Why Change for Change's sake? A Reflection

Leadership focus should only be on change that will capitalise on the big benefit opportunities and/or ensure preparedness for catastrophic situations impacting on the organisation's reputation.

Executive leaders of organisations need to know the difference between a change for a big or small benefit as well a change that will have a big or small cost to the organisation and its stakeholders. Frequent or too much change that is incremental, insipid and insignificant can mean that an organisation’s employees and stakeholders may question whether it is really worth all the effort for little benefit. 

Of course, it all depends on the source, the sense of urgency and need for the change, rather than ‘change for change’s sake’. Why I am raising this premise is because recently I have observed more frequent so called ‘change’ / ‘transformational change’ events than in the past which has stretched resources and not delivered the significant benefits to all key stakeholders. Some changes are definitely transformational and really needed, other changes are not.  The types of ‘change’ can range from the very big and important to the very small for little benefit. 

It is important for executive leaders of organisations to review and consider what the change benefit is and whether it is worth the effort. Is it for the important and high benefit reasons (survival or obtain a great opportunity) or insignificant ego driven or not appropriately risk analysed (change for change’s sake) that will cause more disruption than a benefit?

Examples of ‘big’ benefit changes:

• Capitalise on a big opportunity and/or minimise a potential catastrophic risk scenario (after big picture scanning and risk analysis)

• Mergers and acquisitions in an organisation and industry (where there are win-win and major growth opportunities or survival for all key stakeholders)
  
  
• Economic drivers (for survival and maintain / increase its competitive edge in the market – it may involve leaner management, re-prioritising, cutting out of a declining industry, restructuring, cost cutting and outsourcing)
  
  
• New Leadership / CEO (fixing the messes of the past that is really needed for significant improvement)

Examples of  ‘small’ benefit changes:

• Economic drivers (as an excuse for tinkering with processes, restructuring and downsizing) 
  
  
• Politically driven change (as in private or public sector reshuffled structures eg. – centralised vs decentralised, re-sizing, reshuffling portfolios) 

• New Chief Executive (creating restructures to make their mark that will not be a big benefit to organisation.)

When should we make the Change?

'Change for change’s sake' for little benefit may cause heightened disruption to existing services and ‘change fatigue’ across management and employees. On the other hand, calling resources effectively to enable big benefit change can create greater efficiency and opportunity actualisation. 

When do you call it a change and transformation improvement program and when don’t you?  Some change may seem like a great idea but really was ill conceived and may be in the small benefits bucket. Far worse is when the organisation's stakeholders and people do not see or feel the need for change, have not had an effective history for successful change enablement and/or does not have the right supportive leadership and management culture to support, drive and enable the change.  

So why bother? I liken it to heightening an issue as a crisis and using crisis management techniques. However, the fact is, it is only a minor matter that didn’t need all the hype, response and high impact resources that provides detrimental rather than beneficial change. On the other hand, I see organisations that dismiss a perfectly golden ‘carpe diem’ opportunity or 'sweep under the carpet' a looming potential catastrophic situation because they are too busy focusing on lower order / small things. Perhaps I have seen this all too often as an overseer Board and Audit and Risk Management Committee member and experienced past Auditor.

Let’s focus on the big Change that will really make the difference and matter!

My view is that significant and enforced change (ie, means survival or capitalising on a big opportunity for the company and industry) requires a radical change management effectiveness technique. There is an urgency and a compelling reason to keep afloat and it needs to be done.

I have just been reading the more recent "Leading Change" book sequel “Accelerate”  by John P Kotter, an Emeritus Professor of Leadership at Harvard Business School and ‘Leading Change’ guru. The interesting premise that Kotter highlights is that, in today's world, change is required on a faster time scale due to increasing volatility and therefore requires an agile and new network framework (systems, structures and cultures) in addition to the tried and proven traditional change management approaches to guide successful change. Kotter reinforces that enabling fast ‘change is premised on the fact that it is generally because of a matter of urgency, a big opportunity or to avert a catastrophic impact on the organisation’.

