Change Management 101

Change is inevitable, whatever the size of your business. So what can small businesses learn from big corporations about managing change?

It’s 1975 and Kodak is one of the biggest brands on earth, dominating the photography industry, especially in the USA. Its logo is as ubiquitous as another red and yellow brand – that’s right, McDonalds. Awash with profit, Kodak developed a digital camera, the first of its kind.

A decision had to be made. Embrace this new way to take photographs, or concentrate on their existing, highly profitable model of selling film, cameras and processing equipment. Fearing that promoting their digital camera would threaten their core brand, Kodak quietly and fatally dropped it.

Fast forward to 2012 and Kodak is bankrupt. Successive waves of technological innovation have taken digital photography into the hands of billions of smartphone owners, more than ever owned analog cameras, and there’s not a Kodak logo in sight. Kodak thought the profitable present would go on forever and hid its head in the sand. And worse, it even buried the most perfect lifeline it could have imagined. As an example of why change management should be at the heart of every business, Kodak is hard to beat. So how could it have evolved with the market and stayed out in front? Perhaps if change management had been as well understood in 1975 as it is today, Kodak might have been the company that brought the digital camera into the mainstream and provided the technology for the smartphone cameras in everyone’s pockets today.

What is change management?

Change management is an essential skill that keeps your business going, particularly for those in leadership. Change management isn’t simply a way of coping. It’s a career. According to one supplier of change management training courses, “Change management is the discipline that guides how we prepare, equip and support individuals to successfully adopt change in order to drive organizational success and outcomes.” Another supplier of change management courses recognizes that “There’s no single model of change and no single solution to effective management, but HR … professionals are recognizing they need to ensure they have the skills, knowledge and credibility within their organization to be champions of change.”

Luckily, you don’t have to be an HR professional to adopt the discipline’s main principles. And no matter how small your business, you can learn a lot from the way huge multinationals stay huge. 

Change management examples

Famous cases of change management successes tend to be pulled from huge organizational structures successfully changing course to either negotiate a period of risk, or adapt to a changing world. For instance, Shell’s Downstream-One policy introduced a set of principles that addressed huge inconsistencies in the way Shell operated. From financing to structural hierarchies, Downstream-One rationalized the whole company to effectively reverse creeping inefficiencies and send the share price upwards after a period of decline.

In another big business example, when Spanish banking giant Santander moved in on the UK during the global financial crisis of 2008, they purchased a series of struggling financial brands, all with a strong regional heritage. To make each brand work in the new organization, they took a strict, process-driven approach that meant throwing out each brand’s respective culture and methods and imposing new, lean, consistent ones. Five years later, Santander had firmly established itself in the UK market and the brands they purchased were consigned to history.

It’s certainly true that change management seems to be a more important discipline for big businesses. It’s particularly crucial to those selling change management as a product. After all, if you’re a multinational, it’s harder to change. And if you’re a business titan, the invoice from your consultants will be pretty impressive, too. But small businesses can suffer the same procedural inertia as multinationals and can use the same methods to shake it off, without the massive bill.

For all sizes of business, change management principles remain the same:

1. Build the case for change

You have to know why you need to change and you need to express it clearly. You’ll know when you’ve done this successfully when team members can explain why they, and you, are implementing the changes.

2. Share your new vision

What will your business look like when the changes have been implemented? What are the positives for the whole organization? What about your customers?

3. Commit to adequately resourcing the project

Everyone in your organization who will be asked to change needs the means to do it properly. This is the most common reason for failure.

4. Empower your leadership

Your managers and leaders need the capability to manage change. Do they have the specific skills and characteristics to do it properly?  Do they need to attend a good change management training course?

5. Communicate at every stage

Keep everyone informed and make sure their motivation levels stay high. Even if you have to communicate bad news, how you tell people what’s actually going on will have a direct bearing on your project’s success. Be supportive and empathetic and your organization will support you.

Problems are inevitable, aren’t they?

You might mistake some change management success stories as merely good businesses being run well. It’s when you look at an example of things going wrong that you see how ignoring the discipline’s basic principles can spell disaster. In 1993, FoxMeyer Drugs was the fourth largest distributor of pharmaceuticals in the US, worth US$5bn. In an attempt to increase efficiency, FoxMeyer purchased a new warehouse automation system and hired Andersen Consulting to integrate and implement the two. It was meant to be a US$35m project. By 1996, the company was bankrupt and was eventually sold to a competitor for a mere US$80m.

What went wrong? First, FoxMeyer set up an unrealistically aggressive time line – the entire system was supposed to be implemented in 18 months. Second, the warehouse employees whose jobs were threatened by the automated system were not supportive of the project, to say the least.

After three existing warehouses were closed, the first warehouse to be automated was plagued by sabotage, with inventory damaged by workers and orders going unfilled. By failing to make a case for change, not communicating it properly and failing to resource an unrealistic timeline, FoxMeyer were badly served by professionals who were employed to manage their changes. It’s no wonder a hefty court case followed.

There are many stories out there, of businesses failing to manage change. And there are many versions of the same golden rules. Wherever you look, all the disasters were caused by management ignoring at least one rule. So it’s a pretty straightforward lesson to learn: whatever the size of your business, you need to recognize that change happens and that managing change is your key to staying afloat. And that means putting change management at the heart of your organization, whatever its size.

Is your business urgently in need of change?  

If your business could do with a fresh approach, what do you do next? Hire a consultant or give it a go yourself? Our guide will help you decide. Read Management Consultancy 101 today.