Change is the law of life and those who look only to the past or present are certain to miss the future
John F. Kennedy
The contemporary business world is undergoing massive transformations across all domains. This explains why the corporate world looks entirely different from what it seemed like three to five years ago. In fact, we have seen changes transpire at a rather unrealistic pace facilitated by new styles of leadership, novel business management approaches, and technological advancements.
Needless to say, if changes are thriving across all dimensions of business operations, they need to be managed effectively. An organization can either embrace the changes and propel forward or have an ineffective approach to transformations and concede the advantage to competitors. This is where the concept of change management comes into play. This meticulous article elucidates each aspect of change management ranging from its implications to examples. So, let us get started with our pursuit of a lucid understanding of change management.
Table of Contents
What is change management?
For any organization in any industry, there is a specific set of critical success factors that determine how successful it will be in achieving its strategic goals aligned with its vision. While there could be a wide spectrum of critical success factors in business, change management is a factor that is of identical importance to all organizations.
It is the responsibility of organizational leaders to ensure that an organization effectively adjusts to the changes in the external and internal business environment. The greater the effectiveness of leadership in terms of change management the more sustainable the company will be in the long run. Needless to say, given the fast-evolving nature of competitiveness in the business world, entrepreneurs have no choice but to make their businesses scalable and sustainable for the future. For that, change management strategy has to be at the forefront of business operations and decision-making.
Going further, let us shed light on a more structured definition of management of change and its implications on a business.
Change management definition
In any organization, change management is a set of synchronized measures undertaken to efficiently deal with the ongoing transitions. These transformations can be with respect to processes, organizational goals, leadership structure, company values, external determinants, and so on.
Moreover, an organization’s effectiveness in change management determines how successfully it can adapt to changes that have a direct or indirect impact. Given this reason, organizational change management holds the key to business success in contemporary times of incessant changes. We all saw how the outbreak of the COVID-19 pandemic enforced organizations to make paradigm shifts in their operations and management practices. Subsequently, organizations that had change management capabilities continued to do well despite the pandemic while others who were resistant to change suffered overwhelmingly.
The incorporation of changes is never easy for businesses irrespective of whether we talk about established organizations or budding startups. Changes external or internal can have a direct impact on key metrics of business success and hence organizational change management is of unexplained importance. However, it is important to ask if there are specific classifications of organizational changes that leaders ought to respond to. The answer is yes and the elaboration on the categorizations of organizational changes is given below.
Development organizational changes
This is the classification of changes that are meant to optimize and improve the strategies and processes that the organization has previously relied on. Having said that, such changes lead to progressive developments within an organization. For instance, if an organization introduces employee wellness programs to boost engagement and retention, it will be a developmental change.
Transitional organizational changes
These organizational changes are usually linked to organizational responses to a problem or unprecedented situation. These changes steer an organization to a new state to rescue it from the current problematic state. To exemplify, if an organization moves towards automation in inventory management to address the issue of losses due to human errors, the change will be transitional in nature.
Transformational organizational changes
Transformational changes are massive fundamental modifications or alterations in the core values, organizational culture, or operations within an organization. These changes have major implications in the context of the business as usual within an organization. To elaborate, they bring major changes in the vision, strategic goals, shared values, and leadership within an organization. To illustrate, an organization moving to a permanent remote working environment will tick all boxes to qualify as a transformational change given its mammoth impact.
Therefore, different kinds of changes are met with different types of change management in terms of approaches and tactics. More importantly, there is a holistic process that facilitates the implementation of change management. Probing further, the ensuing section elaborates on the procedural breakdown of how changes are managed in an organization.
Change management process
The process of effective change management is inclusive of different sub-process and steps that need to be executed with careful precision. There is a detailed description of each key step that needs to be ensured in organizational change management taking into consideration a relevant example of organizational change. An illustration of the effective change management process is represented in the following image.
To understand how different processes collaborate with each other in the course of successful organizational change management, each step has been explained in coherence with the real example. The example sheds light on Domino’s resurrection as an outcome of effective change management.
Conducting strategic analysis and preparing for the change
The very first step in the holistic process of change management is to carry out effective external and internal analysis with respect to the organization. This is essential to identify the opportunities that the business can exploit by bringing a change or the threats that the business needs to mitigate with immediate action. Such identification will establish the need or the urgency for the change. In the incremental competitive environment, companies regularly apply strategic analysis and planning methodologies to recognize the prerequisite changes for optimizing processes and business outcomes. Having said that, strategic analysis forms the foundation of the change management process.
