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Randall Schaefer, CPIM, is an
industrial philosopher and independent
consultant. He is a veteran speaker at
APICS events and other
manufacturing-based organizations.
Schaefer is editor of APICS
magazine's Lessons Learned
department and is a contributing author
to the Society of Manufacturing
Engineers' handbook, Material and
Parts Handling in Manufacturing.
Six Steps to Effective Change
Management
Steven A. Melnyk PhD, CPIM
Randall Schaefer CPIM
Introduction
The Western Electric Story
What is the lesson of this story?
• Change management is vital
• Change management is futile
• Change management may fail
• Unions can be self-destructive
Trick question – there are 2 lessons
1. Change management is vital
2. Change management may fail
Main Points of this Presentation
• A poorly thought out, poorly structured, and
poorly implemented change process will
always fail
• A well thought out, well structured and well
implemented change process may fail… but
your chances for success are better
It Starts with Frustration
• The sources of frustration are infinite
• For change to occur, the frustration must be
strongly felt by someone in authority
• There is a six-step process for managing
change
Step 1 – Frustration Reconnaissance
A – Confirm the frustration is justified
• Evaluate current, quantitative (numerical) data? • Evaluate qualitative (expert opinion) data?Informed opinions may be more valuable than numerical data that only validates the frustration
B - Define an alternative and how to get there
• Describe a desirable, high-level alternative to thecondition causing the frustration
• Describe, at a high level, actions that will take you from the current frustration to the desirable alternative
C – Find a Champion
• Respected, task driven, organizational skills, access to resources, authority
• Need not be the person who first recognized the need for change
• If your company has no one fitting the above description, then you must go outside the company to find the champion
If you cannot…
• Assure yourself, and those above you, that there is good reason for the frustration
• Describe an alternative to the frustration and a high level action plan to get from where you are to where you wish to go • Identify anyone in the organization qualified to lead the change
and management will not look outside the organization then…
Step 2 – Determine if its Wise to Go Forward
A – Determine if peers/superiors will support
the change and change process
• The status quo generates a powerful inertia • Top management must be convinced that the statusquo costs more than the change
• It is harder to maintain support for the change process than the change itself
• Is your management willing to back up words with actions?
B – Determine the necessary resources
• Resources will be required; they will cost money • Enthusiasm for the change + natural concern for costs =temptation to underestimate the required resources • Time, not money, is often the constraint
Required time seems excessive to those anxious for the benefits of the change but not involved in the process
• Multiple changes will conflict for resources
C – Present the change as consistent with the
corporate culture
• An organization’s culture is the source of its stability • A change that would clash with the corporate culture – a
make-to-stock company wants to become make-to-order with selectable options
• Change leaders must be sensitive to subtle differences in how the change is presented
D - Develop the implementation plan
Turn your list of required activities (from step one) into a high level implementation plan of sequenced activities, prerequisites, assigned responsibilities, and deadlinesAt minimum, the plan must be: * valid * acceptable * defensible
* feasible
If mgmt. support, resources, or implementation
plan appear inadequate, what should you do?
• Go forward; do it with less because that’s the answer to everything nowadays
• Go forward; do as much as possible with the available resources
• Give up
• Go forward; depend on the organization to provide resources as you progress
Give Up
Research shows that when a change fails, most organizations end up worse off than if they had done
nothing
When a company launches changes with enthusiasm and abandons them as quickly, it burdens future changes with an expectation of failure
Step 3 – Develop keystone metrics
Keystone metrics are a limited number of
performance indicators used as reference points
The content of the keystones identify the broad
intent of the change
The data they display shows how the change is
progressing
Goal – double inventory turns
Which metric is the keystone?
