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Transcript of © Imaginist 2011 THE CHANGE EQUATION Building your Capability for Change Peter Duschinsky Managing...
© Imaginist 2011
THE CHANGE EQUATION
Building your Capability for Change
ORGANISATI ONAL CAPABILITY
THE PROJ ECT
Culture Proce
ss
£
ORGANISATI ONAL CAPABILITY
THE PROJ ECT
Culture Proce
ss
£
Peter DuschinskyManaging Director, The Imaginist Company
© Imaginist 2011
The Purpose of this Presentation
To: Examine what makes an organisation good at managing
change Introduce the key models and tools in the Change Equation
methodology Develop the concepts of:
Change Readiness and Capability for Change Show how the Change Equation can be incorporated into your
standard practices:• at project level - to deliver consistently improved project outcomes• at programme level – to deliver Capability for Change into the
organisation as a key outcome
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© Imaginist 2011
Internal Change Programmes fare no better
The Harvard Business School tracked the impact of change efforts among the Fortune 100 and found that only 30% produced a positive bottom-line improvement…
A survey of change programmes in 400 European organisations quoted by Prof. John Oakland, Emeritus Professor, Leeds University Business School found that:• 90% of change programmes faced major implementation problems• Only 30% delivered measurable business improvements
A CIPD survey of 800 executives found that reorganisations failed to deliver real improvement in performance in 40% of cases
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© Imaginist 2011
Why is it critical to be good at managing change?
The world’s private and public sector leaders have reported to IBM that a rapid escalation of “complexity” is the biggest challenge confronting them (IBM Global CEO Study 2010)
Events, threats and opportunities aren’t just coming at us faster or with less predictability; they are converging and influencing each other to create entirely unique situations
They expect this to continue - indeed, to accelerate - in the coming years: “The complexity our organization will have to master over the next five
years is off the charts — a 100 on your scale from 1 to 5.” (Edward Lonergan, President and CEO, Diversey, Inc)
They are equally clear that their enterprises today are not equipped to cope effectively with this complexity in the global environment
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© Imaginist 2011
Why is it critical to be good at managing change?
David Snowden, CEO of Cognitive Edge, sees this as as shift: “from a world where we can predict probable risks and use risk
management systems to make our plans robust, to one where we need to accept that complex and interdependent risks
will occur, and find new ways to cope, building ‘resilience’ into our organisations”
A resilient system accepts that failure is inevitable and focuses instead on early discovery and fast recovery from failure
This places greater reliance on skilled managers being able to spot, analyse and respond to an emerging and fast-moving situation - and to turn it to the organisation’s advantage
They need to operate within a fast-reacting and resilient organisation – one that is good at managing change
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© Imaginist 2011
What makes an organisation good at managing change?
Are there characteristics we can look out for?
• Strong, visible, empowering, leadership
• High level of trust between managers and staff – decision-making devolved wherever possible
• Clearly articulated and shared vision
• Attention paid to supporting core values
• People able to give priority to new initiatives – overload issue managed well
• Innovation encouraged and well managed
• Good communication between departments
• Collaboration with customers and suppliers
• Adherence to standard ways of doing things
• HR benefits and rewards aligned to business objectives7
© Imaginist 2011
What makes an organisation good at managing change?
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Does your organisation have these characteristics?