The key is to find the existing gaps in processes, planning, systems, or structures that hold back an organization from making the most of the available opportunities or alleviating existing risks. Highlighting the opportunities or risks will help change leaders to prepare for the change in a more effective way. Furthermore, listed below are some effective measures that change managers and leaders can take to brace for the change.
- Defining the need for the change
- Defining the success parameters of the change
- Defining the impact of the change
- Assigning specific roles for leading and managing the change
- Developing efficient communication strategies
- Planning contingencies in the change management process
In 2008, Domino’s Pizza, one of the most successful brands in contemporary times began to struggle for survival as stocks plummeted. The business was nearing a rather disastrous end but it undertook a complete change of its outlook as a brand. To elucidate, the change managers at Domino’s proposed a plan for a complete digital transformation. This transformation to change the public perception of the brand had the company’s vision to be the people’s favorite food delivery app at the heart of it. The top management carried out an effective strategic analysis to highlight the need for widespread digitalization in terms of mitigating risks and converting opportunities. The change leaders first defined the change in terms of the value proposition it will bring to the company and further defined its impact. In their analysis, the change leaders highlighted how competitors were making the most of the shift toward digitalization.
Getting stakeholders on the same page
After defining the change and visualizing its success, there needs to be a quick stakeholders analysis. For seeking approval for the idea of change that the change managers propose, they need to identify the key stakeholders and establish accord among them. The greater the number of stakeholders on the same page the stronger will be the lobby pressing for the change.
For that, the change managers need to find ways in which they can win the confidence of all stakeholders including the investors of the company. Since the change will impact the company’s expenses, revenues, and profitability, it is salient to have investors on the side of the proposed change.
Continuing from the above example, the progressive leaders at Domino’s were successful in persuading the stakeholders, mostly the top executives, in this case, to align organizational change management strategies with a digital transformation that could help the brand to bounce back. The transformation required large investments as a comprehensive digital infrastructure had to be created and systems had to be revamped. So, the change leaders did their best to win the confidence of the investors and got them to back the transformation.
Undertaking effective planning
Once all stakeholders are in accord with respect to the proposed change, the next step is to plan the change at all levels. There needs to be effective planning with long-term objectives being identified and established. Besides, all departments should coordinate and contribute to the planning process to account for every possible issue with respect to the change. In simpler words, risk management needs to complement planning and the leaders should try to keep decision-making more inclusive in nature. Basically, a roadmap needs to be created with clear specifications of skills and competencies that need to be acquired. The roadmap needs to be in coherence with the following parameters.
Assessment: To undertake strategic planning, organizations need to assess their current position with respect to their competitors, the latest trends in the industry, and changing consumer behaviors. Doing so will help the change leaders plan in accordance with the needed capabilities, differentiation from competitors, and external trends that need to be followed as a supplementing factor to effective planning. For instance, if the retail industry is moving towards e-commerce shopping preferences, no expansion planning should be exclusive of strategies for boosting e-commerce infrastructure. For such assessment, SWOT analysis can be a high-value tool that businesses can use.
Vision: For every change that is integrated into an organization, its vision and purpose must be clearly established as that would form the basis of effective strategic planning. When the vision is clearly defined, mission and strategic plans get aligned with the vision in a wholesome way. Having said that, for planning to begin, it needs to be determined how the change will impact the vision of the organization and the value it is going to add to that vision. After the vision has been set, the mission and objectives are finalized.
Shared Values: Every organization has a set of core values in alignment with which they function. Having said that, any organizational change being incorporated has to be in alignment with the shared values of the company. For that, it is imperative to determine the values of the change to determine how it will impact the existing shared values.
Scope of the change: Effective planning would also require defining the scope of the change in terms of long-term goals that the organization has with respect to a specific organizational transition. This will help the change managers align the objectives of strategic planning with the vision. Further, the scope of its optimization also needs to be determined to be able to plan improvement strategies. Knowing the scope of the change will certainly help in preparing for its implementation. Also, the scope of possible restraints needs to be accounted for to plan for negating the obstacles that may hinder the change implementation.
