News

Culture in the context of mergers and acquisitions

Posted on July 31, 2017 in News - 1

Academic research illustrates that half of all merger and acquisition (M&A) activities have failed to create lasting shareholder value. Studies on post-merger stock performance reveal that since 1990, in the two years after their deals closed, nearly 50 percent of the largest M&A transactions failed to produce total shareholder returns greater than their industry peers. Only 30 percent outperformed their industry peers by 15 percent or more. After five years of trading under the new structure, 70 percent of the survivors were still chronic under-performers in their industries. These abysmal statistics are the result that of the fact that, notwithstanding in most cases appropriate measures were taken to identify and quantify legal and financial areas of opportunity and risk, detailed measurement and mitigation of organisational risks emanating from culture were largely ignored.

The infamous case study: Daimler Chrysler

In the field of enterprise business transformation of which M&A work forms a sub-set, the Daimler Chrysler merger is considered the case study that best illustrates the erosion of shareholder value based on the neglect of investigating, quantifying and de-risking corporate culture in the context of complex mergers or acquisitions of large-scale organisations.

In 1998, European luxury car manufacturer Daimler-Benz merged with the U.S. auto-giant Chrysler to form DaimlerChrysler for a price tag of $37 billion. It appeared the perfect industry match. When car sales were on a high, what made more sense than to control both the high-end and the mass market in the auto trade?

Initially, executives of the two companies sold the merger as a “marriage of equals”. This was untrue and became apparent immediately. Daimler-Benz bought Chrysler and treated the company as a subordinate, not a partner. This domination by one partner over the other filtered down from board level to middle management and permeated the entire new organisation.

Company leadership failed to sell their employees on a company vision for the future, and they failed to demonstrate the necessity of the merger and the long-term strategic and commercial benefits of the deal.

Key mistakes made with respect to this transaction are as follows:

• Company leadership did not sufficiently understand the risk of two different professional and social cultures coming together. Mercedes was universally perceived as high-end and premium brand, while Chrysler, Dodge, Plymouth and Jeep were considered by the Germans as a poorer, blue-collar relation.
• Employees at the two companies enjoyed very different wage structures, were organised in very different organisational structures and operated with different corporate value systems. Chrysler and Daimler-Benz’s brand images were founded upon diametrically opposite premises. Chrysler built an external brand centred on American excess, and encouraged a culture of assertiveness and risk-taking, while production was focused on cost-control and ensuring value for the customer. Mercedes-Benz, in contrast, exuded disciplined German engineering coupled with uncompromising quality, which at times lead to cost over-runs and inefficiency. As a result, a culture clash existed as much in the approach and practice to production as it did among employees.
• This fueled an undercurrent of tension, which was amplified by the fact that American workers earned appreciably more than their German counterparts, sometimes four times as much. This is not an uncommon factor that requires careful attention in the context of M&A integrations but was not sufficiently identified and flagged as a major pre-merger risk and was not included in the integration strategy of the two companies.
• Political dynamics at a leadership level exacerbated these tensions. Of particular significance was a sense that rather being a “marriage of equals”(the slogan used incessantly during the deal-making phase of the transaction and on its announcement), company executive leadership was not sufficiently advised or capacitated to lead the creation of a joint project, which would have seen knowledge and skills being exchanged with a subsequent building of camaraderie and mutual respect amongst workers. (This is in sharp contrast to the unlikely pairing of Japanese Nissan and French Renault that has proved that these cultural challenges can be overcome).
• Differing product development philosophies continued to hamper joint purchasing and manufacturing efforts as well. Daimler-Benz remained committed to its founding credo of “quality at any cost”, while Chrysler aimed to produce price-targeted vehicles. This resulted in a fundamental disconnect in supply-procurement tactics and factory staffing requirements.

These various factors had an immediate and direct impact on the performance of the business and without going into unnecessary detail, would result in ongoing changes to the leadership structure of the company and the erosion of shareholder value. Eventually, the nine-year, $37 billion “merger” of Chrysler and Daimler-Benz was dissolved in 2007 for a mere $7.4 billion.

What is culture?

Culture within organisations can appear to be a nebulous concept, however the literature and research in this field has increased substantially in the past 25 years and it now understood to be a critical aspect for consideration within the context of commercial transactions.

We define organisational culture as the set of assumptions and beliefs that employees hold collectively within an organisation, that give rise to patterns of behavior. This behavior in turn defines how work is conceived, conducted and produced and affects all aspects of the corporate value chain from innovation to client-centricity. As a result, understanding the culture of an organisation is critical to building a risk profile in the context of a merger or acquisition. As with the Daimler Chrysler example, where two organisations have different cultures this needs to be adequately identified and addressed. This notwithstanding, working with culture is a complex exercise that requires years of skill and experience, and differing culture in some cases can in fact be a very positive factor in the context of a transaction.