Then you are likely to have:
• High level of involvement and commitment
• Low resistance to change
• Resilience in the face of challenges
• Able to bring in changes rapidly and effectively in response to need
Capability for Change
© Imaginist 2011
Capability for Change
“Stock of capability”(Rebecca Henderson, Harvard Business School)
“Attention and resources focused on people and processes, developing the organisation’s capability and resilience”• Crucial if you want to respond to the accelerating pace of change
and rising levels of business complexity• But erodes through natural entropy and neglect, so requires
continual investment and maintenance
Any Change / Transformation Programme needs this to be part of its core deliverables, but many don’t
The Change Equation provides the tools you need
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© Imaginist 2011
The Principles behind the Change Equation
The Change Equation is based on 3 key contentions:
1. Projects fail when the complexity of the project exceeds the capability of the organisation to cope
2. The changes needed for a complex project cannot be achieved within its lifecycle
3. A conventional ’command & control’ approach to management of complex change projects will not achieve consistently successful outcomes
Let’s apply these…
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© Imaginist 2011
Contention 1
“Projects fail when the complexity of the project exceeds the capability of the organisation to cope”
Management typically: • Underestimates the complexity of its projects • Overestimates the capability of their organisation
So if we want to be able to predict success or failure, we need to measure project complexity and organisational capability
We do this by undertaking a Change Readiness Assessment
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© Imaginist 2011
Change Readiness Assessment
The Change Readiness Assessment (CRA) comprises: • Stakeholder interviews, review of project documentation, analysis,
senior management team workshop, report & recommendations
It allows us to:• identify the underlying causes of low and negative ROI on projects• quantify the barriers to success• predict the success or failure of projects• deliver a Route Map and Action Plan to help clients gain ownership of
the risks and improve performance
Undertaking a CRA at the planning stage will improve a project’s outcomes
Integrating CRA into your standard project planning process will deliver consistently improved project outcomes
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© Imaginist 2011
Change Readiness Assessment
We use a number of key models and tools
We will come back to these…
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© Imaginist 2011
Integrating the Change Equation into standard practice
1. Audit• Undertake CRAs on selected completed projects• Stakeholder face-to-face interviews
2. Analyse• Identify and quantify key common barriers• Adapt methodology, terminology
3. Integrate• CRA into standard project management practice• Change Equation principles into programme architecture
4. Implement• Employ project and programme managers with right skill-sets
Consistent improvement in project outcomes Capability for Change
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© Imaginist 2011
Contention 2
“The changes needed for a complex project cannot be achieved within its lifecycle”
The actions needed to achieve and embed behaviour change usually have to be linked to a wider programme
Building these into a Change (or Transformation) Programme will enable the development of an organisation’s Capability for Change
The Change Equation principles provide the framework
The CRA Route Maps and Action Plans provide the content
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© Imaginist 2011
Contention 3
“A conventional ’command & control’ approach to management of complex change projects will not achieve consistently successful outcomes”
Conventional change management interventions attempt to impose change…so people give up, fall back on ‘what’s in it for me’ and the change project fails
In a complex project, newly emergent ways of working and new forms of organisation need to be recognised, nurtured and embedded
You need to employ project and programme managers with the right skill-sets to achieve this
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© Imaginist 2011
Assessing an Organisation’s CultureUsing the Organisational Culture Evolution model
There’s an inherent tension between the individual and the organisation…
Between the aspirations and motivations of people and the external systems and controls that they work with…
Think of this as a pendulum
© Imaginist 2011
Assessing an Organisation’s Culture
There’s an inherent tension between the individual and the organisation…
Between the aspirations and motivations of people and the external systems and controls that they work with…
Think of this as a pendulum
When it swings to the left, people are ignored in favour of rules and processes…
© Imaginist 2011
Assessing an Organisation’s Culture
There’s an inherent tension between the individual and the organisation…
Between the aspirations and motivations of people and the external systems and controls that they work with…
Think of this as a pendulum
When it swings to the right, systems are ignored in favour of people’ doing their own thing’
© Imaginist 2011
Point of balance
THE ORGANISATION‘External’ Focus:• The organisation’s needs
and direction• Systems and processes• Efficiency
THE INDIVIDUAL‘Internal’ Focus:• Culture• People’s perceptions, attitudes,
motivations, aspirations• Effectiveness
When the pendulum is at the point of balance, the organisation is working well…
But any disruption sets the pendulum swinging…
Assessing an Organisation’s Culture
© Imaginist 2011