So, why am I highlighting this?

When we intend to marshal the whole organisation and our stakeholders to buy in and support ‘the change’ it better be worth the effort.  Once bitten twice shy... or it could be case of  'Peter crying wolf' if it wasn't a change that was urgently needed after all. So, when you do call people and stakeholders to action for a major change that is worth the effort, the people you need to volunteer, the sponsors and buy in from the people for the change may not really be there to support the change when needed!

Let’s reflect and ask ourselves

Are you constantly making small, insipid changes that really don’t make a real positive improvement to your organisation, systems, practices and organisation's outcomes? Do your management and employees feel that they are spinning wheels, going nowhere fast and for little benefit? 

If so, this only creates people fatigue, disruption and little employee / stakeholder buy in. This in turn will make it difficult to marshal everyone when a much needed major change in the future is required. So, think first before jumping into enforcing change that could have more cost than benefit.

My next blog will be on how ‘high benefit' change can be supported.

Are you appropriately managing your Organisation's Brand?

As an expert in integrated risk thinking, I assist Boards and Executives to help prioritise their focus and management activities. That is, to focus on the big stuff and don’t sweat or overdo the small stuff. By the way, don’t forget that we all need to be good corporation citizens and do the right thing for all our stakeholders (both within and outside our organisations)....

So, how can we utilise and consider risk management thinking in the way we do business?
I will use a recent case study to elaborate on this further.

Today, I want to talk about Brand and Reputation and how management decisions to outsource and not effectively manage this situation can affect your organisation’s 'Reputation' risk and your stakeholders.  One recent example that occured in Australia relates to a wholesome and well established homeland brand: ‘Nannas’, famous for its frozen foods - in particular, frozen berries.  Similar to most Western economy organisations, Nanna’s outsourced its manufacturing operations (ie, growth, production and packaging) of berries to a manufacturer (in the Shandong province, China) to reduce its' manufacturing costs.

Unbeknown to most Australians, and recently reported in our local media, Nanna’s berries were grown in heavily polluted waters where, on a weekly basis, one person in this community dies of a cancer related illness due mainly to the environmental pollution. Recently, in Australia, some of Nanna’s ‘frozen berries’ consumers contracted Hepatitis A immediately after consuming the product.  Given the health scare and number of Hepatitis A cases, all Nanna’s frozen berries’ products were removed from supermarket shelves and our home freezers. 

Nannas’ Board and Executive were silent throughout the media and community outfall and it is unsure whether the organisation will ever fully recover from the reputational damage from this incident.  The Regulator was also questioned given they could have seen this coming as similar incidents had occurred in North America before this Australian incident?!

So, what can we learn from this case?  Hindsight is a wonderful thing! As a good corporate citizen, Nanna’s like all organisations should be meeting the acceptable levels of risk appetite and tolerance that its stakeholders and customers would expect of this organisation.  That is, at the very least, good reliable systems and services, quality products, no harm to the community and meeting the required health and safety standards. In this case, outsourcing the services to a Chinese manufacturer, did not outsource the risk to Nannas.  However, in the operational cost reduction drive to secure growth, profits and shareholder expectations, the company had inadvertently not ensured the consumer expectations for the highest product quality and health & safety standards.

Warren Buffet, a Global Authority on risk and investing once said: 

"It takes 20 years to build a reputation and 5 minutes to ruin it and if you understand this you will do things differently"  

So, my question to you is.... learning from this recent incident what would you do differently in your organisation?  Also, if you were in the same situation as Nanna’s Board and Executive, what would you do now?

The reason that I raise this is because, in this current environment there is a significant Organisational risk appetite  to amplify cost cutting and seek major operational efficiencies for profits and/or financial survival. In fact, we have seen over the past 15 years widespread and exponential growth of outsourced services to cheaper alternative suppliers, mainly in other countries.  The risk here is that some other part of your organisation is affected and compromised. Cutting out an operation does not mean a change in the operating model of ensuring health and safety, quality, reliability of the productions, products and services. Management and effective monitoring of outsourced services needs to ensure that there is a high standard of quality of service, product and standards for employees, consumers and stakeholders.  Also, in the outsourced servicing countries, your organisation should ensure it is a good corporate social citizen by ensuring that the health and safety of suppliers’ employees and communities are met as well.

