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Business Impact and Organizational Change Management

Last time we delved into the concept of business impact and defined it using the context of a journey from the "current state" to the "desired future state."  In this blog entry, we will gain a better understanding of why business impact is so important by looking at basic Organizational Chage Management (OCM) principles.  As a caveat, this will not be a comprehensive treatment of OCM by any means and will deviate from what the current methodologies prescribe.

Crawling to flying
OCM comes in two flavors, for the most part:

Kotter.  Developed by John Kotter, this is the direct result of his seminal book (published in 1996) entitled Leading Change: Why Transformation Efforts Fail.

Prosci.  Developed by Jeff Hiatt, this methodology is utilized by the company that he founded of the same name.

You can find a nice high-level comparison between Kotter and Prosci here.

There are others, of course, including an honorable mention of one of my favorite business-related books entitled Who Moved My Cheese? by Dr. Spencer Johnson. (This is a short book and a quick read, written in a format that's very engaging.  I highly recommend it.)

Here's where my explanation deviates significantly from what both Kotter and Prosci dictate.  OCM can be distilled into the following five-part method for establishing direction for a company at the Executive Leadership level.

  1. Strategic.  First, a set of strategic goals is identified with the intention of getting from the "current state" to the "desired future state," as we discussed last time.
  2. Tactical.  For each goal previously identified, an execution plan is created for the specific goal to be achieved.  This includes project timelines, deliverables, milestones, etc.
  3. People.  Next, the people who are best suited to lead each initiative in the previous step are tapped to lead.  These people are sometimes referred to as Program Managers.
  4. Process.  While the tactical plan is being executed, processes that are required to be created or changes to existing processes are identified, defined, and implemented.
  5. Technology.  Finally, enterprise software that is needed to support the new processes is evaluated and acquired.

The specific order of these five parts is important, because it highlights why the expression "no one ever bought software based on features alone" exists - any software purchase (5 in the list, above) that a company makes has to support the process changes (4) needed and being implemented by a team led by the Program Manager (3) based on the tactical plan (2) that was created to support the long-term strategic goals (1) of the business.  In other words, technology is the least important component of this equation.

Similarly, business impact (link goes to my previous blog entry on that topic) is the yardstick that measures whether or not a goal should be a Strategic Goal (capitalized for emphasis).  In other words, if the Executive Leadership Team cannot come to the conclusion that a specific goal has a high enough ROI (using the colloquial definition of the term and not the financial definition) then it won't be added to the strategic plan for the company.

Please note that we are discussing this in the context of the highest levels of a company, but these concepts can just as easily be leveraged at lower levels in a company, whether you are a Vice President, a Director or even a first-line Manager.

To summarize, business impact is the primary driver for most business decisions.  Understanding not only the concept but how to discuss it in conversational terms is not only crucial to determining what changes make sense in a professional setting but also critical to building consensus among your peers to support the changes you hope to implement.

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