The factors that CCG is most interested in when first engaging with a client around issues of culture, pre and post-merger integration and risk analysis in this context are as follows:

1. Who is the leadership of each company, how might we understand their individual personalities and how do they work together as a team? We are particularly interested in the character of the CEO. Is she the type of person who feels comfortable with change, is she charismatic and able to deliver a strong narrative about a transformation or transaction in a way that inspires others (especially during hard times), and is she open to examining sometimes-difficult dynamics within the company?
2. How does the leadership across corporate divisions interact, what are the politics at play between divisions and between executives, general managers and senior managers? Critically, are these various levels of leadership able to engage with one another and manage conflict well, and are minority and dissenting voices tolerated and encouraged.
3. What is the general feeling or tone within the organisation? Are employees engaged, enthusiastic and optimistic about the future consequences of a merger or acquisition and potential subsequent changes in the company structure?
4. Where is power located in the organisation and who might serve as key change agents within the context of a large-scale business transformation, merger or acquisition? These individuals are often not the most senior members of an organisation, but by virtue of their organisational influence and knowledge, are able to wield significant power. It is imperative to identify these individuals early in the piece, listen to their advice and win their support.

The more complex work begins when we overlay the answers to the questions above (and there would be many more we would examine) from both companies and begin to dissect the interdependencies and potential areas of conflict or disconnect between the two.

How do we actually measure culture?

Fortunately we have good tools and methodologies for producing evidence-based analysis of organisational culture.

Some of these methodologies include interviews, focus groups, workshops, online assessments and road shows. Each of these techniques provide the skilled consultant with invaluable information about the mood and tone with each organisation concerned, common areas of concern, and more subtle dynamics that invariably play out at a leadership level.

CCG is accredited at Level 2 on the globally leading culture assessment tool Barrett Corporate Transformation Tools. We use this online assessment to measure the thoughts, enthusiasm and concerns of employees in order to build a picture of the corporate culture as a unified whole, as well as the micro-cultures that invariably exist in the system as well.

We particularly like Barrett because in the context of M&A we can measure the personal values of employees, the company as they currently see it, and what they aspire to in the future. The information produced by the survey is extremely accurate, quick for employees to complete (20-30 minutes), well displayed graphically, easy to understand and cost effective. Careful analysis of these results allows the consultant to build a clear picture of areas of overlap (a positive) or divergence (potential risk).

CCG’s position is that integration as an operational and strategic concept is key for the successful delivery of a complex transformation program. Production integration achieved through strong organisational commitment to the program as a whole, alignment between senior leadership around the need for the program and its intended outcomes, a strong transformation office that is sufficiently resourced to stand up and run the various portfolios of work beneath it, and transformational leadership that is both highly experienced and committed, with an eye for complexity and the gravitas to resolve it, are all key factors for M&A transactions to succeed.

For more information on Barrett and how we use this powerful tool, please see our website at https://changeconsultinggroup.com/change-management-services/ccg-analytics/.

The solution to ensuring that these mistakes are not made

The Change Consulting Group developed System7™ as a system for examining areas of potential synergy and risk in the context of a merger/acquisition, which allows both parties to determine whether to proceed with the transaction and on what basis. It also provides for a detailed set of recommendations that would mitigate risk where this is identified.

What we have consistently found to be true in the context of M&A transactions is that the amount of time spent on the legal and financial aspects of doing a deal far outweigh a deep understanding of the organisational factors which might give rise to risk to the transaction. This is understandable to some degree because the latter are often far more difficult to quantify and leadership usually hope that once a transaction is consummated, the rest will fall into place. This is a critical mistake and will invariably result in total deal failure, or at least failure to realise intended ROI on the transaction. The Daimler Chrysler example above we believe well illustrates this.

The insights gained from our analysis can be used to determine the commercial value of a target company, communicate to the respective boards of directors and senior leadership teams in a productive way and inclusive way, build a successful bidding strategy, manage negotiations (particularly during rocky times), and accelerate the integration of the two organisations with minimum disruption and maximum return.

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Coaching for Performance

Posted on August 31, 2015 in News - 1

CCG is very proud of the work done by our partner company, The Coaching Company, and we are pleased to announce the launch of their latest and updated version of the Coaching for Performance workshop.

This extraordinary product is now in its 12th year of delivery and continues to add value to the daily work of over 1,000 graduates.

Please find following a short description of the workshop and information on this incredible learning opportunity.

For more information please call us today on 021 461 0802 or email [email protected]

Please forward to your HR colleagues for their information.

Who should attend?

