Creating a Value Driven Change Capability for
Executing Organisational Strategy
Cranfield School of Management – April 2007
Professor Chris
Edwards
Rob Lambert
“It is not the strongest of
the species that survives,
nor the most intelligent; it
is the one that is most
adaptable to change
Attributed to Charles
Darwin
Indications are that the rate of
organisational change / transformation
is increasing with an associated
increase in investment risk. In the
public sector the emphasis placed on
integration and efficiency has risen
significantly (fuelled by Gershon and
Lyons) and further re-enforced by the
ODPM’s 10-year vision, 'The Future of
Local Government’. Improved service
delivery, better dialogue with citizens
and communities, strong political and
managerial leadership, and joined-up
services are just some of the challenges
currently facing this sector. Each of the
above requires that such organisations
must have the capability to transform.
The private sector is not excluded from
this revolution; one multi-national
organisation reports 1,500 active
change initiatives at one particular point
in time. No doubt some of these are
minor and involve few individuals,
however many are significant in scale
and complexity. All of this investment in
change is in an attempt to create a
‘better tomorrow’ for the organisation.
As Darwin so aptly states the winners
tomorrow may well not be today’s
strongest, nor today’s most intelligent,
but those most adaptable to change.
For forty years organisations have
focused upon formulating a ‘better’
strategy; one that will provide long term
competitive advantage. This pot of gold
has been a favourite of academics since
the original Porter works of the 80’s.
Many a Chief Executive’s PowerPoint
presentation articulates yet another
‘new direction’ for the business,
however the cynics amongst us will ask
how many of these ‘directions’ will ever
be more than slideware. It is
considerably easier to define a state
that you want to exist than to create that
state. In retrospect ‘strategy
formulation’ is easy in comparison to
‘strategy execution’ but advantage only
comes from the combination of the two.
In many organisations responsibility for
delivering today’s performance is clear
whereas that for creating tomorrow is
less so. Exactly who in an organisation
aligns, prioritises and coordinates the
portfolio of business change initiatives,
ranging from IT enabled change to Six
Sigma local projects as well as strategic
imperatives defined by the Board? Who
is responsible for creating organisational
readiness for change? Who ensures
that adequate business change
resources are allocated to each
initiative? Who mobilises the various
groups that need to be involved in
operationalising the change (IT,
Organisational Development (OD), etc)?
Who tests and signs off the change as
suitable in terms of efficiency and
compliance? Just who rigorously
conducts post implementation
investment reviews on business change
programmes? Some of these tasks are
frequently allocated to a Programme
Office but such a group often exists to
provide administrative and support
services only; not a truly managerial
capability, with real responsibility and
authority. The above questions relate to
responsibility for the creation of the
organisation’s tomorrow and, as such, it
could be said to be the CEO’s
responsibility. But then everything is the
CEO’s responsibility and he/she only
has 16 working hours in each day! In
summary, it is considerably less clear
who coordinates and operationalises the
creation of tomorrow’s business than it
is to understand who delivers today’s
business.
The symptoms of not having a capability
to execute strategy are seen in many
organisations: slow and late delivery of
initiatives; failure to deliver the benefits
of the initiatives coupled with regular
cost over-runs; not forgetting the
ubiquitous ‘change overload’. These
lead to the non-delivery of strategic
goals and eventually vacancies on the
Board, or the organisation becoming a
Creating a Change Capability for Executing Organisational Strategy
target of private equity providers!
Often the non-delivery effects are
compounded by an adverse impact
on the day to day organisational
performance; the constant meetings
regarding change programmes
detract managers from the focus of
delivering this quarter’s profit.
Figure 1: Generic elements of a change capability
Portfolio formulation
1 Engender and reinforce an organisational culture of continuous change
2 Understand the drivers and content of each change initiative at an early stage in
the lifecycle
3 Align and filter initiatives to the strategic goals thus creating the change portfolio
4 Harmonise the strategic leaders team to support the change portfolio
Failing occasionally is, maybe,
unavoidable and nearly acceptable.
However, organisational learning
between initiatives is often non
existent leading to multiple and
repeated failure which is always
totally unacceptable. In some
organisations each transformation
initiative seems to be undertaken to
standards set by the leader of that
particular initiative. To pursue a
nautical analogy each voyage
(initiative) is undertaken rather like
Columbus’s first expedition to the
Americas, which must have been a
planning and operational nightmare.
Organisations require change to be
managed more like a P&O cruise
docking at Southampton: the
required replenishments are radioed
ahead; the waste is waiting to be
taken off; all the consumables are
ready to be loaded. Ten hours later
the vessel is on its way to the next
port, fully prepared to delight its new
customers. This precise planning
has evolved over many years and
clearly has a direct effect upon
P&O‘s bottom line; each day that
passengers are cruising generates
income. Maybe this analogy is
exaggerated, but in some
organisations each transformation
initiative is like an adventure; they do
not seem to be learning from each
experience to ensure the next is
more effective and efficient.
The domain of ‘change and
transformation management’ has
been thoroughly researched by
academics over the years.
Numerous ‘methodologies’ have
been proposed to achieve
successful transformation. In
essence, common themes recur,
which when brought together and
embedded form an organisation’s
change capability. These are shown
in Figure 1. The first four elements
are concerned with developing an
agreed change portfolio. The
Programme execution
1 Develop the detailed business case and obtain approval / refusal for each initiative
2 Establish accountability and governance for each change initiative
3 Execute each change initiative and realise the intended business benefits
4 Manage the ongoing initiative portfolio, conflict, resources and inter-dependencies
5 Co-ordinate the elements of the change capability
6 Review, learn and improve the change capability
literature stresses the criticality of
the leadership team communally
committing to this prioritised
portfolio. The remaining six
elements are involved with the
detailed planning, delivery and
review of the change initiatives.
Recent research undertaken at
Cranfield suggests that these six
elements are necessary but they are
insufficient, in themselves, to deliver
the critical benefits. Realisation of
these benefits is more closely
associated with the formulation of an
agreed change portfolio.
Maybe more important than an
effective process is the unifying of
responsibility for ‘creating tomorrow’.
Presently hundreds, if not
thousands, of individuals are
involved in managing aspects of
change in a single organisation.
Initiatives are often uncoordinated
and reflect a situation of twenty
years ago when change was minor
and spasmodic. Examples exist of
the same organisational activities
being redesigned by numerous
separate individuals as part of
separate initiatives without any of
them knowing of the existence of the
others! Today with responsiveness
and agility increasingly becoming the
organisational focus, clear lines of
responsibility for change are
essential. The UK has seen a
distinct rise in the number of
advertisements for individuals with
‘Transformation’ and ‘Change’ in the
job title, particularly in the public
sector. Such a role is central to an
organisation as it exclusively focuses
upon generating tomorrow’s
success. Logic suggests, and the
job advertisements confirm, that
there is a need for such an individual
but what is their background; what
are their core competencies and
maybe most important of all where
are they being developed?
As Finance Directors take on an
increasingly strategic role involving
custody of long term shareholder
value, what will their involvement be
in creating the value driven change
capability? Are they to be instigators,
overseers or recipients of others
vision?
Our purpose in writing this article is
to stimulate a debate so that
organisations begin to enhance their
capability for executing the business
strategy. As the school report might
say “More emphasis needed on
‘strategy execution’ and rather less
on ‘creating the perfect business
direction’”. The issues discussed
here are to be explored in more
detail at a forthcoming conference at
Cranfield.
Professor Chris Edwards
c.edwards@cranfield.ac.uk
Rob Lambert
r.lambert@cranfield.ac.uk
© Cranfield School of Management