Professor John Kotter, causes change to become a campaign. Employees buy into the change after leaders convince them of the urgent need for change to occur.

There are 8 steps involved in this model:

1. Increase the urgency for change

2. Build a team dedicated to change

3. Create the vision for change

4. Communicate the need for change

5. Empower staff with the ability to change

6. Create short term goals

7. Stay persistent    

8. Make the change permanent

Significant advantages to the model are:

- The process is an easy step-by-step model.

- The focus is on preparing and accepting change, not the actual change.

- Transition is easier with this model.

The disadvantages of the McKinsey 7-S Model are:

- Steps can’t be skipped.

- The process takes a great deal of time.

It doesn’t matter if the proposed changed is a change in the process of project planning or general operations. Adjusting to change is difficult for an organization and its employees. Using almost any model is helpful, because it offers leaders a guideline to follow, along with the ability to determine expected results. This is helpful because change is difficult to implement and manage.

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Major cost and risks of change management

What is change risk ?
A risk in a project sense is an outcome that causes a change whether that change has a benefit or adverse effect on the running of a business. Each change made is a risk.

The main risks with change can be summarized as:

· People

Mapping out Stakeholders and where the fall in relation to the change project is essential to the ‘people’ aspect. Identifying their concerns, needs and wants against perceived benefits and actionable outputs of a change project is essential.

Eg., In change projects of Afghanistan where the stakeholders were the NATO Coalition Forces, Foreign Government Organisations, Non-Government Organisations, the United Nations, Charitable Organisations and the Afghan Government, with cultural and linguistic issues to overcome. Therefore getting everyone to agree on policy with actionable outputs and benefits can be challenging.

Ensuring that the change team has the correct structure, leadership and sponsor support assists greatly with a change project. Without this support to the change team they will become side lined as personalities and egos take over from identified benefits and improvements leading to a high risk of failure of the change project.

· Benefits

Detailing the perceived benefits and using this as the reasoning behind any investment in a change project will present its own unique sets of risks, issues and problems. This is where you have hung your hat to say ‘if we do this then the benefits that we will see will be’. However if the benefits do not materialise then you’re in trouble. Mapping out primary and then secondary or even tertiary benefits is a useful task, this allows the change manager to map out his benefits realisation time line and have a benefits management strategy right from the start which can be then used to firstly justify the change project and then used to brief senior management on progress. It has the benefit of being a tool that can be used to keep a change project on track.

· Processes

As with any change the way that business activities are conducted will change. It is essential that business processes are modified and updated to keep pace with the change. This is a boring task but without it any benefits will be quickly lost as the ‘people risk’ aspect of a business goes back to what they were used to and were more comfortable with. Consider downloading our white paper on boosting productivity for your business to find out more.

· Management

An effective risk management strategy set up and planned with risk management documentation is key. Even a simple risk scoring policy that allows risk to be prioritised is better than nothing. Ensuring that the correct level and fidelity of data made available to enable change greatly assists with the management and understanding of risk.

All risk, issues and problems must be identified, understood, allocated, managed and mitigated to ensure a successful change project outcome.

What is change cost ?

A critical concept that motivates full-lifecycle testing is the cost of change. The below figure depicts the traditional cost of change curve for the single release of a project following a serial (waterfall) process. It shows the relative cost of addressing a changed requirement, either because it was missed or misunderstood, throughout the lifecycle. As you can see the cost of fixing errors increases exponentially the later they are detected in the development lifecycle because the artifacts within a serial process build on each other.

For example, if you make an requirements error and find it during the requirements phase it is inexpensive to fix. You merely change a portion of your requirements model. A change of this scope is on the order of $1 (you do a little bit of retyping/remodeling).

If you do not find it until the design stage, it is more expensive to fix. Not only do you have to change your analysis, you also have to re-evaluate and potentially modify the sections of your design based on the faulty analysis. This change is on the order of $10 (you do a little more retyping/remodeling).

If you do not find the problem until programming, you need to update your analysis, design, and potentially scrap portions of your code, all because of a missed or misunderstood user requirement.This error is on the order of $100, because of all the wasted development time based on the faulty requirement.

Furthermore, if you find the error during the traditional testing stage, it is on the order of $1,000 to fix (you need to update your documentation and scrap/rewrite large portions of code).

Finally, if the error gets past you into production, you are looking at a repair cost on the order of $10,000+ to fix (you need to send out update disks, fix the database, restore old data, and rewrite/reprint manuals).