When it comes to strategic planning, every business will come across the need to institute a major organizational change, whether it’s implementing a new technology, establishing different operational processes, restructuring staff, or changing employee culture. On paper, such changes seem relatively easy to carry out—management defines the change, trains the employees, and then executes the change.
In reality, however, organizational change has an extremely high failure rate. Research by McKinsey & Company shows that as many as 70% of change programs fail to achieve their goals, mostly due to employee resistance and lack of management support. This isn’t just a problem at large corporations either: approximately half of respondents in a small business study reported that change efforts typically failed at the execution phase, and a quarter of respondents said that the post-implementation phase is often the biggest stumbling block.
Why change fails
Traditional change initiatives typically come from management identifying a problem and then proposing a solution. For example, say an online retail business is having trouble driving repeat customers and would like to install a new CRM platform to improve customer retention and cultivate loyalty. The company decides to invest in an expensive CRM solution, then hires a third-party to oversee implementation and training. One year later, customer retention rates haven’t improved, and even worse, many employees aren’t using the platform correctly. What happened?
Change management theorists point out many reasons why change can fail: lack of vision or alignment, lack of communication, lack of resources, and so on. But one of the biggest reasons may be the simplest: lack of buy-in. Simply put, people tire easily of change. Perhaps they don’t see how the change will benefit them, or they think that it will result in more busy work.
That’s why every change initiative depends entirely on people—ultimately it’s employees that must accept and drive the change, and their participation is crucial at every step of any change management process.
Empathy and design thinking to initiate change
One of the biggest mistakes that business leaders can make when trying to implement change is thinking they already know what the solution is. In fact, it’s often the case that management doesn’t have a full understanding of what the problem is.
Change management experts say that this is where principles of design thinking can help to initiate the change process. The first step, empathy, is one of the most important—it requires that management put their assumptions about the business problem aside in order to deeply appreciate the experiences, knowledge and beliefs of all the people who might be impacted by a proposed change. In essence, management must first listen to its employees, especially those on the front line working on the day-to-day tasks.
In the search for a new CRM solution, for example, it’s the customer service agents and sales reps that have the most insight into current issues and problems. Is customer retention low because service agents are slow to respond? Are agents slow to respond because of issues relating to technology, operations, or communication? Does sales have trouble generating repeat business because there’s no insight into the customer data? What data is needed and why is not currently being captured?
Through employee interviews and feedback, management can then arrive at the second step of design thinking: defining the problem. Reframe the original problem based on new insights gained through the empathy process and derive a meaningful challenge statement that your business wants to solve.
For example, instead of saying, “We want a new CRM solution to solve customer retention,” the new challenge statement would incorporate both employee feedback as well as an overall vision that derives from your company values: “We want the best technology and operational processes that will help us to deliver customer service above and beyond the industry standard and improve customer retention rates by 50%.”
Having a clear challenge statement helps everyone on the team to grasp the bigger picture. Instead of seeing change initiatives as “more work,” employees can understand the goals, purpose, and benefits of the change as it relates to their own job roles.
Employee empowerment ensures changes stick
In addition to helping define the problem or challenge, front-line employees must also be involved in creating and implementing the solution. Not only do front-line employees come up with some of the best ideas, but by empowering them to take ownership in the project, they are more inclined to see the change through and make it successful.
Empowerment can take many forms, whether it’s in helping to generate ideas, test out prototypes, or getting other employees on board with the change by becoming exemplars within the organization. In the CRM project, for example, a company could involve employees through various stakeholder committees, such as a consulting committee for the buildout, a review committee for testing, and a training committee for super users and admins.
Like with any strategic plan, major change initiatives are best implemented in steps and phases using an iterative process that allows the company to test and refine processes until they’re successful. Define project milestones and institute KPI checkups to ensure that the project is tracking to the original challenge statement and goals. Promoting short term wins (e.g. “the new customer service ticketing system has cut down response times by 2 hours”) also helps to keep the team motivated and helps to institutionalize or “cement” the change within the company.
As the old saying goes, change is inevitable. It’s how you manage change among your employees that determines whether change can translate to growth.