• Matt Moynihan

Understanding the Shades of Change

Trying to predict the future is best reserved for fortune tellers and maybe a lucky stock broker or two. Nevertheless, companies predict their futures annually as they go through a similar process setting budgets, reviewing markets, and developing forecasts to deliver a viable plan to meet shareholder expectations. Of course, as 2020 has reminded most of us, things usually don't go as planned due to the constant force of changing business dynamics. However, with a better appreciation of where the sources of change occur, how they may impact your organization and proactive planning around the high risk areas, achieving your plans can be easier than you think.

Sources of Change

Change can originate from various sources as shown in the adjacent figure. The change can be planned (i.e. acquire new customers) or can be unplanned (i.e. customers are lost). Both planned and unplanned changes can result in opportunities (losing bad customers) or challenges (losing good customers). In general, planned changes are easier to manage because it is easier to

manage timing, resources, and priorities with other active projects.

To help plan change, it is important to have an effective business planning process. Business planning involves developing a business strategy and making assumptions about how the various sources of change can impact your business. For example, perhaps your 18-24 month business plan is based on the assumption that the you only have two competitors. However, how would your plan be impacted if a new competitor entered the market, or alternatively, if one exited the market?

It is impossible to develop assumptions for all of the boxes shown. However, by prioritizing the various sources into high risk areas, it is possible to allow for a more focused management approach to help plan/mitigate risk, avoiding the implications of any negative change.

Best practice requires that these assumptions be validated on a regular basis (typically monthly). As the assumptions change (and for sure they will), the APEL framework can help develop scenarios and solutions that can be implemented more proactively.

The Different Shades of Change

There are also varying degrees of change complexity as shown in the above figure. Fine tuning of policies, processes and current products are the easiest forms of change to manage. Typically, these types of changes are confined to limited groups or functions within a business. For example, the demand team may make a change on how it wants to conduct product forecasting. These changes are unlikely to impact the R&D or Logistics teams. However, numerous fine-tuning change initiatives can be siloed across various functions which results in significant workloads for the entire enterprise.

As the complexity of change increases, the nature of the change is likely to impact multiple functions at the same time. For example, merging two businesses will likely impact multiple functions such as supply, demand, and R&D. Larger, more complex change initiatives will consume more bandwidth of any organization because of the need to respond collectively. When introducing large change initiatives like business re-organization or M&A’s, it is important to consider the impact on other active projects. Ignoring prioritization decisions will certainly increase stress levels and possibly create resistance.

Change is a constant and will always be a force to be reckoned with. However, determining the sources of change that create the highest risks will give you a leg up. Identifying the types of change currently occupying your organization will allow you to prioritize your vulnerable areas. Consequently, you will have a significant advantage to proactively plan and take required action to ensure you stay on course to meet your business goals.

Some say that all change is difficult. The truth, however, is that the complexity and difficulty of implementing company changes varies according to circumstances. All change is not created equal-but all organizational change requires careful planning and strategizing.

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