What New Gen Consulting do and how we help organisations is having Board directors and Executives periodically reflect on their business by undertaking a ‘reality’ health check on  the organisation’s strategic and operational areas by walking through an environmental scan of the organisation's business (using the traditional SWOT, PESTL approaches). We also take into account the risk tolerance expectations of each key stakeholder of the organisation, ranging from external regulators, competitors, shareholders, consumers, standard setter directions, industry associations, partners and internally in terms of the board, management, employees and suppliers. 

Sometimes, as Board directors and Executives of our organisations we get into ‘group think’, ‘blind sided’ thinking without taking a real fresh look of what are the things that matter to all our stakeholders and what our expected outcomes and associated risks in getting there are.  We tend to get hooked into fad programs (such as cost cutting, transformational change and outsourcing) without calculated risk consideration of the compromises that are made and whether they would be tolerated or not tolerated by our key stakeholders. And on top of this, we are trying to figure out how we navigate in a world of fast changing technology, big data, social media communications and security without understanding what real upside and downside risks we need to effectively manage and who we are really managing for. Let’s not forget our Customers, our Shareholders, our Regulators, our People, Suppliers and our Industries. It’s a risk balancing act which requires Boards and Executives to understand what they are really there for and that each decision or non-decision made has a consequence with a big or small unacceptable risk attached. 

Regular ‘reality’ health checks assist in fleshing out what areas are compromised or managed to an unacceptable risk level. The key is to work out what needs to be done and it all depends on whether it is the big stuff (ie, not tolerable and needs to be fixed urgently) or it is the small stuff (ie, is tolerated by all stakeholders and would not impact on all strategic outcomes of the organisation).  It is only by objectively understanding our business and stakeholder context that this can be done.

I hope that this blog reinforces some of the responsibilities of boards and management and also the importance of considering each key stakeholders’ risk appetite and tolerance for all aspects of your organisation. Regular reality checks from a helicopter and objective view will facilitate fleshing out the not negotiable big stuff from the small stuff. This is so that your Board and Executive can confidently make better decisions and improve management actions to achieve better outcomes.

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Thank you for taking the time to read this.....

This is a transcript from my recent video log (on 1 March 2015)

Risk management

Welcome to my first 'official' blog on behalf of New Gen Consulting.

I decided to start this blog to demystify what is Governance and Risk Management and how it could be utilised for better effect to organisations and individuals. 

This will be the start of a regular series of information and learnings that I would like to share.

Always think of risk management as being one of many tools to improve business excellence, strategy development and operational performance.  Risk management should be tailored and integrated in the way that you think and do work.  It’s more of a mindset backed by frameworks and written procedures rather than the other way around. 

It's all about:

• Taking the 'helicopter' view to determine the priorities and key areas of focus and then having the capacity and discipline to drill and manage in line with your organisation's risk appetite and tolerance levels"
  
  
• "Managing the risks (both challenges and opportunities) that will impact on your defined goals and objectives"
  
  
• “Focus on the big stuff, don't sweat the small stuff”
  
  
• “Focus your efforts on continuously improving the “management of risk in your business” and don’t just focus on the risk itself”
  
  
• “Making the most of the upside and minimising the effects of the downside”
  
  
• "Good business and commonsense management."

Risk management as a discipline provides the understanding to know the difference between big and small, imminent and rare, effectively managed and un-managed, objective reasoning and subjective bias!  How do you want your team and you to be thinking and doing?


If you would like to speak to New Gen Consulting about how to get the right risk management focus and mindset, please contact us at info@newgenconsulting.com.au    


We listen, understand and tailor!