In Part 1, we presented the Three Laws of Organizational Change:
- Law of Persistence: A person or process continues its current behavior (won’t change) until an unbalanced force is applied.
- Law of Power: The force required to cause a change depends on two things: the mass of the object (how big the thing is that we’re trying to change), and how fast we need to get to the new state.
- Force = how big X how fast
- Work = force X how far
- Law of Reciprocity: To change something we have to interact with it. Every interaction produces an equal and opposite response.
The key conclusion based on these laws is:
In order to effect a change, a force is always required.
Change doesn’t just happen.
This means that change will never take place without work (energy over time). So what and where is the source of this energy? To answer this question we need to understand the Chemistry of Change.
What is the Source of Energy/Force For Change?
To affect an organizational change, we need a force that is strong enough, and we need the energy to see the change through to completion. But where does that energy come from? And what kind of energy is required for organizational change to succeed?
There are three distinct kinds of energy:
In every case, regardless of the type, energy is generated by difference; the greater the difference, the greater the energy.
Think of a hydroelectric generating station. What do you picture? Do you picture a dam and a waterfall? The energy generated is a result of the difference in height from top to bottom. The purpose of a dam is to create that difference. Water, moving from high to low, supplies the energy that turns the turbines and creates electricity; the greater the distance between the top and the bottom, the greater the force and energy.
‘Difference’ is the source of energy; and energy is required to exert a force.
Electricity is measured as the potential difference between two points.
To make a choice and pursue a goal that is different from the status quo requires emotional energy. When we care about something we have more energy for it. When we don’t care (apathy), we have no energy for it. Emotional energy is the energy required to fuel organizational change.
Without emotion there is no motion.
Since we derive energy from difference, it is a perceived difference in personal future value that triggers our chemistry of emotion. When we perceive a difference between where we want to be, and where we are, and when that difference matters to us, then that sparks emotion, and that produces energy for action (motion).
To effect an organization change requires emotional energy which can only come from people. In order to generate emotional energy in an individual, three conditions must be met:
- They must be aware of the impact of the change
- They must care about how it affects them personally, either directly or indirectly
- They must be able to place a personal value on the impact.
Emotional Energy = function of (perceived value of a difference)
A single organizational change can create multiple stakeholder impacts. A new status quo can lead to stakeholders experiencing one or more of the following perceived and real consequences:
- They can be better off—more value.
- They can be worse off—less value.
- They can be unaffected—no change in value.
Evaluating the difference for each stakeholder is the key to determining if we have enough power and energy to effect the target changes. Accomplishing this is difficult for a number of reasons, in particular:
- It can be difficult to accurately quantify the direct impact of a change.
- Even when we can quantify the impact, we cannot easily and accurately determine how that impact will be valued by each stakeholder.
For example: a $1000 per year raise to someone earning $20,000 may have much more value than the same $1000 per year raise to someone earning $100,000. This makes intuitive sense. But what about a $1000 raise to ten people, each currently earning the same thing? Will each place the same value on the same $1000 increase? Not necessarily. Value perception is individual and circumstance and time specific. There is no formula to compute it, as of yet. That same raise a month from now may be valued very differently than today by the same person.
What all this means is that as difficult as it is to quantify the direct impact generated by a change, it can prove almost impossible to quantify the value of that impact to each stakeholder, even when interacting with the stakeholders themselves. And to make things more challenging, that value is subject to change without notice.
To reiterate, there are three potential responses to a change, based on each stakeholder’s perception of consequences and how they value them:
- Response to a perceived increase in value: support/assist
- Response to a perceived decrease in value: block/resist
- Response to no difference in value: apathy/ignore
A perceived decrease in value as the result of a change will elicit a resistance response. Therefore, if every project you’ve been on had resisters, then maybe it’s the changes that need to be reviewed. Perhaps most organizational changes tend to result in a reduction in certain stakeholders’ value propositions. If that’s the case, resistance is only natural.
Chemistry is about the emotions generated by the stakeholder question, “What difference will it make to me?” In order to generate a force for change, we need to turn on people’s emotions in the direction of the desired change.
