9789144143552 by Smakprov Media AB

CHANGE MANAGEMENT ANETTE HALLIN

ANNA OLSSON

MARIA WIDSTRÖM

Original title: Förändringsledning © Studentlitteratur, Lund 2019

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Art. No 43702 ISBN 978-91-44-14355-2 First edition 1:1 © The authors and Studentlitteratur 2021 studentlitteratur.se Studentlitteratur AB, Lund Translation: Rikard Ehnsiö Design: Henrik Hast Layout: Catharina Grahn/ProduGrafia Cover design: Jens Martin/Signalera Cover illustration: Christian Bertrand/shutterstock.com Printed by Dimograf, Poland 2021

CONTENTS

PREFACE TO THE ENGLISH VER SION 7 PREFACE 9

01 / The need for change management 11

Why is change management important? 13 Different perspectives on change management 18 Planned change 23 Radical, incremental and continuous change 26 Aim, contents and target audience of this book 27 02 / Change models 29

Models for individuals undergoing change 31 Models for groups undergoing change 47 Models for organizations undergoing change 55 Models for change management 65 How to pick the right models? 72 03 / Driving forces behind organizational change 75

Change – more, faster and with greater complexity? 77 Change factors 79 The organization’s response to change 89 From strategy to change effort 100

C ontents

04 / Organizing for change 103

How are change efforts organized? 105 Roles and responsibilities 113 What does a change leader do and know? 115 05 / Planning for change 127

Clarifying outcomes 129 Analyzing conditions 137 Defining the scope of activities 152 06 / Creating awareness and strengthening

engagement 167 Creating awareness 169 Strengthening engagement 174 Using all senses 194 07 / Training, evaluating, consolidating and

handing over 197 Training 199 Evaluating 208 Consolidating behaviors 211 Handing over 215 08 / Final reflections 221

Are all changes planned? 223 The complexity of changes 226 REFERENCE S 229 INDE X 235

The need for change management

In this chapter, we explain why working with change management is important. We offer a definition of the concept of change management and describe various perspectives in relation to this concept. We then describe change, its nature and its driving forces – that a change may be radical, incremental or constant. We end by presenting an overview of the contents and layout of the book.

Why is change management important? “Change or die!” proclaims media profile Alan Deutchmann. As a journalist, Deutchmann has followed and written about develop ments in Silicon Valley, the area in California known for its innova tive and rapidly growing IT companies, and his statement is also the title of one of his books (Deutchmann 2007). One might argue that this statement is typical of how we currently discuss companies and other organizations. There is a widespread belief that they constantly need to improve and develop in order to ensure that the products (goods or services) offered correspond with current demands and that they offer value. In light of this, various change initiatives are constantly initiated in a large number of organiza tions. Since change initiatives mean that people need to change their behavior – which is not always easy – change management is necessary. Otherwise, it is not possible to achieve the objective of change efforts: value. © THE AUTHORS AND STUDENTLITTERATUR

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Changing behavior is not always easy The purpose of a change initiative may, for instance, involve improv ing the quality of what the organization offers, better serving the clients or creating new products for a new customer group. When embarking upon such an initiative, it is obviously important to think strategically; for example, to ensure that the organization has the proper structures and resources for ensuring that the change has the desired outcome. However, a key aspect for whether or not a change initiative is successful concerns whether the individuals involved have the ability to “transform” and do things differently. If the quality of a product is to be improved, then the people manu facturing it need to work differently from what they are used to in the production process. And if an organization is to improve in terms of providing service, then the employees facing customers need to change their approach. Unless the employees change their behavior, it is very likely that the change effort fails to achieve its desired effect. This is where change management enters the picture: an effort aiming to support behavioral changes. The fact is, changing behavior is not always easy. Just because the management team in an organization has decided that a certain change should occur does not necessarily mean that the members of the organization actually change in the ways necessary for the change to achieve its desired outcomes. There is a great deal of research showing that people do not always make rational decisions. Frequently, we let our feelings guide our behavior. At a time when organizations to a large extent are described in quantitative, meas urable terms (Power 1997), it is also easy to forget that an organi zation is not something other than its people and that everything else – such as processes, structures and digital aids – are things produced and developed by people, who, for various reasons, have decided to work together with a certain task and toward a specific objective. All forms of change thus imply that people are – and must be – in focus. In some instances of change, their success is entirely dependent on individuals altering their behavior. So, in other words, 14

