The Real Cost of Transformation and Culture Change

Posted by Paula Alsher on Fri, Feb 17, 2017 @ 11:41 AM

Recognize this:  if you are implementing an ERP, Lean/Six Sigma, Shared Services, a new Patient Care Model—you are under-taking transformational change that has a cultural change component.  When you begin the transformational change journey, there are inevitable truths your leaders must come to grips with!  This is not just a change for the project team, or the organization at large.  It is a change for the leaders themselves, and their role can’t be overlooked or under-estimated.  The Cost of Change


Let’s Get on the Same Page

“Transformation” is one of those business buzz words that is thrown around all the time, without a clear understanding of what it really means, and more importantly, what it will cost in terms of resource consumption for implementation to be successful.  The simplest way to understand transformation is to compare the basic types of changes in order of magnitude:

  • Minor - Business as usual changes
    Minor alterations to the Frame of Reference (FOR) resulting in minimal disruption and resistance
  • 1st Order - Doing the same things, but a little better, faster, cheaper
    Major alterations to the existing FOR resulting in significant resistance
  • 2nd Order  - Doing new things, in different ways than ever before
    The old FOR is no longer adequate. A new FOR must be created resulting in maximum disruption and resistance—requires old FOR to be broken down

How Committed are Your Leaders?

These transformational changes have scope and complexity that typically take 3-5 years to fully implement.  This has an important implication for leaders in terms of prioritization and leaders’ own personal commitment—namely that the transformation needs to remain one of the top 2 or 3 initiatives for the full implementation lifecycle.  What we see too often in our change management consulting is that the transformation is the bright shiny object at the beginning, but it loses its luster over time and gets replaced by the next shiny object.

Leaders need to commit 20-30 % of their time to this transformation! and the specific actions they will need to take to be successful, and the true price they will personally need to pay.  Know that they will need 

That Thorny Culture Issue

Changing culture requires a whole lot more than putting out a new slogan and creating a new vision and mission statement.  No culture change is possible without changing the formal and informal reinforcements that are engrained as your current “success pattern.” {Tweet This}  Culture change requires a fundamental change in how people are reinforced for the new desired behaviors, and these are best inculcated at the project level, in how the work of the organization actually gets done! 

A great example of this is the widespread attempt to implement Lean/Six Sigma simply as the application of new processes.  At its heart, Lean/Six Sigma is transformational in scope, and a culture change.  What are the new behaviors you are seeking for leaders and their direct reports?  How will you provide positive rewards for observed compliance, and negative consequences for non-compliance?  Do you want to “do Lean” or do you want to “be a Lean organization?” 

Process follows reinforcement!  That is the essential AIM principle that should guide your transformation. 


Be Aware of the Costs

There are both short and long-term costs when transformational changes fall short of optimization.  The short term is more obvious, but the long-term is significant, because when you fail, you lose trust and credibility for your leaders, and this spills over to future changes.

So you have to go into transformation with your eyes open!  And when you make the transformation leap, you can’t go back again.

The Real Cost of Transformation and Culture Change


Topics: Transformational Change, Culture, Value Realization/ROI