Excerpts of talk at IIT Delhi, Department of Management Studies, HR Conclave, September 15, 2012
Change for organizations is inevitable. The velocity of change in the business environment is higher than ever before. Global economic outlook continues to be uncertain, business cycles are becoming shorter, existing markets are declining and new one are becoming significant, customer needs are changing, technology is continuing to evolve at a dazzling pace, and there is lot of opportunity for innovation. Organizations have no option but to adapt to the changes happening in their environment. Those who step up and capture the opportunities can become world beaters. Equally, those who fail to adapt can see surprising decline. Despite the inevitability of change, many organizations struggle to get going with meaningful change, and even those who do often find it difficult to implement their change management programs and derive the desired results from them. Clearly Change Management is a story of many paradoxes. It is inevitable but very difficult to initiate and implement. You get it right you become a world-beater, you get it wrong and you can destroy a business built over many decades. It can be a source of energy for people or destroy morale. And finally for HR, it can make you a hero or a villain!!
I have had the opportunity to be centrally involved in change management in two outstanding organizations – McKinsey Knowledge Centre and Fidelity Worldwide Investment’s operations in India. I would like to share with you a snapshot of my experiences in change management and some key lessons I have learnt.
McKC Change Management journey
It has been my great privilege to be involved in building the McKinsey Knowledge Centre in India over 8 truly wonderful years. Popularly known as McKC, it is a shining example of the depth and breadth of research and analytics capabilities that can be delivered from India and how such a centre can become a force for transforming a large, global organization like McKinsey. McKC is a remarkable journey, one that reinforces that it is possible to achieve your dreams!!
McKC had a humble beginning 14 years back in 1998 starting from two rooms in the Taj Palace Hotel. Its initial objective was to be a research back-office to support research units within various McKinsey offices. It was perhaps the first initiative of its type in the world. It quickly established that not only could you deliver research out of India but do so directly to consultants across the world. However, the scope and positioning of the Knowledge Centre remained uncertain. It is at that stage in 2002 that I joined McKC. Over the next 8 years, McKC grew from 60-70 people when I joined to 650+ when I left it in 2010. It is now undoubtedly one of the largest Knowledge Centres of its type in the world.
What is remarkable is not just the growth in scale of MCKC but how its scope evolved. McKC went through two very fundamental phases of transformation. It first evolved from being a support capability to becoming the core knowledge hub for McKinsey. From supporting other research teams across the world, it became an integral part of those teams often with their global managers being based there. Moreover, from performing transactional research it progressed to being the home for proprietary knowledge development and subject-matter experts within McKinsey. The second phase for McKC’s transformation saw it becoming an innovation hub for McKinsey. McKC helped develop many new specialized consulting services like Centers of Competence, Advanced Analytics that McKinsey could have never developed otherwise. Majority of capabilities now at McKC are not existing capabilities that were offshored from other locations, but new capabilities developed in India that never existed within McKinsey. These new services and delivery models have allowed McKinsey to serve its clients in a superior way and are redefining how McKinsey thinks about its client service model globally.
McKC change management journey has been a deeply satisfying and successful experience. Not only was has McKC created significant impact in a great firm like McKinsey, but also established a high benchmark and example of innovation and expertise that can be delivered from India. In this process of growth and transformation, McKC also able to create scores of young leaders who are creating great impact both within McKinsey and elsewhere in the industry. (See blog post “How to build a world-class Knowledge Centre” for more insights on the McKC journey).
Fidelity Change Management journey
After 12 years with McKinsey, I decided to leave the Firm in 2010. I felt that time had come for me to explore new horizons and give myself an opportunity to develop in new ways. In June 2010, I joined Fidelity Worldwide Investment as a Managing Director and their Country Head for India. Fidelity is one of the largest mutual fund companies in the world. In my role, I am responsible for our offshore operations in India and also development of our global location strategy. My Fidelity change management story is still in early stages. It has some interesting similarities to my experiences at McKinsey but also many important differences. Both Fidelity and McKinsey are incredibly successful organizations with strong cultures and lot of pride in their heritage. However, with McKC I had the opportunity of shaping a very young organization where the opportunities for growth were more apparent. While at Fidelity, I joined a relatively mature and stable organization, an organization that was good but with the opportunity to become great. The change need was important but not urgent and therefore more difficult to rouse people to action.
Historically, India office has been the hub of back-office functions like Technology, Operations and Finance within Fidelity. Over a period of time, our people in India have built tremendous domain expertise and understanding of the business. This presents opportunities for them to step up and add lot more value than perhaps what they were expected to do earlier. They can evolve from transaction oriented work to setting up new IP and knowledge intensive capabilities. They can step up from execution to innovation and leading globally. However, this requires a comprehensive program of shaping mindsets & behaviours, building capabilities and influencing stakeholder expectations. It is this exciting journey that we are currently engaged in.