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managing change efforts to a large extent concerns supporting changes in behavior. All of us know that it is easy to understand that we need to change our behavior but that achieving a change may be extremely difficult. Anyone who has ever tried to quit smoking, alter their diet or start exercising is aware of this fact. Just because a decision has been made to undertake a change does not automatically bring about this change. Nevertheless, this book is not about how to quit smoking or making changes toward a healthier life – it is about how to manage change efforts in an organization. But the very fact that organizations consist of people means that the dynamics of change are the same – albeit on a different scale and in a somewhat different manner.

DO NOT UNDERESTIMATE CHANGES IN BEHAVIOR! Jill Nyqvist, former vice president and head of the development depart ment at Gästrike Återvinnare, has this to say in relation to not under estimating behavioral changes in change efforts: It is easy to underestimate the need to coordinate the actual change; that is to say, alter people’s behavior. The focus is frequently on the issues surrounding the actual change. However, the benefits of the change as such do not matter unless people start doing things differ ently. Without a change in behavior, the intended results and outcomes of the change will not materialize. However, the costs for carrying out the development efforts remain.

People sometimes condescendingly talk about behavioral changes as representing the “soft aspects” of organizational change, meaning that it is difficult to address them in a systematic and scientific manner. This is not the case. Sure, it is not always possible to talk about scientifically proven causality when it comes to change efforts. This is not all that strange – we humans are more complex than that: we do not always react the same way to the same thing. But this does © THE AUTHORS AND STUDENTLITTERATUR

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not mean that change efforts cannot be carried out in a conscious, structured and scientific manner. On the contrary. In this book, we describe how. What, then, is the purpose of structured change efforts?

The objective of change management Simply put, one could say that the results we want to achieve by means of change management concern value. In companies, there is frequently talk about business value realization, while the concept of value realization is commonly used in the public sector. The quicker an organization manages to transform its activities in such a way that the employees affected by the change work in accordance with the new approach, the quicker the organization can realize the expected value of the change and thus increase its revenues. However, changing an organization is associated with costs and other types of challenges as such a change always involves a period of transition. The term transition is here used to indicate the time during which the individuals in the organization go from one way of doing things to another. As mentioned above, people do not always alter their behaviors simply because someone else has decided that they should do so, which means that the transition may be prolonged, and sometimes the change effort grinds to a halt or stops completely. That a transition is prolonged may, for instance, be due to the fact that people are unable, do not have the courage or do not understand how to change their behaviors. We discuss this further later in the book. In this kind of situation, there is a risk that individuals choose to leave the organization and that the rate of sick leave increases due to poor mental health. Hence, a change may be costly, both in economic and emotional terms, which is why the goal of change efforts is to minimize the nega tive effects of the change while seeking to maximize and realize value as quickly as possible. This is done by consciously and in a planned manner supporting the employees in the organization through the change so as to speed it up, which means that the desired value is 16

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achieved faster at the same time as minimizing negative consequences resulting in increased costs. This means that change management has clear links to both the cost and revenue side of an organization. THE IMPORTANCE OF STRUCTURED CHANGE MANAGEMENT Olle Håkansson, IT manager at Biometria, compares the lack of structured change management with a soccer game played using an invisible ball: Implementing a major change without structured change management is like playing a game of soccer using an invisible ball. Achieving sen sible communication within the team is practically impossible. There will also be a lot of unnecessary running around, lots of unexpected collisions and probably never-ending discussions as to whether or not the ball was in or out …

Definition of change management In this book, our point of departure is a commonly used definition of change management developed by the independent, worldwide organization for professional change leaders, the Association of Change Management Professionals (ACMP). This is how ACMP defines change management: a deliberate set of activities that facilitate and support the success of individual and organizational change and the realization of its intended business results.

