The role of change management in strategy development

Based on feedback I’ve received from previous articles, a common challenge for people tasked with developing a new strategy is understanding where change management fits into the process. It’s a great point, because invariably when you create a new strategy, you impose a raft of changes on your organization. So, at what point in the development process should you start managing change? And what are some tactics to address change effectively? Since I haven’t seen this topic discussed elsewhere, I thought I’d tackle it here.

To be clear, I don’t intend this as a dissertation on specific change management methodologies. There are countless volumes of material that cover that topic in depth. My intention is to discuss why change management is essential for strategy development and the key factors to address to ensure change is managed effectively. I also review a set of tactics to help you improve how you manage change across the entire strategy development process.
 

When strategy meets change

Strategy development, by its very nature, is an exercise in change. In most cases, you’re making decisions that significantly alter where and how your business pursues its goals. This is true for a full corporate strategy where you’re making choices about the fundamentals of the business model itself, such as product and services mix, customer segment and geographic focus. It’s true of a line of business strategy such as a city’s transportation strategy, where you determine the portfolio of transportation investments required to optimally route residents through the growing community. It’s also true of a horizontal capability strategy, such as an IT strategy or a geospatial strategy, where you decide on the best combination of people, process and technology to advance the business agenda through new tech innovations. All strategies impose a change of some degree, and that change needs to be managed.

The question is: what are the specific change factors you should consider during strategy development? And how should you address them?

To answer these questions, I devised a simple model that aligns the three main stages of strategy development with a set of empirical change factors. The result is a set of tactics to help you address change at each step of the strategy development process.

Effective change management begins early in the strategy development process and addresses empirical change factors

Tactics for managing change at each stage of strategy development

The change factors included in the model are called the DICE factors. These factors were developed by BCG and are based on decades of research with different organizations. Collectively, the factors represent the four areas that have the greatest impact on success when implementing any kind of change-based undertaking. I personally like them as a simple and tangible way to focus change activity during strategy development and have consulted them during many geospatial strategy engagements that I’ve supported.

In brief, the DICE factors are:

• Duration: The total length of time of the change program, or the time between reviews 
• Integrity: The quality of your implementation team in terms of their ability to execute the changes
• Commitment: The support of influential leadership and engagement of people directly impacted by the change
• Effort: The amount of additional work required of people tasked with implementing changes

While the DICE factors are not the only factors to consider when implementing a change program, they make evaluating the likelihood of success easier. In this way, they serve as a convenient checklist of change best practices to focus on during strategy development. When devising a new strategy, you’ve got enough to do already, so having a simple way to test if the change side is on track can greatly expedite the process.

To understand how to use the DICE factors during strategy development, I’ve separated the process into three distinct stages: formulation, planning and execution. While specific methods vary, most strategies generally progress in this fashion.
 

Strategy formulation

Strategy formulation is where strategy development begins. It’s also where change management begins. At this stage, you typically start by defining your business goals and aspirations. Next, you perform market analysis to determine the demand for products and services and to gauge opportunities with your customers. Next, you review internal processes and systems to understand if and how they could support these new opportunities and where gaps exist. You might also conduct external and internal consultation to understand the needs and interests of different stakeholders. Based on this information, you and your strategy team will generate options regarding where to focus your efforts and how you’ll capitalize on emerging business opportunities. Then you make a clear choice about your direction. By the end of strategy formulation, you should have a clear picture of where your business is going to share with everyone.

At this stage, change management is primarily about creating buy-in. You’re making fundamental decisions about your business’s future, so it’s critical you build awareness and cultivate support for the proposed direction. That means ensuring that key influencers are engaged early and often and that key contributors are freed of other commitments to invest time and energy in the process. Also, it’s critical you address the concerns of those who would resist a new strategy and the changes it implies. When handled well, strategy formulation is a process that creates enthusiasm and early buy-in for the strategy.

Specific actions to take during strategy formulation include:

• Duration: Engage key stakeholders as soon as possible and minimize the time between engagement sessions. This means starting the engagement process early, at the inception of the strategy. Then, continue to socialize findings and recommendations regularly as strategy formulation progresses.
• Integrity: Often, people fall into two camps during strategy formulation: naysayers and change seekers. Naysayers act as blockers to change, preferring the comfort of the current situation over change. On the other hand, change seekers want to up-end things and can run roughshod over what’s already working well. Assign leads to the strategy development process who are adept at respecting and balancing both tensions.
• Commitment: Clearly communicate the motivation for the strategy and directly address feedback or concerns. Formally involve influential stakeholders by creating a steering committee of senior leaders and working groups of cross-functional SMEs. 
• Effort: Ensure that key contributors have sufficient time to commit to strategy formulation by allocating a set number of days a month to the strategy effort. Help to balance their schedules by supporting the deferral or rescheduling of competing projects and finding backfill support for daily work.
   

