Chapter 2

Select the Change Approach That Is Right for Your Organization

I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.

—Jimmy Dean

The assessment informs the nature and size of the opportunities for improvement. Understanding the characteristics of these opportunities is critical in identifying and selecting the type of change required that will best meet the needs of your organization. Most organizations fail to realize that selecting the correct type of change approach is one of the most crucial steps in their excellence journey. An incorrect selection of the change type at this stage leads to failed efforts or disappointing results. In other words, the wrong approach equals wrong results. To help choose the right approach, let’s now learn about the different types of change and their characteristics.

All kinds of change can be broadly categorized under three types (Figure 2.1).

Incremental Change: As the name suggests, the change is incremental in nature. It is a small step-by-step improvement on previous performance over time. Typically, this problem is confined within a department or function. It is known and experienced by the frontline during daily operations. In Figure 2.2, F1, F2, and F3 represent functions and the dots represent the problem that could be anywhere in that functional area. Oftentimes, possible solutions to the problem are known; they just need to be implemented according to which one best meets the requirements.

An individual or a small working group comes together and solves the problem within a day or at most within four weeks. The motivation for undertaking an incremental change is to gain efficiency. The scientific approach to problem solving—Plan Do Study Adjust (PDSA); the seven quality tools (flow chart, histogram, cause-and-effect diagram, check sheet, scatter diagram, control chart, and Pareto chart), and the basic Lean Thinking tool kit are mostly sufficient to address the problems in this category.

Transitional Change: If the problem is more complex than an incremental change could solve, it requires more effort, more data analysis, a higher degree of problem solving tools and structure, and more time and resources to bridge the gap between the current and desired future state. The solution to the problem may or may not be known, but steps toward the new state can be defined, managed, implemented, and controlled within a scheduled timeframe. The problem could occur in a functional area or it could be organization-wide. In Figure 2.3, vertical lines F1, F2, and F3 represent a scope confined to functional areas; the horizontal lines P/S 1, P/S 2, and P/S 3 represent multiple touchpoints of different functions that are involved in delivering the product/service; and the meshed grid represents a combination of both.

The motivation for undertaking transitional change is not only to gain efficiency but also effectiveness. In a transitional change, structured project management framework and tools from process improvement methodologies such as Lean, Six Sigma, Process Reengineering, Agile, etc. are leveraged, in addition to the tools used for incremental change. The duration of the project can vary from multiple months to multiple years. It is, however, recommended that larger and longer projects be broken down into phases and deliverables, with each phase restricted to be accomplished in not more than twelve months.

Transformational Change: This type of change is more strategic in nature. The motivation for change is beyond gaining efficiency and effectiveness. It is undertaken only when at least one of the following scenarios are true:

1.The question is of survival and time is of the essence when

a.There is an external threat of competition,

b.An organization’s product or services have become or are likely to become obsolete, or

c.An organization is or anticipated to be in fiscal deficit.

2.The existing organizational culture cannot produce the new results that the shareholders/stakeholders need to achieve, which triggers the need for the organizational culture to change. Some of the other triggers that may call for a culture change are installation of a new CEO, a merger, and a spin-off.

Transformational change is not for everyone. If your organization does not fall into any of the scenarios mentioned above, you do not require a transformational change—period.

In an HBR article, Ron Ashkenas, coauthor of The GE Work-Out and The Boundaryless Organization, differentiates between change management and transformational change. He explains that change management means implementing finite initiatives, which may or may not cut across the organization. The focus is on executing a well-defined shift in the way things work. During a transformational change, you implement a portfolio of initiatives, which can be independent or intersecting with the goal not just to execute a defined change but to reinvent the organization based on a vision for the future.

In a transformational change journey, the future is unknown when you begin and is determined through trial and error, discovering and learning, as new information is gathered. The tools, frameworks, and methodologies used for incremental change and transitional change are helpful but not sufficient. It requires a new management system model that impacts change at a system level and fundamentally changes the way the business is currently run (Figure 2.4). When the change process is complete, the prior organization is no longer recognizable.

Transformation results in new forms of being that bear little resemblance to what existed before—a true paradigm shift. Paradigm shifts are movements from one primary world view and way of operating to a radically different one. Chris McGoff, author of The Primes, says, “A butterfly is a transformation, not a better caterpillar.” In incremental and transitional change, the desire to improve the past directs what we do. The past sets boundaries and constrains possibilities. In a transformational change, the future directs your actions and only the limits of imagination and courage constrain possibilities.

