INPACT 2: How to avoid a failed project - Slidecast 2: Organisation’s capability

Slidecast 2: Assessing the organisation’s capability gap and its impact on the project’s ROI The Change Equation Or how to avoid a failed change project! Peter Duschinsky Managing Director, The Imaginist Company

Why else do change projects fail?
The last slidecast focused on project complexity – we typically underestimate it, so we under-resource it and our expectations of outcomes are too optimistic
Look at these quotes:
“ 85% of project success is dependent on factors related to people ” Ohio Center for Information Based Competition
“ Even amongst successful implementations, 47% of companies reported serious challenges with end-user adoption that often put projects in jeopardy” - AMR Research
“ Companies that spend less than 17% of ERP implementation budgets on training put their projects at increased risk of failure” Gartner

It turns out that success rests as much on the capability of the people in the organisation to cope with change and take advantage of new systems, as on how well the project was planned and implemented
The complexity of the project needs to be within the capability of the organisation
We’ve seen how to assess the complexity of a project
How do we assess the capability of the organisation?
By looking at its Culture and its Process Management Capability

Assessing an Organisation’s Culture
There is an underlying tension between the individual and the organisation
Successful change needs an integrated approach encompassing people and process in a balanced approach
Point of balance
ORGANISATION
‘ External’ Focus:
The organisation’s needs and direction
Systems and processes
Efficiency
THE INDIVIDUAL
‘ Internal’ Focus:
Culture
People’s perceptions, attitudes, motivations, aspirations
Effectiveness

Imagine the pendulum swinging and rising at the same time…
ORGANISATION
Efficiency
THE INDIVIDUAL
Culture
Effectiveness

Looking at it from the top, you would see it a bit like this:
ORGANISATION
Efficiency
THE INDIVIDUAL
Culture
Effectiveness

That gives us the basis for our Culture Evolution Model
Assessing an Organisation’s Culture ORGANISATION ‘ External’ Focus THE INDIVIDUAL ‘ Internal’ Focus 5 8 Systemist Imaginist 7 6 Empiricist 3 Dialectic 1 Pragmatist/Anarchic 4 Aligned Structuralist 2 5 Pragmatist/ Aligned 9 Pragmatist/ Empowered

This model allows us to identify the predominant organisational culture
Each point on the spiral represents a separate, definable culture
Each culture builds upon the earlier ones, progressing up the spiral
Assessing an Organisation’s Culture It indicates how well the organisation will cope with change EXTERNAL FOCUS (Organisation) 5 INTERNAL FOCUS (Individual) 8 Systemist Imaginist 7 6 Empiricist 3 Dialectic 1 Pragmatist/Anarchic 4 Aligned Structuralist 2 5 Pragmatist/ Aligned 9 Pragmatist/ Empowered

Mapping your Management Culture
Which of the following descriptions most accurately describes your organisation (or your part of it)?
You might be able to identify more than one - that’s because they are not discrete styles
Each is only achievable when those below it on the spiral are in place
The chances are you will focus mainly on the negative aspects of your management culture
But each style has positive and negative elements - if not nurtured, they degrade over time

This is where we all start In this entrepreneurial organisation, it’s results that count The boss may be micro- managing everything or leaving members of the team to do more or less what they like, as long as they achieve results Either way, success is what counts, not how you get there – ‘just do it’ There are some laid-down procedures, but people only follow them or take up a new initiative if they see benefits for themselves in doing so The Management Culture model: Level 1 8 Systemist Imaginist 7 6 Empiricist 5 Pragmatist/Aligned 9 Pragmatist/Empowered 5 1 Pragmatist/Anarchic Structuralist 2 3 Dialectic Aligned 4

Rules, devolved authorities and formal procedures govern how this organisation works That has allowed the organisation’s operations to be scaled up, but it will also have allowed ‘silo working’ to emerge, hindering the sharing of ideas and knowledge across the organisation Change is slow and painful; decisions are often passed down, with formal but inadequate consultation; initiatives are not encouraged The Management Culture model: Level 2 8 Systemist Imaginist 7 6 Empiricist 5 Pragmatist/Aligned 9 Pragmatist/Empowered 3 Dialectic Aligned 4 1 Pragmatist/Anarchic Structuralist 2

The organisation wasn’t efficient, so management brought in the Business Process Redesign consultants, the LEAN specialists and an ERP system Your organisation is now streamlined, focusing on cost cutting and efficiency, with modern, rationalised and automated processes But it still doesn’t seem to be working very well, does it? Why not? The Management Culture model: Level 3 4 Rationalist 8 Systemist Imaginist 7 6 Empiricist 5 Pragmatist/Aligned 9 Pragmatist/Empowered Structuralist 2 Aligned 4 1 Pragmatist/Anarchic 3 Dialectic

