Building Internal Change Management Capability To
Achieve Competitive Advantage
Michael WrightDirector, Learning, OD and Change Management,
Constellation EnergyBill Young
Director, Education Alliances, Capella University
2
Welcome
“In the long run, the only sustainable source of competitive advantage is your organization’s ability to learn faster than its competition.”
-The Fifth Discipline Field Book
3
Agenda
• Introduction to Constellation Energy 10 minutes– DVD (4 minutes)
• Building Change Management Capability 10 minutes
• Components of Change Management Capability 10 minutes
• Case Study: Application at Constellation 10 minutes
• Questions & Closing 10 minutes
Introducing Constellation Energy
5
The Constellation Energy Family
6
Powering Our Growth
Revenue
Employees
Fortune 500 Rank
3.9 Billion
9200
432
4.7 Billion
8700
421
9.7 Billion
8650
352
12.5 Billion
9570
203
17.1 Billion
9700
167
TBD
TBD
125
7
Energizing Our Future
8
Our Next Phase of Growth
• Florida Power & Light and Constellation Energy to merge, creating the nation’s largest competitive energy supplier
• Constellation Energy will be the second largest electric utility
• $28 Billion transaction
• Will create a Fortune 100 company
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Managing our enterprise wide changes is a huge investment of money, assets, time, and resources.
Change Management, The Next Generation Manufacturing Report, 1997
Common Challenges In Managing Business Change
1. Lack of (effective) leadership: a.) actions (or inaction) by the leaders of the organization b.) the style and approach used by those leaders
2. Poor (or no) framework/model and tools for change
3. Failure to set metrics and benchmarks 4. No disciplined change process
Our Challenges In Managing Change
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Failure Is Not An Option
All other obstacles32%
Management behavior not supportive of the change
29%
Employees fearfuland resistant to change
23%
Inadequate resources (time, knowledge, money)
16%
Greatest Change Management Obstacles
Best Practices in Change Management, ProSci, 2000.
Given the cost and people impacts, we can not leave managing change to chance.
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• Time/cost over-runs (delayed results)…………… • Cost of project restarts…………………………..……. • Lost market opportunities……………..…………….... • Market share erosion to competitive forces…... • Reduced features or functionality………..….…….. • Loss of desired efficiencies……………..…………….. • Reduced productivity……………………………..……... • Increased HR expenses for turnover…..………….. • Unanticipated marketing expenses for delays.. • Stock valuation fluctuation…………………….….…...• THE ULTIMATE: Project write off……………….….
$ ? __$ ? __$ ? __$ ? __$ ? __$ ? __$ ? __$ ? __$ ? __$ ? __$ ? __
Managing Change Is Important To Our Bottom Line
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Managing Change Vs. Building Change CapabilityManaging Change Building Change
CapabilityChange Happening To Us We Are Making Change Happen
Event-driven, Focused On Specific Change Execution, Limited Knowledge Capture For Future Changes
View Managing Change As The Way We Do Our Business
Requiring Ongoing Skill And Knowledge To Manage Whole-
scale, Constant Change
Bottom Line Impacts Can Be Significant
Bottom Line Impacts Are Minimal Given The On-going Nature Of Building Capability And Focus
On Change
Time To Adoption Can Vary Depending Upon People’s Experiences Of Change
Accelerate Adoption Rate Of Change
When The Pressure Is Off, Go Back To Old Ways Of Doing Things
Future State Focused
Event-Based Change Transformational Change
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“True change takes time; it is not a simple quick fix where you bring in the change agents and
straighten out the organization. It is the systematic creation of a change capability
through learning how to build and use outsider insider expertise.”
J. Klein, True Change: How Outsiders on the Inside Get Things Done in Organizations
Building Change Management Capability:
A Source of Competitive Advantage
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Insider-Outsider Approach to Building Capability
INSIDER SKILL, KNOWLEDGE, RELATIONSHIPS, CULTURE
OUTSIDER BEST PRACTICE,KNOWLEDGE, COMPETENCY
CHANGE MANAGEMENT CAPABILITY
An “insider-outsider” infrastructure accelerates Constellation Energy’s approach to building internal
change capability.
