Six Steps to Effective Change

Management

Randall Schaefer CPIM

With thanks to Professor Steven A. Melnyk, PhD.
Eli Broad School Of Management at Michigan State University
 Introduction

The Western Electric Story

The lesson of this story

Change management is vital

Change management may fail

 Main Points of this Presentation

A poorly thought out, poorly structured, and

poorly implemented change process will always
fail

A well thought out, well structured and well

implemented change process may fail… but your
chances for success are better
 It Starts with Frustration

The sources of frustration are infinite

For change to occur, the frustration must be

strongly felt by someone in authority

There is a six-
six-step process for managing
change
 Step 1 – Frustration Reconnaissance

A – Confirm the frustration is justified

Evaluate current, quantitative (numerical) data?

Evaluate qualitative (expert opinion) data?

Informed opinions may be more valuable than numerical

data that only validates the frustration
B - Define an alternative and how to get
there

Describe a desirable, high-

high-level alternative to the
condition causing the frustration

Describe, at a high level, actions that will take you from

the current frustration to the desirable alternative
C – Find a Champion

Respected, task driven, organizational skills, access to

resources, authority

Need not be the person who first recognized the need

for change

If your company has no one fitting the above

description, then you must go outside the company to
find the champion
 Step 2 – Determine if its Wise to Go Forward
A – Determine if peers/superiors will support
the change and change process

The status quo generates a powerful inertia

Top management must be convinced that the status quo

costs more than the change

It is harder to maintain support for the change process than

the change itself

Is your management willing to back up words with actions?

B – Determine the necessary resources

Resources will be required; they will cost money

Enthusiasm for the change + natural concern for costs =

temptation to underestimate the required resources

Time, not money, is often the constraint

Required time always seems excessive to those anxious for the benefits of
the change but not involved in the process
C – Present the change as consistent with the
corporate culture

An organization’s culture is the source of its stability

Culture clash -- a make-

make-to-
to-stock company wants to become
make--to-
make to-order with selectable options

Change leaders must be sensitive to subtle differences in

how the change is presented
D - Develop the implementation plan

Turn your list of required activities (from step one) into a high
level implementation plan of sequenced activities,
prerequisites, assigned responsibilities, and deadlines

At minimum, the plan must be:

* valid
* acceptable
* defensible
* feasible
 Main point of Steps 1 and 2
Do not go forward with too few resources

Research shows that when a change fails, most

organizations end up worse off than if they had
done nothing

When a company launches changes with enthusiasm and

abandons them as quickly, it burdens
future changes with an expectation of failure
 Step 3 – Develop keystone metrics

Keystone metrics are a limited number of performance

indicators used as reference points

The keystones identify the broad intent of the change

The data they display shows how the change is progressing

 Goal – double inventory turns
Which metric is the keystone?

1 Average setup time for manufactured parts

2 Days supply of inventory

3 Qty. of purchased parts carrying minimum buy quantities

4 Average through-
through-put time for manufactured parts
 “Days supply of inventory”
is the keystone

Average setup time for manufactured parts…

Qty. of purchased parts carrying minimum buy qtys…

Average through-
through-put time for manufactured parts

are detailed metrics that that would be developed

to support the keystone metric
 Clarify the keystone with a gap analysis
Keystone gap analysis fulfills 4 important functions

1. Defines where we are

2. Defines how far we have to go to get to where we wish to be

3. Becomes the basis for measuring progress

4. Becomes the basis for creating reasonable expectations

 Reasonable expectations are vital to
maintaining top management support

Expectations must address:

Where we wish to be

How long we will take to get there

The pace of change

The path of change if the pace is non-

non-linear
 Step 4 – Develop Detailed Metrics

Detailed metrics communicate what each individual must do to support the change

Detailed metrics keep people focused and coordinated

Detailed metrics show the progress of activities necessary to support the change

Detailed metrics must:

• be verifiable and quantifiable
• use easy to understand standards
• clearly state acceptable/unacceptable results
• be presented in a format meaningful to those responsible for results
 Goal – Convert the factory to lean production

Which is the bad metric?

1 Percentage of employees convinced that lean is vital to the
future of the company

2 Percentage of manufactured parts with secondary routings

3 Percentage of suppliers capable of delivering just-

just-in
in--time

4 Percentage of manufactured parts with SMED capability

Bad metric

“Percentage of employees convinced that lean is

vital to the future of the company”

Difficult to gather the data
Each employee would have to be questioned each time the
metrics were posted

Impossible to verify
Would require you to believe what they tell you

Impossible to quantify
How much conviction constitutes “convinced”?
Beware of metrics distortion

People fear change because it is an opportunity to fail

The greater the change, the greater the temptation to

attach a less threatening interpretation to the change

Remember the “telephone game”?

Assure that the people’s understanding of the change

does not become “watered down”
 Step 5 – Sell and manage the change

Selling the change refers to generating acceptance
throughout the organization

Convincing employees to support the change is the

most important part of managing the change

Do the usual things - articles in newsletter, open

meetings to address employee concerns, etc.

Selling the change will result in employees divided by

the 10/10/80 rule
 Anticipate the 10/10/80 rule
10% - the supportive few will immediately see the
benefits and actively support the change

10% - the nasty few will invent reasons to be

uncooperative and will speak against the change at
every opportunity

80% - the passive majority won’t care about the

change but will go along as long as management
supports the change

Focus on the 80%

 Early success can convince the 80%

Change projects have several components

You cannot address them all at once

It is tempting to first address components that

promise the biggest reward

It is prudent to first address components with

low complexity, low cost, short lead time and a
high probability of success
 Publishing the metrics

The leader must periodically publish the metrics and be

prepared to answer questions about them

Never hide a metric because it is trending in the wrong

direction

When metrics trend wrong, and management continues

to support the change, it sends a powerful message to
employees
 Step 6 – Intervene when necessary
When a metric is out of control:

Judge whether the cause was foolish expectations or

process failure

Correct foolish expectations

Judge whether process failure was smart failure or

stupid failure
Metrics - smart and stupid process failures
Smart failures – Everyone did the right thing but results
were not as anticipated because something was
overlooked when the metric was developed

Change the process and/or metric

Stupid failure – An employee deliberately fails to do the

right thing and results reflect it

Discipline the employee; terminate if the attitude continues

 KNOW THE DIFFERENCE

SMART FAILURES
VS.
DUMB FAILURES

knowing how to manage each is vital

to successful change management
 Discipline is vital
Tolerating an uncooperative employee shows
other employees that management is not serious
about the change

It encourages others to take shortcuts, not follow

instructions or snipe at the change
 Out with the old

Intervene to stop employees from continuing

old processes

Inertia will convince Mary she must continue her

old processes until Joe first changes his

It may be necessary for Joe to change processes

before Mary but it’s not an acceptable excuse
Mary must not be allowed to hunker down with
her old, comfortable processes

She must notify the change leader that Joe is

holding her up
Joe should be disciplined for not changing his processes
as instructed

Mary should be disciplined for not alerting management

that Joe was causing her delay
 Final comments
When you’ve finished these six steps, you’ll have done everything
to maximize the chances of your change being successfully
Implemented

Evaluated the initial frustration

Evaluated the wisdom of going forward

Developed a few keystone metrics

Developed detailed metrics to support the keystone

Sold the change to employees and managed the details of the change

Intervened when necessary

This does not assure success but makes it more likely

 Final comments

If you have done an excellent job on each step, your

odds increase even more

Excellence seems to attract luck to you and

cooperation from others
 Contact info

Randall Schaefer CPIM

Rschaefer@magimfg.com