Coaching is an essential activity to help improve, enhance, or develop an employee’s workplace skill levels and performance. Coaching for Performance is an ideal course for anyone who needs to use effective coaching skills to develop others, whether they are line managers, internal coaches, or HR professionals.

Course overview

Coaching for Performance is an entry-level workshop that introduces basic coaching skills in the context of your leadership framework and in line with company strategy regarding the use of coaching as a management style.

Coaching for Performance is delivered by a highly experienced facilitator, who uses full colour slides and a 70-page workbook to ensure learning is exciting, easily adopted and deeply embedded.

Delegates are not expected to have any prior coaching experience or training.

Delegate feedback

Clients who have gained tremendous value from this course include Coca-Cola, South African Breweries, NGK Ceramics, South African Gymnastics Federation and Rand Refinery.

Loved it – very educational and informative!” Manager at SAB

“Excellent.” Executive at SAB

“A must for every line manager.” Line manager NGK Ceramics

“Awesome course – the material is brilliant and can be used daily!” Senior manager South African Gymnastics Federation

The workshop will cover

  1. The history of coaching, definitions of coaching, how coaching might be used in the workplace, and differences between coaching and mentoring;
  2. An overview of a your performance management/review systems, and how coaching should be utilised when conducting performance-related conversations;
  3. An introduction to coaching as a leadership methodology, including the tools, skills and models a workplace coach requires in order to conduct performance related workplace conversations with direct reports;
  4. Ongoing experiential practice of the tools, skills and models introduced on the workshop, to ensure delegates have a high level of skill on completion.

This two-day workshop will provide delegates with a sound theoretical overview of coaching as a leadership methodology, a description of the key skills of a workplace coach (including asking good questions, listening, providing feedback appropriately, and setting action-oriented goals), and an introduction to the GROW coaching model.

Delegates will be given lots of opportunity to practice these skills and models on the workshop and to show competence in this regard.

Critical outcomes of this workshop include

  1. Prepare for an effective one-on-one coaching session with his or her manager/direct reports;
  2. Competently conduct one-on-ones and performance reviews using the steps and skills of the GROW coaching model;
  3. Coach through challenging situations, for example, where a line manager is not able to reach agreement with a direct report on a performance rating score.

An interactive, “action learning” style is used throughout (based on coaching theory with a focus on allowing plenty of time for delegates to practice applying tools so as to imbed learning).

Case study

This workshop was delivered for over seven years (2005-2012) at South African Breweries (SAB) to over 600 managers and executives. The Coaching Company linked coaching as a workplace performance enhancement tool to SAB’s internal performance management process so that on a monthly basis managers were using coaching to have performance related conversations with their direct reports and ensuring that workplace challenges were early identified and remedied.

About The Coaching Company

The Coaching Company has been leading the South African coaching industry for 15 years. We have worked with dozens of companies and non-profit organisations and coached and trained thousands of delegates.

Coaching for Performance was first launched in 2005 to massive acclaim from over 1,300 delegates. It has been run in the FMCG, mining, automotive and sports sectors of the South African economy.

Sign up your organisation for a pilot today. Call us on 021 461 0802 and benefit from South Africa’s best training product in coaching for performance!

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Questions about change implementation

Posted on June 27, 2015 in News - 0

Dear friends and colleagues

We are often asked ad hoc questions about change and strategy implementation, and we either cannot answer these in full, or our answers are not documented for the benefit of others.

So we have decided to start a new programme on our blog called Your Questions.

We would like to invite you to ask us as many questions on social, economic, political or organisational change as you wish.

No topic is too narrow or broad.

Please let us have your questions in the comments box below, or email us on [email protected]

Please let us know if you would like us to attribute the question to you. If you would, please provide any of the following details: your first name, your surname, your professional designation, the organisation you work for.

We look forward to hearing from you!

The CCG team

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The Complexity of Contracting

Posted on March 20, 2015 in News - 3
change consulting services

Have you ever entered into consulting work without a contract? CCG stresses the importance of the contracting phase in any consulting engagement.

This is important for three reasons:

  1. It helps to establish a relationship between the two parties;
  2. The experience provides both parties with the opportunity to discuss expectations and outcomes sought from the consulting engagement;
  3. If done in a good way, negotiation of fees can begin to build a sense of partnership and collaboration between the parties. A good agreement should be balanced in such a way that both parties feel that they are receiving fair value for what they are providing or receiving in exchange for such value.

A very common cause of failure for change engagement is misalignment or lack of agreement around fees upfront. In many cases consultants do not take the time to discuss fees in full with their clients because they fear that in some way this process will alienate their client. What results from a lack of alignment around fees is that this comes back to haunt the consulting engagement in the future, when budget is no longer available for the engagement to continue or either party disagrees on what is to be provided and for what fee. In the same way, a change request process is critical to allow for additional professional fees to be paid, should the scope of the engagement change.