Well perhaps we didn’t spend enough time gaining the ownership for the changes… It might be better if: Then silo working might stop being such a significant barrier to change The Management Culture model: Level 3
People were valued more than processes
Sharing knowledge was valued, as opposed to having (and protecting) knowledge
Managers and staff were encouraged to network and exchange ideas and information across the organisation
8 Systemist Imaginist 7 6 Empiricist 5 Pragmatist/Aligned 9 Pragmatist/Empowered Structuralist 2 Aligned 4 1 Pragmatist/Anarchic 3 Dialectic

Now, as a result of strong leadership and a good level of dialogue between people, the values and aspirations of the staff in your organisation are in line with its policies and strategic direction People feel valued and understand how they fit into the scheme of things, so are more motivated to accept change that will benefit the organisation, even if it doesn’t reduce their workload. Because people and processes are aligned, things work well Sounds like a good place to work, doesn’t it? The Management Culture model: Level 4 8 Systemist Imaginist 7 6 Empiricist 5 Pragmatist/Aligned 9 Pragmatist/Empowered Structuralist 2 1 Pragmatist/Anarchic 3 Dialectic 4 Aligned

Once people feel valued and share information the organisation starts to function differently Managers trust their staff to act in the best interests of the organisation Decisions can be made closer to the customer, quickly and effectively Staff are actively encouraged to get involved in innovation and performance improvement initiatives Things get done, change becomes easier The Management Culture model: Level 5 8 Systemist Imaginist 7 6 Empiricist 9 Pragmatist/Empowered Structuralist 2 1 Pragmatist/Anarchic 3 Dialectic Aligned 4 5 Pragmatist/Aligned

Now the organisation is not so inward-facing and obsessed with internal power-plays, it can function better in the ‘real world’ Key information about your customers, suppliers, competition etc. flows across departments, as well as up and down the management hierarchy Because it does not suffer delays or distortion from passing through departmental silos, the information is timely and accurate, which means that management decisions are well-informed and effective The Management Culture model: Level 6 8 Systemist Imaginist 7 9 Pragmatist/Empowered Structuralist 2 1 Pragmatist/Anarchic 3 Dialectic Aligned 4 6 Empiricist 5 Pragmatist/Aligned

Because your organisation is working well, senior managers are not focused on short-term fire-fighting and intervention, allowing them the time to concentrate on longer-term planning and more important issues They are operating with timely and accurate information, which means they can make intuitive, high quality and far-reaching decisions - and that means the organisation is able to cope well with change This requires a different calibre of manager, the Imaginist The Management Culture model: Level 7 8 Systemist 9 Pragmatist/Empowered Structuralist 2 1 Pragmatist/Anarchic 3 Dialectic Aligned 4 5 Pragmatist/Aligned 7 Imaginist 6 Empiricist

The organisation now recognises its place in its business, economic, social and community contexts – and plans and manages accordingly Your CEO makes him/herself visible and available, and is vocal in championing changes and issues that are critical to the organisation’s success, but his/her leadership style is to steer from behind and focus on building longer-term capability, rather than intervening in operational issues This works because the organisation has a strong and effective Board and an aligned workforce The Management Culture model: Level 8 9 Pragmatist/Empowered Structuralist 2 1 Pragmatist/Anarchic 3 Dialectic Aligned 4 5 Pragmatist/Aligned 6 Empiricist Imaginist 7 8 Systemist

Finally, if you are lucky enough to be working in an organisation that has set itself the challenge of being the best in class: You are fully empowered to plan and manage your own workload, within a supportive management culture This includes working collaboratively in teams and leading and participating in change projects, to continually improve the effectiveness of the organisation to meet its customers’ needs This is a learning organisation We’re a long way from the culture of blame and focus on short-term gain, where we started The Management Culture model: Level 9 Structuralist 2 1 Pragmatist/Anarchic 3 Dialectic Aligned 4 5 Pragmatist/Aligned 6 Empiricist Imaginist 7 9 Pragmatist/ Empowered 8 Systemist

Where are you? Structuralist 2 1 Pragmatist/Anarchic 3 Dialectic Aligned 4 5 Pragmatist/Aligned 6 Empiricist Imaginist 7 9 Pragmatist/Empowered 8 Systemist EXTERNAL AXIS (Organisation) INTERNAL AXIS (Individual)

