CHANGE – What do we mean by success? Pt. II

In part one I asked the difficult question, ‘How do we determine success when investing in organisational change?’ I ask because this question does not seem to be at the fore of decisions about which change approach to take. Perhaps it should be.

In this, the second in the series, I frame success by asking two questions. The first ‘Who should benefit from investments in change?’ is strategic in nature. The second ‘What time periods should be considered when monitoring change outcomes relative to success criteria?’ relates more to the organisation’s dynamics. I also introduce the idea that some outcomes of change are intended, while others are unintended.

When thinking about the strategy, and the organisational change it urges, there are a multitude of potential starting places. Many focus on industry dynamics; identifying a niche where capability and execution can create a (reasonably) sustainable edge. Others start with a sense of purpose; a long term vision of what an organisation could achieve and the benefits that can flow. Another starting point is with stakeholders; making clear who the organisation is intended to benefit.

This stakeholder perspective is an important as it calls out those whose voice needs to be represented when defining the strategy and ensuing change. And it sets the stage for these voices to be part of the process for determining change success. Let me call out, in no particular order, those stakeholder groups I think need be considered.

Staff are often identified in an organisation’s Vision, Mission and Values statements. Most organisations would like their staff to be motivated, smart, hardworking, innovative, agile, capable and focused, so strategy often aims for these outcomes. The reality of the make-up of organisations is that staff and shareholders have many and divergent interests which can play out in organisational politics in turn driving investment in change.

Obviously shareholders should benefit from the success of an organisation and the investments it makes. After all, it is through the risks shareholders take that the organisation has the backing required to function. In a for profit organisation shareholders are the direct owners of shares (as distinct from some institutions such as investment funds or insurance companies who own shares on behalf of the real backers). What about in government organisations? Who are its shareholders? Philosophically, at least, I am sure most would agree that tax payers could be considered in an equivalent light to shareholders. In a not for profit organisation the equivalent is a much broader group of stakeholders which includes the general public, donors, and those named through the purpose of the organisation.

‘Customers’ are the stakeholders who are the recipients of products or services the organisation delivers. Often strategies are specifically aimed at improving the organisations position relative to their customer: higher market share, more transaction volume, greater loyalty and deeper relationships might be some desired outcomes. There can be confusion when discussing ‘customer’ so let me be clear what I mean. Here I am talking about the ultimate beneficiary. In a for-profit model, the customer is the one at the end of the value chain who pays the final price. Similarly in a government and NFP setting, the customer is the consumer of the service.

Most often the confusion arising from the term ‘customer’ is when people consider the world from the point of view of the work they do. A logistics business, for example, might consider a food manufacturer, or a supermarket chain to be their customer. While these stakeholders might pay the bills, they are intermediaries in a value chain, and in strategy sense, need to be thought of as such. Better still, as with suppliers below, they can be viewed as partners.

Suppliers are often critical to the success of a strategy. At times their capacity constrains volumes; a fact that can also drive competitor behaviour. Likewise, organisational success is impacted by other supplier  attributes such as quality and timeliness, cost and technology.

At times strategy is driven by regulation and government policy. Here though, I’d argue the stakeholder is the community within which the organisation operates, and from whom it draws staff, investors, partners and customers. Regulation and policy are expressions of explicit community standards and expectations. I believe it valuable to also consider community’s tacit expectations as these influence government regulation and policy as well as organisational culture.

There is also a need to consider the natural environment, not only because it is a driver of community and government intervention, but also because it impacts the long-term sustainability of the organisation and the world in which we, and our children live.

This is a nice segue into the second question I posed regarding time. In part one of this blog I distinguished between installation and strategic organisation change outcomes. When a system is installed and ‘goes live’ there is a sense of success. If we consider the change from a broader perspective, installation can be seen as just one milestone on the journey to strategic success. The time horizon, therefore, becomes an important tool in developing clear success criteria.

How long does it take for the effects of an investment in change to flow through? Whilst the answer is context specific, the thinking and response will influence how long benefit monitoring should be in place for, and what approach might be taken to organisational change. More on the latter in a moment.

In taking a longer view of the outcomes of a change initiative it is possible (and a good idea) to examine the effects the change is having on the culture of an organisation and its partner network, as these effects typically take longer to show up. It also helps think about how change outcomes can be incentivised and thereby increase the accountability of those steering the change to focus on more than short term installation. Allied, with this it also helps shape focus on outcomes that might not have been anticipated or intended, but which leave a legacy, positive or negative, for the organisation and future change initiatives.

If we are to improve the return on change investment, then we need to improve both the way we think about success, and the way we learn from approaches taken to organisational change. The selection of one approach verses another must be made more explicitly, be whole system oriented and contextualised within the organisation’s strategy. And the approach should be selected because it better fits with the stated intent of the initiative, and not be based on what is popular, easy, understood, better for one (group of) stakeholder(s), or lower in direct cost. The selection of an approach, and the assumptions that underpin it, should form part of overall success monitoring and organisational learning. In the absence of a more rigorous methodology we not only risk waste, we set a trajectory for repeating the mistakes of the past.