Types of Change
Changing a system to become better able to eliminate variation is known as standardization. Mapping out organizational processes and flows is part of creating standardization. When trying to standardize, training efforts are aimed at creating common approaches to work. The International Organization for Standards (ISO), as a standardization technique, works to develop standards in an ever increasing menu of fields of human endeavor. When we worked in manufacturing, our company used a concept called the “Key Elements for Safety.” These key elements helped standardize how we reported, addressed, and corrected safety issues in our manufacturing facilities. Furthermore, with healthy system definitions focused on the voice of the customer, performance management can be employed. The idea is rather simple and straightforward. Once organizational leaders understand what is required of them from their external customers, organizational leaders can now create practices and processes to meet, and potentially exceed, the requirement of the customer. Having the view of value streams needed to delight customers captured in system format, system owners can be assigned and help nurture both the internal processes and the system outcomes. So instead of having a job with a list of tasks unconnected to anything, people are engaged in a dynamic system with measureable outcomes, which when joined with other critical value streams results in delighting the customer. In short, standardization helps to reduce variation, thereby improving the overall performance and reliability of whatever result you want to produce.
Incremental improvement is another type of change, which targets a shifting performance to a new, more desirable level. In a statistical sense, while standardization is about reducing variation, incremental improvement is about shifting the performance to a sustainable new plane. Incremental improvement entails a mind-set geared toward problem solving: determining root causes of inferior performance, converging on an answer or solution, and systematically implementing that solution. Incremental improvement methodologies are abundant and all follow a plan-do-study-act framework.1
The basic idea behind the plan-do-study-act framework is that you start with your plan. Where do you want to go? Then you actually do something: You implement the plan. Following the implementation, you review or study your results to determine if the actions you took created the desired results. Following your review, you then adjust your plans or act upon the results of your study. This cycle then starts over again with the re-creation or modification of your plan (see Figure 2.1).
Having established standardized systems with a focus on customer satisfaction, system owners can lead incremental improvements by addressing process enhancements. Incrementally improving the systems in concert with other value streams allows for the entire organizational results to improve. And with the system owners leading the incremental improvements, they are able to move the changes into standardization. Without this companion relationship between incremental improvement and standardization, improvements are lost and good ideas do not result in permanent system changes.
The third type of change involves breakthrough results, discontinuous change, and is brought about by redesign—that is, transformation. Transformational improvement is arguably the least understood yet the most critical type of change work. Here, the primary mental model is one of creation—bringing something into existence—and not simply making something like performance problems go away, as is the case with incremental improvement. Text messaging as a way of communication is an example of transformational change; it was not an incremental improvement over traditional methods of communicating. With breakthrough change, the aim is stepwise improvement. While we think the steps and suggestions in our book can help you lead all three types of change, our major focus will be on transformational improvement (see Figure 2.2).
Figure 2.1. The plan-do-study-act cycle.
Transformational thinking suspends focus on the current systems with an eye on the future to be created. In transformational thinking, a future is something to be created and not a problem to be solved. Using a greenfield or white paper approach, thinking isn’t saddled with the current problems. In this way, new and radical ideas are allowed to surface, giving way to transformation and breakthrough performance. Of course, the work then becomes moving the current situation toward the future vision with its new operational approaches.
The importance of transformational change has been highlighted in the wake of increasing technological and social change.2 In our combined world history, major transformation erupted as an occasional tsunami. The world was upended with major wars, noted inventions such as the printing press and cotton gin, and shifts in governance models. We could note these major, transformational changes on a timeline and even understand to a large degree the interdependency of the individual changes. But in today’s world, the tsunamis of change are rapidly hitting the shoreline. There is not enough time to absorb one tsunami before another one hits. And given that the world’s population has more than doubled since 1960, there are many more people creating change through both need and inventiveness. More change, composed of both social and technical facets, is overwhelming many people. But freezing in the face of major change doesn’t mean the wave coming toward the shore is going to stop.
Figure 2.2. Different types of organizational change.
So whereas standardization and incremental improvement were all well and good in the past, only interrupted by the occasional transformational change, all three work in our daily lives all the time. Be it the impact of satellite global positioning systems and communication, computerization of nearly everything, advances in energy sources or genome mapping, change is ubiquitous. Developing skills, passion, and an appetite for leading transformational change is now a requirement in our lives, families, teams, and organizations.
An example comes to mind. Imagine 200 years ago. What advice would a mother and father give their children as those children became mothers and fathers? Something about working the land as a farmer or hunter? Something about “old wives” remedies for sicknesses? Maybe some advice about how a father should behave or about the advice that a father should impart to his children? Our guess is that the transmission of parental advice was fairly stable across many generations over the previous 200 years. Now think about the advice your parents might have given you with respect to how to raise your children. If your children are like ours, they are involved in way too many activities; the only way we can communicate with them is via text messages, and we spend most of our quality time together in the car. What happened? A tsunami of change has descended on the family unit in terms of social changes, cultural changes, and technological changes. We are not at all implying the advice our parents gave us is now all wrong (that is why it is called wisdom), but we are suggesting that changes are all around us, and successful individuals (e.g., leaders of organizations, coaches of sports teams, and even parents of children) need to develop skills to cope and lead the changes. What can make this frustrating is that often the skills to lead change are developed at the same time as the change itself is being implemented. (Think about how parents had to figure out the acceptable use of text messages at the same time that their children were starting to use text messaging.)
More broadly, it is difficult to accomplish transformational change resulting in an expected outcome in part because of the need to continue the work of standardization and incremental improvement. When thinking about a brand-new idea such as creating the horseless carriage or automobile, the blacksmith is still faced with the daily work of shoeing horses. While a movie studio is thinking about transforming their production facility to accommodate 3-D technology, that same studio is still thinking about standardizing budgets and the editing process. While General Motors is thinking about transformation with regards to alternative fuel technologies, the company is still thinking about incremental improvement in fuel economy and existing gasoline-powered vehicles. While McDonald’s is thinking about how to deliver healthy alternatives to current and potential customers, it is also concerned with making incremental improvements in its Happy Meal and standardizing how its employees prepare customers’ sandwiches. It challenges the mental capacity of many to keep focused on the daily work along with seeking incremental improvement and then breaking away and envisioning a whole new reality. And this nimble mind-set requirement applies to the individual, team, or organization undertaking a transformational initiative. Complicating matters further is the relative nature of the three types of change. With an individual, it is like having a desired and hard-won transformational weight loss. The effort and focus in achieving the weight loss is one thing, but moving to standardize long-term diet and exercise patterns is another challenge—thus the yo-yo weight changes seen so often in our society. In an organization, producing a transformative change in customer service within a branch office should be applauded. But without standardizing the practices at this branch and rolling out the change to the other branches, the positive strides will be turned backward. And after the transformational change is made throughout the organization, incremental improvement is needed in order to keep up with evolving customer expectations and competitive responses. All three types of changes are needed.
Given the magnitude of transformational change, many leaders make a key mistake when beginning transformational change programs: They create a separate department, unit, or in some cases, organization to design and implement the transformation effort. On the one hand, organizations do need some distance between the day-to-day operation and the change process to design transformation. However, too much distance makes it challenging to understand the intricacies involved with implementing and managing the transformation process. A successful approach we have used has been to identify two separate teams integral in the transformation process: The transformation design team (TDT) and the leadership team (LT) play unique roles in creating transformation. Years and countless transformational undertakings have pointed to the distinctive role each team has and how they operate best together.