An Integrated Approach to Change

Change in business is often focused on the short-term with the objective of creating economic value for shareholders as quickly as possible; or sometimes focused on the long-term with the objective of patiently building the corporate culture. As 70% of change initiatives fail, the authors of “Cracking the Code of Change” (HBR, 2000) suggest that managers need to grasp the two basic theories of change and then “carefully and simultaneously balance these very different approaches.”

 

Here’s how to take an integrated approach to change followed by further considerations (“et alors”).

 

An Integrated Approach to Change

 

All changes in business can be compared along six dimensions for which theory “E” (emphasizing short-term economic value) can be balanced with theory “O” (emphasizing long-term organizational culture). Here are the six dimensions:

 

Goals

 

E:  Maximize shareholder value
O:  Develop organizational capabilities
E+O: Explicitly embrace the paradox between economic value and organizational capability

 

Leadership

 

E:  Manage change from the top down
O:  Encourage participation from the bottom up
E+O:  Set direction from the top and engage people below

 

Focus

 

E:  Emphasize structure and systems
O:  Build up corporate culture: employees’ behavior and attitudes
E+O:  Focus simultaneously on the hard (structures and systems) and the soft (corporate culture)

 

Process

 

E:  Plan and establish programs
O:  Experiment and evolve
E+O:  Plan for spontaneity

 

Reward System

 

E:  Motivate through financial incentives
O:  Motivate through commitment – use pay as fair exchange
E+O:  Use incentives to reinforce change but not to drive it

 

Use of consultants

 

E:  Consultants analyse the problems and shape solutions
O:  Consultants support management in shaping their own solutions
E+O:  Consultants are expert resources who empower employees

 

Et alors

 

As ever, it is always easier said than done! There are two things here: one is easy, one is challenging. What is easy is that the combination of the two theories is not that complicated: the key message is that change agents should not focus on just theory “E” or “O” but give due consideration to both – the combination is not so much a “new” path, but both “paths”. What is challenging is the same thing: that the combination of the two theories is very difficult! This is the very essence of the theory (under goals) that there is a paradox between the short-term economics and the long-term capabilities of the organizations. Day-to-day demands often distract the manager from the longer-term perspective; whilst long-term organizational strategies often appear to be in conflict with short-term economics. Achieving “integrated” change requires acceptance of this tension and promoting it (i.e. including both change theories) and then carefully managing that tension!