Organisational Capability - the next step
We have looked at management culture
Now let’s focus on the organisation’s capability to manage its business processes

We use the Process Capability Maturity Model (CMM) to assess the organisation’s process capability – the discipline and consistency with which processes are managed
Organisations with aspects of their operation at levels 1 and 2 will find it difficult to introduce standard systems and processes Assessing an Organisation’s Process Management Capability 1. Initial Ad hoc process Chaotic 2. Repeatable Stable process Controlled environment 3. Defined Standard process Consistent Execution 4. Managed Measured process Quality and Productive Improvement 5. Optimised Effective process Continuing Improvement Software Engineering Institute

The Organisational Capability Indicator
Combining these two assessments gives us a high level indication of the Organisational Capability
V.High V.High V.High V.High V.High High V.High High High High High High High High High High High Med Med Med Med Med Med Low Med Low Low Low Low 5 4 3 2 Level 1 9. Pragmatic/Empowered 8. Systemist 7. Imaginist 6. Empiricist 5. Pragmatic/ Aligned 4. Aligned 3. Dialectic 2. Structuralist 1. Pragmatic/ Anarchic Management Culture Business Process Capability

The Organisational Capability Indicator
Combining these two assessments gives us a high level indication of the Organisational Capability
So, for example, a level 2 culture and level 3 process capability suggests a Medium overall capability to cope with change
V.High V.High V.High V.High V.High High V.High High High High High High High High High High High Med Med Med Med Med Med Low Med Low Low Low Low 5 4 3 2 Level 1 9. Pragmatic/Empowered 8. Systemist 7. Imaginist 6. Empiricist 5. Pragmatic/ Aligned 4. Aligned 3. Dialectic 2. Structuralist 1. Pragmatic/ Anarchic Management Culture Business Process Capability

Where on the exponential complexity scale was your project? ? Was it significantly further up the scale than you had thought?

Combining Capability and Complexity
Put the project’s complexity status into the context of your organisation’s capability, to show the relative complexity of the project - the gap between the organisation’s capability and that required to manage the project and cope with the changes it requires people to make
Complexity Too Complex Complex Not Simple Simple Low Med High Capability = This project is not within your organisation’s capability = This project is at risk of not realising expected benefits = The project looks as if it’s within your capability

Combining Capability and Complexity
In this example, the project is at risk of not realising expected benefits and, as planned, may actually be beyond your organisation’s capability to cope with the changes it would bring
Complexity Too Complex Complex Not Simple Simple Low Med High Capability = This project is not within your organisation’s capability = This project is at risk of not realising expected benefits = The project looks as if it’s within your capability

Other models and tools
We now have a reasonably good assessment of the likely success or failure of the project
A typical assessment process involves face-to-face interviews with stakeholders which would also provide the stories and rich detail that is needed to make sense of these top-line results
Two other models add further to our understanding:
The Trust/cost model
The Dynamic Benefits Realisation model

Measuring Trust
We measure the 3 dimensions of relationships to give a Cost/trust Indicator:
How far do you trust your boss to represent your interests, consult you when necessary and keep you fully informed?
How far do you trust your staff to work without your keeping an eye on them?
How far do you trust your colleagues to share accurate information and keep you informed about changes that might affect you?
Dimension 1: Relationship with my manager Dimension 2: Relationship with my staff Dimension 3: Relationship with my colleagues

Measuring Trust
Score each of these on a scale where:
0 = not at all
1 = not sure
2 = mostly
3 = totally
Add these up (max 9)
Convert into %... eg 4/9 = 45%
Invert that to find your Distrust Factor
so 45% –100 = 55% distrust
Dimension 1: Relationship with my manager Dimension 2: Relationship with my staff Dimension 3: Relationship with my colleagues

Measuring Trust The higher the levels of distrust, the more time and effort the project will require and the higher the cost, so add at least 55% to planned time and cost 55% High Low

Benefits Realisation With only two questions we can assess how well the project will realise ‘indirect’ benefits such as efficiency savings:
Does the project have a published benefits realisation plan?
Are Dept/Division heads formally accountable for achieving the performance improvements enabled by the project?
Why?

