Change Management and Continuous Improvement

The importance of change management to successful continuous improvement initiatives cannot be expressed enough. Anytime there is a change it needs to be managed. Otherwise the transformation initiative is bound to fail. Studies have shown that more than 60 percent of transformational initiatives fail, not due to the lack of technical or resources, but rather due to the lack of proper change management.

Any leader who wants to drive a successful continuous improvement program should keep in mind that the soft stuff is the hard stuff. Just hiring a Black Belt or Lean Expert with the right credentials is not going to ensure the success of the initiative. We have always seen that continuous improvement programs have been successful only when there was visible senior leadership support and commitment to the program as well as a planned change management initiative tied to the program to ensure that all employees are moving from the current state to the expected future state with the program.

In fact, we have observed that putting a program management office in place to start with the program management in itself is a change management initiative. This becomes more important when an organization has an existing Enterprise PMO and a separate Enterprise Quality Organization that drives the program. Invariably the question comes up around ownership of these projects, after the initial few continuous improvement projects are successfully implemented. Turf wars are sure to happen unless a proper change management exercise is carried out at the beginning of the program deployment.

The need for change management becomes even more important when a continuous improvement initiative is implemented in a services industry. In the services industry most of the process improvement root causes usually have a human element involved–like training issues, behavioral issues, etc. A company that does not follow proper change management procedures while implementing the continuous improvement program will not be able to get the benefits of the program once the projects are rolled out because of the resistance to change.

Home Depot is a great example where the people on the front lines resisted the change. We are not going to get into the merits of whether Six Sigma methodology was even the right methodology for that company’s culture, but even if it were, because of the resistance to change from the people who actually worked on the floors of the store, the program would have most likely failed. In an article in Bloomberg Businessweek that was published in January 2007, the then CEO, Bob Nardelli, was described as “autocratic and stubborn” by a store manager and his style was resented by the employees, and they were never motivated enough to support his Six Sigma initiative.

Another telling comment in the same article mentioned that, “He seemed less concerned about people being friendly.” Probably not the right change management for a team in who believed that customers came to Home Depot not because the products were necessarily cheaper, but rather because they can discuss and get advice from a real and hopefully friendly representative.

As per a Price Waterhouse Cooper study that was carried out a few years ago, 75 percent of all transformation initiatives fail or do not meet the intended goal. In fact, more than half of the failures are attributable to poor change management related to people issues, communication issues, and the culture of the organization.