As a result of these points, we would very strongly stress the need to have in-depth and sometimes fairly protracted discussions around professional fees.

These discussions should include the following:

  1. What is the appropriate hourly rate or project fee that will be charged for the piece of work undertaken by the consultant or consulting firm?
  2. In very clear terms, what scope does the project fee cover in total?
  3. What budget should the client expect to make available in the event of changes to the project scope?

It is imperative for consultants to keep in mind that very often our clients have no idea what is required for the total and successful delivery of the consulting engagement concerned. They need guidance in this regard from consultants. If for some reason the consultant is unsure of what is required for delivery because for some reason the project is emergent in nature, then he or she should say so upfront and provide a fee mechanism that takes into account and manages the risk that such uncertainty introduces into the consulting relationship.

Please remember that consulting is a collaboration between two parties, the consultant or consulting organisation and the client organisation and at the basis of this relationship is trust and the ability to work together. Fees are a common area of distraction or confusion for a consulting relationship and therefore it is imperative that this is taken care of right upfront.

What we would suggest is as follows:

  1. Draw up a clear proposal that describes a detailed scope of the proposed engagement; the methodology that you plan to follow with respect to the engagement delivery; project delivery dates and timelines; and the outcomes that the client should expect to see in the future;
  2. Request an engagement meeting with your client to discuss the proposal and talk about the various aspects of the engagement. What are both parties expectations? What do you hope to achieve together and do you feel that the right quality of relationship, clarity and dialogue exists to achieve these ends;
  3. Continue to talk through these areas of disagreement and/or risk until there is absolute clarity in these areas and we would strongly suggest that you do not start the consulting engagement until these various points are agreed to and documented.

Contracting is a fraught and often difficult area for consultants who are either not sufficiently experienced in the contracting around and negotiation of fees or are hesitant to enter into such negotiations because they feel that they might damage the relationship with their client. It must be said that the same goes for many client organisations.  Many of our clients do not have a strong legal background, nor the ability to read complex proposal documents.  They may also feel uncomfortable with discussing some of the finer points of such a proposal or internal organisational politics that might have a bearing on the consulting assignment you have been requested to deliver.

Regardless, it is imperative for all parties that such difficult topics are surfaced and resolved in the best interests of all parties and towards a successful consulting engagement.

To conclude, we believe that the consulting profession is not just about your skill as a consultant in terms of your technical know-how, but equally about your professional and commercial ability to deliver an end-to end product in a methodologically sound and coherent way, which includes the ability to contract, negotiate and engage on an ongoing basis with your client around sometimes difficult commercial challenges.

If a consultant is not able to meet these important professional imperatives then we believe the situation not only jeopardises the consulting work that we deliver, but also equally undermines our reputation as consultants.

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Industrial Relations Conference Cape Town

Posted on November 3, 2014 in News - 0

We are proud to announce that Stephen Rothgiesser, Practice Lead: CCG Advisory is speaking on Stakeholder Management and Partnership Facilitation in the Context of a Complex South African Labour Environment at the Knowledge Resources Industrial Relations Conference in Cape Town on 12 November 2014.

INFORMATION

Two-day conference • 12-13 November 2014
Pre-conference Workshop • 11 November 2014
UCT Graduate School of Business, Protea Breakwater Lodge, V&A Waterfront • CAPE TOWN

The current state of industrial relations in South Africa calls for a more strategic approach, as the high level of unrest is a cause for concern for investors and investor confidence.

Issues such as poor socio-economic conditions of workers, inter nion rivalry and violent strikes resulting in job losses need to be addressed.

Knowledge Resources has organised a high level industrial relations conference, focusing on the changing IR environment – new realities, new challenges and new approaches.

The speakers and topics have been carefully selected to reflect the latest trends in the South African industrial relations landscape.

8 REASONS WHY YOU SHOULD ATTEND

  • Understand the power of mediation and alternative dispute resolution strategies
  • Identify ways of restoring true worker democracy through collective bargaining reform
  • Learn how to reduce long protracted and violent strikes
  • Create your own performance management legal toolkit
  • Discover best practices for communication before, during and after strikes
  • Know whether the South African industrial relations framework supports or hinders economic growth
  • Hear about the strategies, realities and the way forward for the new collective bargaining scenario
  • Find out about the present and future South African labour relations landscape

WHO SHOULD ATTEND

  • Industrial, labour and employee relations
  • HR Directors
  • Senior HR Managers
  • Legal Advisors
  • Heads of Strategy
  • Public and private sector
  • Government from municipal to national level

MORE INFORMATION

Contact CCG at 021 461 0802 or Gugu Mazibuko [email protected] or 011 706 6009

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New CCG Learn Presentations!