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The Transformation Support Continuum
DEPENDENCEINTERDEPENDENCEINDEPENDENCE
Internal skills and capabilities are
believed adequate.
Underlying belief: Little support is needed to successfully execute
the change.
“We need just do it.”
Internal skills and capabilities can be developed to support
the change.
Underlying belief: A combination of external
guidance and the development of internal capability is the best means to ensure that
there is adequate, well-trained support through the formation
of a transformation.
“We develop the capability for success over the long haul.”
Internal skills and capabilities are
completely lacking.
Underlying belief: High levels of
external expert support are needed
to successfully implement the
change because internal capability is
so lacking.
“We need to let them do it to us.”
At Constellation Energy, we have a significant need to develop internal change capability that will build and
improve over time.
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Competitive Advantage: Our Future State
CHANGE MANAGEMENT
CAPABILITY
Structure: A well positioned, functional and visible infrastructure with roles and responsibilities, tools and technology
Process: A robust, disciplined, easy-to-use work flow. A set of action steps and tasks that are flexible and adaptable. Integration into SIRIUS, integration framework & processes. Aligned to High Performance Teams, Leadership Development, Performance Management, corporate culture, business & organizational needs
People: Internal coaches, consultants, trainers. Skilled and capable change leaders as sponsors of change. Experienced change agents. Knowledgeable partners in change capable of dealing with the ambiguity of a constant changing organization
Culture: Belief in risk-taking, disciplined approach and cross department orientation. Behaviors that show tolerance of change
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Building Our Future State
SIRIUS SIRIUS TOOLKITTOOLKIT
FAST STARTFAST STARTTOOLKITTOOLKIT
SIRIUS SIRIUS FRAMEWORKFRAMEWORK
ENTERPRISEENTERPRISEPMOPMO
LEADINGLEADING CHANGECHANGE
PERSONAL PERSONAL STRATEGIESSTRATEGIES
IN COPING WITHIN COPING WITHCHANGECHANGE
EFFECTIVELYEFFECTIVELYMANAGING MANAGING
CHANGECHANGE
ONLINE ONLINE TRAININGTRAINING
CHANGE AGENTCHANGE AGENTNETWORKSNETWORKS
COMMUNITYCOMMUNITYOF OF
PRACTICEPRACTICE
INTERNAL CMINTERNAL CMCONSULTANTSCONSULTANTS
CM KNOWLEDGECM KNOWLEDGESUITESUITE
CHANGE MANAGEMENT
CAPABILITY
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CHANGE MANAGEMENT
CAPABILITY
Cementing Future State Capability Through
Learning
Managed by L&OD
Delivered by L&OD
Delivered by BPI
Supported by: SIRIUS Executive Coaching ePMO Business and financial simulation Consulting skills development
SIRIUS GP Course Depth of Understanding
Pro
jec
t P
rio
riti
zati
on
Wo
rks
ho
p Basic Principles of:
Project Management Change Management Problem Solving and
Process Improvement
Integration of Constellation Leadership Competencies
PROJECT MANAGEMENT Curriculum
SIRIUS-I
All aligned with SIRIUS Framework and are designed to build internal capability in all areas
CHANGE MANAGEMENT Curriculum
SIRIUS Curriculum
Effectively Managing Change
Leading Change Personal Strategies Course
PM Principles
Integrated Cost &
Scheduling
Risk Mgmt
Leadership & Communication
Skills
MS Project
Co-Delivered by BPI/L&OD
SIRIUS-C
Managing Project Mgrs
Bre
ad
th o
f U
nd
ers
tan
din
g
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Supporting Just-In-Time Change Consulting
• Executive understanding and commitment to our change management approach (SIRIUS)
• Enough capable in house expertise (change agent networks and internal change management consultancy)
• Sufficient resources and time to support continued development of change agents and internal change consultancy
• Visibly positioning and sponsoring internal resources as dedicated and competent to assist with major change efforts
• Ensuring external consultants understand our change management methodology, as the change framework, partnering with internal resources to create and execute change plans
CHANGE MANAGEMENT
CAPABILITY
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Future State Impact
Training• 1079 staff trained from 1/06-7/06 • Increase in SIRIUS training• Course feedback is very positive (~6.5
out of 7 satisfaction rating )• Seeing higher enrollment: SIRIUS-GP &
Community of Practice for continuing education
Methods & Support• Community of Practice is actively
sharing examples, best practices, updated tools and providing ad-hoc mentoring via Share Point
• Internal CM consultants are partnering with engagement directors to better leverage internal capability
• Toolkit v3.0 Design Review feedback from Focus Group participants, ”Love it … when can we use it”
We are leveraging our COP to hone our methods & provide a wider-reaching support model.