1 Average setup time for manufactured parts
2 Days supply of inventory
3 Qty. of purchased parts carrying minimum buy
quantities
4 Average through-put time for manufactured
parts
“Days supply of inventory”
is the keystone
Average setup time for manufactured parts…
Qty. of purchased parts carrying minimum buy
quantities…
Average through-put time for manufactured parts
are detailed metrics that that would be developed to support the keystone metric
Clarify the keystone with a gap analysis
Keystone gap analysis fulfills 4 important functions
1. Defines where we are
2. Defines how far we have to go to get to where we wish to be
3. Becomes the basis for measuring progress
4. Becomes the basis for creating reasonable expectations
Reasonable expectations are vital to
maintaining top management support
Expectations must address:
• Where we wish to be
• How long we will take to get there • The pace of change
• The path of change if the pace is non-linear
Step 4 – Develop Detailed Metrics
Detailed metrics communicate what each individual must do to support the change
Detailed metrics keep people focused and coordinated Detailed metrics show the progress of activities necessary to support the change
Detailed metrics must:
• be verifiable and quantifiable • use easy to understand standards • clearly state acceptable/unacceptable results
Goal – Convert the factory to lean production
Which is the bad metric?1 Percentage of employees convinced that lean is vital to the future of the company
2 Percentage of manufactured parts with secondary routings
3 Percentage of suppliers capable of delivering just-in-time
4 Percentage of manufactured parts with SMED capability
Bad metric -- “Percentage of employees convinced
that lean is vital to the future of the company”
• Difficult to gather the data
Each employee would have to be questioned each time the metrics were posted
• Impossible to verify
Would require you to believe what they tell you
• Impossible to quantify
How much conviction constitutes “convinced”?
Beware of metrics distortion
• People fear change because it is an opportunity to fail • The greater the change, the greater the temptation to attach a less threatening interpretation to the change • Remember the “telephone game”?
• Assure that the people’s understanding of the change does not become “watered down”
Step 5 – Sell and manage the change
• Selling the change refers to generating acceptancethroughout the organization
• Convincing employees to support the change is the most important part of managing the change • Do the usual things - articles in newsletter, open
meetings to address employee concerns, etc. • Selling the change will result in employees divided by
the 10/10/80 rule
Anticipate the 10/10/80 rule
10% - the supportive few will immediately see the benefits and
actively support the change
10% - the nasty few will invent reasons to be uncooperative and will
speak against the change at every opportunity
80% - the passive majority won’t care about the change but will go
along as long as management supports the change
Focus on the 80%
Early success can convince the 80%
• Change projects have several components
• You cannot address them all at once
• It is tempting to first address components
that promise the biggest reward
• It is prudent to first address components with
low complexity, low cost, short lead time and
a high probability of success
To transform a company into a lean operation,
which activities should be addressed first?
• Layout fabrication departments into work cells• Create assembly lines capable of mixed model production • Identify which machines and dies must be made SMED
capable and estimate the cost for each
• Determine the costs of eliminating order minimums for purchased parts
• Implement a preventive maintenance plan for all workcenters • Determine which manufactured parts should be stocked and
which ones should be managed via lean techniques
Which activities should be addressed first?
Determine which manufactured parts should continue to be stocked and which ones should be managed via lean methods
Determine the cost, if any, of eliminating order minimums for purchased parts that carry minimums
Publishing the metrics
• The leader must periodically publish the metrics and be prepared to answer questions about them • Never hide a metric because it is trending in the
wrong direction
• When metrics trend wrong, and management continues to support the change, it sends a powerful message to employees
Step 6 – Intervene when necessary
When a metric is out of control:
• Judge whether the cause was foolish expectations or process failure
Correct foolish expectations
• Judge whether process failure was smart failure or stupid failure
Metrics - smart and stupid process failures
Smart failures – Everyone did the right thing but results were not as anticipated because something was overlooked when the metric was developed
Change the process and/or metric
Stupid failure – An employee deliberately fails to do the right thing and results reflect it
Discipline the employee; terminate if the attitude continues
SMART FAILURES
VS.
DUMB FAILURES
knowing how to manage each is vital to successful change management
KNOW THE DIFFERENCE
Discipline is vital
Tolerating an uncooperative employee shows
other employees that management is not serious
about the change
It encourages others to take shortcuts, not follow
instructions or snipe at the change
Out with the old
Intervene to stop employees from continuing old
processes
Inertia will convince Mary she must continue her
old processes until Joe first changes his
It may be necessary for Joe to change processes
before Mary but it’s not an acceptable excuse
Out with the old
Mary must not be allowed to hunker down with
her old, comfortable processes
She must notify the change leader that Joe is
holding her up
Joe should be disciplined for not changing his processes as instructed
Mary should be disciplined for not alerting management that Joe was causing her delay
Final comments
When you’ve finished these six steps, you’ll have done everything to maximize the chances of your change being successfully Implemented
•Evaluated the initial frustration •Evaluated the wisdom of going forward •Developed a few keystone metrics
•Developed detailed metrics to support the keystone
•Sold the change to employees and managed the details of the change •Intervened when necessary
This does not assure success but makes it more likely
Final comments
If you have done an excellent job on each step, your odds increase even more
Excellence seems to attract luck to you and cooperation from others