Posted on June 16, 2014 in News - 0

CCG Learn is proud to announce the addition of three new presentations to our learning portfolio.  These have been offered as bespoke solutions for CCG clients previously (either as keynote presentations or internal learning experiences) and we have reworked the content into three standalone presentations that are designed for presentation to both small groups (12-20 delegates) and large audiences (60-300 delegates).

All presentations are beautifully designed with full colour photos ensuring that all slides are picture dominant for maximised delegate engagement and content absorption.

1. Doing Change and Strategy Better: Theory and practice on the history of change and strategy implementation, iconic and more recent examples of where strategic projects have failed (often dismally!) either in their entirety or to achieve the intended ROI for a project.  The focus of this presentation is on organisational tools and skills that managers and leaders can use on the line or as change agents to more effectively support the implementation of strategic change initiatives.  A 45 minute presentation followed by 45-90 minutes of questions, delegate insights and facilitated discussion.  Best delivered in large group format (60-300 delegates)

2. Living Through Change/Thriving Through Change: Theory and practice of change management, how this area of professional practice developed in political science, psychology and information science, and areas of strength and weakness with practice today.  The focus of this presentation is on the individual experiencing change within organisations and providing delegates with insights, models and tools for better understanding change as a psychological and cognitive process, how to more effectively respond to and even thrive in a changing environment, and how to support self and others during a change moment and period of transition.  A 45 minute presentation followed by 45-90 minutes of questions, delegate insights and facilitated discussion.  Can be delivered in small group format (12-20 delegates), right up to very large format (60-300 delegates).

3. The Politics of Change: An overview of the least understood area of theory with respect to change: Political Science.  We explore the influence of Political Science on change, from the Greeks through the Middle Ages and up to the present age, with fascinating and rich examples.  This presentation is principally designed for internal HR and OD consultants as well as senior managers and leaders who need to understand how the politics of an organisation (both conscious and unconscious, spoken and unspoken) and corporate culture, often dictate the success or otherwise of a strategic change initiative.  We explore theory and practice and then critically relate this to processes and dynamics currently underway in your organisation.  A 45 minute presentation followed by 1½ to 3 hours  of questions, delegate insights and facilitated discussion.  Best delivered in smaller group format (12-40 delegates)

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Doing Strategy Well in the Context of Change

Posted on June 8, 2014 in News - 4

Recently CCG gave a keynote presentation to a group of senior executives who are struggling with the appropriate response to strategy implementation in their organisation.  We were struck by the importance of three key change concepts that delegates repeatedly asked questions about during Q&A.

We are convinced that these elements are key to the success of large-scale change and strategy implementation: Leadership, Communication and Structure.

1. Leadership

There is much written about the importance of leadership in the context of change, and we should know all the good reasons for this.  We would like to use this space to talk about the specifics of how to deploy and position leadership appropriately for an enterprise or divisional level change programme.

a. Project Sponsor: Each project requires a single person to hold authority and accountability for the programme to internal and external stakeholders.  CCG’s view is that this person should either be the CEO or divisional head.  The seniority of the person holding this role is key because there will be times (usually during crisis when leadership is needed most) when a single person with sufficient credibility and positional power will be required to stand up on behalf of a project, argue its merits, explain its rationale, sign off on additional budget, and manage naysayers.  This is most critical in the context of senior internal stakeholders (members of C-Suite or Exco) or external stakeholders (Board, unions, stakeholder communities, government, state institutions), and particularly at moments when the longevity or purpose of a programme might be questioned.

b. Project Lead: This is usually a C-Suite/Exco member, or divisional head (in the context of a divisional programme), who has ultimate line management authority for a programme and who is institutionally responsible (usually to the CEO) for the success (or otherwise) of the programme.  Their role is to manage tasks, budgets and timelines on a day-to-day basis, and to report on progress, risks and achievements to organisational structures not directly involved in the programme.  It is imperative that this person is highly change attuned, committed to the programme and has a high level of institutional credibility and status.

c. Project Board: We would strongly advise that you appoint an overall governing structure to manage the day-to-day task of running a large-scale programme.  We would suggest that this structure is populated with 8-10 delegates, who represent as diverse a cross-section of the organisation as possible.  Diversity of representation at a Project Board level will ensure that a myriad of personal and professional networks will be activated across the organisation and support what we refer to as “viral” change.  This approach supports communication, support for the project and interaction around employee concerns and recommendations.

2. Communication

There are a tremendous number of articles and books written on the role and importance of communication in the context of change.  We are told ad nauseam that we must communicate with our people, and communicate more and more.  And of course we do this, by way of emails and posters and flyers and workshops and town hall meetings.

