Instilling ownership

The previous stages of our five-stage program will give employees a significant degree of ownership. But don’t assume it will continue throughout the act stage. To see that it does, establish strong governance, scale up initiatives appropriately, and monitor and adjust them as needed.

Establish strong governance

Research shows that change programs with governance structures clearly identifying roles and responsibilities are 6.4 times more likely to succeed. The vast majority of successful programs include four such elements: an executive steering committee (ESC), a change-management office (CMO), executive sponsors (ESs), and initiative owners (IOs) and their teams.

An executive steering committee typically includes the most senior leader and a senior executive team. It owns the change program’s overall direction; makes critical ongoing decisions, such as approving changes in execution plans, reallocating resources, resolving issues, and reshaping initiatives; and holds people accountable for results. When the ESC communicates the progress of change programs frequently during the act stage, they are a whopping eight times more likely to succeed.

The change-management office coordinates the overall program, tracking its progress, resolving issues, and facilitating transparent, effective interactions between the ESC and the initiatives. It seldom leads them but sometimes helps share best practices and acts as a thought partner for initiative teams. Typically, a full-time senior leader responsible for the overall change program runs the CMO. Its size depends on the transformation’s nature, but it typically includes resources for monitoring and reviewing activities, metrics, budgets, and impact, as well as for communications and change management.

Executive sponsors provide guidance, judgment, and leadership for initiative teams by reviewing their progress, helping periodically to solve problems, suggesting and validating changes to execution plans, and focusing on the business impact. They may be either members of the ESC or senior leaders, one level down, who directly own particular initiatives. The ES strives to optimize particular initiatives; the ESC, the full portfolio.

Initiatives are executed by initiative owners and their teams, who typically work for line organizations but may also come from staff functions. IOs generally help formulate the initiative charter; identify resources, operating expenses, and capital requirements; determine the scale-up approach; and develop timelines and milestones. Their responsibilities include both problem solving and people solving.

The CMO provides support and oversight. But accountability for the impact of initiatives should be placed, so far as possible, with line management and built into relevant budgets—no aspect of a change program is complete until they fully reflect it. Programs with clear roles and responsibilities are six times more likely to succeed than programs that don’t; those with effective CMOs, twice as likely.

To understand this governance model, consider the case of a retailer restructuring its global operations after quarterly losses. When an organizational-health survey identified many health issues, the CEO created an ESC comprising senior leaders from the retailer and its parent company. The retailer then created a CMO led by the respected senior manager of its most profitable business line. He enlisted one of his top performers and two respected middle managers from other departments and hired an external change expert and a retail-turnaround specialist. Each of the 25 health initiatives identified in the architect stage had an IO and ES who helped ensure that teams remained committed to targets and had the necessary resources. The teams also included part-time “project amplifiers,” who publicized initiatives to the organization and communicated its concerns back to the teams.

This clear ownership model helped the retailer to reorganize its 75,000-strong workforce and to cut costs by 12 percent within six months. The whole company’s health improved significantly. The program’s light yet robust structure was easily dismantled, and the business then took responsibility for the ongoing effort.

Choose scale-up methods

Companies implement the vast majority of initiatives by testing ideas, learning from failures, and scaling up successes quickly—an approach that limits damage, provides valuable lessons, and builds an appetite for change. But impatient organizations often implement pilots too quickly.

Consider the experience of the Netherlands-based insurance group Achmea. Spurred by the government’s radical healthcare reforms, the company launched a change program in one of its divisions. The initiatives included a plan to raise the call center’s efficiency by 25 percent and to improve the customer experience. Achmea’s initial pilot was a huge success, but the company soon found that the approach of the manager who led the effort was hard to replicate because he had relied on personal influence, not new systems. As this example shows, the pilot phase should include two tests: proof of concept (to establish that an idea creates value) and proof of feasibility (to ensure replicability). Often, this second test also trains leaders for later waves of implementation. Once Achmea adopted the double-pilot approach, the change program proceeded successfully.

Companies can choose among three broad “flavors” for scaling initiatives: linear, geometric, and “big bang” (Exhibit 1). In the first, the proof-of-feasibility pilot is replicated across the organization, but no area starts until the previous one finishes. This works best if a company rolls out an initiative in only a few areas and isn’t in crisis, the stakes are high, deep dives by experts are needed, resistance to change is strong, and the tool kit and solutions require extensive customization.

In geometric scale-ups, implementation occurs in progressively bigger waves. This makes sense if multiple areas share a few common features, many areas must be transformed, a linear approach would take too long, capable implementers are readily available (or can be trained ahead of demand), and the organization can absorb the changes. In big-bang scale-ups, implementation occurs across all relevant areas at once. That takes many resources, but for a relatively short time, and makes sense if multiple areas share many features, the transformation is urgently needed, little resistance is expected, and the company can deploy a standard tool kit.

A multinational energy company, for example, used the linear approach to roll out unified HR software that replaced freestanding national systems. Senior management understood that if the company switched in one go, or even region by region, technical issues might overload the project. The new software represented a major shift, so the company also wanted to ensure that all country organizations embraced it and that concerns at any one location could be addressed before the rollout continued.

But this company chose a geometric approach to implement its new global procurement strategy. An analysis of vendor relationships uncovered similarities among markets in buying patterns and levels of procurement sophistication and vendor choice. Grouping similar markets into clusters enabled the company to increase its leverage with vendors. It then used the geometric approach to roll out the project in increasingly large groups of regions and countries. Procurement teams got up to speed quickly, approaches were progressively refined, and cost savings escalated rapidly.

Another initiative revamped public-relations processes. The company had recently experienced a crisis it hadn’t handled well, because of a decentralized approach to managing its public image. One initiative therefore centralized stakeholder management and PR, installed new policies and guidelines, and aimed to make the general public and key stakeholders aware of the company’s efforts to improve transparency and accountability. A big-bang effort fully implemented the program in two months.