As the Greek philosopher Heraclitis said, “Change is the only constant.”
The term change management may not have existed during his time, but his quote could not be more relevant for companies in today’s age of digitization and globalization. In this article, you will read how good organizational change management can succeed, the huge role good communication plays in it, and how Objective and Key Results (OKR) can support a successful change process.
- What is change management?
- Requirements for change management
- Change management processes and methods
- Examples of change management success: Netflix
- OKRs & change management
- Change management FAQ
Today’s (working) world is constantly changing. While inventions like the first cars were seen as milestones of the century 150 years ago, today’s world sees a constant flow of new technologies, innovations and methods. A term most people are probably familiar with by now: digital transformation. We find ourselves in the middle of the digital transformation and, unless companies want to fall behind their competition, they must face it.
To ensure a company change is sustainable and effective, it needs to be planned and guided. Change management is needed. But what does that mean exactly?
Change management refers to a targeted process within an organization that uses structured measurements, activities and tasks to effectively and efficiently guide a change process. In addition to competitive pressure and the digitization of work processes, as mentioned above, this change process can also take place for other reasons. This includes the introduction of new products, personnel restructuring or mergers with other companies.
Change management includes various processes, methods and tools that can be used to guide the change in a structured way. The best known are presumably the 3-phase model from Kurt Lewin, the 8-step model from John P. Kotter and the 5-phase model from Wilfried Krüger.
Lewin’s Change Management Model describes the simple 3 phases of “unfreezing,” in which the participants are sensitized to the upcoming change, “changing,” in which necessary changes and training takes place, and “refreezing,” which represents acclimatization to the new status quo.
In his research, Kotter found that 70 percent of all change processes in organizations fail. He cites resistance from employers who have not been adequately included in the process, as mentioned above, as the reason for this failure. As a solution, Kotter describes 8 steps in his change management model that are strongly geared towards communication and motivation of the staff:
- Establish a sense of urgency
- Create a guiding coalition
- Develop a vision and strategies
- Communicate the vision
- Remove obstacles
- Create short-term wins
- Build on the changes
- Anchor the changes
Just as similarities can be found in these 2 models, Krüger’s 5-phase change management model is also based on similar building blocks. These include initialization, conception, mobilization, implementation and stabilization.
Learn how to set high-quality goals here.
There are numerous examples of how change management can be implemented in a company. One of the best and most well-known of them is Netflix. Today, everyone knows the company as a streaming service. But do you know how Netflix got started in 1998? It began as a DVD rental service!
As early as 1999, Netflix was able to gain market shares from companies like Blockbuster by using a more customer-centric business model. Instead of charging a fee for every DVD rented and a late fee when it was returned late, the company introduced a monthly fee users could pay to rent as many movies as they wanted. By 2003, this model had won Netflix over 1 millions subscribers. In 2007, 9 years after the first DVD was mailed, Netflix faced the biggest change in its business model to date: Due to internal and external pressure, as the company itself reports, they introduced an online streaming service. With Amazon also having released a streaming service shortly before, Netflix was at a crossroads.
But we all know how this story ends. Netflix successfully mastered the transition, becoming a prime example of a good change management concept. Although the path was not without obstacles, management in particular stood behind the digital transformation and focused all of its resources on the goal.
It is important to note that Netflix involved the entire organization in the change management process. The employees and the company culture were not forgotten—quite the opposite actually. The company worked to give employees as much freedom as possible. Through a decentralized organizational structure and avoidance of top-down decision-making, innovative strength and staff efficiency continue to be sustainably promoted to this day.
OKRs are a method that can support the change management process particularly well. After all, as we saw in Kotter’s 8-step model already, the results and success we achieve at the end of the day depend largely on the goals and visions we set at the beginning.
Clear objectives and their independent fulfillment are especially important to ensure successful change management. This is exactly where the OKR Framework comes in. It helps support the active implementation of a change in the company and makes it tangible for employees.
This can be illustrated using the example of Netflix once again. An overarching Objective in the company’s OKR planning in 2007 could have looked something like this:
“We adapted our business model to the 21st century and have seen success with a new streaming model.”
With this Objective, Key Results—which can measure the effect of individual actions—can be derived. Teams can then work towards these results. These Key Results are a measure of the Objective’s value propositions and help to better estimate the success of change management and make it truly measurable for the first time.
This is particularly helpful in reassuring employees about the change they will face. Many change management models also reference the “valley of tears,” showing the way out and ensuring motivation can be maintained. The goal is then to “rescue” them from the “plateau of hope” (see graphic).
Using the Netflix example, exemplary Key Results could be:
“X percent of our new users were gained via the new streaming product.”
“The market share of the new streaming product compared to its competition is X percent.”
OKRs in the change process can also be used to help promote and improve change management itself. These are referred to as “Change OKRs.” Methods, such as surveys, can be used to determine how well the change is accepted by the employees and the resulting value can be added to the OKRs as an Objective. Measures to reach these internal Objectives could be, for example, internal newsletters, training courses or communication platforms.
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What is change management?
Change management refers to a targeted process within an organization that uses structured measurements, activities and tasks to effectively and efficiently guide a change process.
What is important in change management?
A clearly defined goal (e.g. with help from OKRs) and communication with employees are particularly important. Employees need to understand WHY a change is being made and be included in order to contribute to a successful transformation.
Why is change management necessary?
For organizations in change processes, change management is important in ensuring that processes run as planned and as successfully as possible. The aim is to activate and bundle available skills as well as minimizing resistance. The process should also be made as attractive as possible for both management and employees.
What change processes are there?
Change management encompasses a wide variety of processes, methods and tools that can be used to guide the change in a structured way. The most well-known are presumably the 3-phase model from Kurt Lewin, the 8-step model from John P. Kotter and the 5-phase model from Wilfried Krüger.
What is the ROI from change management?
The ROI of change management is the added value created from employees’ acceptance of the change. This can be measured, for example, through lower costs, more effective project execution or reduced time investment.
Why does change management fail?
In most cases, change management fails in an organization when a concrete vision is missing and leadership does not properly communicate the change with employees, resulting in their needs not being met and ultimately creating resistance among the staff.
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