Transformational change requires a high degree of mental and emotional strength as it can be chaotic and emotionally draining at times, when individuals feel lost in their ability to estimate the duration of the ongoing constant change. During this phase, many people, including some leaders, expect to see a clear step-by-step roadmap for change laid out, and change facilitators have no choice but to pacify teams by providing Gantt charts and schedules from project management. Unfortunately, transformational change cannot be managed with a linear and time-bound plan. The period of change in the mindset and behavior of a critical mass of the organization cannot be predetermined. What can be managed though are the parts of the transformation that require elements of incremental and transitional change.

Since most people are not comfortable being in the unknown zone for very long, it is the leadership’s responsibility to keep the organization focused, engaged, and on the transformational path. It is not uncommon to see leaders themselves losing steam midway. In that situation, the CEO assumes responsibility for reenergizing people across the organization.

When an organization is in survival mode, all hands are on deck. You need multiple breakthroughs, fast. You do not have the time to rely purely on incremental improvements for keeping the lights on. You need to implement incremental improvements, transitional improvements, and a new management system model—all simultaneously. Unlike in other change types, the CEO creates the vision and owns the implementation of the high-level plan by enabling systems and structures. Prompt decision making with clearly defined non-negotiables takes precedence over consensus building. There is a heavy focus on executing, building trust, and respecting one another while experiencing challenges during implementation. Continued fast-paced experimentation and corrective actions are undertaken, i.e., a PDSA on steroids replaces a traditional PDSA. Intensive support is provided to solicit ongoing feedback and address stress and emotions that run high due to unpredictability during the transformation period.

Ford, General Electric, and Apple, to name a few, are all examples of organizations that have gone through turbulent times but have bounced back, bigger and stronger. Not to discount the importance of engaging the frontline, the middle management, and other senior executives who played key roles during the transformational journey in these organizations, it was the CEOs who followed through with their vision to make it a reality.

On the other hand, when an organization is not in survival mode and the intent is either to improve the business or to build a distinct culture over time by selecting from the CVF mix of four culture types, a great approach is to conduct improvements using traditional PDSA. Teams make incremental changes in their respective processes over time, study and learn from them, and make adjustments to their process to make them better. The organization has the time to educate its staff in the continuous improvement methodology, build consensus, and engage people at all levels across the organization to collaboratively build the new organization—slowly and steadily, one brick at a time. In this case, the organization becomes better organically and may potentially transform over time.

According to Scherrer-Rathje et al., for an organization to be successful at implementing Lean and transforming, it needs to take a top-down approach led by senior management and based on change within the whole organization’s culture, system, and thinking. Management is responsible for strategic direction (top down) and improvement work is managed by employees (bottom up). The bottom-up approach, by itself, is not sustainable. When applied it usually forms small isolated islands of Lean work, which has a risk of people reverting back to previous practices. The system therefore must be implemented using a top-down approach, but built from the bottom up, and it must have the support of the entire organization.

As mentioned earlier, it is unfortunate that specific process improvement tools and methodologies that are best suited for incremental and transitional change are being promoted as silver bullets for a transformational change. The tools for incremental change and transitional change are powerful and work when the organization is stable. These tools, without being supplemented by elements of the management system, can neither change employee behavior to affect organizational culture nor turn the organization around when it is struggling.

In their book, Bringing Leadership to Life in Health, Graham Dickson and Bill Tholl write, “We need to move from incremental change to purposeful reform—the difference being that change is a single act, while reform is a process.” In a turbulent environment when nothing is predictable, courageous leadership is needed.

Detailed Comparison of Critical Characteristics for the Three Types of Change

Based on my practical experience from more than two decades in the area of organizational excellence, supported by best-practice academic literature and leveraged shared experiences of several leaders and consultants, I have provided in Table 2.1 a detailed comparison of the three types of change.

Summing-up: Incremental change is seen as a slow process, which modifies the landscape only slightly. If implementation of small changes is done over a long period of time, it leads to a more efficient organization over time. Transition is seen as a fluent change toward a new future, which is an improved version of the existing organization, but transformation is seen as a change toward a future that is fundamentally different from the existing organization. The transformational change offers the best perspective in dealing with uncertain, unexpected, and unprecedented futures (Figure 2.5).

Sensei Gyaan: As a leader, understand the characteristics, expected deliverables, and limitations of each change type before selecting the change approach that is right for your organization. This will allow you to set realistic expectations from the change journey and help you and your team avoid unnecessary frustrations along the way. Practitioners and leaders can use Table 2.2 as a rule of thumb for selecting the type of change in their organization. Also, I encourage leaders to ask these questions:

1.What is my motivation for change? Am I concerned about efficiency, effectiveness, or behavior change?

2.Do I have a culture that will get me the new results I want to achieve?