And all of this is good.  EXCEPT: Often we are not communicating in a dialogic or conversational fashion, and as a result  we don’t necessarily know what is really on people’s minds.  We also often don’t give employees a chance to speak (particularly to leadership in large format events) in a manner that allows for thoughts and feelings to be expressed, heard, digested and responded to.

The lesson: We need to provide more opportunities for employees at all levels of an organisation going through a change programme, to meet together in a way that allows for two-way conversation and solution making.

This is not always easy or practical to do, but if we want to run successful change initiatives, it is imperative that we seek out appropriate solutions and technologies to achieve this result (and we do have such facilitated techniques that can support us in this regard).

3. Structure

(The other possible heading here is Whether or Not a Model or Methodology is Necessary.  And the answer is Most Certainly Yes!)

There are many, many change and strategy implementation models in the marketplace and you should choose one that suits your organisation, but that you should choose one!  Particularly when dealing with enterprise or divisional level programmes with lots of moving parts and people, it is imperative to have a structure within which to map the implementation journey and to keep a sense of where you are at during planning and delivery.

Change and strategy implementation is an exceedingly complex process.  Unfortunately within management science and professional practice we do not have a good track record of doing this organisational activity well, but that does not preclude us to learning from the past and building better professional practice for the future.

Albeit brief (given the challenge of this medium and because change is an inherently active process that requires engagement and dialogue to accomplish well) we hope these notes will help in this difficult and exciting area of professional practice.  In forthcoming weeks we will attempt to flesh each of these areas out in more detail.

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A Theory of Change and Strategy Implementation

Posted on May 25, 2014 in News - 1

In last week’s newsfeed, we proposed that a more sophisticated understanding of the strategy process was to separate strategy formulation from strategy implementation.  In order to provide some initial thoughts and theory in this regard, we would like to share the following with you.  

The following is an excerpt from a presentation recently developed by Stephen Rothgiesser, the Managing Director of CCG.  We would love to hear your thoughts, comments and feedback on how we might improve this piece of work:

 So what do we need to do in order to do change better?

CCG believes there are two things that we need to do better: We need to build more coherent and useful definition of change, and we need to build more practically useful models and methodologies for doing change and strategy implementation.

Let’s start off by looking at a better definition of change:

In this context it is important to bear in mind that the field that is generically referred to as Change Management is only about 50 years old.  It first emerged as an area of interest as the result of a book entitled Diffusion of Innovations, which was written by American sociologist Everett Rogers in 1962.  In this important work, (which is the second most cited social sciences book ever written), Everett explored the way in which human beings communicate and adopt new ideas, and he described the uptake behaviour of difference human personality profiles in the context of new technology.

As a result of this theoretical background, Change Management as a concept has unfortunately (in our view) been linked to two fields in particular: Information technology (IT), where change management is recognized as a set of tools to help and encourage employees to adopt new technology, through training and explanation and showing the advantage of new technology; and psychology, which has had a significant influence on Human Resource and Organizational Development practitioners who work in the field of change today.  In this latter context, professional practice is concerned about influencing the thoughts and feelings of employees, to help them deal with change that has taken place within their organization.

At CCG we believe that these definitions and theoretical positions of change are insufficient; in fact we do not use the phrase change management at all because we seek to break with this tradition to instead build more complex and useful approach to the field that we describe as Change Implementation. 

Based on professional practice, what we realised is that we needed a more complex, integrated and extended theoretical model of change to adequately capture events as they unfold prior to, during, and after a change moment.  As a result, Change Implementation refers to change as the entire process of events and planning that take place before a change moment, the process of transition that transpires between the AS IS status quo and the TO BE state that we strive towards, and which occurs at the closing off of the transition state.  Change Implementation also refers to the strategy implementation processes that unfold post project closure, which include activities to measure return on investment, to measure success levels and project outcomes, to tie up loose ends, and to identify ongoing project activities that are required to ensure sustainability of the change process and to manage potential risk going forward.

We define a change moment as any moment in time that a new strategy is introduced into an organization (or human system).  That strategy might seek to restructure the organization, to change the culture of the organization, to develop and deliver a new product out of a division or cluster of that organization, to change the structure of functional areas within that organisation, or it might relate to the implementation of new systems of governance or operational protocols.

The point here is that once the decision is taken to do something different or new and this is then announced or actioned in some way within the organisation, this action gives rise to a change moment for the simple reason that what we are seeking to do in the future is something different from the past.

Change is also a process that involves a number of interrelated and interlocking pieces, which is comprised of a number of factors in addition to human beings, and it is for this very reason that that traditional definition and approach to change as that which emerged from the work of Rogers is insufficient in our view.

