Sep 13 2007
Does change always equal ROI?
Why does change fail to generate an ROI in business? Assuming that change is the right thing to do for your organization, you may find that it will fail. Anytime you work to make change and it fails, you not only lose the cost of implementation, but you also have lost opportunity.
The blue line above represents productivy. When you implement any change, you have to understand that your productivity will decrease. The more significant the change, the greater the decrease in productivity. Often, when the productivity drops off, managers and employees begin to complain about the change and as such, the change is forsaken. When you forsake the change, you will revert back to your former productivity but will have lost all the cost (money and time) invested into the change and will be no better for the change.
The most important thing when making a change is having a vision of what should and will be. As productivity decreases, that is the time when the change should be more embraced. By doing that, you will find that you will improve your processes and earn an ROI.
It will get worse before it gets better. If you can’t accept that, don’t make a change.
Corey Smith is the Vice President of Innovation at Fisher’s Document Systems.
[…] The most important thing that I learned through that process is that most people don’t like change. Most people would prefer to maintain the status quo if it means to keep things the same. Moreover, people are very selective about the amount of change they are willing to endure. Most change is forsaken long before any benefits of that change is realize. Take a look at my change versus ROI graph. […]
You know Corey, I do firmly believe change is hard, and people generally only want change because they are unsatisfied with the current situation, but is the grass really greener on the other side?
Of course, this is a rhetorical question in the grander sense of this reply, but a question that should, nonetheless, be asked by those change agents within a business and really examined. It is my humble opinion that only two things should dictate change: 1) an internal desire to positively impact the business and 2) an external market pressure or development that dictates change to survive.
People by their very nature are experiential. This is to say that they must generally experience a great deal of pain or pleasure to enable the catalysts for change to take root. It is my submission that change only occurs in any form of permanence with the former as it takes an increasing amount of pleasure to perpetuate lasting change (see economics 101: the law of diminishing returns).
So in a nutshell, change for its own sake never succeeds, and you are dead-on in stating change can indeed be painful. However, it is that very vision of change from the leader given to the troops, and reinforced by line managers that keeps change on track - along with a good business plan of course!
What I would submit, however, is that change management can be positive, and much quicker to realize ROI, and much less painful, even to the point of being positive, if you have spent the time building a culture that is high capacity and dedicated to the grander vision of a leader…
You must consistently remind people why we are changing, but most importantly, as a technologist and business process improvement advocate, I have found that gaining not only C-level buy-in but grass roots buy-in to be the real key. This is why my number 1 metric is always long-term cultural adoption.
Communistic you say? Not in the least. I have found that your associates can often tell you what is screwed up most in the business. Why is this? Because they are often closest to your customer… This is of course to say you have built a high-capacity team and that you have the right people on the bus — and in the right seats on the bus (to use a line from Jim Collins).
Culture is king and how change can be accomplished in both good and bad situations… Great article, and keep it coming!
[…] had a great comment on a previous post of mine about change and ROI. I received this comment from a new friend of mine and it was so good (much better than I probably […]
Ken… I liked your comments so much, I stole your words and wrote a new post. How about that for finding cheap content?
Change for the sake of change.
[…] I just recently had the pleasure of meeting a new friend, Corey Smith, at ITEX, who runs the Master the Business blog, through a colleague of mine, Darrel Amy, who owns Dealer Marketing Systems. He wrote a rather interesting article on his blog that I was thumbing through called ‘Does change always equal ROI?’ […]
Corey –
I love your phrase “change forsaken.” That’s priceless.
I found a number of reasons why change fails to earn significant ROI. (I’ll try to not repeat Ken Stewart’s fine comments in response to your posting.)
1. Leaders don’t understand why people support or resist change. Consequently their strategies rely too heavily on financial and technical concerns and ignore the human side of the equation.
2. I don’t believe people naturally resist change, but they do resist change that is inflicted on them. Too often involvement in the change process is too little, too superficial, and too late. I have seen mind-numbing PowerPoint presentations pass as “getting people involved.”
3. Leaders fail to make a compelling case for change. They begin with “how” instead of addressing “why” first.
4. Leaders move on to the next change too quickly. I can understand the impetus to do that, but when they shift attention, the entire organization hears a signal that the current change is no longer very important.
Rick Maurer
http://www.beyondresistance.com
http://www.changemanagementnews.com (blog)
[…] In Corey Smith’s blog, http://www.masterthebusiness.com/2007/09/13/does-change-always-equal-roi/ […]