Before we get started, let me deal with one important point: many people confuse risks with issues, and nowhere more so than in large scale change or transformation. This misunderstanding is the first and biggest challenge, because there are things that will happen - issues - that must be planned for in almost all major changes. 

For example:

  • The project or business plan will never cover everything that is going to happen; and it (and the managers of the change) must be able to flex accordingly.
  • You may find that not everyone you hire to manage elements of the change can do their job. You must be prepared to identify, mentor or change out those under-performers quickly, before the change is significantly derailed or delayed.
  • The effort required to make positive change stick (once it’s happened) is as large as the effort to get there in the first place. It usually needs a different management approach, and probably a different kind of manager, to lead the business to success in its “post transformation” state. 

On the other hand, risks are the things that might happen to derail the planned major change or business scale-up.  These are the possible problems, which need processes in place to detect swiftly and then control, should they occur. 

In my experience, some of the biggest real risks to successful transformation come from the reactions of the change sponsors – or business owners – to the inevitable issues arising from major change.

These are not the theoretical or possible risks, detailed in the much-loved heat maps and risk mitigation plans of most major change programs. But rather, they are  the real risks arising from not managing the change appropriately, when things don’t go exactly to plan.

There are three common risks of this type:

  1. Planning for perfection: It can look very easy (and attractive) to draw up a significant business change on a spreadsheet or board paper, without considering the real human effort and skill needed to make that change a reality. If the change is commissioned without a real understanding of what is likely to actually occur, then this can challenge the final success of the venture.

It’s highly possible that a significant change will be delivered, which however does not meet senior management expectations as to the pace or immediate financial outcomes of the change.

I have seen financial budgets which assume (and commit) bottom line business benefits before the change initiative has even hired a worker. This can only lead to disappointment in the short term, and focuses too much attention on the vagaries of the actual period of change, when the real value lies in the many years of altered outcomes expected after the change.

It’s rather like being disappointed at the day to day outcomes from fitness training, rather than the fact that over the course of a year you might significantly improve your fitness for the long run.

Change is often a voyage of discovery, which means that new things are learned along the way which could not possibly be known at the outset. These learnings must be incorporated into the new change and business plans, and used for further successful evolution of the transformation.

To paraphrase the famous saying: “No plan survives contact with reality”. And yet so many business sponsors and leaders don’t manage change to their plan or forecast well. This can send confusing signals to those driving the change, who may think they are coping well with numerous challenges and making good progress, only to find that they are not matching the expectations held at the top of the business.

This is not an excuse for failing to make effective change happen at the appropriate pace. Rather, it is a reminder that the benefits of significant change can sometimes take longer to arrive, and take more effort (and more learnings) to deliver than first expected. Contingency should not just be a number in a spreadsheet, it should be a state of mind.

  1. I’m not going to change but I expect you to do so: unchanged leaders leading change: If you want new things to happen, you almost always need to start with an agent of change, a catalyst to spark the transformation.

Too often, businesses try to manage major change with the same leadership which has learned how to manage effectively in the old way of doing things. It’s very hard to blow up your old world of certain outcomes for a new one of uncertainty, unless there is a crisis or serious problems in your current way of doing things, that make it impossible to continue as before.

Even then, the experience and skills required to manage a “business as usual” operation are very different to those needed to make major change a success. There are numerous examples of leaders being ineffective in one state of change, but hugely effective in another.

As one example of many, consider Winston Churchill, a great wartime leader who had a mixed career in more ordinary times of peace. So the leaders or owners of a business must be prepared to bring in management change to make real transformation occur successfully.

Change sponsors must also recognise that when the business reaches its new state of being – post-transformation – then new leadership is also required, to bring the business back into a BAU state at the new and improved level of performance or business outcomes. Otherwise, it’s highly likely that under-performance will follow, as the change agent (or agents) look to continue the rapid evolution of the business, rather than building the consistency and certainty into the operation that is now needed. 

  1. Assuming all boats rise equally with the tide: In every business – in every walk of life – human performance covers the range, from excellent to downright average. Every leader and manager should of course do his or her best to improve overall performance and, over time, to train up or weed out those who are not up to the job.

However, in a period of major change, it is much riskier to have average or sub-standard managers in the business, at any level. What I have seen is that someone who is competent at a certain size of business (or team) and in a predictable environment, can struggle and fail to lead acceptable performance when the team or job gets bigger, or where significant change needs to be driven through the business.

It’s no crime to be outgrown by the organisation you are in, but too many times these struggling managers and team leaders are left to flounder on.  Their authority to lead is based on their past performance and, sometimes, by the loyalty the organisation has in them as known quantities. People who are known and liked by the broader organisation.

However, this isn’t fair to the individual, nor to the business, as everyone will suffer from the (recently) inadequate manager. It’s always hard to deal with someone who isn’t performing (and in the changed business, never will at their prior level), but everyone gains from prompt action, including the individual. Provided the role change is managed respectfully, the individual is almost always happier in another role, and everything goes better.

Where this risk becomes a real issue, is where it is not dealt with. Usually many people can see the under-performance, which both hinders the transformation, and also discredits management in setting out the performance expectations of the business.

Alternatively, the under-performer may burn out under the stress of the situation, with real individual suffering and significant collateral disruption around them, in every part of their life.

The way that the business or transformation leadership deals with this challenge is a critical test, which can often make or break a major change initiative, and over time, significantly alter the trajectory of a whole business venture. 

This is not an exhaustive list of real risks. Many business change activities have specific situations that present their own unique risks and challenges.

Scaling up a business fast or launching a new product or service, for example, is quite different to offshoring or streamlining an operation for better productivity or service outcomes. These in turn differ from a major upgrade to core technology platforms, or major process re-engineering to remediate the way the business services its clients.

However, all of these kinds of transformation involve leaders delivering significant change to the way people work over time, to a hoped-for better business outcome. Robust but flexible planning; leadership that is a genuine catalyst for change; and empathetic management of the new status quo by ensuring the right people are in the right job, are relevant to transformation initiatives of any size. 

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