This definition is based on the notion that change management represents carefully considered, planned and structured work where people in the organization are given the support they need in order for the change to achieve its desired (business) results. Change initiatives are frequently launched in relation to the organization’s executives or board of directors making a decision to face changing conditions in its environment. Such a change requires resources © THE AUTHORS AND STUDENTLITTERATUR

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beyond the framework of day-to-day operations, and there is an ambition that the change should produce results within a given timeframe. The change management team is responsible for plan ning, organizing and implementing this work.1

Different perspectives on change management One might look at change from a number of different perspectives, and depending on the perspective chosen, the focus will shift and different issues will play a key role. In this section, we describe four different perspectives on change management: the perspective of the individual, the perspective of the change initiative, the strategic perspective and the organizational perspective (see Figure 1.1). We then describe the perspective adopted in this book. Individual behavioral changes

Introducing a specific change in the organization

• Who is affected? • The complexity of the change • Readiness for change • Which kind of support is needed?

The strategic view

• Project planning • Resource optimization

The organization’s ability to change

• Cultural dimensions • Values • Leadership • Group efficiency • Structures

FIGUR E 1.1 The four perspectives on change management: the perspective of the individual, the perspective of the change initiative, the strategic perspective and the organizational perspective. Source: Maria Widström & Helena Werner.

1 Change management is a long term and in order not to complicate things too much for the reader, we sometimes simply use “change” or “change effort” when referring to change management, the work carried out by the change management team or the expected effect of change management efforts.

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The perspective of the individual Adopting the perspective of individual change means that the focus is on the behavioral changes taking place in single individuals. Understanding how an individual reacts and develops in relation to change is crucial for successful change efforts, as highlighted in the saying “organizations do not change, people do.” Change efforts to a great extent involve supporting individuals in terms of altering their behavior, and in order to give them the support they need, it is important to understand where the individual is located on his or her journey of change. A tool for this is the “transition curve” (Fisher 1999/2012), which is described in more detail in the next chapter but is also shown in the form of an outline in Figure 1.1 and which in a standardized manner illustrates how an individual reacts to change over time. Coaches and others working with human resources in organizations naturally use the individual perspective as the basis for their change management efforts.

The perspective of the specific change initiative When an organization initiates a specific change initiative, a few or several individuals are typically affected. Hence, understanding how a single individual goes through a change is not sufficient for managing this change at a more comprehensive level. This perspec tive focuses on how the change should be planned and how it may be implemented in order to be successful. The change probably requires, for instance, different amounts of effort from different individuals and at different times. In other words, this concerns asking and formulating answers to questions such as: Which outcome is the organization expected to achieve as a result of the change? Which individuals are affected and how? How many of the expected outcomes are dependent on behavioral changes (which affect the relevancy of working with the change in a structured manner)? Which activities need to be prioritized in order to provide the support necessary for achieving the desired behavioral changes? © THE AUTHORS AND STUDENTLITTERATUR

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These types of questions are key when planning change manage ment efforts. The answers are then used for planning and defining different activities. How this is done depends on the change model used, which is described in more detail in the next chapter.