What we would rather propose as a more sophisticated model that properly describes the scope of change in any organization, is that there are four interlocking areas that make organisations work and that we need to ensure speak to one another in a coherent and useful way in the context of change: These areas are

  1. People who are either contractors or employees who are dispersed across an organizational matrix;
  2. Hard systems that those employees use and engage with to do their work (these are computers and other tangible assets);
  3. Systems of governance, the rules, systems and processes that employees need to adhere to in order to act within accepted professional norms and standards within the organization;
  4. Operational systems and processes which inform the way in which pieces of work are tasked, completed and referred on to ensure organizational efficiency and profit.

So what we put to you today is that the introduction of new strategy into an organization gives rise to a change moment (because we are wanting to change a future state in some way), which in turn gives rise to complexity and risk because of the interplay of these four different areas in an organisation that might be impinged upon and affected during the transition state of a change process.

It is this complexity that we are concerned with identifying and engaging with.  As a result, Change Implementation can most appropriately be described as an activity which seeks to identify what is complex about introducing strategy into an organization and the inherent risk that this set of activities gives rise to.

In response to this, the change tools and methodologies that we have developed (and continue to develop) seek to provide an integrated approach to project planning; identification, mitigation and management of project risk; project management; engagement with human actors as and when required in order to support adoption of new behaviours and practices; and to deliver new strategy into the organization in a coherent and effective manner.

This is the new field of Change and Strategy Implementation. 

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The Change Review: McKinsey Interview

Posted on May 15, 2014 in News - 0

A key purpose of this newsfeed is to stimulate discussion and debate around some of the challenges associated with change and strategy implementation.  Part of this process is about sharing our experiences and areas of concern with our listeners, and part of this is about commenting on the work currently being done by our colleagues.  Some of this engagement might be critical of that work; this should be seen solely in the light of professional dialogue and debate.

Disagreement should be welcome in an emergent profession such as ours, particularly as we tussle with often enormously complex areas of practice with respect to change and strategy implementation.

The reason we felt it necessary to include the disclaimer above is that we wish to make reference in this newsfeed to articles written by colleagues at various consulting practices around the world, to engage with their ideas and experience and to offer our professional opinion and thoughts in this regard.  At all times we wish to be constructive and in the spirit and interest of adding value to the change and strategy consulting professions.  Of course, we encourage responses to our thoughts and welcome your comments in the space provided below this item.

With that out of the way, this week we would like to comment on what we feel is an important video interview put up in October 2013 by two strategy consultants, Chris Bradley and Angus Dawson, out of the Sydney office of McKinsey & Company (You can see the full interview here).

We feel this interview is extremely important in the context of change and strategy implementation because of two key points made by Mr Bradley and Mr Dawson:

1. Strategy is still a relatively young discipline, emerging from the new field of management studies in the 1960’s, supported by the strategy greats like Peter Drucker in the 1950’s, and more recently, Michael Porter, Gary Hamel, Henry Mintzberg and Tom Peters.  Any yet, if you speak to strategy consultants worth their salt (and McKinsey consultants are certainly at the top of the pile in this regard and we have enormous respect for that firm), they will admit that we continue to learn.  

In fact it is probably true to say that strategy consultants are currently scrambling to really understand and respond to the enormous pace and scope of change that globalisation has foisted on us (and the additional complexity that social media, big data and the financial crisis has thrown into this complex mix).  The impact of these events on the field of consulting are not our purview in this article; our key concern is the fact that these men are brave enough to admit that we are still learning and we feel that this is extremely important for consultants to acknowledge if we are to do our work better (and the statistics as we describe elsewhere on this site are not in our favour).

2. The most important point that the interview conveys, however, (and we can’t stress enough how fundamental this point is), is made by Chris Bradley when he first starts speaking.  He says: “Another layer (of strategy formulation) is bringing psychology and adult learning into strategy and realising that strategy’s not just about what’s written on the paper but about the thinking and feeling processes of the leaders of the company.”  This is a hugely important statement, especially from a firm of strategy consultants of McKinsey’s stature:  It is a recognition that strategy does not happen unless it is understood, bought into and actualised by an often diverse (and often conflicted) group of human beings, usually spread over a wide organisational array, with an enormously complex set of people, process, systems and governance structures in place that often get in the way of the smooth implementation of this strategy.

Strategy formulation, and certainly strategy implementation, is therefore a process of engaging and deploying human beings in such a way that they understand their own motivation for action, as well as the areas of resistance or upset that they might experience from time in time in various parts of their organisation.  As a result, it takes not just smarts to build a strategy, but an enormously complex psychological toolkit in order to execute it.  And from our perspective at CCG, if we can’t execute a piece of strategy, it might as well be binned.

What the article does not speak to, however, (and what we believe is the more difficult part of our work with respect to strategy consulting), is how we get strategy implemented.

