Category Archives: Change Management

The management of change leading to the realisation of benefits and value

Stakeholders and Change Management

When considering stakeholders, there are very few one-to-one relationships. Most stakeholders are, and have been, influenced by a range of relationships in and around your project, program and your organisation.

Stakeholders and Change Management

Change Management and Stakeholder Management

Stakeholder management is a key facet of organisational management where stakeholder management is often aligned with marketing, branding and corporate social responsibility (CSR) initiatives.

Similarly, stakeholder management central to change management and the ability to realise the benefits the change was initiated to deliver. The benefits will not be realised unless the key stakeholder communities accept and embrace the changes.

Project and program management also has a focus on effective stakeholder management. In a change initiative, the project and/or program undertakes the work to deliver the elements needed to facilitate the change but are only ever part of the journey from concept to realised value.

A typical evolution of a change initiative would flow along these lines:

  • The organisation decides on a major organisational restructure and as a consequence initiates a change management process and appointed a change manager.
  • The change manager develops the business case for the program of work and the executives responsible for the organisations portfolio management approve the business case and agree to fund and resource the program.
  • The program manager sets up the program management team, established the program management office (PgMO) and charters a series of projects to develop the various deliverables needed to implement the change.
  • The projects deliver their outputs.
  • The program integrates the outputs with the operational aspects of the organisation.
  • The organisation’s management make effective use of the new systems and processes.
  • Value is created for the organisation and its owners.

The change manager is the sponsor and primary client for the program but the people who need to be convinced of the value of changing are the operational managers and their staff. If the organisation does not accept and use the new systems and processes very little value is generated.

Within this scenario, stakeholders in the operational part of the organisation, and particularly the managers will be key stakeholders for a range of different entities:

  • They are stakeholders in the organisation itself and part of the organisational hierarchy.
  • They are stakeholders in the change process being managed by the change manager.
  • As end users of the new systems and processes they are also stakeholders of the program.
  • As subject matter experts (SMEs) they are likely to be stakeholders in at least some of the projects.

In one respect change management is stakeholder management. Therefore, in a change management initiative, stakeholder management should be an integrated process coordinated at the change manager’s level. All of the organisational elements working on the change need to coordinate their stakeholder management efforts to support the overall outcome. Confusing and mixed messages don’t help anyone.

But this is just one typical business scenario. When considering stakeholders, there are very few one-to-one relationships. Most stakeholders are, and have been, influenced by a range of relationships in and around your organisation. Consequently, focusing on a simple one-to-one view is unlikely to provide the best outcome for anyone.

Effective stakeholder management requires a mature organisational approach. One approach to developing this capability is the SRMM (Stakeholder Relationship Management Maturity) model described in my book. Stakeholder Relationship Management: A Maturity Model for Organisational Implementation. I will outline the SRMM model in a later post.

The Scope of Change

This blog is going to try and link project and program management with change management and benefits realization.

As a start, the only point of undertaking a project or program is to realize some form of value. Benefit realization! To realize value, three elements need to be brought together:

  1. There needs to be a new product or process created (an artifact);
  2. People within the organization need to make effective use of the artifact to deliver a service;
  3. The service as delivered needs to be accepted and used in the ‘market’.

The role of Strategic management and Portfolio management is to determine what services are likely to be accepted or needed by the market; a new shopping centre, an improved insurance package or simply a more efficient process to deliver information. These decisions will depend on the objectives of the organization, and is not the province of this blog.

The generally accepted role of project management is to create a unique product, service or result (an output) and the role of program management is to manage a group of related projects to achieve an outcome more efficiently than if the projects had been managed in isolation. Neither of these processes achieves real value in themselves. The realization of sustained value is achieved by the organization using the program’s outcome effectively over many months or years.

The Scope of Change Management

The Scope of Change Management

Projects and, to a greater extent, programs can realize some benefits, partially in the design and delivery of their respective outputs. Early benefits realization is frequently linked to ‘soft’ elements in the range of deliverables such as developing effective training, managing the transition to operations and ensuring a proper support framework is developed. Achieving these elements require the project/program team to really understand the requirements of their stakeholders. However, as demonstrated by the cost/benefit graph, benefits realization should continue for years after the program is finished and closed.

The extended timeline for value realization has important ramifications for organizational change management. Each project is an intense burst of change and the program absorbs these changes and has additional change effects of its own. These ‘activity related changes’ will include beneficial and negative impacts on a range of associated stakeholders. Some changes are disruptive caused by the execution of the work, learning curves, etc. Some changes positive caused by the improvements the projects and programs were initiated to deliver. Achieving a successful project/program outcome requires the effective management of these stakeholder communities, but the stakeolder management activity is essentially tactical.

The critical requirement to deliver sustained value is the organizational culture change needed to actively embrace the program’s outcomes and make valuable use of them. Embedding a culture change into an organization is a 2 to 3 year process as the change migrates from ‘new and threatening’, to ‘accepted (but the old way are still fondly remembered)’ to the ‘established old way’ things are done around here. This type of long term organizational change can only be accomplished by the organization’s line management supported by senior management. This is the realm of the program sponsor and executive management!