The strategic perspective It is rare that only one change process at a time is carried out in an organization. Typically, a large number of change initiatives are carried out simultaneously. Adopting a strategic approach in relation to change management is about establishing structures and models taking a holistic perspective in relation to these, prioritizing between these and ensuring that they have the resources they need. As a basis for this work, one may use visual summaries and correlation analyses, showing the extent to which the outcome of the various changes depends on behavioral changes. The feeling that “everything is changing around here” is not uncommon in organiza tions experiencing a large number of changes being implemented simultaneously, and this change fatigue is important to take into consideration when initiating new change initiatives. The perspec tives of correlation analyses vary. For instance, one may compare the impact on people with how critical these changes are for the organization or what they cost to implement. These analyses are all based on how individuals are affected in different change initiatives and they clarify and contribute to more accurate planning in rela tion to resources and time so that the overall strategy – that is, the strategy for all planned changes in the organization – is improved. The strategic perspective also involves deciding where the change management expertise is to be located in an organization. Some organizations have chosen to make the HR department responsible for change management. In other organizations, it has been linked to project activities. Many organizations have chosen to set up a new organizational function called CMO (change management office). The CMO func 20

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tion gathers the resources working with change management, while also coordinating different change initiatives so that skills and resources may be allocated in an efficient manner.

The organizational perspective Adopting an organizational perspective means focusing on the organization’s ability to change. Such a focus requires a good under standing of the organization, such as its culture and values, how leaders and groups operate, what formal and informal structures in the organization look like and how to design a structured change effort. The purpose of this perspective is to create an organization capable of changing so that both ongoing and planned changes may be implemented smoothly. The organizational perspective focuses on aspects such as leadership development, training in change man agement and structured methods in order to drive change included in the other management models found in the organization. There are several development models used today focusing on continuous development. These models, however, only have a major impact once they succeed in developing the organizational perspec tive in change management. Some examples of such development models include lean (Liker 2004, Senge 1995/2006), agile methods (Abbas et al. 2008, Cohen et al. 2004, Larman & Vasili 2003) and DevOps (Forsgren et al. 2018).

The perspective used in this book The four perspectives described above depend on and affect each other. If, for example, we are tasked with implementing a specific change, it is natural to look upon this as a specific change initiative to be planned, organized and structured. But in order to do so, we also need to understand how individuals go through a change in order for us to give them the support they need. The strategic per spective, with its knowledge of which other change initiatives are

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underway, is also important for understanding not only why people in the organization react the way they do but also how the change effort is prioritized by the organization’s management team. In order to succeed in change efforts, all perspectives thus play an important role.

“THE PEOPLE SIDE OF CHANGE” Petra Dannapfel, strategic business developer at the Karolinska Univer sity Hospital, has this to say regarding change management and “the people side of change”: In my organization, we are presently carrying out the largest change in Swedish healthcare history. Everyone is talking about and planning for changing systems, IT, working methods, structures, physical environments and partnerships. Fewer talk about change management and “the people side of change.” Those who understand that the change needs to take place in our employees have a hard time knowing how they should proceed in practice.

This book primarily describes models, tools and methods using the second perspective as the point of departure – the perspective of the specific change initiative. At this point, however, it is important to once again stress that all perspectives play a role, even though the second perspective is used as the point of entry for this book. However, our choice of perspective means that we will not engage in in-depth discussions on how to create strategic views from a change management perspective or how to establish the change manage ment profession in an organization, nor do we focus on individual differences or characteristics. Developing an organizational culture inclined to change is also outside the scope of this book, even if suc cessful planned changes will strengthen the organization’s capacity to manage continuous change efforts.

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Planned change The notion that current organizations need to be increasingly vigilant regarding what goes on in their environment is based on the belief that an organization cannot be seen as separate from the rest of the world – the organization is part of a larger system. What happens in the market in which the organization operates, with regard to the organization’s competitors, in the countries where the organization operates, in the society in which the organization exists and from which it takes its employees, etc. alters the organization’s conditions, and to survive and continue to operate, the organization needs to analyze this in a structured fashion and make plans on how it needs to change (read more in Bosch 2016). This systemic approach serves as the point of departure for a planned change effort. In Chapter 3 we describe a categorization of various driving forces behind planned change initiatives initiated by organizations. There are, however, a couple of current trends influencing change efforts at an overall level: technology development and globalization as well as a changing perspective on leadership and work. Hence, we choose to outline these trends here.