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3
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6
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Point of balance
THE ORGANISATION‘External’ Focus:• The organisation’s needs
and direction• Systems and processes• Efficiency
THE INDIVIDUAL‘Internal’ Focus:• Culture• People’s perceptions, attitudes,
motivations, aspirations• Effectiveness
The evolution of an organisation’s culture can be described as a set of 9 points on a spiral
Assessing an Organisation’s Culture
Each culture builds upon the earlier ones, progressing up the spiral
Each point or ‘level’ represents a separate, definable culture
To progress up the culture spiral we have to deal with the underlying tension between:
The ‘External’ Focus:• The organisation’s
needs and direction• Systems and processes• Efficiency
The ‘Internal’ Focus:• Culture• People’s perceptions,
attitudes, motivations, aspirations
• Effectiveness
© Imaginist 2011 24
The 9 Culture Levels
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
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1. Focused on me
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
1. Focused on me
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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DIV
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We all start by doing everything
ourselves.This works for a
while, but…
We all start by doing everything
ourselves.This works for a
while, but…
Assessing an Organisation’s Culture
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
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As we grow, we need to
delegate. This needs rules
and processes…
As we grow, we need to
delegate. This needs rules
and processes…
Assessing an Organisation’s Culture
1. Focused on me
© Imaginist 2011
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
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Assessing an Organisation’s Culture
This needs rules and
processes…The problem
with this is that it becomes
bureaucratic and ‘tribal’.
This needs rules and
processes…The problem
with this is that it becomes
bureaucratic and ‘tribal’.
Organised 2.1. Focused on me
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
1. Focused on me
3. Engaged
5. Devolved
7. Creative
9. Empowered
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Assessing an Organisation’s Culture
So we streamline our processes…
So we streamline our processes…
© Imaginist 2011
Organised 2.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
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sAssessing an Organisation’s Culture
But that didn’t seem to work
very well. Why?
But that didn’t seem to work
very well. Why?
Efficient 4.
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1. Focused on me
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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DIV
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Assessing an Organisation’s Culture
Perhaps we didn’t spend enough time gaining
ownership for the changes…
Perhaps we didn’t spend enough time gaining
ownership for the changes…
1. Focused on me
© Imaginist 2011
Organised 2.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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Assessing an Organisation’s Culture
When we involve people in creating their future, they pull the changes through, instead
of resisting them! ‘Efficiency’ +
people = ‘Effectiveness’
When we involve people in creating their future, they pull the changes through, instead
of resisting them! ‘Efficiency’ +
people = ‘Effectiveness’
Efficient 4.
1. Focused on me
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
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And when everyone is pulling in the
same direction, we can give people more control over
how they achieve results
And when everyone is pulling in the
same direction, we can give people more control over
how they achieve results
Assessing an Organisation’s Culture
1. Focused on me
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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Assessing an Organisation’s Culture
Now that we are working as
a team, communication
flows undistorted -
across as well as up and down
– so we can
focus outwards and use real-
time information to make better decisions
Now that we are working as
a team, communication
flows undistorted -
across as well as up and down
– so we can
focus outwards and use real-
time information to make better decisions 1. Focused on me
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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- ‘Intern
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Assessing an Organisation’s Culture
Now managers have the
information to enable them to make radical
and innovative decisions
Now managers have the
information to enable them to make radical
and innovative decisions
1. Focused on me
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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Assessing an Organisation’s Culture
Now the captain at the helm can stop fire-fighting and intervening
- and start thinking
strategically
Now the captain at the helm can stop fire-fighting and intervening
- and start thinking
strategically
1. Focused on me
© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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Assessing an Organisation’s Culture
Now people can be empowered to manage their own work - the most effective organisational
culture
Now people can be empowered to manage their own work - the most effective organisational
culture
1. Focused on me
© Imaginist 2011 37
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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Where are you now?
Where do you need to be?