Best Practices in Change Management
Change Management is a fascinating but complex topic. Despite being involved in change management for over 15 years as a manager and consultant, I still see myself as a keen student of this topic and am learning continually. Nevertheless, I would like to share with you six best practices that have I have learned over the years:
- Focus on the right type and amount of change. While change is inevitable, leaders need to make conscious choices to change things that will produce the greatest results. Change is inherently difficult so it is important to focus efforts and not dissipate energy. Change for change’s sake does not help. For example, there is often an over-reliance on changing organization structures as a way of driving performance change. In my experience, such changes cause a lot of heartburn while rarely fulfilling their promise. In addition, it is important to recognize that any organization has a certain capacity to absorb change. Therefore, it is critical to prioritize and sequence change initiatives so managers have clarity on what to focus on and equally capacity to execute. This is an area where my perspective has changed significantly from when I was a consultant to being a manager. As a consultant, I was focussed on getting all possible smart ideas on the table. As a manager, I realized that if you put too much on table it will confuse your people. To ensure successful execution, you have to focus on few not many ideas.
- Establish “why change” clearly and persistently. Biggest challenge in change management is to move people out of their “comfort zones” and for them to truly accept the need for change. There is inertia inherent in us as human beings. We like predictability and certainty. We convince ourselves that what we are doing is the right thing. Moreover, it is hard for people to achieve the objectivity needed to question and change their daily routine while they are actively immersed in it. You throw a frog into boiling water and it will jump out, but a frog who is a bucket of water that is being slowly heated never realizes what is happening!! Therefore, it is critical that you establish the need for change clearly and persistently. It is important to go beyond the corporate logic and see the change from an individual’s perspective – why they should change, what they need to do differently, how it will impact them. In this, you have to appeal to both the head and the heart. Moreover, you need to be persistent in establishing the need for change. Rarely do people accept a significant change at one go even if they say they do. You have to keep at it!! If you are persistent, you can reach a tipping point where people finally get conviction around the need for change. That is perhaps the most important milestone in your change journey.
- Build a committed change leadership team. It is critical to have a core team of committed and inspiring change agents at the center of the change program. No leader, however inspiring, can drive significant change alone. You need to have force multipliers who will not only embrace the change themselves but evangelize it across the organization, those who will stay through the journey through both ups and downs. There are certain type of individuals who are more open to change – those who have high levels of personal confidence and broader outlook. These are analogous to the “early adopters” in marketing!! In my experience, I have often found more change agents in the second line of management than the first line of management. The latter are often too vested in the status quo while former could see opportunities in the change.
- Take a long term view. Organizations have a lot of inertia, and change especially of mindsets & behaviours takes time. You have to be patient and persistent. Often new managers rush to declare all that was done before them as rubbish and to change everything. This is a recipe for failure. You have to spend time to fully understand the situation especially the history and culture, and build trust with people. The “Hare and Tortoise” story is very relevant in change management. You need to take not a 1-2 years view but a 3-5 years view for achieving substantial outcomes. I have experienced that progress at the 2 year mark can be underwhelming, but if you are persistent results in the 3-5 period can be outstanding. Therefore, you need to pace yourself and set realistic expectations. Do not lose heart. It is OK to lose or not fight a few battles. If you are persistent, results will come.
- Build stakeholder coalition. You need to understand the organization politics and power centres, and how you work them to achieve your change objectives. One of the key aspects of my corporate education has been recognising the reality of organization politics. Self-interest is an inherent aspect of human nature, so politics exists in all organizations and you have to be prepared for it. Moreover, organization politics is not always bad; you can also use it for good (BTW, Lord Krishna from Indian mythology provides an excellent role model for using politics for good!!). Any organization will have power centres and people are very sensitive to cues from them. You can give your change program a big boost if you can understand motivations of key stakeholders and find alignment and visible support from them. Equally, if you don’t, your change program can get derailed very quickly.
- Communicate, communicate and communicate. Communication is absolutely critical. There are four aspects that are important in communication – keep it simple, cover all levels, communicate frequently and consistently, and be open and honest. You need to articulate the need for change (WHY), your vision (WHAT), and benefits of the change for organization and individuals in a simple manner. Employees at all levels should be able to understand the messages and what it means for them. Often the messages remain limited to the top levels and do not reach down the line; and, if they do, they are articulated in ways that are not relevant for majority of the staff. Moreover, you need to communicate often and be consistent in your messages. When you are going through change, people feel insecure and have a high need to know. Repetition helps in such cases!! Finally, you need to treat your people like mature adults, and be open and honest with them even if it is bad news. That works much better than trying to hide or soft pedal any difficult messages.
I hope the above best practices help you play a positive leadership role in transforming your organization. Please remember, Change Management is not just about the CEOs, HR or the senior management, but something professionals at all levels can and need to play a role in. Change needs to happen across the organization. This presents opportunities for professionals at all levels to step up and make a difference. If you aspire to develop as a leader, then be proactive and take ownership of the change opportunities around you. Don’t let the size of the challenge weigh you down. Just be positive and focus on your karma. You will be surprised how much power your individual actions can have. All the best for the exciting times ahead!!
