1) The document outlines 10 principles of change management to help companies transform quickly. It discusses tools and techniques for addressing the human side of change, starting change at the top, involving every layer of the organization, making a formal case for change, creating ownership, communicating the message, assessing cultural landscape, addressing culture explicitly, preparing for the unexpected, and speaking to individuals. 2) The principles are based on the idea that successful long-term transformations require addressing both strategic plans and the human/cultural aspects of change through systematic and integrated change management practices. 3) The document provides examples from various companies to illustrate how each principle was applied in real change initiatives.

1. strategy+business
10 Principles of Change Management
by John Jones, DeAnne Aguirre, and Matthew Calderone
04/15/04
© 2004 Booz Allen Hamilton Inc. All rights reserved.

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10 Principles of Change Management
Tools and techniques to help companies transform quickly.
by John Jones, DeAnne Aguirre, and Matthew Calderone
W
ay back when (pick your ing of the human side of change find themselves wondering why
date), senior executives in management — the alignment of the their best-laid plans have gone awry.
1 large companies had a company’s culture, values, people, No single methodology fits
simple goal for themselves and their and behaviors — to encourage the every company, but there is a set of
organizations: stability. Shareholders desired results. Plans themselves do practices, tools, and techniques that
wanted little more than predictable not capture value; value is realized can be adapted to a variety of situa-
earnings growth. Because so many only through the sustained, collec- tions. What follows is a “Top 10” list
markets were either closed or unde- tive actions of the thousands — per- of guiding principles for change
veloped, leaders could deliver on haps the tens of thousands — of management. Using these as a sys-
those expectations through annual employees who are responsible for tematic, comprehensive framework,
exercises that offered only modest designing, executing, and living with executives can understand what to
modifications to the strategic plan. the changed environment. expect, how to manage their own
Prices stayed in check; people stayed Long-term structural transfor- personal change, and how to engage
in their jobs; life was good. mation has four characteristics: scale the entire organization in the process.
Market transparency, labor (the change affects all or most of the
mobility, global capital flows, and organization), magnitude (it involves 1. Address the “human side”
instantaneous communications have significant alterations of the status systematically. Any significant
blown that comfortable scenario to quo), duration (it lasts for months, if transformation creates “people
smithereens. In most industries — not years), and strategic importance. issues.” New leaders will be asked to
and in almost all companies, from Yet companies will reap the rewards step up, jobs will be changed, new
giants on down — heightened glob- only when change occurs at the level skills and capabilities must be devel-
al competition has concentrated of the individual employee. oped, and employees will be uncer-
management’s collective mind on Many senior executives know tain and resistant. Dealing with
something that, in the past, it happi- this and worry about it. When these issues on a reactive, case-by-
ly avoided: change. Successful com- asked what keeps them up at night, case basis puts speed, morale, and
panies, as Harvard Business School CEOs involved in transformation results at risk. A formal approach for
professor Rosabeth Moss Kanter often say they are concerned about managing change — beginning
told s+b in 1999, develop “a culture how the work force will react, how with the leadership team and then
that just keeps moving all the time.” they can get their team to work engaging key stakeholders and lead-
This presents most senior execu- together, and how they will be able ers — should be developed early,
tives with an unfamiliar challenge. In to lead their people. They also worry and adapted often as change moves
major transformations of large enter- about retaining their company’s through the organization. This
prises, they and their advisors con- unique values and sense of identity demands as much data collection
ventionally focus their attention on and about creating a culture of com- and analysis, planning, and imple-
devising the best strategic and tacti- mitment and performance. mentation discipline as does a
cal plans. But to succeed, they also Leadership teams that fail to plan redesign of strategy, systems, or
must have an intimate understand- for the human side of change often processes. The change-management