Technology development and globalization It is sometimes said that we now live in “the second machine age” and that we are witnessing “the fourth industrial revolution” (Brynjolfsson & McAfee 2014, Floridi 2014). These terms refer to the fact that current technology developments look different from the past. The storage and transfer of information by means of digital technologies and the fact that computers represent “general purpose technologies,” meaning that they can be used for all kinds of purposes and in all sorts of contexts, constantly give rise to new companies and in different ways change the conditions of existing organizations. Since digital developments occur at an exponen tial speed – the data capacity of digital aids (e.g., computers and

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smartphones) doubles every eighteen months – things are moving quickly, which is why digitalization is sometimes said to bring about a structural transformation. The economic, political, cultural, social and psychological conditions for people are changing. What we are seeing now, in other words, is a transformation as significant as the ones during the three previous industrial revolutions.2 As a result of current technological developments, work, leadership and organiza tion are changing in many different ways. At the same time, a globalization process is underway, which means that the countries of the world are increasingly tied together and integrated with each other economically, politically and cultur ally. Companies sell their products and recruit labor from countries all over the world, people move between countries and continents for a variety of reasons, ideas are diffused and cultures influence one another. This alters people’s experiences – even their identities (Castells 1997). Technology developments and globalization stimulate each other and in different ways lead to changes in organizations. Among other things, these developments mean that we now live in what business intelligence company Kairos Future refers to as a “raplex” world (a combination of the words rapid and complex), where a change initiative needs to achieve its desired outcomes relatively quickly as a new change initiative is right around the corner. Many people claim that current organizations need to be inclined to change – they need to be agile – in order to be competitive, and change management is in this context seen as a tool (see Dikert et al. 2016 for a summary of the research on agile organizations). However, not just the world outside organizations is seen as increasingly ever-changing and complex – even organizations them 2 The first industrial revolution was characterized by a mechanization of manufacturing through the invention of the steam-powered machines. The second revolution was characterized by mass production as a result of the invention of electronics and internal combustion engines, while the third revolution came about as a result of the transition to a service society through the invention of computers.

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selves could be said to be complex and intertwined. Systems and processes are rarely confined to individual departments but concern many employees in the organization. For instance, in the past when a finance department got a new financial system, only the finance department was affected. Today, the entire organization is affected since many employees, even outside the finance department, com monly have access to the system in order to, for instance, preview or authorize invoices. When the financial system is replaced, all of these people are thus affected; they need to change how they work and this does not necessarily transpire smoothly. In line with this development, change management has emerged as an attractive way of working methodically toward the goal of everyone affected by the new IT system not only knowing how to use it correctly but also to ensure that they are actually doing so.

New perspectives on leadership and work Another trend affecting change efforts in organizations is that the perspective on organization and leadership has changed. Tradition ally, managers in an organization have had the most information regarding things related to the organization, and this information advantage is something that they have been able to benefit from in their leadership. This has changed as a result of digitalization, and current employees frequently have access to the same information as their managers, which alters the conditions for leadership. Many organizations have also started to take employee engagement more into account by introducing more independence; for example, by means of independent teams – something said to motivate employees (Chen & Kanfer 2006, Laloux 2014, Sinek 2011). Finally, many people today also look upon work as something more than just being able to pay the rent and put food on the table. Many want to feel that what they do in their work is meaningful (Kilhammar & Ellström 2015). These changes in relation to the conditions of organization and leadership have resulted in a growing

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awareness that everyone in an organization “needs to be on board” when embarking on a change.