Key performance indicators: For measuring the progress of the change, the productivity of employees with respect to the new status quo, and the improvements in the change, leaders need to clearly define the key metrics. Furthermore, these key performance indicators have to be backed up with clear communication tactics so that employees have a clear idea of how their participation in the change will be gauged.
Creating strong change teams: The next step in planning the change management process is to form change teams and identify change leaders. Ultimately, it will be the project management teams that will execute the strategic plans and will manage the change as expected. Therefore, it is essential to put effective planning behind how change leaders want their project management teams to be. The more effective the project management teams the better will be the results in terms of managing the change successfully. Also, leaders need to be identified for fixing accountability.
Needless to say, the planning needs to be documented with attention to detail. To add, the envisaged plans have to be aligned with the clear goals and objectives of the change being introduced.
Proceeding with the example further, Domino’s top management began with widespread planning at all levels to implement the change in an effective and successful way. It started with the assessment of its infrastructure to compare how much work needs to be done to bring the kind of digital transformation that was being looked at. The vision of the change was defined in terms of adding greater value to customers’ experience by offering them greater convenience through digitalization. The company planned that it will invest in digital marketing and in the continuous optimization of its digital channels including the launch of its own app. Further, the change leaders set KPIs for app downloads and revenue from its mobile channels as a part of planning its overall transformation. By 2011, app downloads on iPhone had surpassed 500,000. Also, by then, it had made 10 million pounds from its mobile channels majorly due to the vision of its leaders during the planning phase of this change. Even today, innovators at the company are bringing constant innovations like pizza tracker notifications, casting pizza trackers on TV or smartphone, and live pizza tracking features to its food ordering app. Strong teams have been working for the last decade to plan new innovations and execute the vision behind them successfully.
Worthwhile analysis and resource allocation
Moving forward, clear and transparent planning will help the top management to identify the tools, techniques, and other strategies needed to manage the change. Also, the company may require fresh expertise, new leaders, or revamped human capital to successfully manage and implement a change. After identification, there needs to be an in-depth analysis of the identified resources and their relevance to the change being implemented.
Once the list of resources is filtered based on relevance after the analysis, resources need to be allocated. A systematic and rational allocation of resources is required for the productive implementation of strategic plans drafted in the previous step.
The following are some effective measures that change leaders should take at this stage of the change process.
- Identifying the resources and capabilities using VRIO Analysis: VRIO Analysis can be a very effective tool in identifying the present state of resources and capabilities within the organization. The analysis of resources can help change leaders recognize the missing core competencies in the organization.
- Highlighting the gaps in resources and organizational capabilities: Comparing the present state with the desired state will help in determining the gaps. Change leaders need to closely examine the two states to ascertain the existing gaps. Furthermore, these gaps need to be highlighted in front of the top management to seek assistance or allocation of funds.
- Acquiring the prerequisite resources needed for change management: The gaps in resources may exist in the form of financial resources, technology, innovation, workforce skills, and so on. Depending on what resources are missing, organizations need to take immediate action to fulfill the disconnect. If new tools are needed, they need to be acquired in a timely manner. Similarly, if the gap in resources is in the terms of employees’ skills, training programs should be introduced.
- Beginning the change process: After the prerequisite resources have been arranged and the gaps have been filled, resources then need to be effectively deployed or allocated in a planned manner to kickstart the process of change and its management.
Probing Domino’s change management further, the change leaders at the company analyzed all the available resources and determined the resources required. The need for resources existed in terms of upskilling employees to work on digitalization and a revamped technological infrastructure. To take its vision forward, Domino’s also introduced its customized pizza delivery vehicles with installed ovens to serve hot and fresh pizzas for adding greater value to its customers. To manage the paradigm shift to digitalization, the company deployed various resources in terms of finances, human resources, expertise, technological innovations, and other resources to lead the change towards success. Even in contemporary times, to build on the change, the company is allocating large funds to innovations like AI ordering, GPS tracking, and electric bikes for delivery.
Developing strategic communication strategies
In the successive step, the leaders need to strategically communicate the change and its implications to everyone in the organization so that everyone can understand the transformation. Such clear understandin g and a sense of direction are vital for every employee to adapt to the change in a timely manner. Otherwise, if there is miscommunication regarding the change process, it will affect individual performances and hence, the overall organizational efficiency in the course of the change.