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approach should be fully integrated 3. Involve every layer. As transfor- John Jones
(jones_john@bah.com) is a vice president
into program design and decision mation programs progress from
with Booz Allen Hamilton in New York.
making, both informing and defining strategy and setting targets Mr. Jones is a specialist in organization
enabling strategic direction. It to design and implementation, they design, process reengineering, and
change management.
should be based on a realistic assess- affect different levels of the organiza-
ment of the organization’s history, tion. Change efforts must include DeAnne Aguirre
readiness, and capacity to change. plans for identifying leaders through- (aguirre_deanne@bah.com) is a vice
president in Booz Allen Hamilton’s San
out the company and pushing Francisco office. She has 18 years of
2. Start at the top. Because change responsibility for design and imple- organizational and technology strategy
experience serving multinational clients.
is inherently unsettling for people at mentation down, so that change “cas-
She is coleader of the firm’s strategic
all levels of an organization, when it cades” through the organization. At security initiative.
is on the horizon, all eyes will turn each layer of the organization, the
Matthew Calderone
to the CEO and the leadership team leaders who are identified and trained (calderone_matthew@bah.com) is
for strength, support, and direction. must be aligned to the company’s a Senior Associate with Booz Allen 2
The leaders themselves must vision, equipped to execute their spe- Hamilton in the New York Office.
He specializes in organization
embrace the new approaches first, cific mission, and motivated to make transformation, people issues, and
both to challenge and to motivate change happen. change management.
the rest of the institution. They A major multiline insurer with
must speak with one voice and consistently flat earnings decided to
model the desired behaviors. The change performance and behavior
executive team also needs to under- in preparation for going public. The
stand that, although its public face company followed this “cascading
may be one of unity, it, too, is com- leadership” methodology, training
posed of individuals who are going and supporting teams at each stage.
through stressful times and need to First, 10 officers set the strategy,
be supported. vision, and targets. Next, more than
Executive teams that work well 60 senior executives and managers
together are best positioned for suc- designed the core of the change ini-
cess. They are aligned and commit- tiative. Then 500 leaders from the
ted to the direction of change, field drove implementation. The
understand the culture and behav- structure remained in place
iors the changes intend to intro- throughout the change program,
duce, and can model those changes which doubled the company’s earn-
themselves. At one large transporta- ings far ahead of schedule. This
tion company, the senior team approach is also a superb way for a
rolled out an initiative to improve company to identify its next genera-
the efficiency and performance of its tion of leadership.
corporate and field staff before
addressing change issues at the offi- 4. Make the formal case.
cer level. The initiative realized ini- Individuals are inherently rational
tial cost savings but stalled as and will question to what extent
employees began to question the change is needed, whether the com-
leadership team’s vision and com- pany is headed in the right direc-
mitment. Only after the leadership tion, and whether they want to
team went through the process of commit personally to making
aligning and committing to the change happen. They will look to
change initiative was the work force the leadership for answers. The
able to deliver downstream results. articulation of a formal case for

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change and the creation of a written of change. This requires more than understand the issues, feel the need
vision statement are invaluable mere buy-in or passive agreement to change, and see the new direction
opportunities to create or compel that the direction of change is as clearly as they do. The best change
leadership-team alignment. acceptable. It demands ownership by programs reinforce core messages
Three steps should be followed leaders willing to accept responsibili- through regular, timely advice that is
in developing the case: First, con- ty for making change happen in all both inspirational and practicable.
front reality and articulate a con- of the areas they influence or control. Communications flow in from the
vincing need for change. Second, Ownership is often best created by bottom and out from the top, and
demonstrate faith that the company involving people in identifying prob- are targeted to provide employees
has a viable future and the leader- lems and crafting solutions. It is rein- the right information at the right
ship to get there. Finally, provide a forced by incentives and rewards. time and to solicit their input and
road map to guide behavior and These can be tangible (for example, feedback. Often this will require
decision making. Leaders must then financial compensation) or psycho- overcommunication through multi-
3 customize this message for various logical (for example, camaraderie ple, redundant channels.
internal audiences, describing the and a sense of shared destiny). In the late 1990s, the commis-
pending change in terms that mat- At a large health-care organiza- sioner of the Internal Revenue
ter to the individuals. tion that was moving to a shared- Service, Charles O. Rossotti, had a
A consumer packaged-goods services model for administrative vision: The IRS could treat taxpayers
company experiencing years of support, the first department to cre- as customers and turn a feared
steadily declining earnings deter- ate detailed designs for the new bureaucracy into a world-class serv-
mined that it needed to significant- organization was human resources. ice organization. Getting more than
ly restructure its operations — Its personnel worked with advisors 100,000 employees to think and act
instituting, among other things, a in cross-functional teams for more differently required more than just
30 percent work force reduction — than six months. But as the designs systems redesign and process
to remain competitive. In a series of were being finalized, top departmen- change. IRS leadership designed and
offsite meetings, the executive team tal executives began to resist the executed an ambitious communica-
built a brutally honest business case move to implementation. While tions program including daily voice
that downsizing was the only way to agreeing that the work was top- mails from the commissioner and
keep the business viable, and drew notch, the executives realized they his top staff, training sessions, video-
on the company’s proud heritage to hadn’t invested enough individual tapes, newsletters, and town hall
craft a compelling vision to lead the time in the design process to feel the meetings that continued through
company forward. By confronting ownership required to begin imple- the transformation. Timely, con-
reality and helping employees mentation. On the basis of their stant, practical communication was
understand the necessity for change, feedback, the process was modified at the heart of the program, which
leaders were able to motivate the to include a “deep dive.” The depart- brought the IRS’s customer ratings
organization to follow the new mental executives worked with the from the lowest in various surveys to
direction in the midst of the largest design teams to learn more, and get its current ranking above the likes of
downsizing in the company’s histo- further exposure to changes that McDonald’s and most airlines.
ry. Instead of being shell-shocked would occur. This was the turning
and demoralized, those who stayed point; the transition then happened 7. Assess the cultural landscape.
felt a renewed resolve to help the quickly. It also created a forum for Successful change programs pick up
enterprise advance. top executives to work as a team, cre- speed and intensity as they cascade
ating a sense of alignment and unity down, making it critically important
5. Create ownership. Leaders of that the group hadn’t felt before. that leaders understand and account
large change programs must overper- for culture and behaviors at each level
form during the transformation and 6. Communicate the message. of the organization. Companies often
be the zealots who create a critical Too often, change leaders make the make the mistake of assessing culture
mass among the work force in favor mistake of believing that others either too late or not at all. Thorough