Assessing an Organisation’s Culture
1. Focused on me
© Imaginist 2011
Assessing an Organisation’s Process Management Capability
1. Initial Ad hoc process Chaotic
2. ManagedRepeatable process
Controlled environment
3. Defined Standard process
Consistent Execution
4. Quantitatively Managed
Measured process
Quality and Productive Improvement
5. Optimising Effective process
Continuing Improvement
Software Engineering Institute
Where are you?Where do you need to be?
What’s stopping you?
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© Imaginist 2011
The Organisational Capability Indicator
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Management Culture
9. Empowered
8. Holistic
7. Creative
6.Informed
5. Devolved
4. Efficient
3.Engaged
4.Organised
1. Focused on me
© Imaginist 2011
‘Transformational’
Scrap whole operation/business and
start again
Major impact on people
‘Transitional’Replace one system or process with another
Some impact on people
‘Developmental’Apply management
improvement techniques to “make it work better”
Little impact on people
LOW Complexity HIGH
‘Developmental’Apply management
improvement techniques to “make it work better”
‘Developmental’Apply management
improvement techniques to “make it work better”
‘Transitional’Replace one system or process with another
‘Transitional’Replace one system or process with another
‘Transformational’
Scrap whole operation/business and
start again
‘Transformational’
Scrap whole operation/business and
start again
e.g.
How should we measure complexity?
Complicated = not simple, but outcomes are ultimately knowable
Complex = not simple and outcomes are never fully knowable40
© Imaginist 2011
Terminal 5
Over 28,000 lost bags, 700 cancelled planes and more than 150,000 disrupted passengers
“The Terminal 5 debacle is a national disgrace” Daily Mail, 14 April 2008
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© Imaginist 2011
So what went wrong?
1. Shortage of staff car parking spaces
2. Only one employee security checkpoint operating
3. Some staff unable to log on to the computer system
4. Hand-held communication software running slow
5. No managers on the ground to re-allocate work
6. Shortage of bar-reading storage bins
Baggage handling staff late in arriving
60 staff queue to get into terminal
6am: 3 planes leave without bags
Bags pile up, unattended
By midday 20 flights cancelled
4pm: baggage conveyor belt grinds to a halt, BA suspends all baggage check-in
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© Imaginist 2011
In 2004, HP's project managers knew all of the things that could go wrong with their ERP centralisation programme. But they just didn't plan for so many of them to happen at once.
The project eventually cost HP $160 million in order backlogs and lost revenue—more than five times the project's estimated cost.
Gilles Bouchard, then-CIO of HP's global operations, says: "We had a series of small problems, none of which individually would have been too much to handle. But together they created the perfect storm.”
Complexity is exponential!
“The Perfect Storm”
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© Imaginist 2011
Complexity is Exponential
”We live in a world that can change exponentially – but we have brains that are hardwired to plot things out linearly - the software in our brains compels us to think about progressions as being simple arithmetic ones
So as a species, and a society, we deal poorly with uncertainty in non-linear domains.” Prof Albert Bartlett, University of Colorado
That’s one good reason why management typically under-estimates the complexity of projects!
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© Imaginist 2011
‘Transformational’
Scrap whole operation/business and
start again
Major impact on people
‘Transitional’Replace one system or process with another
Some impact on people
‘Developmental’Apply management
improvement techniques to “make it work better”
Little impact on people
LOW Complexity HIGH
‘Developmental’Apply management
improvement techniques to “make it work better”
‘Developmental’Apply management
improvement techniques to “make it work better”
‘Transitional’Replace one system or process with another
‘Transitional’Replace one system or process with another
‘Transformational’
Scrap whole operation/business and
start again
‘Transformational’
Scrap whole operation/business and
start again
e.g.
How should we measure complexity?
