July 30, 2010 Vol. 3, Issue 7
Spurred by shifting social, political, and economic conditions as well as disruptive technologies, change management is increasingly a feature of organizational life today in all sectors.
There is a vigorous dialogue in the global business community about the need to adapt to rapid changes in the economy, technology, politics, and sustainability. The financial crisis has led to reforms in banking and financial services. Newspapers and magazines have seen their business model turned upside down by the Internet. The book publishing industry is undergoing the most dramatic change since Gutenberg’s printing press with new technologies like e-book readers. Management experts who have looked at these cross-sector challenges have found that the learning curve is steep in every industry.
“Adhering to one best way of doing things worked well during the industrial era, but the forces of globalization, digitization, mobile communications, and sustainability pose a different set of challenges today,” wrote the late C.K Prahalad in the June 2010 issue of the Harvard Business Review. Citing examples like Xerox and Toyota, he noted that it is difficult to break from successful business models of the past.
The auto industry is one such group facing this reality. With cars becoming increasingly driven by software code (approximately 10 million lines), the companies that survive this shift will be the ones capable of reducing system complexity and improving ways to handle the complexity that remains (Harvard Business Review, June 2010).
This dynamic is also reshaping the aerospace industry as well, observed Steve Jolly, systems engineer at Lockheed Martin, in “Is Software Broken?” (ASK Magazine, Spring 2009). The Apollo guidance computer was limited to 36,000 words of assembly language, whereas the Orion crew vehicle is up to one million lines of code. Software can make everything either happen or stop, said Jolly at the Academy’s second Principal Investigator’s Forum in May 2010. The industry has to respond accordingly. “There are thousands of ways to fail. Most have not been explored.”
Change used to be sparked by scandals, new technology, or once-in-a-lifetime events, wrote Vinay Couto, Frank Ribeiro, and Andrew Tipping in “It Makes Sense to Adjust” in the May issue of Strategy + Business. What used to merely be a rocky landscape is now more fluid, volatile, and unpredictable than ever. The authors call for organizations to “institutionalize the capacity to alter strategies again and again,” and explore the different kinds of change management behaviors that organizations practice.
In “The Need for a Chief Portfolio Officer in Organizations,” (PM World Today), Pieter Steyn looked at a survey that IBM conducted of 1,000 CEOs around the world in 2006 and again in 2008. During that two-year period, CEOs reported that the gap between expected change and their ability to manage the needed transformation nearly tripled. Traditional management techniques are not enabling executives to keep pace with the challenges they face, and communicating within traditional architectures is cumbersome. Steyn suggests that as program offices become increasingly common in organizations, the establishment of “Chief Portfolio Officers” can help reduce and manage the burden of change management on CEOs.
