Planning change and changing planning

A short while ago, I worked with a firm to redesign their planning progress. The motivation for the assignment was described by an executive from that firm:

“We felt very good about our planning process, believed that it was structured to ensure that we got ahead of opportunities and addressed the problems that were challenging our business units. A few years ago, for example, we concluded that the business model we had in place in one unit was becoming dated. Customers were looking for more and more customization in the equipment that they bought from this group, and were expecting a much more intelligent product. While the concept of Big Data hadn’t yet become popularized, they were looking for a data stream that would yield significant cost savings in their operations. In any case, our planning process identified these requirements, and our business plan mandated that the team take steps to implement them.

“Quite frankly, we fell on our sword as we tried to implement these changes. Looking back, it was surprise after surprise. Trying to even address customer needs for customization was a challenge. We had always relied on our distributors for customer interface. We had no skills in doing this, and even ran into conflicts with the distributors over end customer interactions. And when we muddled through and got an order, we found we weren’t very good at production to order. All of our processes were designed for high-volume runs, and we basically lost money on each custom order. And to be honest, we never even got to first base in terms of the information idea. That was just outside of our company’s skill set.

“What we gained from this unintended ‘learning experience’ was that strategy was only half of the equation. Without equal attention to execution, good strategy goes nowhere. So we realized that our planning process had to evolve to ensure that we were planning for change along both the strategic and implementation dimensions.”

This firm’s experience was hardly unique. I will cite two learning experiences of my own, ones that convinced me of the importance of focusing on implementation as a critical element of planning. The first involved a webinar that I conducted several years ago on the topic Best Practices in Strategy Implementation, sponsored by the Institute for the Study of Business Markets. The webinar technology that was used allowed for some real-time polling of the participants, the vast majority of whom said they were currently involved in implementation projects. The quite striking finding that emerged from the use of this polling technology was that only 26% of the respondents said that their companies offered any in-career education programs related to implementation. Most corporations today spend well over $1000 annually per employee on education and training. Such programs span a wide range of topics – from how to develop strategy to how to motivate employees to how to use the newest IT tools. But the finding from this poll, as well as what I’ve heard over and over in discussions with executives in many different companies, is that very little of this money is spent on developing competencies related to implementation projects. Teams are given very important implementation assignments without any training or tools to help them to succeed.

The second experience which motivated my understanding of the importance of developing implementation skills emerged from a research project that I did on the challenges of making changes to a firm’s business model, reported in an earlier article in the September 2011 issue of Business Excellence. Such business model changes are frequent, typically motivated by sound strategic thinking, much as was the case of the firm whose case study was reported earlier, addressing critical strategic goals such as profit improvement, growth, new market entry, or the introduction of new technology.

In essentially all cases in which firms try to implement changes to their business model, such changes represent a major challenge to implement. That reality underscores the importance of the following finding from the research cited above. By a very substantial margin, the two reasons cited as responsible for situations in which the new business model failed to deliver the hoped-for results were “Implementation process was poorly managed” and “Internal resistance to the new business model”. Those two factors emerged from a long list of potential problems that spanned a spectrum from a flawed strategy to customer resistance to competitor responses. The teams that will be responsible for implementing business model changes will have to grapple with challenges aplenty, some involving the technical aspects of the change, some involving gaining buy-in from customers and other key third-party organizations, and some involving challenges associated with resistance from within the corporation itself. Without a strong implementation plan and a team prepared to execute it, those challenges often prove too much to overcome.

Ben Franklin once said “By failing to prepare, you are preparing to fail.” The experience of the firm that I cited earlier and the findings from my ISBM poll and the change management research project certainly suggest that his words remain true and apply today. Firms need to change their planning process in order to plan for change. Planning processes must not only define the appropriate strategy, but also provide a solid foundation for its implementation. I believe that there are three primary dimensions along which the planning process must evolve to ensure a high probability of success in the implementation of change.

