Change management as a discipline has been around for about half a century. It’s already created a management industry which, according to IBIS World, has been valued at $8 billion here in Australia. And companies have made huge investments in training and change management books (over 116,000) on Amazon.
And yet, the change management industry appears to be a complete and utter failure. Most studies show a 60-70 per cent failure rate for organisational projects. And that figure has remained constant since the 1970s.
There are so many stories of change management failure abound. Consider for example Borders Bookstore. Its change management efforts were completely lame-brained. The company embarked on an aggressive expansion of its retail footprint right around the world, saddling it with long-term leases that would later help put it into bankruptcy.
Borders’ procurement teams acquired CDs and DVDs, failing to anticipate a plunge in sales of those items as consumers gravitated to digital delivery systems. And then there was the big mistake of negotiating a deal to allow Amazon to control its online business. Borders had no control of its online sales channel. It didn’t get its own website until 2008, and by then it was too late. Borders is a text book example of a failed change management strategy.
So why do we even try? Because managing change has become the key for companies to get a competitive edge, to break out from the pack and carve out their unique niche.
And that’s particularly true for procurement leaders who have to identify the right strategy to reduce costs, manage suppliers and drive a better bottom line. The act of buying has been around since ancient times. What’s changed is the pressure on procurement leaders to manage the change, anticipate external pressures and show they have a skill and passion for directing change.
So where is it going wrong? May I suggest that a lot of the time, it goes off the rails when managers bring in outside experts and consultants to manage the change management plans. They are effectively outsourcing it, they’re squibbing on the ownership of the process.
But change management only really works when the manager owns the process and has accountability. Their arse must be on the line and they know they have to make it work.
In the end, effective change management comes down to two things: preparedness where you can anticipate change and see it coming, and then the agility, the ability to move quickly and decisively.
And this is where people skills kick in. Too many times, procurement managers see change as a technical process. It’s actually about people. Change management programs often fail because people at the top fail to involve employees. I remember seeing one government department where most senior managers had virtually no commitment to the change which had been mandated from above. Change management efforts there were a disaster.
What’s needed are employees and managers who are agile enough to prepare for change. And what does that require? For a start, it’s important to have a well-defined strategy where employees can see there’s something in it for them (e,g promotions career paths development new opportunities).
As long as people can see something in change for themselves and they feel they can cope with it, they are more than happy to do it. But they certainly don't want to be pushed through a change process that they don't feel they can handle.
Finally, every procurement needs to remember the eight rules of change management set out by Harvard Business School professor John Kotter.
- Create urgency: everyone in the company has to want the change. You can do this by looking at the threats if you don’t change and the opportunities if you do.
- Form coalitions where you have a team of the most powerful and influential people in the business behind you
- Create a vision and strategy for change
- Communicate that vision
- Remove obstacles which means identifying the people who are resisting it and bringing them on board and rewarding the managers implementing it.
- Create short-term wins with sure-fire targets.
- Build on the change by analysing what’s going right and what needs improving.
- Making sure the changes stick by infusing them into the organisation’s culture.
Good luck and stay focused.