In our view, it is easier to formulate strategy than it is to implement it, simply because strategy formulation can rely on smarts and industry data and metrics in order to forecast trends and possible commercial trajectories that are either in the organisation’s interests or otherwise, and they can determine proposed behaviour.  But strategy, once formulated and presented on paper and slides, remains a set of ideas unless it can be operationalised within an organisation.  The formulation of strategy usually gives us no indication of how it might be executed.

In fact, many companies spend a lot of time and money defining a strategy, but very little (if any) time actually describing, in detail and on paper, how they seek to go about executing this strategy within their organisations.  Please note that we are less concerned in this regard with execution of a new product line (for example) to one’s customer base, and more about how we distribute a set of instructions and directives to the myriad of employees who are required to make this happen within the organisation.  In other words, we are concerned in this instance with how we mobilise an often disparate group of individuals towards a single goal.

It is our belief, therefore, (and a fundamental premise upon which we practice as strategy implementation consultants), that we should understand strategy as emotion and that commitment, buy-in and passion are as important for successful implementation as the raw intellectual validity of the ideas contained within a strategy.

Strategy is an innately human activity, that uses all of us for its emergence into and success within the world.

This is a profoundly important insight because it separates strategy into two discrete activities: The first is the formulation of strategy which is a purely intellectual exercise.  The reason that McKinsey is such a globally recognised leader in this regard is that they hire and nurture brilliant analytical minds to formulate strategy, and provide an environment, framework, structure and systems to ensure that the very best strategy is formulated.  But equally, there is a growing understanding that strategy has a second component which is about planning and structure required for the execution or mobilisation of a strategy within the internal spaces of organisations.  This second aspect of change and strategy implementation is more messy, sure, because it calls us to work with human psychology and human fallibility, but it is vital to get right and an increasingly important area of professional practice within the sphere of strategy consulting. 

In next week’s post we will pick up on the second part of this discussion and provide detail on how we might define the field of strategy implementation as something discreet from strategy formulation.

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Building internal change capability is HARD!

Posted on May 8, 2014 in News - 0

In last week’s blog, we promised to dive into more detail on why building internal change competence is so difficult, and, more to the point, why internal change agents often have such a challenging task.

Building internal change capability is hard because:

  1. Good experiential training is hard to find: In our opinion, there are currently insufficient tertiary level programmes (whether formal or bespoke designed for an organisation) that provide a deep level of theoretical and technical support for internal change agents (by this we mean HR and OD professionals, as well as line managers and leaders who understand how vitally important a deep change competence is to their role function).  A key part of such a programme would be linking change and strategy implementation theory to practice within that client organisation’s specific context.  We can’t stress this enough: The most common concern we hear from internal change practitioners is that they went on an extensive course but on their return to the office were unsure of how to use the tools and skills learnt within their work environment.  [We put this out as a challenge to all tertiary institutions to prove us wrong; if you feel that you do offer such a programme and we are convinced of this, we will certainly sing your praises on this website.  Please let us know who you are in the comments section below.]
  2. Most organisations do not yet recognise change as a strategic imperative and as a result internal change consultants are often not granted access to important information that is vital in order to deliver change at a strategic level.  [Remember, we are not interested in defining change as simply an operational set of tasks that involve training, version control or changing the hearts and minds of individuals.  Change implementation is the full process of designing, structuring and implementing a strategic programme within a business.]
  3. Even where access is granted, influence is often hard to come by.  Most organisations do not have change represented as a discrete skill set at a Board or Exco level, and if we are correct that change is not yet recognised as a strategic skill set and that, often as a result of this, most company executives themselves do not have sufficient awareness and/or training in this regard, the change requirements for the implementation of strategic projects are overlooked.  A seat at the table in order to influence decisions around strategy, its formulation and critically, its implementation, is therefore of vital importance if we wish to turn this situation around.

What is the solution?  We would suggest the following:

  1. As professional change consultants we need to do more to both influence, build and lecture on tertiary level training programmes.  We are committed to this at CCG and have made a strategic decision to step up our efforts in this regard by engaging with local colleagues and universities.
  2. Organisations would do well to appoint professional internal change agents and to build discrete change teams that are comprised of a diverse groupings of influential individuals from across the organisations and representing all levels of the company.
  3. Organisations would do well to appoint change representatives to important strategic forums, even if this presence is on an ad hoc basis in order to influence decision-making.
  4. External change consultants have an important role to play in this regard: Consulting firms provide extensive experience in the field from a range of industries, we can often see organisational dynamics that are hidden or unconscious for employees, and, if we are courageous enough, we are able to speak to these dynamics in a good way in order to build consciousness in this regard and to provide solutions that might resolve these challenges.

This area of practice remains a challenge for all stakeholders.  We would very much like to see improvement in this regard, and believe this is possible if we pool resources and engage with one another in developing more effective practices and approaches.

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