That's how Controlling 2017 keynote speaker Jeff Klabish kicked off his remarks. After the keynote, we had a frank talk about change management as organizational sticking point point. Klabish, who is the Change Management Practice Director at Alta Via Consulting, explained why external volatility and internal change are connected.
That's exactly how we reframe change management from organizational chore to the essential ingredient in business transformation - not to mention software projects, cloudy or not.
For those indifferent to carrots, there's the stick. In Klabish's change management deep dive later that day, he shared research from a Deloitte CIO study, where most of the biggest factors in project failure are all connected to people/change problems:
Used with permission of Alta Via Consulting
Tying org change into the big disruptive picture
Klabish's core view on change management boils down to:
- We live in uncertain times (global economic shifts)
- Profitability is getting harder to obtain (price competition)
- More companies than ever are on death watch (latest example: Toys R Us)
- Other companies are thriving while making disruptive moves (Amazon eating Whole Foods)
- To get out in front with new digital projects, companies need an effective approach to change - otherwise all the shiny new tech will falter
After citing a laundry list of destabilizing global economic factors, Klabish added in the burdens of regulatory environments (think revenue recognition, GDPR, data security). Toss in the talent wars: recruiting high performers while finding a way to transfer the in-house knowledge of retiring baby boomers.
Companies that overcome these impediments are putting slow movers on the defensive. Klabish:
Uber and Lyft are changing the way we view transportation in the last mile logistics. My local pizza parlor now uses Uber to deliver pizza to my home. Virtual assistants, like Amazon Echo, Google Home, Apple's Siri, are revolutionizing the way I get up in the morning... Neurosurgeons right now at John Hopkins Medical Center are using Virtual Reality in patient MRIs to virtually practice brain surgery to avoid complications on the operating table.
Better use of data is separating winners and losers
Hitting closer to home for the enterprise software professional - in this case SAP controllers - Klabish said that use of data is separating winners from losers. I've written about how cloud ERP customers are discovering the advantage of data visibility. The flip side are legacy systems where master data is a mess and systems aren't easily accessed:
Organizations who are able to harness new data will have an amazing competitive advantage. The need for management reporting, impacts all of you. To consolidate and interpret all that data that is being generated and growing exponentially.
Klabish cited a 2017 study by CFO Research and SAP, which polled, 1,544 executives about the outlook for success in their organizations over the next five years:
- 75% said that success will depend on making effective use of their data.
- 77% said that success will depend on organization's ability to obtain instantaneous access to real time information.
- 84% said that success will depend on translating data to swift and decisive action.
- 85% of CFOs certified said that success will depend on being able to adapt to rapid change and greater business complexity.
That means modernizing legacy software, enhancing predictive capabilities, pulling in external data on the fly. Basically - being a lot more adaptable. Klabish sees a pattern in how the most successful companies do this, grounded in a "command center" where data is evaluated and acted on. But an insular hunker-in-the-bunker approach won't work:
When organizations enter a time of uncertainty, one of the first things they do is evaluate their own situation. They think about themselves. They forget they're in a business ecosystem with their suppliers and their customers.
Winning organizations think outside in:
World class organizations evaluate how the situation impacts their suppliers and their customers first. They actively reach out to their suppliers and customers and talk to them actively, including them in the solution process. Many times, they even invite them into their command centers, so that they can make their decisions together.
Then Klabish said something that surprised the audience:
World class organizations also focus on a few important goals and change faster by changing less.
Oversaturation is a real problem:
Many of the organizations that I work with right now are at the point of change saturation. The organization has so many change efforts happening at the same time that their employees are completely overwhelmed - and many times frozen in place. They have no idea which initiative take priority. World class organizations focus on a few key strategic goals.
Mission is nothing without middle managers
This is a riff on the classic wisdom on change management: "make sure you have executive buy-in." Executives need to hone a mission that extends into line of business priorities. And that's where this audience comes in:
Controllers and CFOs need to work with these executives to determine and prioritize corporate goals. And determine which projects help the organization achieve those goals and stop unnecessary projects.
Once the focus is clear, then a change management plan can be enacted. But if you don't pull in middle managers early, you're going to fail:
Middle management is the number one source of resistance to change. And if you think about it, it makes sense. Middle managers have the hardest jobs when it comes to organizational change. Many times, they are responsible for carrying out the change and they didn't even have a role in deciding it. They have to deal with employee push back. They have to deal with productivity dips, disappointed customers.
Then there is the problem of misaligned budgets and a compensation bonus structure that's not linked to the change initiative:
When middle managers take a step back, they evaluate the change and ask themselves, "what's in it for me?" And many times the answer is... Nothing.
There's a better way:
World class organizations involve middle managers early in the change process. They align compensation and bonuses; they incorporate budgets in the change initiative. And they make it worthwhile for middle managers to support the initiative. The folks in HR and accounting really need to come together to make this happen.
One final distinction: change management is no longer a discrete push tied to a project. It's a way of corporate life:
World class organizations make change management a way of every day life... Key customers are encouraged to supply feedback and suggest opportunities for improvement. You have no idea how many blank stares I've received when I've asked my clients what communication channels are in place where you communicate to your employees, and obtain employee feedback.
From here, it's the nitty gritty of change management - something Klabish dug into that afternoon. I won't get into the meat of his team's methodologies here, but one document is the organizational assessment:
Used with permission of Alta Via Consulting
- A stakeholder analysis identifies the skills gaps in the organization, and groups constituents into categories for ongoing communication.
- The functional impact document examines the impact of change on the user level.
- The communications strategy defines the communications plan and channels to use.
- Organizational readiness tools help monitor training progress and levels of user acceptance.
After the sessions, Klabish and I got into the tough part of the conversation. This goes back to a longstanding grievance of mine: the definition of consultant has turned from straight-talking advisor to "customer is always right" yes man/woman. But when you're a change management consultant, you can't tell the customer what they want to hear. Your job is to hold up an accurate mirror.
Hopefully, your client buys in. Hopefully, the employees and management share a collective purpose that gets them over the speed bumps. But what happens when you get stuck? What happens when you hit the fork in the road between advisory and going along the path the client wants?
Klabish told me he's committed to the harder road of the real advisor. On a change management project, the absolute last resort is firing people for attitude. But yes, on rare occasions, Klabish's advisory has resulted in change blockers being moved out of a company. Yep - fired. On the happier side, once those disgruntled employees were gone, the change efforts gained momentum. Those remaining on the fence saw the consequences of fence-sitting - and bought in.
And yes - sometimes Klabish's team is the one to move on. But, months down the line, Klabish is never surprised when his phone rings: "Can your team come back in?" Kicking out the change management consultants and going your own way can have consequences. Once those consequences are clear, the wake up call comes.
The good news: once the change management process gets on track, the technology part is easy. Well, easier. And that's how AltaVia's full SAP practice enters the picture. Combining forces with Alta Via's S/4HANA team, the goal is to offer the complete project, from tech to process change.
The agenda: get your clients a major step closer to an adaptive business - out in front of whatever disruptions lie ahead. No easy task - but it beats the heck out of trying to get users to embrace systems they have no stake in.