SIRIUS Training Participants 1/06-8/06
0
50
100
150
200
250
CEPS
CCG
CNE Gas
BGE Home
BGE
CGG
CNE
Corporate
193180
199
150
13
204
12
62 66
CHANGE MANAGEMENT
CAPABILITY
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Contributors To Our SuccessCHANGE
MANAGEMENTCAPABILITY
INTEGRATION OF CHANGES
LINKAGE TO ALLKEY DRIVERS
ANALYSIS OF CHANGE IMPACTS
ALIGNED TO PM METHODOLOGY
QUANTIFIABLEMEASURES AND
RESULTS
PROACTIVE PLANNING
COMMITTED LEADERSHIP
ENGAGED EMPLOYEES
Case Study:
Lessons Learned
QuestionsMeeting Close
Appendix
Change Framework, Tools & Training
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Scope
Investigate
Reason
Innovate
Undertake
Sustain
Define the opportunity and potential benefit to our customers and to Constellation Energy.
Determine baseline of the current performance and define customer requirements for improved performance.
Explore the root causes and identify gaps.
Evaluate quick hits and potential solutions, prioritize them and develop a strategy for implementation.
Implement the quick hits, pilot the more complex solution, and validate the improvement.
Transition the solution to the owner, confirm the results, and share the knowledge
Ch
ang
e M
anag
em
ent
an
d P
roje
ct
Man
ag
emen
t
Constellation Energy’s Change Management Framework
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Investigate Reason Innovate Undertake Sustain Scope
Index
Glossary
Identify Risks & Issues • Identify & manage the risks & issues • Review project with sponsor and key
stakeholders• Implement project tracking
Project Definition
•P
rob
lem
S
olv
ing
Tools
•P
roje
ct
Man
ag
em
en
t •Tools
Define the Project
• Understand business problem• Collect any existing data• Understand impact areas• Identify & assess stakeholders• Define boundaries & constraints •
Ob
jecti
ve
s
Develop the Charter
• Identify key metrics• Estimate the effort and resources• Define team & mobilize resources• Develop draft project charter
•C
han
ge
Man
ag
em
en
t •Tools
Core tools … help meet objectives Additional tools provide added depth for understanding, analysis and/or engagement
Voice ofCustomer
High LevelProcess
Map
LessonsLearned
EngageSponsor
StakeholderPlanning
ManageRisks
Project Tracking
ProjectReview
EstimateResources
EstimateSchedule
EstimateCost
DraftCharter
ManagingBig Scope
EngageTeam
FacilitationTechniques
ChangeTracking
ProjectComms
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Internal Change Management Curriculum
32
Supporting Change Management Resources
Communication Vehicles
34
Transformation Communications
Revenue
Employees
Fortune 500 Rank
3.9 Billion
9200
432
4.7 Billion
8700
421
9.7 Billion
8650
352
12.5 Billion
9570
203
17.1 Billion
9700
167
TBD
TBD
125
35
Change Management Community of Practice
36
Change Management Knowledge Suite
Internal Change Management Consultancy
38
Internal Change Management Consultancy
People
Process
Our approach to change management focuses on transitions – helping people bridge the gap from current to future state in the quickest and most efficient way
EnablersOutput/Results
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Our Change Management Practice
• Internal – we have change management resources on staff who understand the organizational culture and are ready to help you when needed
• Experts – from our Business Process Improvement Group who’s distinctive competence is change management; we have years of hands on experience across a broad range of initiatives
• Flexible - our level of engagement can be adapted to suit your needs; we can offer full time or part time support
• Lower costs – our fees are lower than those of external resources
Change Agent Networks
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• Creates ownership among impacted employees by giving them an opportunity to be involved, voice their opinions, and shape the approach being used to implement the change
• Increases effectiveness and trustworthiness of communications through respected peer delivery
• Reduces change resistance by encouraging associates/”end users” to understand the need for change and its potential advantages
• Supplements communications coming directly from Business Unit Management / Supervisors
• Coaches and enables associates to take action and make the change effort successful
• Provides feedback of the change effort back to the project team
• Builds change leadership for the future
• Input into design of change
Why do we need a Change Network?