The first of these involves the basic blocking and tackling of effective project management. Every project associated with implementation, change management, new business models, or similar motivations has complexity that can only be addressed through a structured and orderly approach, drawing upon best-in-class tools to manage and monitor the project. Defining the change that is required from a strategic perspective is only the tip of the iceberg from an implementation perspective. “Leaving the details to later” is typically a prescription for failure. A best-in-class planning process prepares the implementation team with a detailed plan, providing clarity as to assignments and responsibility at a very detailed “What – Who – When” level of detail.

In my experience, more often than not, the processes that are required to move from high-level strategy to “What – Who – When” detail not only raise the likelihood of success, but also uncover important elements of the strategy that were overlooked previously. Requiring that strategy be translated into implementation plans is thus a double benefit to the firm.

The second requirement of a best-in-class planning process is that it addresses the organizational and human dimensions of the planned change, considering both the internal and the external constituencies that will be impacted by the changes planned. Far too often, strategy only focuses on the “hard” themes – target markets, competitive positioning, product attributes, pricing, etc. Those factors are clearly important, but so are organizational and human factors. Any significant change to a firm’s business model will ripple through the organization, impacting on departments, systems, processes, and people in ways that are often poorly understood when only the “hard” elements of strategy are considered. The experience of the firm whose case study was presented earlier serves as an example. They had no systems in place to manage production to order, no competencies in end customer relationship management, and no organizational units ready to bring intelligence into their equipment. Their strategy was well founded in that it responded to needs of their customers, but their preparation for implementation was sorely lacking.

Focusing on these factors not only responds to the challenge underscored by the finding on internal resistance to change within the firm, but also to the reality that customers, channel partners, suppliers, and many other external organizations are likely to have an important “vote” on the success of the project. One best practice lesson that emerges over and over is the need to fully understand the external implications of change, and get into a position to sell the concept and gain support from key third-party constituencies. One project manager with whom I recently worked said that “Bringing the voice of our customers into our project plan was the single most important ingredient behind our success. They warned us of multiple problems that each had the potential to derail what we were doing.” His insight is common among leaders and organizations that have brought external messages into the project plan.

The third area in which I recommend for inclusion in the planning process involves uncertainty. One of the realities of most change management projects is that they will lead into some uncharted waters. It’s as much of a bad assumption to assume your team can grapple its way through such waters as it is to assume that they are genetically able to manage complex projects effectively without any investment in their skills or in the tools made available to them. Drawing upon lessons from other environments, through processes as simple as talking to people with the right experiences through ones as formal as benchmarking, can allow a team to navigate such uncharted waters without running aground. Insights and information are keys to the success of many projects. The ability to gain such insights must be a central part of the skill set of project leaders and their teams.

Another dimension of planning for uncertainty involves recognizing its inevitability. It is a rare when a project of any magnitude doesn’t involve surprises and requirements for mid-course corrections, and project success along all dimensions – schedule, budget, and outcome – is often determined by whether those unanticipated twists and turns derail the project or not. Scenario planning is a skill, one that can be learned and embedded into project management processes and disciplines. Sometimes the alternative scenarios reflect the changes that inevitably occur in the business environment, from frequent ones like business cycles to infrequent ones like tsunamis. Other scenarios are driven by competitor responses (or customer responses) to the changes being implemented. The more the implementation team is able to anticipate and monitor changes and have plans (and budgets) in place to address them, the more likely they are to succeed.

Changing your planning to include a focus on managing implementation and change can help you achieve strategic goals. The business environments in which we all operate will demand more and more agility on the part of our companies, in order to realize the opportunities that are emerging and address the challenges that are inevitable. The companies that build solid foundations for implementation during the planning process – getting to “What – Who – When” levels of detail, addressing organizational and human dimensions of change inside and outside the firm, and planning for uncertainty – will be those that are able to realize the goals targeted by their new strategic plans and celebrate the successes that they achieve.