Radical, incremental and continuous change The description of a planned change concerns how to bring about change. Another way of describing change is to focus on how quickly change occurs. In this context, one may, for example, consider the frequency of impulses for change by distinguishing between radical (non-continuous), incremental and continuous change, where the different types of change are based on their speed. A radical change involves a major change in many different parts of an organization occurring during a short period of time (Grundy 1993, Senior 2002). However, there is a great deal of research showing that this type of radical change is rarely permanent, as such change initiatives frequently result in defensive behaviors on the part of the organization’s employees, who do not alter their behavior in ways necessary for the change to be enduring (Luecke 2003, Rodnem By 2005). Incremental change refers to a change effort taking place in one part of the organization at a time and in relation to one defined problem – not several. The organization thus gradually undergoes change and the employees can “keep up” with modifying how they work (Burnes 2004b). Sometimes, researchers also refer to punct ured equilibrium in order to describe a process over time where the organization is said to exist in a state of equilibrium, which is then disturbed by impulses for change at specific times (Burnes 2004b). Continuous change, finally, as indicated by the term, relates to organizations constantly working with change – the organization’s capacity for change is expanded, as described in the above organiza tional perspective.

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Aim, contents and target audience of this book In this chapter, we have explained why working with change management is important, while also discussing and defining this concept. We hope the reader has been given an introduction to change management and is eager to read more. We imagine that the individual reading this book is interested in learning how change management may be carried out. Perhaps you are a student or participate in a course on change efforts, or perhaps you work with or are affected by change. This book aims to serve as an introduction for anyone interested in change efforts. At an overall level, one might say that the chapters in this book belong to two parts: Chapters 1–4, where we write about change and change efforts, and Chapters 5–7, where we describe how change efforts occur. Chapter 2 presents an overview of the most common change models, all of which anyone working with change and change management should be familiar with. As seen below, these are based on both research and the experiences of consultants and others working with organizational change. In Chapter 3, we describe the drivers for change in organizations and how the strategy work leading up to a planned change initiative is carried out. We clarify how needs for change may be managed strategically by means of business intelligence, business analysis, business development and innovation efforts. In Chapter 4, we discuss different ways of organizing in relation to change, which roles exist and the responsibilities of different roles. We return to the role of the change leader and further describe what a change leader does and thus needs to know. Chapters 5–7 describe how to plan and implement a lasting change. When reading these chapters, it is important to remember that change efforts may well be linear in the planning phase but that the implementation is carried out in an iterative manner. The activities described in primarily Chapters 6 and 7 thus frequently take place recurrently and simultaneously. © THE AUTHORS AND STUDENTLITTERATUR

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In Chapter 8, finally, we discuss whether all changes are actually planned. We also reflect upon how the contents of this book may help change leaders, executives and employees in their change efforts. When writing this book, we focused on what we believe that you as a reader need to know about change as a change is initiated, planned, implemented and evaluated. In order to visualize how change management is carried out, we have created the “change funnel” (see Figure 1.2). This illustrates how various driving forces behind change lead to various change initiatives being organized, in a context characterized by various change models – how the change efforts are planned, driven and handed over. As shown in the figure, working toward change does not occur sequentially. Activities driving change are carried out again and again until the change has resulted in the desired outcomes.

Chapter 3

Chapter 2

Driving forces behind change

Change models

Chapter 4

Organizing for change Chapter 5

Planning change

Chapter 6 Chapter 7

Driving change

Chapter 7 Handing over

FIGUR E 1.2 The change funnel, visualizing a change process and the chapters of this book.

We return to a more detailed picture of the change funnel at the beginning of each chapter to remind the reader that what is pre sented in the given chapter is relevant in structured change efforts.

CHANGE MANAGEMENT Why are some organizational changes successful while others face opposition within the organization and fail to have the desired effect? The key to success is change management. This is a book for readers wanting a broader and deeper understanding of how working with individuals in a structured fashion may improve the results of organizations undergoing change. Change Management describes the need for change and presents a number of established models on how individuals, groups and organizations change. The authors then go on to offer a detailed presentation of what change efforts look like in practice. This book is aimed at people wanting to improve their knowledge and ability to support people in a changing organization in a planned and structured fashion. “This I have really been waiting for! I will recommend it to be used at KTH Executive School.” Anders Holmström, Former Director Industry at KTH Executive School “Every leader should read this. It gives a great insight into how to drive change.” Hawar Akman, Customer Operations Manager at Iver

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