If you search for Change Management across the interwebs, you’ll get all kinds of results, much of it focused on understanding and coaching a person through the psychological process that change creates. You know the one that goes from excitement, to denial, then the pit of despair, then acceptance, and finally growth. I know…sounds a bit dramatic – and rightfully so. When you make a change, do you consider the risk and implications across all affected functions of the business? As your Lean Manufacturing or Continuous Improvement teams work to increase quality, productivity, and service levels, are they effectively managing change in a way that enables growth while sustaining the base? Surely there are some aspects of the process that are good and should be sustained, right? This article explores the concept of Change Management as a Continuous Improvement tool and how this critical skill-set creates a distinct competitive advantage for any business.
What is Change Management?
Change Management is a systematic approach to driving proactive risk identification and mitigation for changes, and then ensuring the effective close-out of change initiatives. The objective of change is usually to improve some aspect of the business, which is good. The challenge is that in some improvement efforts, the consequences can be pushed to another area of function of the business and not discovered until it’s too late. For example, modifying a filling machine to increase productivity could also cause poor quality or safety if the risks aren’t effectively identified and mitigated in advance of making the change. Change Management helps to make changes more likely to succeed without disrupting other key areas of performance.
Why is Change Management Important in Continuous Improvement?
I’ll start by giving you three excellent reasons you should be investing in Change Management capability:
1) Change is inevitable – its either happening for you or to you
2) The pace of change is increasing – more disruptions in less time
3) Those who are best at it will win the future
You’ll find little talk about Change Management in most Lean books or sources of CI information. Many of the creators and early observers of Lean Manufacturing learned from Toyota, which is primarily a car manufacturer. The automotive industry is a manufacturer-driven where the car maker has a lot of control over what gets produced and sold. In this environment, the manufacturer has more control over the pace of change and there just aren’t as many major disruptions. Within the plant, as the vehicle moves from station to station, the operator completes a defined sequence of process steps, making it easier to stabilize production flow and establish true equipment and process ownership. When a new body-style is released every few years, there may be new equipment or retooling changes. The capital project orientation of Early Management (EM) is more than sufficient in this environment.
In other, more market-driven industries, change is more frequent and often more dramatic. The principles of EM apply but the tools aren’t very applicable for non-capital changes such as people, processes, and, in some cases, products. For example, in many CPG companies, there are several new products launched every year, requiring significant changes across the organization. Additionally, operators may be responsible for a series of equipment that produces a variety of products that can change regularly. The level of true process and equipment ownership is more difficult to establish than in other manufacturing environments. It’s a much more fluid dynamic and requires a more comprehensive approach to Change Management. Otherwise risks spiral out of control, which can be a major liability for consumable goods like food, for example.
How to Do Change Management Effectively
The objective of Change Management is to successfully execute changes more quickly without compromising or taking losses in other key areas of the business. The idea is to achieve and sustain the desired steady state in less time, cost, and overall less resources consumed. To do this, you’d need to drive more proactive risk assessment and mitigation for changes. This includes risks across all affected functions including safety, quality, production, cost, service levels and even morale. A best-in-class Change Management process have the following 5 phases:
Phase 1) Leadership Review – Leadership filters changes and assigns resources needed for successful execution
Phase 2) Risk Mitigation – Change Owners (single point of accountability) assess and mitigate associated risks
Phase 3) Leadership Alignment – Leadership verifies that all critical risks have been mitigated
Phase 4) Change Execution – The change is implemented, teams are trained, communication is completed, and key learnings are captured
Phase 5) Close-out – Leadership verifies satisfactory completion of the items in Phase 4
This simple process is scaleable to be effective from the production line up to the enterprise level. Lean Manufacturing and Continuous Improvement initiatives inflict an incredible amount of change on an organization. The importance of the critical skill-set of Change Management is highlighted by the fact that over 70% of Lean initiatives fail to sustain. Market and process-driven companies especially face a unique set of challenges that require more frequent and severe changes in just about every aspect of the business than more discreet manufacturers such as auto-makers. As a result, it’s imperative to effectively execute and close-out changes because there are always several others coming through the pipeline.