Change isn't something that happens just once in a while

I recently worked with a mid-sized professional services client on a change strategy for the implementation of a new customer relationship management system.  As part of the process, I was given a couple of years' worth of sales figures, which showed a real change in the revenue they were earning from different solutions they offered.

"I'm seeing a big increase in sales of Product X, but a decline in sales of Product Y," I remarked.  "I thought you told me you wanted to increase Product Y sales because it was higher margin and created a more steady revenue stream in the long-term.  What's happening?"

The Director of Sales sighed. "We changed the way we wanted to approach the market with Product Y, and now no one really knows what's going on."

Turned out that the senior leadership team couldn't agree on the revised positioning of Product Y (did they target one or two verticals, or try to go after a larger market segment?), which meant that marketing couldn't create any messaging around it - and that meant that not only were they not doing any external communications, they weren't doing any internal communications, either.  So the sales team, left in limbo but still wanting to make their numbers, were selling as much of Product X as they could while basically ignoring Product Y.

This is what I call 'everyday change': The kind of shifts in day-to-day business that seem like small things - until 6 months pass and you realize that little change, left unaddressed, has actually resulted in some big (and not positive) changes for the business.  No one bothers to create a 'Change Management Strategy' or call in a change management expert for this sort of thing, because it doesn't seem like a big deal.  But it is.

The solution?

As an outside consultant who already had access to the senior leadership and was accepted as a change expert, I was able to help my client:  At the next meeting I added 'product offerings' the agenda and we were able to map out a plan:

• We set aside time to finally get agreement on the revised positioning for Product Y
• We agreed on some basic features and benefits messaging
• Marketing was tasked with creating some internal communications, which were then approved by the leadership team
• Because leadership was now all on the same page, they could take that back to their teams
• We arranged training for everyone in the organization - not just the sales team
• Marketing prepared an external communications plan which was presented to the organization with some fanfare

None of this took very long - it was really just a matter of forcing the organization to make it a priority, and then taking the time to communicate it to the organization.

The result?

Sales of Product Y rebounded almost immediately - the salespeople preferred to sell it anyway, due to the higher margins.

The lesson?

Change management doesn't always mean allocating a huge budget for what is clearly an organizationally-transformative initiative.  Sometimes it just means managing day-to-day changes in business focus as efficiently as possible, to ensure that business goals are being met and everyone in the organization is moving in the same direction.

No matter how many years I work in change management one thing never ceases to amaze me.  How the simplest and easiest things to avoid are not, and they are the things that trip us up.

I’m a member of an association that is an international group with a corporate/chapter structure.  This association has gone to standard processes in one area of the organization.  In addition, two of the core values of the corporate entity are flexibility and collaboration with their chapters.  Both are great core values.  Unfortunately the way they have manifested themselves in the endeavor to standardize a process is this:  The ‘standards’ aren’t written down, the head of the group just talks about them. (Often in the abstract, which is in and of itself a problem but I won’t go into that here.)  And when someone does something not to the standard instead of reiterating the standard dispassionately, they want to enter into a conversation to re-convince the individual of the need for standards.  And maybe the standards stay the same, but it is hard to tell because there isn’t anything written that anyone can refer to.  To some individuals working with the standards they seem to change, which is confusing.

You can see where this is going.

There are so many things wrong with their approach; it is hard to know where to begin.  So I’ll just say this:  Clarity, Clarity, Clarity.

As we know, when making a change it is important to be crystal clear about the change and what it is, and what it’s not.  People do better when they know the rules.  And if the rules or standards appear to be changing pretty regularly, it is hard to abide by them.  That’s why when you change procedures or processes it is important to put them in writing in a way that anyone can pick them up and understand them.  We know this, but it still isn’t being done. (Now you know why I say there is work here for my grandchildren.)

One of the frustrations of this corporate group is that they don’t know why they have to have the same conversation over and over again.  To this I say, to you it is the same conversation, but to others it may not be.  And if, in fact, you are having the same conversation over and over again, maybe it is because the other person isn’t clear about the rules.

When I mentioned to this corporate entity that the standards need to be clear, they told me it wasn’t ‘black and white’.  Problem number 2: If you are going to have standardization, the rules that govern it need to be black and white.  This is the rule, this is what the rule covers, this is what the rule doesn’t cover.  Otherwise it isn’t a standard.  This seemed to go against their core values of collaboration and flexibility but it really doesn’t.

Standards are by their very nature not flexible, but they are often surrounded by ways to be flexible.  You can have a standard that says ‘you must do a, b and c’ but then when it comes to ‘d’ there are options.  It is still a standard.  And these standards were created in collaboration with representatives from many of the chapters, so there is collaboration.  But once they are set, if you really want to standardize, you can’t continue to act as if there is flexibility and collaboration regarding the standards – or you will just confuse people, which is exactly what is happening.