Communication is the key and will always be for companies to succeed in alignment with their visionary goals. Further, when it comes to change management, the significance of communication increases a lot more as new instructions and information need to be conveyed at all levels.
Therefore, successful communication strategies need to be developed to ensure that there are no communication gaps. Besides, change leaders should also underline the existing communication gaps that could negatively impact the change management process. For finding these gaps, the leaders need to assess the present communication strategies and determine their scope. Also, another great way to highlight the communication gaps is to seek direct feedback from employees on the communication policies of the company. Subsequently, knowing the gaps will lead to the development of refined communication strategies aligned with the vision and values associated with the proposed change.
Probing further, for implementing a successful communication strategy, the following factors need to be prioritized.
- Establishing communication goals
- Maintaining clarity and transparency
- Framing the message concisely
- Defining appropriate mediums of communication
- Tracking internal communication KPIs
- Using feedback as an effective communication tactic
In Domino’s context, strategic communication took place at levels to communicate the vision behind the change and how it will impact the company overall. Domino’s being a global brand with multiple outlets across the globe used different communication channels to pass on the knowledge and information linked to the change. Clear and transparent communication goals were set and these goals were tracked with internal communication key performance indicators.
Besides, there are different departments within the company that operate from different locations and the change had to be communicated to all the verticals in the organization. For that, the company also transformed its internal communication strategies for optimized results in change management. Advanced internal communication tools were brought in to support the change management process and feedback mechanisms were created. Despite having global operations and a highly diverse workforce, Domino’s has excellent communication strategies that add great value to its change management objectives.
Efficient monitoring of the implemented change
Upon the introduction of the change and even during the course of its incorporation, leaders need to monitor the progress in a consistent manner. For monitoring the pace of change or the effects of the change, leaders can apply various key performance indicators. These metrics along with other quality checks will give an assessment of how successful a change has been in terms of its application and expected returns.
Moving ahead, the key is to use KPIs effectively for monitoring the progress of the change once it has been embedded in the organization. For that, leaders need to set milestones to determine the success of the change. Having set the milestones, leaders can use KPIs to track if milestones are being achieved in alignment with the vision and mission of the goal. When strategic goals are monitored using milestones, the supervision becomes more effective. Besides, adaptive actions can be initiated to get better results and plug the gaps in the progress of the change.
In augmentation to Domino’s example, the change managers at the company created a strong mechanism for monitoring and controlling the change. These monitoring and controlling actions have their own key performance indicators that help in tracking. The company planned the integration of advanced technologies to monitor its goals linked to this change. This is something where the company brought regular upgrades and at present, Domino’s uses AI surveillance to monitor and manage its operations. Furthermore, Domino’s deployed Google Analytics to monitor the success of its digital strategies and online sales have been used as a KPI to effectively measure the success of its digital revamp.
Driving continuous improvements
The role of leaders and top management does not end at the successful integration of an organizational transformation. There will always be a scope for further refinements and leaders and project managers need to keep exploring the opportunities for improvement. For business outcomes to improve in a consistent way, the performance of new changes inculcated in the organization needs to be continuously optimized as well.
Continuing Domino’s example, the company is still committed to enhancing the digital experience of its customers with regular updates in its app and website. Also, in its digital marketing strategies, the company has been constantly bringing improvements in terms of personalized messages and predictive analytics. Various KPIs are closely tracked to gauge the improvements in its digital performance as a company. Domino’s is deploying all the latest SEO techniques and even influencer marketing to keep adding value to its success as a digital giant.
Therefore, the above explanation in alignment with the case study of Domino’s clearly explains how different processes culminate with each other to make organizational change management successful. For greater clarity, let us look at some more real examples of successful organizational change management.
Successful change management examples
Example 1: Successful change management by British Airways
Today, British Airways is one of the most successful and renowned airlines in the world with its operations spread across the globe. As per the company’s official website, the company has completed more than 100 years in service and has 30,000 employees associated with it. However, the company’s success has never been instant and a major reason why it is such a powerful airline company of the modern world is its effective change management.