A common barrier to change is the perception that:
“change is something that is done to you”
This is the ‘push’ dynamic found in most change programmes
Wouldn’t it be better if the changes were being PULLED by the operational managers and staff?
That’s what the Dynamic Benefits Realisation model helps us to do

It is often hard to demonstrate the efficiency benefits from a change programme
Business cases can claim these as cashable benefits, but most organisations do not check whether the benefits have been realised - they simply cut budgets to reflect the theoretical improvement and leave it to the local staff and managers to cope
This puts managers under pressure to cut corners, so the quality of performance goes down
So what’s the alternative?
Hold local managers accountable for the changes in their part of the organisation
Don’t try to measure indirect ‘savings’, focus on improvements to core performance targets , enabled by the new system and processes

Identify potential impact on core processes
eg Speeds up or eliminates process (typically up to 50% average time savings achievable)
2. Calculate resources potentially available for redeployment Who (how many affected in group)? How much time saved? 5. Prioritise roll-out Based on the relative value of the benefits identified in [4] 4. Agree who is accountable for its realisation Identify key System/ Process users and ensure representatives are on Project Management Board 3. Agree measurable improvement and by when Quantify value; use existing service level improvement KPI wherever possible 6. Manage project with System/ Process user representatives driving it, not the Project Manager Hold local managers accountable at Board level for core KPI improvements

Benefits Realisation Indicator Possible Outcomes Accountability? Plan in place? No No Yes Yes
This project will not achieve its savings objectives
No
Without formal framework, local managers will not be held accountable in practice – put one in place
Yes
Make local managers accountable for adopting the new processes and redeploying released resources to drive improved performance, or the benefits will not be realised
No
This project has a good chance of achieving the planned benefits
Yes

Calculating the Impact
This is where we calculate the potential impact of these indicators on the business case
We consider the status of each of the elements identified in the assessment and calculate the impact on costs or benefits, or both
This gives us an overall impact on the project’s bottom line
That’s the language senior managers understand!
- % Total potential impact on benefits + % Total potential impact on project timescales/costs Other factors impact estimated at: IT Solution 9 Relationship with suppliers 8 OTHER FACTORS Delivery of Project Impact estimated at: Benefits Realisation 7 Distrust factor 6 Visibility of process 5 DELIVERY OF PROJECT Project Impact estimated at: Complexity of project 4 Clarity of objectives 3 PROJECT Capability Impact estimated at: Capability Maturity 2 Management Culture 1 ORGANISATION Benefits -% Time/ Cost +% Potential Impact Status Component

Deliverables: Action Plan & Route Map We develop an Action Plan to overcome the barriers, mitigate the risks and help clients plan for success
Consider carrying out a programme to raise the levels of process capability ahead of implementing the project or using the project itself to inject the necessary disciplines. In this case it is crucial for the Board to make compliance to the new processes mandatory.
The organisation’s process capability is poor. This means that any projects which seek to standardise and improve processes to achieve greater efficiency will be very difficult to achieve.
Process Capability
A programme of interaction and dialogue across the organisation is urgently needed to improve the management culture. This needs to include increasing trust, see below.
The lack of information-sharing, alignment and empowerment will jeopardise the success of the project. At the very least it will mean poor take-up and a lower than planned level of benefits.
Management Culture Action required Implication Component Organisation

Deliverables: Action Plan & Route Map
Using the Culture Evolution model, we develop a Route-Map to improve the organisation’s capability for change
We ask two questions:
If you are here now, where do you need to be?
What will happen if you don’t change?
The first question identifies what needs to change
The second gives you the ammunition you might need to defend the change – it describes the future if you stay where you are
The more mature the management culture, the better the organisation will adapt and respond to change Structuralist 2 3 Dialectic Structuralist 2 3 Dialectic

The Change Equation is about changing mindsets
Is your organisation underestimating the complexity of its change project/s?
Does it have the capability to cope with the changes?
Are you investing in change management early enough?
What more do you need to do to ensure that your change project/s will succeed?

Thank you for listening!
Peter Duschinsky
[email_address]
‘ The Change Equation’ is now available from Amazon.co.uk

Who are we?
The Imaginist Company is a change management consultancy
We specialise in helping private and public sector clients identify and overcome barriers to change and performance improvement
Under our 'bethechange' brand, we work with non-profit organizations across the world, advising them on strategic development and transformational fundraising programmes
Working with a team of associates and partners, Imaginist undertakes projects and programmes which require:
‘ Quantum’ thinking and the creation of new approaches
Research, diagnostic assessment, analysis and evaluation
Development of clearly articulated guidelines and policy documentation
Dissemination, facilitation and mindset change
Contact us at: [email_address]

INPACT 2: How to avoid a failed project - Slidecast 2: Organisation’s capability

by The Imaginist Company on Feb 19, 2010

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