I could go on, but I think you get the picture.  The lesson I want to share with you from what I describe is this:  when you are leading change it is important that you have clarity on several levels.

Clarity Level 1:  Make sure you, yourself are clear about the change – what is changing and what isn’t.  Make sure you understand the change from the perspective of the changee – the person doing the changing.  If you are the change agent, it is incumbent upon you to understand other perspectives.

Clarity Level 2:  Have repeatable explanations of the change that ensure it is clear to everyone.  By repeatable I mean written.  If there are standards or new rules, make sure the rules are written in a way that everyone can understand.  Do a test – ask people not involved in any way to read the standards and tell you what it means to them.

Clarity Level 3:  Invite and welcome questions about things that aren’t clear – no matter when they occur  - in a month, in two months, in two years. Knowing what others are clear about – and not - is a gift.  Inviting questions so you can further clarify is a great way to continue the collaboration.  Maybe the standard needs to change, maybe the standard needs to be clearer, maybe there is a need for another standard, maybe everything is completely clear.  Whichever it happens to be, clarity should always be your goal – but not clarity to you – clarity to others.

Keep in mind that a change may be simple and straightforward to you, but change and how it is viewed is in the eyes of the recipient of that change, not you. 

Want to talk more about change in your organization?  Call me any time – especially today because I’m snowed in!

There is so much talk lately about acquisitions and mergers.  Seems like everywhere you turn, someone is buying someone or merging with another.  Big seems to be in.  I'm good with that, but with all the focus on the money end, I bet few are thinking about how bringing two cultures together will affect their bottom line.

Let's start with some statistics:

• 70% of mergers and acquisitions fail to achieve their anticipated synergies
• 50-90% fail to meet financial expectations
• 50% suffer an overall drop-off in productivity for the first 4-8 months
• 'People problems' are cited as the top failure factor in mergers and acquisitions

^{[Some information above is from "Culture Management in Mergers & Acquisitions" by SquarePeg.  You can download the PDF here.]}

There are a variety of reasons why mergers and acquisitions fail (TechCrunch has an interesting list - which includes more than a couple of the 7 Deadly Sins), of course.  But the one that often goes under-recognized is the role of organizational culture.

I suppose in some ways it's not surprising that 'culture' isn't addressed more often or more thoroughly:  Typically, the people driving an M&A are the $5000 pinstriped-suit, Bluetooth-obsessed finance guys (and they do seem to be predominantly male) who are more comfortable with variables they can quantify, like shareholder value, than they are with more qualitative concepts like 'organizational culture'.

Except that it's not actually all that difficult to quantify the cost of a culture fit misfire - it's just a matter of breaking it down into its component parts.  Let's look at some ways to do this.

Loss of top performers:

In my experience, it's the loss of senior A-list employees that can cause the most lasting damage to a merged or acquired organization.  It's not just at the VP-level, either.  Losing senior managers - the ones who've been quietly ensuring that their departments run smoothly and productively, but who are often ignored during a flashy M&A and who are left reeling from a sudden, dramatic change in organizational culture - can leave gaping holes in an organization that take months, and sometimes years, to fill.

But let's quantify the loss.  Assuming we lose 5 senior managers with an average annual salary of $110,000 each, and using a turnover calculator from Drake International, this represents a cost of $5.7 million.  (Sure, Drake's a staffing company and they're a little biased, but even the most conservative estimate here is more than $2 million - and that's just 5 senior managers, not the employees who follow those managers to their new employers.)

Loss of market confidence:

If there's one thing M&A people love, it's Driving Shareholder Value.  But culture clash can mean a drop in shareholder value, as Microsoft's acquisition of Nokia last year has demonstrated.  There are probably other more recent one's, but I particularly like this one.

Loss of productivity:

Mergers and acquisitions can cause productivity losses even in the best-case scenarios.  An unaddressed culture fit problem can make the problem much, much worse - and exponentially more costly.

Let's think about it this way:

• 5000 employees
• Each of them spends 30 minutes a week for 3 months overcoming culture fit challenges (either in increased meetings or decreased work product)
• That's 32,500 hours in lost time
• At a blended cost of $150/hour, that's $4.8 million

It's not difficult to quantify the cost of ignoring the ROI of culture in a merger or acquisition.  The bigger question is:  Why are the M&A drivers leaving so much money on the table?  It isn't hard to manage, you just have to pay attention to it and put people on it that understand both culture and business.