The company was founded in 1919 and in its initial phase, the company could not deliver the expected business results. After decades went by, in 1981, John King was appointed as the new Chairman of the company. This marked the beginning of massive organizational changes within British Airways both in the organizational structure and operational structure of the company. Given his observation of the large-scale wastage of expensive company resources, John King decided to initiate some concrete changes. His priorities included downsizing the company, expelling a few board members, and upgrading the fleet of aircraft.
Before executing the above changes, he clearly defined the changes as linked to boosting the profitability of the company in times of crisis. He clearly defined that his actions are meant to protect the company from risks of bankruptcy.
More than 20000 employees were relieved of their duties as a part of this massive change management pursuit. This made other employees of the company highly insecure about their careers but with fine leadership, John King managed the chaos and showed empathy towards them. To add, he got the stakeholders and investors on the same page that the new fleet needs to be replaced with modern jets that can keep the company competitive in the fast-evolving civil aviation industry.
Besides, he effectively planned the change across all stages of its implementation and had identified restraints beforehand. He also planned for monitoring the changes and how the change will be controlled if it does not meet its objectives.
Subsequently, in John King’s excellent chairmanship, British Airways started its journey to be one of the most profitable airlines in the world. It took some major changes and more importantly, strategic change management for the company to succeed and reach a stature where it currently is.
Example 2: Successful change management by Coca Cola
Coca-Cola is a popular name in more than 200 countries and its journey of massive success that it has achieved over 135 years is synonymous with intelligible change management. Coca-Cola began its journey in 1892 and since then it has decisively responded to all changes that have affected the business. After Coca-Cola rolled out as a caffeinated cold beverage, it continuously kept expanding its product portfolio and brand portfolio to stay competitive especially when it began to face fierce competition from Pepsico. Today, the company has more than 200 brands including Minute Maid, Sprite, Georgia, Costa Coffee, and the list is ever ending.
Coca-Cola has continuously responded to changing consumer preferences and inclination to more choices with swift changes. It kept growing its brands to cater to a vast customer base ranging from the ones who want to buy packaged water bottles to the ones wanting to have coffee. In 1960, Coca-Cola acquired Minute Maid with the vision of being a total beverage company. Today, Coca-Cola is actually a total beverage company and in fact, the largest in the world.
For effective change management, the change leaders clearly defined that this move is aimed at being a total beverage company and its success will be seen in terms of offering greater and healthier choices to its customers. The stakeholders' analysis was done by the change leaders and the investors were persuaded to believe in the idea of acquiring Minute Maid. Furthermore, the KPIs were set in terms of how much revenue generation this acquisition will get for the company and how it will add to the company’s sales.
To manage this change effectively, the product portfolio of Coca-Cola was changed to add Minute Maid to the product range and further marketing strategies were developed to market Minute Maid under Coca-Cola’s brand name. To further manage the change, new executive leaders were appointed to head Minute Maid and the employees working for Minute Maid were acquired by the company. To further build on the success of this acquisition, Coca-Cola diversified Minute Maid and launched ready-to-drink Minute Maid juices in 1973 followed by Minute Maid Premium in 1996. Even today, effective branding strategies and diversification strategies are being implemented by Coca-Cola to optimize the success of Minute Maid.
Having said that, Coca-Cola has continuously evolved as a beverage industry in response to consumer trends and other factors to keep delivering high value to consumers with diverse needs. When consumers started becoming conscious about sugary drinks, the company responded with healthier alternatives and products like Diet Coke. It would not be incorrect to say, the success of the company can be largely attributed to a wide spectrum of success stories of effective change management.
Besides, over the years, the company has driven massive changes in its advertising and marketing strategies with digital transformation at the epicenter of these changes. Also, in terms of its workforce planning, Coca-Cola changed its hiring policies to make room for diversion and inclusion in its workforce to drive greater business value. Also, the company has incorporated changes in response to the growing preference for sustainability.
Therefore, Coca-Cola’s legacy of more than a century has been largely dependent on change management. The company has always responded proactively to internal and external changes and hence, it serves as a perfect change management case study.
To encapsulate, in times of crisis, major transitions in the external business environment or internal changes within an organization, effective change management becomes highly crucial. Indeed, it is a critical success factor for companies, and its effectiveness is subject to how meticulously leaders plan changes and manage them to get the desired results. Besides, as the business environment continues to become incrementally competitive, the vitality of successful change management will continue to rise in the future. It is going to be a major competitive advantage that businesses will look to gain over their competitors.