Friday, May 1, 2009

Change Management - The Subtle Difference Between Being Inert and Fickle

With the current problems faced by various companies in different sectors (automotive, newspaper, media etc), I thought it might be a good idea to look at change management and how urgency affects decision making as well as overall performance.

Change management is often an issue of hot debate amongst well meaning managers. On one side, there are those who argue "If it ain't broke, don't fix it" while others would warn that "change is needed to compete / differentiate / survive".

Often, there are good arguments to be made on both sides. This is particularly true for live systems that are operating 24 hours. In any change management scenario involving downtime, taking live systems with large traffic loads down is best done during off-peak hours (maintenance on a subway system, telephone network, power plant etc) when the demand of those affected is at a minimum.

However, before that decision is even reached, managers will do cost-benefit analysis and evaluate whether a decision to implement a change should be accepted. You'll notice that generally speaking, there is a trend in that as time progresses, the readiness for change (sense of urgency) increases, but the performance (strategic capability) to change precipitously declines ("is it too late?").
The sweet spot of change management is an anticipatory change right before it becomes reactive, or in other words, making a change at the last minute so that it is ready right when it's needed (the metaphorical holy grail of change management). Why is the performance of change management so low at the beginning? Why don't we invoke changes (assumed to be improvements) right away?

Think about it in terms of discounting the required time and resource "investment" from when it is implemented to when it becomes optimally useful. In the same vein as disruptive technologies (as coined by Clayton M. Christensen in his 1995 article Disruptive Technologies: Catching the Wave) if you provide too much utility too fast, the capacity to efficiently utilize the resource diminishes until your capabilities and needs catch up. In this scenario, the "If it ain't broke, don't fix it" philosophy wins out.

For instance, think of fax machines. When the fax network was "young", owning an expensive fax machine didn't make sense as you could only be connected to a small network. However, as the network grew, having a fax machine to be connected to this larger network became critical to the point where to not have one was a detriment to your business. Same can be said of email and many other technology changes. There is usually a hefty premium to be paid for first mover advantage when it comes to technological improvements.

It is no secret that change management is essentially looking out for the long term at the expense of the short term (which is why it can often be a very difficult decision to make). And while short term results are critical for demonstrating solvency and profitability in the long run, ignoring looking into the horizon for too long can have disastrous effects (as we are seeing now as weak companies struggle in this economic recession).

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