Organisations need excellent change management skills to determine how external environmental events could impact them so they can either mitigate against them or exploit them to their advantage
by Paul Taylor, consultant and CISI external specialist
The past couple of years have seen some of the most turbulent changes in history.
Brexit has changed the political landscape in the UK and EU forever and it is safe to say that its long-term impact will take many years to fully materialise. Covid-19 has caused widespread disruption across the globe with sudden changes in social practices, increased economic hardship as well as a tragic number of deaths. The UK has had five different prime ministers in the past six years (including three in the current year) which has created political instability and paralysis as well as a massive decrease in trust in the political establishment. Finally, there are some very challenging economic conditions now with increasing bank interest rates and inflation across the globe.
Therefore, to survive it is important that organisations, whether they are political, government, commercial or charitable, successfully cope with this constant flow of environmental impacts. This means that they need efficient and effective change management to ensure they are aware of any external changes and understand their impact, which will then allow them to either implement plans to mitigate against them and/or implement changes to take advantage of any opportunities that they could present.
Organisations therefore need solid and robust processes to continually monitor the external environment.
Scanning the external environment for impacts
There are several different models and methods that firms could use to perform this environmental scanning. The PEST model, which has been around for many years, is still valid and popular. This is where organisations assess the external environment through the following four lenses:
- Political factors – What political factors could impact the organisation? Such as legalisation changes, tax rates, and political instability.
- Economic factors – What economic factors could impact the organisation? Such as inflation rates, exchange rates, and economic growth.
- Social factors – What social factors could impact the organisation? Such as demographic changes, cultural changes, population growth, and people’s attitudes.
- Technological factors – What technological factors could impact the organisation? Such as new technologies that are becoming popular.
All changes need a clear business reason and must provide some sort of benefit It is important to remember that the four above categories are not siloed and there are interdependencies between them. For example, one could say that social media was originally a new technology factor which has had a social impact, which in turn could have a political impact in terms of new legislation being implemented to manage it or increased political instability in certain countries.
While the selection of an analysis model or tool is important, it could be argued that obtaining vigorous and appropriate data is even more important. It is essential to remember that any analysis is only as good as the underlying data that is used in the evaluation. This means that organisations need to pay careful attention to the data they gather. One good tip is to gather data from multiple sources and then combine it as part of the assessment. The range of different sources is vast and can cover data:
- gathered by the organisation themselves
- obtained from external organisations such as specialist data providers
- provided by governments and other political groups
- obtained from academic research
- obtained from industry peers or working groups.
This richer and wide collection of data will allow organisations to provide deeper analysis because it will allow data to be compared, any biases to be identified and corrected, any gaps to be identified and possibly even filled, and also allow any correlations and cross-linkages between causes and impacts to be uncovered.
Implementing changes to either mitigate against impacts or exploit them
Once this environment scanning analysis has been completed, organisations can determine what changes they need to make themselves to either mitigate against the impact of the environmental changes and/or exploit any opportunities that the environmental changes could offer.
This list of organisational changes must be implemented successfully, which means organisations need a strong change management capability to allow this to happen:
- It is important to ensure that the change links to a key business reason and provides some benefit to the organisation. Although, the benefit will likely be to meet the challenge or take advantage of the opportunity the environmental scanning has identified. However, always be wary of making a change without a clear business reason because, otherwise, time and effort will be wasted.
- All changes need to be supported by clear and visible management support. This will help with motivation regarding implementation.
- It is essential to understand what actually needs to be changed. The traditional methods of scope definition are still valid, but organisations need to think much deeper to understand what functions, processes, products, technology, roles, and suchlike could be impacted and therefore need to change. Apart from ensuring that nothing is missed, it also ensures that the right people are involved in the change.
- Does the organisation, including its suppliers and customers, have the skills and capabilities to implement the changes successfully? Most organisations think of this in terms of the ‘traditional’ project management skills, such as planning, resource management, and risk management, but this is a much wider area. For example, does the organisation have the required technical skills to make the change? Or does it have the required human or interpersonal skills? Interpersonal skills are particularly important and are often overlooked. Change is very much a social process. It is triggered, implemented and used by humans. Therefore, it is very important to manage the human side of implementing change.
- It is important to implement the change in the best manner. For example, has the change been ‘broken up’ into suitable work streams covering areas such as technology changes, testing, legal changes, process changes and so on? Has the go-live approach been agreed upon in terms of, for example, parallel runs required, phasing, and a big bang? Is there sufficient governance in place to provide oversight and control across the entire implementation?
Finally, it is important to remember that change is hard work and challenging. This means people need to work long hours to implement a change. Therefore, it is important to appreciate the efforts of the change team. A simple “thank you” goes a long way.
Opinions expressed in this article are those of the author alone and do not necessarily represent the views of the CISI.