These ideas also have important ramifications for effective stakeholder management:

  • Project level stakeholder management is relatively short term and focused on minimizing opposition to the work whilst ensuring necessary organizational support is in place to deliver the project’s outputs effectively. This is essentially tactical in nature.
  • Program level stakeholder management has a wider view that needs to engage with the organizations strategic vision to ensure the program’s outcome is optimized to the changing circumstances within and around the organization. The key issue here is identifying and responding to changing stakeholder requirements, needs and expectations/perceptions over time; so as to optimize the value of the ‘outcome’ the project was established to deliver.
  • Organizational level stakeholder management needs an even broader and longer term view focused on the strategic needs of the organization and its long term relationship with both internal and external stakeholders. Sustained value creation requires both the organizations internal staff and its external customers to jointly perceive the programs ‘output’ as valuable to them and also to perceive the organization favorably so they together maximize its use:
    • For a new shopping center with a 20 year lifespan this translates to retail tenants being willing to rent space and the ‘public’ seeing the shopping center as a ‘good place to shop’.
    • For a new call centre management system this translates into the call centre staff seeing the system as efficient and easy to use and clients of the business perceiving the system and staff as friendly, efficient and effective so they are happy to make repeated use of the system.

Conclusions

Change management and stakeholder management are closely aligned. Effective stakeholder management is essential for successful change management.

Change management and stakeholder management must start as soon as the project or program are initiated but should continue well after the project/program are completed.

The on-going organizational component of change management supported by strategic stakeholder management is critical if the real value of the outputs/outcomes created by the projects and program are to be realized.

Benefits realization is a line management responsibility starting with the project sponsor. All project and program managers can do is ensure their deliverables are crafted to facilitate and encourage benefits realization.

Value is in the eye of the stakeholder

The only purpose of undertaking any business activity is to create value! If undertaking the work destroys value the activity should not be started.

The Value Chain

The Value Chain

Any value proposition though is ‘in the eye of the stakeholder’ – this is rarely solely constrained by either time or cost. Effective value management requires an understanding of what is valuable to the organisation and the activity to create value should be focused on successfully delivering the anticipated value.

The chain of work starts with a project or similar activity initiated to create a new product, service or result. However, the new output by itself cannot deliver a benefit to the organisation and the project manager cannot be held responsible for the creation of value. The organisation’s management has to make effective use of the output to realise a benefit. It is the organisations management that manages the organisation and these people need to change the way the organisation works to realize the intended benefit. The role of the project team in value creation is to ensure their output has all of the necessary characteristics and components to allow the organisation to easily adopt the ‘new output’ into it’s overall way of working (eg, effective training materials).

The outcome from making effective use of the output is expected to create a benefit – however to realise a benefit, the outcome needs to support a strategic objective of the organisation. If the outcome is in conflict with the organisations strategy, value can still be destroyed. Strategic alignment is not an afterthought! The processes to initiate the project should have as a basic consideration its alignment with the organisations strategic objectives.

Assuming strategic alignment is achieved, the realised benefits should translate into real value. The challenge is often quantifying value – the concept of ‘value drivers’ helps. Value drivers allow the benefit to be quantified either financially or by other less tangible means.

In the current economic climate, organisations are finding operating capital in short supply. Therefore a new process to accelerate the billing cycle can be measured at several levels:

  • The output from the activity to develop the new billing process is simply the new process – this has no value.
  • Once the organisations management starts using the new process the measurable outcome is a reduction in the billing cycle from (say) 45 days to 32 days.
  • The benefit of this reduction in the billing cycle could be a reduction in operating capital needs of $500,000.
  • The value of this reduction is $500,000 at 12% interest = $60,000 per annum.
    The above example may also trigger additional value by allowing the capital to be redeployed into another profit generating activity, improving customer relationships, etc.

Once the whole organisation is aware of the value proposition, decisions to de-scope the initial work to meet time constraints and/or cost constraints can be made sensibly.

  • A decision to de-scope the project to achieve a 2 week saving in time that results in a 6 week longer implementation period (eg, by reducing training development) is clearly counterproductive.
  • Similarly a decision to de-scope the project to avoid a $5,000 cost overrun that changes the reduction in the billing cycle time from 13 days to 6 days will result in a halving of the capital saving and a cost increase to the organisation of $30,000.

The challenge is identifying and communicating the value drivers to all levels of management involved in the activity so that valuable decisions are made in preference to knee jerk gut reactions focused on short term, easy to measure metrics. Value is created by meeting the strategic needs of the organisation’s stakeholders – this requires careful analysis and understanding of who they are and what are their real requirements; ie, effective stakeholder management.

For more ideas on the realisation of value, see the work by Jed Simms at: http://www.valuedeliverymanagement.com/

For more on effective stakeholder management see: http://www.stakeholder-management.com