What is organizational change and what are the specific characteristics of project management methodology as applied to change projects?
By a strategic event we normally mean an impact in time and scope change in corporation life that influences the whole corporation or a significant part of it. Very often a strategic event is called a strategic change.
The examples of strategic change may include:
Political changes of the company status: Merging, selling parts of a market, redistribution of ownership between the private and public sector, etc.
Changes in the internal structure of the company: Moving from a functional structure to a balanced matrix or introducing new management approaches such as introducing the methodology of total quality management.
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Strategic change can be caused by a number of situations:
In an Ideal Situation: A decision made by top management for a significant improvement or change of business processes or product transitioning of the company to a new level of development.
In a Normal Situation: A decision made by a company's top management under strong external pressure or in order to solve serious problems, such as a significant decrease of profits, a financial deficit, the low efficiency of management systems, etc.
In a Bad Situation: A crisis and/or organizational collapse when further functioning of the organization in its current form becomes impossible.
Unfortunately, in most cases a bad situation leads to organizational destruction. At its best, the collapse decreases the efficiency of strategic changes; at its worst, it denies top management the opportunity to implement strategic actions. Therefore, the strategic change has to be carried out before the organization enters a crisis situation and the inevitability of a change becomes apparent.
It is easy to see that the change event fits all the characteristics of a project.
First of all, in order for a change to be successful, it has to:
Be compact in time. If you try to prolong a change process for an unknown number of years, it is going to ruin the company.
Have clearly formulated goals and clearly stated objectives in its scope. Any attempt to carry out a change that does not have a well- determined scope will lead to a waste of money and time, and no result will be achieved.
Be determined in budget. As a change event always considers expenditures to be made, you have to be careful that it does not lead the company to financial collapse.
Have well-considered mechanisms of "getting in" and "getting out." The change process does not just happen; it is a special state of an organization that is characterized by specific management and financial schemes. Before it starts, you ought to have a clear understanding of how you are going to get the organization into this special state and how you are going to get it out of it.
As the change process fits the characteristics of a project, it can be managed with the application of project management methodology. However, this type of project has a number of specific features, including the external environment, the company organization, the project, and the long-term effects of a project on this external environment; the difficulties of applying classical financial justification methods and the need for more qualitative indicators of project success to be considered; the need for a more flexible, changeable chain of relations between the activities and the final results given more opportunities for changing any of the sections of the chain.
The modification of a project management methodology developed for international socioeconomic programs and projects enlarges the opportunities for applying project management to the internal projects of the company oriented toward implementing change. The modification is known under a number of names, including the one we like best— results-based or results-oriented project management methodology. The concept of a methodology is built on the idea of results chains describing project development from inputs to long-term results—sort of a WBS turned 90 degrees to the right where the major long-term results form the top level of the WBS. This is illustrated in Figure 7-4.
The major differences between results-based management and a classical project management approach include:
The orientation on long-term and medium-term project results mainly happening outside of the project scope and outside of the project manager's framework of authority.
The ability to use qualitative result indicators along with quantitative indicators for both justifying the project and using performance management.
The increased flexibility inside the sections of a result chain allowing change on any component of the chain including inputs, activities, outputs, outcomes, impacts, and indicators as the project is developing and its progress is monitored and analyzed using result indicators.
Figure 7-4: Classical WBS compared to results-based management
What is a change process and what are its stages?
The change process has two intermediate, somewhat ''invisible'' phases and three formal change stages. The process starts with the preliminary phase of understanding the need for change. This is illustrated in Figure 7-5.
After that, the change should follow these three stages:
Building the foundation for a change
Building the concept of change
Implementing the change
After the change implementation is over, the final activity of a change process is to bring the company back to normal operation with the results of change being realized and introduced to normal processes.
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With the change process, it is important to remember that:
Ignoring the first two stages, building the foundation and building the concept, leads to a change failure. This is the most common managerial mistake.
Figure 7-5: Change stages and project processes Only the third change stage, implementation, has to do with actual change in project execution and is usually regarded as a whole change project.
The first stage is normally carried out as invisible work that is not seen by personnel and sometimes is not even seen by the company's top management. It has to be carried out by the initiator of the change.
The second stage of change can be carried out within the scope of the normal functional operations of a company or as a separate project, group of projects, or program.
Finally, the last ''invisible'' process is the transition to normal operations. Although it is not considered as a formal stage of change, it is extremely critical in order for a change to be successful and very often involves major stress on behalf of the change implementation team.
Generally, all three stages for change along with two ''invisible'' processes are compliant with normal project process groups with the first stage corresponding to project initiation processes; the second stage to project planning processes; and the third stage to project execution processes. The last ''invisible'' change process is responsible for the organizational transformation into a new state. The results of the change are introduced into normal company operations. This corresponds with normal project evaluation and closeout processes.
Successful change is possible only with eight major factors of transition success being considered (John P. Kotter's eight key change success factors). According to Kotter, in order for change to be efficient, it is important:
To form an understanding of the necessity of change and its inevitability.
To form a team having enough skills and authority to lead a change.
To form a thorough vision of change and the strategy of activities needed for its successful implementation.
To pass this vision on to the people, to inform them of the overall strategy of activities, to delegate authority, and to lead by personal example.
To eliminate obstacles and support risky undertakings and creativity.
To provide small victories; to find and reward successes within a scope of overall strategy and vision of a change.
To secure achievements and support continuous movement.
To fix changes achieved into the culture and to relate the new behavior with success in people's perception.