Who Drives Change?

Lately I've been thinking about change initiatives within an organization, particularly about who owns these initiatives and harnesses them to achieve true value.  Whether it's Lean, Theory of Constraints, Product Lifecycle Management, Business Process Management, Manufacturing Operations Management, Supply Chain Management, Resource Consumption Accounting, or even Project Management, someone must champion the initiative from conception to integration.  There is, of course, a whole management consulting industry around organizational change, and I think that's a valid approach for assisting change.  However, consultants do not have ownership of the initiative; they can sell and support, but only the owner can derive business value.

So who's responsible for change within an organization?  The answer cannot be "everyone" – when everyone is responsible, then no one is accountable. "Management" also seems to be too vague as an answer; who in management will decide which initiative to pursue?  Responding with "It depends on the initiative" seems to fall flat – the kinds of transformational initiatives previously mentioned have organization-wide impact, and pigeon-holing one into a business silo seems to be the oft-cited cause of failure.  What's left seems to be the executive team, but given their other responsibilities for running the organization, driving change initiatives often falls into lower-tier priority levels.

One approach that has gained a foothold is the creation of "Offices" or "Centers of Excellence".  Project Management and Lean tend toward the "office" moniker (PMO, Lean Office), while BPM, PLM, and MOM frequently utilize the "CoE" tag.  No matter the name, these are changes to the organizational structure that can work between business siloes to achieve the strategic initiative.  These have the advantage of being focused on the success of an initiative – resources are allocated and the team/group/department is accountable for specific results. People can look at the organizational structure and say "this group is responsible for driving change related to this initiative."  Depending on organizational precedence though, even these sub-structures are at risk of being siloed.  For example, Lean is typically "owned" by Operations, and other parts of the organization are often free to choose whether or not they want to participate in the initiative.

Change is as certain as taxes

I think the change to organizational structure is the right approach, but must be divorced from existing business sub-structures.  There needs to be a C-level executive responsible for organizational change, not only change management but leadership as well.  The fact that organizations have CFOs, CIOs, COOs, and heads of HR and Marketing is an acknowledgement that specialized focus is necessary in these areas; I'm arguing that the same can be said for organizational change.  The "Chief Change Officer" would lead a team of business architects, analysts, internal consultants, and change facilitators to:

• establish standards and practices
• institute governance
• assure alignment between organizational entities
• make changes to existing organizational structures as new technology permits new capabilities
• engage and involve the organization in change
• provide measures to the executive team demonstrating the value of change as it is implemented

Perhaps this could be called the "Office of Strategic Change Leadership (OSCL)" or "Change Leadership CoE (CLCoE)".  All the existing CoE's would become subsets of the CLCoE, creating a clear line of accountability throughout the organization for successfully adapting to change.

Some studies have shown that organizational change efforts account for between 25% and 35% of every project budget.  Other studies have shown that transformational change initiatives are unsuccessful over 40% of the time, with only 5% being completely successful.  With these kinds of numbers, it's clear that organizations need to become better at adapting to change.  It's axiomatic that when Management wants to make something happen, they change the organizational structure to ensure it does.  It's time this same logic is applied to change itself.

The Real Skills Gap

There's been a great deal of discussion in industry press about a growing skills gap – typically focused on technical skills but occasionally on leadership skills as well.  The March 16^th issue of Crain's Cleveland Business had a front page article on manufacturing leaders nearing retirement; "Who", they ask, "will run the manufacturing industry when the generation in charge eventually walks away?"  The US Chamber of Commerce Foundation published a 2014 white paper entitled "Managing the Talent Pipeline: A New Approach to Closing the Skills Gap" which paints a dire picture of talent systems that are not keeping pace with economic requirements, and manufacturers who struggle to find the skills they need in the job market as talent nears retirement.

Peter Cappelli of The Wharton School skewers the current understanding of "Skills Gap".  His 2012 book "Why Good People Can't Get Jobs: The Skills Gap and What Companies Can Do About It" debunks the mythology of technical skills gaps, and states the problem really lies within the systems used to acquire talent.  The April 2014 issue of Inc magazine contains an article entitled "Why the Skills Gap 'Crisis' Is Overblown", offering further evidence that the skills gap isn't as great as we've been led to believe.  Interestingly, both sides of this argument focus on management systems to resolve the issues around acquiring needed skills.

To me, this suggests a very different kind of skills gap – the skills around strategic planning and management.  I recently attended the Siemens/Electro-matic "Manufacturing in America" Symposium where one of the seminars was focused on acquiring and maintaining technical expertise.  A slide shown during this session depicted one company's skills gap analysis, with large deficiencies over a broad range of skills. This left me wondering if the company's leadership had a clear understanding of the skills required to operate their business.  But acquiring people for skilled trades and keeping skills current is just one symptom.  On March 13^th, iBASEt's Conrad Leiva posted a blog noting a disconnect between Manufacturing Operations Management strategy and challenges.  He cited a recent LNS Research study,  and observed a mismatch between respondent's stated objectives and the business challenges they are experiencing – and recommends a realignment of objectives to address challenges rather than a myopic focus on cost & quality.

In his book "Good to Great", Jim Collins notes that Level 5 leaders "look out the window to apportion credit…they look in the mirror to apportion responsibility"; perhaps it's time for corporate leaders to look in the mirror to address the skills gap they may find there.