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cultural diagnostics can assess organi- determined that business realities case for change, grounded in facts
zational readiness to change, bring demanded a greater focus on prof- and supported by the organization
major problems to the surface, iden- itability and bottom-line accounta- at large, existed. Some adjustments
tify conflicts, and define factors that bility. In addition to redesigning were made to the speed and
can recognize and influence sources metrics and incentives, it developed sequence of implementation, but
of leadership and resistance. These a plan to systematically change the the fundamentals of the new operat-
diagnostics identify the core values, company’s culture, beginning with ing model remained unchanged.
beliefs, behaviors, and perceptions marketing, the company’s historical
that must be taken into account for center. It brought the marketing 10. Speak to the individual.
successful change to occur. They staff into the process early to create Change is both an institutional jour-
serve as the common baseline for enthusiasts for the new philosophy ney and a very personal one. People
designing essential change elements, who adapted marketing campaigns, spend many hours each week at
such as the new corporate vision, and spending plans, and incentive pro- work; many think of their colleagues
building the infrastructure and pro- grams to be more accountable. as a second family. Individuals (or 4
grams needed to drive change. Seeing these culture leaders grab teams of individuals) need to know
onto the new program, the rest of how their work will change, what is
8. Address culture explicitly. the company quickly fell in line. expected of them during and after
Once the culture is understood, it the change program, how they will
should be addressed as thoroughly as 9. Prepare for the unexpected. be measured, and what success or
any other area in a change program. No change program goes complete- failure will mean for them and those
Leaders should be explicit about the ly according to plan. People react in around them. Team leaders should
culture and underlying behaviors unexpected ways; areas of anticipat- be as honest and explicit as possible.
that will best support the new way of ed resistance fall away; and the People will react to what they see and
doing business, and find opportuni- external environment shifts. hear around them, and need to be
ties to model and reward those Effectively managing change involved in the change process.
behaviors. This requires developing a requires continual reassessment of Highly visible rewards, such as pro-
baseline, defining an explicit end- its impact and the organization’s motion, recognition, and bonuses,
state or desired culture, and devising willingness and ability to adopt the should be provided as dramatic rein-
detailed plans to make the transition. next wave of transformation. Fed by forcement for embracing change.
Company culture is an amalgam real data from the field and support- Sanction or removal of people stand-
of shared history, explicit values and ed by information and solid deci- ing in the way of change will rein-
beliefs, and common attitudes and sion-making processes, change force the institution’s commitment.
behaviors. Change programs can leaders can then make the adjust- Most leaders contemplating
involve creating a culture (in new ments necessary to maintain change know that people matter. It
companies or those built through momentum and drive results. is all too tempting, however, to dwell
multiple acquisitions), combining A leading U.S. health-care on the plans and processes, which
cultures (in mergers or acquisitions company was facing competitive don’t talk back and don’t respond
of large companies), or reinforcing and financial pressures from its emotionally, rather than face up to
cultures (in, say, long-established inability to react to changes in the the more difficult and more critical
consumer goods or manufacturing marketplace. A diagnosis revealed human issues. But mastering the
companies). Understanding that all shortcomings in its organizational “soft” side of change management
companies have a cultural center — structure and governance, and the needn’t be a mystery. +
the locus of thought, activity, influ- company decided to implement a
ence, or personal identification — is new operating model. In the midst
often an effective way to jump-start of detailed design, a new CEO and
culture change. leadership team took over. The new
A consumer goods company team was initially skeptical, but was
with a suite of premium brands ultimately convinced that a solid

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