What can we learn from the history of change management?
Change management, as a formal discipline, has been around since the 1990’s. However references to change and change management can be found in the psychological literature more than 40 years earlier. Psychologists described “change” as the unfreezing, moving, and refreezing of thoughts or behaviors. These developments described how people internalized change and their experience with it, though the researchers did not apply these concepts to an organizational setting.
It wasn’t until the 1990’s that the topic of change and change management was applied to organizations, and managers and leaders took notice of the new groundswell of articles and books such as John Kotter’s “Leading Change”, and Spencer Johnson’s “Who Moved My Cheese”.
Since the 90’s was marked by globalization and rapid advancements in technology, the need for managing change was paramount to the success of a business. G.E., for example, was undergoing rapid global and technological changes in the 80’s and 90’s under the new leadership of Jack Welch. Welch understood the importance of change management and charged his senior leadership with developing tools and techniques to incorporate change management principles across his massive enterprise. His initiatives were so successful that G.E. spun off a consulting arm to help other organizations handle their change efforts.
G.E.’s success in managing change, however, is not the norm. Experts estimate that the success rate of major change efforts in organizations is only between 30% – 50%. When a change effort fails, it not only results in financial losses, but in decreased employee morale, lost opportunities, and wasted resources. So how was G.E. so successful while others failed miserably? Welch, although some disliked his methods, knew it was about the people and not just the process.
Prior to the emergence of the formal discipline of change management, most change efforts ignored the people and the culture within an organization. In the 80’s and 90’s, the “reengineering” boon proved this to be true. Most reengineering efforts were immense projects resulting in business process redesign and workforce reductions, that ignored organizational culture while failing to take into account the people side of change. A study in the late 1990’s showed that over 70% of these reengineering efforts didn’t only fail, but actually made things worse. In fact, several years after the craze ended, all three founders of reengineering, Michael Hammer, James Champy and Curtis Davenport, issued written apologies to the industrial world admitting that amidst the enthusiasm of groundbreaking change, they had forgotten about people.
From this brief history we can clearly see that change initiatives must take into account not only the organizational culture, but the employee, after all, who are the company. Consequently, like most business initiatives, it comes down to leadership. We hear the term change management quite often; however, we should be hearing the term change leadership. In order to ensure that change efforts are successful, initiatives must be championed by strong leaders that fully understand the organization’s culture and the importance of including all employees in the change process. Not only does leadership need to take into account the effect the changes are having on the people, they need to include employees at all levels in planning and executing the change effort. Change efforts, such as reengineering, that do not take this into account, are doomed to failure, and a failed change effort can have negative consequences, both financially and operationally, that are worse than if no effort was undertaken at all.
So what can we learn from the history of change management? Regardless of what change methods or techniques are used, first, change needs to be lead, not just managed. Second, we must ensure that the organization is ready for change and can sustain the changes once they are made. And finally, we must take into account the culture and the people of the organization. Change is an inside job. It’s not easy, but all organizations need to change if they want to last. As W. Edwards Deming said, “It is not necessary to change, survival is not mandatory”.