Co
mp
lexi
ty F
acto
r
75 4803600
10800
32400
72000
05000
1000015000
2000025000
3000035000
4000045000
5000055000
6000065000
7000075000
80000
1 2 3 4 5 6Exponential Complexity Model
Co
mp
lexi
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acto
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75 4803600
10800
32400
72000
05000
1000015000
2000025000
3000035000
4000045000
5000055000
6000065000
7000075000
80000
1 2 3 4 5 6
Not simple - needs some
project management
A complicated project – needs an
experienced project
manager
Your project is too
complex – break it down into separate projects and
employ a programme
manager
Simple project
A complex project – needs a
dedicated project team
Exponential Complexity Model45
If complexity is exponential, we can build it with just 3 factors: X * Y * Z
© Imaginist 2011
The Exponential Complexity Tool
Which 3 factors? They must be:• Common to all projects• Quantifiable by stakeholders• Good predictors of the complexity of a project
The Exponential Complexity Tool uses the following 3 factors:
1. Number of people or Stakeholders involved
(More people = more complex = higher risk)
• Number of business activities or Processes affected
(More ambitious = more complex = higher risk)
• Elapsed Time to implement (in months)
(Longer to implement = more complex = higher risk)
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© Imaginist 2011
The Exponential Complexity ToolC
om
ple
xity
Fac
tor
75 4803600
10800
32400
72000
05000
1000015000
2000025000
3000035000
4000045000
5000055000
6000065000
7000075000
80000
1 2 3 4 5 6
Not simple - needs some
project management
A complicated project – needs an
experienced project
manager
Your project is too
complex – break it down into separate projects and
employ a programme
manager
Simple project
A complex project – needs a
dedicated project team
Exponential Complexity Model
72,000
• Think about a project you are familiar with• Where on the scale do you think you are?
• Think about a project you are familiar with• Where on the scale do you think you are?• Now do the numbers: Stakeholders x Processes x
Time 20 200 18 mths
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© Imaginist 2011
Deliverables: Action Plan
Organisation
Component Implication Action required
Management Culture
The lack of information-sharing, alignment and empowerment will jeopardise the success of the project. At the very least it will mean poor take-up and a lower than planned level of benefits.
A programme of interaction and dialogue across the organisation is urgently needed to improve the management culture. This needs to include increasing trust, see below.
ProcessCapability
The organisation’s process capability is poor. This means that any projects which seek to standardise and improve processes to achieve greater efficiency will be very difficult to achieve.
Consider carrying out a programme to raise the levels of process capability ahead of implementing the project or using the project itself to inject the necessary disciplines. In this case it is crucial for the Board to make compliance to the new processes mandatory.
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© Imaginist 2011
Organised 2.
Efficient 4.
Informed 6.
Holistic 8.
3. Engaged
5. Devolved
7. Creative
9. Empowered
TH
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sDeliverables: Route Map
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You are here
You need to be here
1. Focused on me
© Imaginist 2011
Deliverables: Calculation of the Impact
- %Total potential impact on benefits
+ %Total potential impact on project timescales/costs
Other factors impact estimated at:
IT Solution9
Relationship with suppliers8
OTHER FACTORS
Delivery of Project Impact estimated at:
Benefits Realisation7
Distrust factor6
Visibility of process5
DELIVERY OF PROJECT
Project Impact estimated at:
Complexity of project4
Clarity of objectives3
PROJECT
Capability Impact estimated at:
Capability Maturity2
Management Culture1
ORGANISATION
Benefits-%
Time/Cost +%
Potential ImpactStatusComponent
© Imaginist 2011
Summary
The Change Equation methodology is designed to be integrated into standard practice:
• at Project level – CRA ensures Change Readiness and deliver consistent improvement in change project outcomes
• at Programme level – Change Equation principles, Route Maps and Action Plans provides framework and content to deliver organisational Capability for Change as a key outcome
Only with both of these in place can an organisation respond to the challenges it faces with the speed and resilience it needs to survive
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© Imaginist 2011
Peter Duschinsky
Managing Director
The Imaginist Company
Email: [email protected]
Tel: 020 8201 1478
Mob: 07801 802 571
Web: http://www.imaginist.co.uk‘The Change Equation’ is available from Amazon.co.uk
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