People will react to a real or perceived change in their value outcomes. People are less concerned about the technicalities of the change and more interested in the value impact of the change to them, real or perceived. The greater the distance between their perception of current value and potential future value, the greater the emotional force and energy. The change itself is not the cause of how people feel about the change. The perceived impact is the cause. And that’s chemistry. Feelings generate energy and force. Apathy generates inaction.
In order to increase the support energy and decrease the resistance energy, we need a good understanding of the total stakeholder impacts. But how do we get that?
Understanding the Difference : The Stakeholder Value P & L
A program/project may produce numerous individual change impacts. Any one of these may contribute to project failure. Therefore, it is crucial to understand all the forces (support, resist, apathy) that will come into play on that project. A Stakeholder Value Profit and Loss (P & L) Statement is a tool that makes all the potential impacts overt. Think of it as a P & L for the project.
To develop a Stakeholder Value P & L, identify the following for each stakeholder:
- The change
- Real impacts
- The impact of that change
- The direction of the impact; this determines the direction of the force—assist, resist, ignore.
- How each stakeholder feels about the impact of the change? Quantify likely range of values each individual stakeholder will attribute to the impact—strength of force.
- How long will the feelings last? This is a measure of how much energy is likely to be spent by each stakeholder. A stakeholder may initially react with great resistance but quickly lose interestor change their feelings. That’s a strong force but minimal energy.
- Perceived impacts(repeat a. to d. above)
More projects run out of energy before they run out of money, than the other way around.
And, by the way, running out of money is really running out of investor energy. Understanding the real and perceived impact of each change to each stakeholder group and individual stakeholder is essential to success. This should be undertaken at the very beginning of a program as part of the selection process. Don’t start a program that does not have sufficient force and energy to complete. The following formula summarizes the concept:
Force for change: Assist force – Resist force > force required for change
It would be nice if we could simply plug in numbers into this formula and generate an answer. But we can’t. What we can do is use our Stakeholder Profit and Loss Statement to analyze our change and develop alternatives that generate more assist forces and fewer and weaker resist forces. We can minimize the risk of failure but we cannot guarantee success.
Perception is Reality
Perception is reality. Right?
Perception is not reality. However, people make decisions based on their perception of reality. That means that as change managers we always have two choices.
- We can make real changes to our project which will result in a real change in the future reality, thereby changing the forces and energy available.
- We can affect the perception of the reality, while leaving real consequences alone, thereby changing the forces and energy available.
We can alter the available force and energy by changing the real impact or by changing the perceived impact. As an ethical manager, I would support improving the real impact and working to bring the perception in line with the reality. As a program/project manager you must be able to detect the difference and you should work to maximize the real value and bring perceptions in line wth the real.
When Does Change Management Begin?
All projects introduce change. Therefore, all projects require force and energy to complete. Understanding how much force and how much energy will be required is something every project needs to understand. And it needs to understand this at the very start of a project. In fact, I would say that it’s a requirement for starting the project. That means that a change management assessment, using the Stakeholder Profit and Loss Statement or similar concept, should be undertaken as part of the decision to proceed, rather than as part of the subsequent project planning and execution. Once a project is started, people’s commitments tend to become fixed and jeopardy becomes attached to major changes or to cancellation. Changing the impact reality becomes much more difficult once the plane is off the ground (so to speak).
Progress requires change. Change requires effort (work and energy). People are the source of the emotional energy required for project work. That energy can be applied in support of the change or against the change. The strength of the force will be determined by the difference in perceived value created by the change. The direction depends on whether the value goes up or down for a particular stakeholder. The job of the project manager with regard to change is to fully understand all impacts and how they affect each stakeholder’s perception of value. The Stakeholder Profit and Loss profile is a good tool for achieving that.
The best case is when every single stakeholder sees real value as increasing for them as a result of the change. This is the holy grail of Change Management. It is the single scenario that requires the least energy to implement any given change because the resistance forces will be zero and the support forces will be at maximum. It is the only condition that generates a win-win-win…. scenario. The focus of Change Management should be to create such scenarios, not to manage people through win-lose initiatives, as is too often the case.
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