Strategy planning

Once the strategy is formulated, the next step is to plan it out. This means estimating the work needed to execute the strategy. During this stage, the strategy team drafts up initiatives, identifies resourcing and funding requirements, and develops risk mitigation strategies. This is usually documented as an action plan that, once executed, delivers on the goals of the strategy. All in all, the intention of your strategic plan is to transform your strategy concept into a concrete, actionable roadmap.

The change factors you face during strategy planning relate primarily to people’s perception of how feasible the strategy is to implement. Few things can kill a strategy quicker than a poorly designed plan. The vision that got people excited during formulation looks like a fantasy when matched with a plan that has no practical basis. Avoid this fate by carefully and inclusively planning out your strategy. Ensure that you consult those with significant knowledge in their subject area to map out initiatives, and adopt an objective and diplomatic approach to setting priorities. Above all, ensure that the plan is realistic in terms of the additional work required of people. Your strategy depends on your people’s level of commitment—you must get this right.

Specific actions to take during strategy planning include:

• Duration: Develop a plan that incorporates clear, measurable milestones that trace back to your strategic objectives. This ensures that stakeholders understand the timing and contribution of key outcomes to the overall strategic vision.
• Integrity: Incorporate subject matter expert input into initiative planning. Tap those with the most pertinent knowledge to provide their opinion on effort and risks. Avoid planning activities where you have a limited understanding of their complexity.
• Commitment: Prioritize initiatives using a transparent and objective value-risk-cost matrix to minimize individual biases and competing interests. People will tend to favor initiatives that directly address their interests. Adopting an impartial prioritization methodology will help people see the value of other initiatives outside their purview and encourages a “for the common good” mentality.
• Effort: Assume no more than a 10% increase in workload for key contributors to strategy execution. This comes directly from the BCG research and is healthy advice to avoid overtaxing employees. Where more than 10% is needed, start planning for backfill. This could involve temporary staffing or capable staff drawn from other areas of the organization.
   

Strategy execution

After strategy formulation and planning comes the real work. Strategy execution is where your strategy becomes a reality. At this stage, resources are mobilized, initiatives are launched and (hopefully) goals are achieved. During execution, all eyes are on the strategy team. Leadership monitors progress closely, with a keen eye on the status of major milestones. Delays and setbacks are heavily scrutinized. The strategy is an idea no more; results and outcomes rule.

The key to successful strategy execution is ensuring that stakeholders remain engaged in the process and are well-supported when changes impact their daily lives. Ensure rigorous program governance to track, monitor and communicate progress to the rest of the organization. Open and honest communication is essential to maintaining support for the strategy. It can be the difference between a winning strategy and one that fails to launch.

Specific actions to take during strategy execution include:

• Duration: Regularly review the progress and impact of the strategy and re-formulate or re-plan if it’s off the mark. Some aspects of your strategy might be flawed. In that case, alter course, but make sure you catch issues early by frequently tracking and monitoring outcomes and performance.
• Integrity: Establish delivery teams responsible for specific initiatives. The idea here is to assign a portfolio of projects and activities under the banner of an initiative to a focused team to ensure a cohesive effort. This is instead of assigning projects in a piecemeal fashion resulting in poor coordination.
• Commitment: Deliver early, visible wins. The last thing you want is a strategy that takes years to deliver any tangible results. Stakeholders will lose interest, and your strategy will be a memory—filed away as a failed experiment. It’s critical to maintain momentum by delivering early and regular wins, even if they’re small wins in the overall scheme of your strategy.
• Effort: Continually monitor morale among key contributors and address early indicators of burnout or loss of motivation. Regularly check in with the people responsible for implementing the key initiatives that drive the strategy. Are they still on board, or is belief starting to wane? Listen to their concerns and work relentlessly to remove the barriers causing frustration.
   

Key takeaways

Change management is a large and complex topic, and I encourage you to explore it further. That said, when it comes to strategy development—particularly the early stages of strategy formulation and strategy planning—simplifying your focus to a subset of empirical change factors (i.e., the DICE factors) will greatly improve your odds of a smooth execution. After all, developing and implementing a new strategy is hard enough; keep change management front and center but keep it manageable.

Some points to keep in mind:

• Strategy is an exercise in change.
• Change begins when a strategy is formulated, accelerates through planning and reaches a peak during execution.
• To simplify change management, focus on the outcomes of effective change management. These outcomes are encapsulated in the change framework called the DICE factors.
• Use the DICE factors to ensure that you address change at each stage of strategy development, from formulation to execution.
• Integrate the tactics described in this article into your formal change management methodology when developing strategies. And if you haven’t adopted formal change management in your organization—look into it!

For further reading, check out my e-book Geospatial Strategy Essentials for Managers.

This post was translated to French and can be viewed here.