In my article a year ago (Pilot's Log, Dec 2010) the focus was on managing the execution of change which is imposed by Private Equity investors. How to reduce risk and speed up delivery by focusing on people and establishing trust, priorities according to the constraints, and sustainability through modelling and forecasting.

In this follow-up article I am broadening the view to talk about the need for Change Strategy, and the options for resourcing the creation and management of such a strategy.

The changes initiated in a Private Equity context are rarely of a minor or incremental nature. They are usually significant, structural, even disruptive. Yet at the same time there is value to be protected. Intellectual capital is an important, sometimes crucial part of that value - in other words, there are key people throughout the organisation (not just near the top) who need to be retained in a positive engagement. Equally there are stakeholders and influencers within and outside the organisation who need to maintain a clear and common understanding of the key aspects of the change, without being troubled by the detail. Furthermore the change is often dependent upon, or affected by, factors outside the control of the organisation: the global economy is the obvious example; in some industries it might be the weather; in others, perhaps raw materials availability.

A strategy for change must take a panoptic view of the organisation and the context in which it operates and plans to change. Above all, it must think ahead and pre-handle as many scenarios as possible, to protect the required outcome whilst flexing the route to get there. The following sections explore this across five different components.

Visible Value

The value arising from a change can be many things other than the obvious one of sustainable profit. The proposition may be complex and this value may not be equally applicable to everyone involved (especially when replacing and reducing staff). Nevertheless, the consequences of failing clearly to explain the value will be rumours, wrong expectations, poor decision-making, lack of commitment, inefficiency, delays … both inside and outside the company.

Change is not free – it costs money and time (which is more money) – so it's vital to have a clear and shared understanding of the criteria for success (usually money, though sometimes indirectly so such as reducing time-to-market or improved market position).

The value must be expressed in high-level framework terms to which all participants can relate equally, and then again in more specific terms to each group in a way that is relevant to their participation. Staff and suppliers, for instance, need different information, encouragement and calls to action, all within the consistent value framework.

It will be helpful to all concerned to express this value not just in terms of the company concerned, but also in the broader context of the market and environment within which the company operates.

The value must be defined in terms of measurable and practical benefits, and must be a combination of short, medium and long-term deliverables. If the short term is going to be nothing but pain, then say so. (If the long term is nothing but pain, then perhaps your strategy is somewhat flawed.)

Range of Acceptable Outcomes

There is rarely a single 'right' outcome nor a 100% certainty of achieving it. The real world is littered with random events and unknown factors which may impact on your plans, usually at the worst possible moment. Of course the strategy will seek to anticipate as much as possible, however there will still need to be some flexibility.

We'll talk about internal flexibility later, but one potential area of flexibility is in the outcomes i.e. the benefits delivered. It is worth exploring whether there are 'good, better, best' options in the delivery of numbers, a time-box of acceptable dates, or a low-consequence move between short, medium or long-term deliverables.

As an aside here, I generally advocate that dates should be the last thing to shift. This is because they are the most easily visible and commonly understood feature of the outcome, and to shift them will decrease trust and may have unexpected knock-on effects.

The important point is that it is a lot less risky to think these things through up front. If you are doing the analysis after the disrupting factor has occurred, there is a danger of tactical or knee-jerk reactions that weaken the value. Furthermore, this exploration acts as one more sanity check on the robustness of the outcome value. If indeed there is no room for flexibility at all, this tells you that you are probably on a high risk path – whether it is unacceptably high risk is of course dependent on the circumstances.

External Resilience

The purpose of this element is to protect the efficiency and effectiveness of the change work by shielding it from external factors. This is perhaps the hardest area of all, looking outside your area of control, competence, even knowledge. The 'unknown unknowns' are out there, waiting to get you. You have to go looking for some things you suspect, to make them visible, and you have to scenario plan where, within reasonable time constraints, no scenario is too crazy. A small investment in external expertise, people who have trodden the same path, may pay huge dividends here alongside your own 'what-if' thinking.

Again, this also provides another sanity check on the robustness of the outcome delivered into the real world. If you cannot see any dangers, then you haven't looked hard enough. Too many dangers, and you might want to reconsider the viability of the change.

Internal Flexibility

Just as with external resilience, there will almost always be the need for flexibility within the organisation as the change is executed. The more that is thought through in advance, the better the responses and the lower the stress.

