The global economic landscape is in flux; some say a recovery is imminent, some not so optimistic. In the manufacturing sector, an uptick is being attributed to three driving forces: declining imports as companies review their supply chain strategies; continued market consolidation and acquisition activity, and “green” products and companies in the solar, wind and geothermal space. The biggest challenges today stem from the complex supply chain with global operations, logistics, warehousing and reduced time available for new product introduction and time to fulfil a customer order.

Most companies continue to concentrate on reducing costs to manufacture a product or service. Many companies look to determine the most productive and economical ways to manufacture their product. Areas of focus include make/buy decisions, warehouse locations and footprint, speed of new product introduction, logistics strategy, local optimization of facilities and processes to manufacture a product in the minimal time, and reduction of overall costs. All of this boils down to reducing overall cost, growing revenue and driving consistent performance to customer and shareholder needs.

As an immediate and direct result of the uncertain economic environment, many business leaders today are executing change management programs. According to a recent global survey conducted by The Economist Intelligence Unit (EIU) and commissioned by Celerant Consulting, nearly two-thirds of senior executives are currently instituting change management programs. Despite their recent popularity, a successful change management program is still a rarity – 58 percent of respondents admit that half or fewer of their initiatives have been successful over the past five years. This is a significant trend, but what many executives don’t realize is that there are a few specific steps which, if followed, can be integral to the success of business transformation.

Survey respondents indicated that the three key success factors in change management are leadership, planning and communication. So, what do companies need to do to rapidly convince employees of the benefits of change? None of what is required is rocket science, but it is important to get things right.

Let’s take a closer look at each.

1. Effective leadership is critical. The best leaders of change are not ones who dictate their plans, but those who bring vision; inspire people with a sense of urgency; and then help them to bring their own creativity to the project. When asked the single most important factor for successful change management programs at their organizations in the last year, the clear leader was “commitment of senior managers”, cited by 31 percent of respondents.
2. Projects need to be effectively planned. This involves not only the basics of knowing where you are going — lack of clearly defined milestones was a leading cause of failure at 24 percent of companies — but also the psychological elements of bringing people along. People like to win, to know they are making progress. Lay out a detailed map, then measure the milestones and celebrate forward motion. Thorough planning is essential to success, yet, according to our survey, it is often overlooked.
3. Good communication is an essential element. At nearly one in five companies, good communication was a leading cause of success in change management. The message need not just be how the change program is progressing — important as that is — but that the company and leadership are still committed to the change program, and that it matters whether people continue to take the change seriously. The key message in motivating people to endorse change is often not how the company is doing on a chosen set of metrics, but that the change program still matters. This points back to leadership. Getting across the ongoing commitment to change by the top executives is essential.

Amid the shifting challenges of the modern business environment, an ability to manage change effectively gives strong competitive advantage. Ironically, external crises help drive change in organizations and the current economic slowdown is providing a “burning platform” for change. More companies are planning more change and planning to spend more on it. Unfortunately, too many of these change initiatives will fail. Companies are devoting sufficient money to the problem, but too often find it harder to win over the hearts and minds of their people. Leadership, planning and communication must make the case for change successfully, harness the capabilities of the entire company, and keep employees motivated over the course of the change initiative and beyond.

Business is a human endeavor and companies are populated by people with interests and emotions. Change management is about leading people to change. Processes and procedures can help, and certain tools are indispensable, but ultimately this is art, not science.

NOTE: This article is based largely on the annual Change Management surveys conducted by Economist Intelligence Unit.

 Stan Gwizdak is the vice president, manufacturing for Celerant Consulting.