This diagram shows a 'stretched blanket' held by different generic factors at the four corners. If any one of these factors is altered it will pull the blanket and affect the other three. Although this might look technology related, it is relevant to any deliverable outcome. For instance, reducing the time available for the change, because the benefits are needed earlier, is a not uncommon situation. Whatever this does to cost, it will certainly compromise either function or quality and difficult trade-offs may need to be made. Evaluating those trade-offs may need research and analysis, for which more time is needed, and then we've come full circle – unless this was anticipated before the change started. So it's a good discipline at the outset to conduct what-if tests on adjusting these factors.

It is very hard to get something right the first time you do it. The options are:

• take the time to deliberately do a dry-run, or beta, or pilot;
• accept it will be 80% right and fit-for-purpose, with improvements to come later;
• take a lot longer to get started, pulling in all the external experience you can get, to make the one shot your best shot.

...and the best choice depends on the circumstances. However, when faced with a large and complex organisational change, I think you know that I would advocate the latter. You get the experience from the first two options by using the right people.

Resourcing & Structure

Strategy management does not stop when the change implementation starts, it keeps handling the big picture until the change is done and the benefit outcomes are measured.

The change strategist must be impartial, with no emotional or political baggage to cloud their judgement. They can be agnostic on the quality of the commercial rationale for the change, it is not for them to double-guess the investors' or board's approach. However they may (or indeed should) say something if it seems to them that the strategy is driving towards a cliff. What they do need is a thorough understanding of the rationale, in order to manage the communication, structuring and prioritisation of the change.

The change strategist must question, challenge and play devil's advocate to tease out and sanity check the vision, the expectations, the deliverables, dependencies and risks. It is better that they are not a subject matter expert, because they must ask the 'dumb' questions and in some cases they must 'say the unsayable'.

For all these reasons it is very important to choose your change strategist and his/her reporting line very carefully. It can be someone from inside the company, although there are hidden dangers: they may be 'too close to the trees', and they may have difficulty with the new relationships and reporting. It may be a suitably experienced investor, as long as their agenda is perfectly aligned. Or an increasingly successful model is to use a professional interim, someone who has been there before and specialises in this type of work.

As to the reporting line, there may be multiple lines if that helps to tie the whole picture together, and they should be as senior as possible. One reporting line must go to a senior executive or other stakeholder who is the overall champion for the change, and to whom the change strategist can turn if they run out of fire power.

In my view, the ideal strategy team is often three people – led by the change strategist, a highly structured organisational expert, and including a subject matter/industry expert, and a finance expert (because it always comes down to money in some way).

Example 'popcorn' scenario

An experienced, charismatic, high energy sales & marketing man was put in charge of a new business unit, with a brief to create and sell value adding services on top of the existing data products. He handpicked a team of top performing sales, marketing, product and technical people and myself as programme manager. Initiatives were started and dropped literally on a daily basis, driven by individual agendas a chaotic discussions. This was truly a lot of popcorn in a small pan – keeping the lid on was difficult. I took on the role of 'organising muscle'.

My first step was to be a friend to each member of the team, to establish some trust and open communication. My second step was to maintain visibility of the expectations and deadlines given by the parent company – wall posters in every room. We then, painfully, agreed a broad set of statements to which everyone could relate, and which defined the short and medium term goals in monetary and market presence terms, the types of third party relationships needed, the acceptable levels of risk and the pitch to the prospective customer base.

The team members then proceeded, led by the boss, to work chaotically exactly as before! The only new thing was the addition of often ingenious rationalisations on how the latest bright idea really did fit into the strategy framework. So I instituted 9 am meetings every day, through which all new ideas had to be funnelled, and in which those ideas were 'prioritised'. Only the daft ideas were binned, all others were "put on the list while we concentrate on the top priorities that best deliver against the strategy with lowest risk". Day after day we played the 'game of consequences', pointing out that we cannot do everything, and just occasionally a new opportunity was promoted at the expense of other existing work. Gradually the team became used to the structure and rigour which did not seek to kill their entrepreneurial spirit, but instead helped to channel their energies down optimal paths.

Incidentally we achieved a lot of good work together in the back of a 747 as we shuffled between London and New York – it's the ultimate off-site, no interruptions location.

In Conclusion

This article represents my views, from 17 years' experience as an interim in 12 different organisations, after 20 years' employment in 4 companies, and alongside 7 years as a trustee/chairman of a national charity. As with any views, they are of course open to challenge and debate and I will be more than happy to engage in such. There is no single 'magic bullet' answer to getting change 'right'. What is highly desirable, and indeed practical, is to have a common, consistent & visible framework for action which is adapted to individual circumstances, and which is flexible within an acceptable range of outcomes.