Change Network Overview
A Change Network is a structured group of employees who work with the projects to support the implementation of change.
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Change Network RolesThe design of the Change Network focuses on cascading commitment from Executive Sponsors to Change Targets that are being asked to adopt the change in a consistent
and rigorous way.
Initiating Sponsors
• Set vision, defines changes, and communicates priorities
• Provide resources and support • Publicly demonstrate commitment• Aligning change to business strategy
SustainingSponsors
Change Agents
• Support change and communication efforts within respective organization; partner with supervisors to deliver key messages
• Provide a designated communication point• Surface issues/concerns; work with project to
resolve / address
Change Targets• Listen to / read communications• Ask questions and identify issues• Understand / adopt change
• Demonstrate commitment to outcomes• Allocate resources / support and provide
project guidance• Publicly support and validate change effort• Support and coach change agents
Change Network
CM
Tea
m•
Bui
lds
chan
ge n
etw
ork
•C
oord
inat
es a
nd c
oach
es m
embe
rs•
Pro
vide
s co
nsis
tent
, coo
rdin
ated
in
form
atio
n an
d m
ater
ials
43
Change Network Structure
Initiating Sponsors
Steering Committee
Sustaining Sponsors
Advisory Committee
Sustaining Sponsors
Controllers Committee
BU 1Change Agents
- Finance*- Procurement**
- Operations
BU 2Change Agents
- Finance*- Procurement**
- Operations
BU 3Change Agents
- Finance*- Procurement**
- Operations
BU 4Change Agents
- Finance*- Procurement**
- Operations
Other Non-RegChange Agents
- Finance*- Procurement**
- Operations
BU 1End Users
BU 2End Users
BU 3End Users
BU 4End Users
OTHEREnd Users
Representatives from all impacted business units create a “spider web” of change agents across the organization. Depending on the impact of the change, the appropriate
change agents would be called into action
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Change Network Structure
Project PYXIS
Initiating SponsorSteer Committee
Sustaining Sponsor Sustaining Sponsor
BU Change Agents
Change Targets
BU Change Agents
Change Targets
Initiating SponsorSteer Committee
Sustaining Sponsor Sustaining Sponsor
BU Change Agents
Change Targets
BU Change Agents
Change Targets
E-Time Project
HR Transformation
Initiating SponsorSteer Committee
Sustaining Sponsor Sustaining Sponsor
BU Change Agents
Change Targets
BU Change Agents
Change Targets
Initiating SponsorSteer Committee
Sustaining Sponsor Sustaining Sponsor
BU Change Agents
Change Targets
BU Change Agents
Change Targets
Initiating SponsorSteer Committee
Sustaining Sponsor Sustaining Sponsor
BU Change Agents
Change Targets
BU Change Agents
Change Targets
Initiating SponsorSteer Committee
Sustaining Sponsor Sustaining Sponsor
BU Change Agents
Change Targets
BU Change Agents
Change Targets
Merger & Integration
Initiating SponsorSteer Committee
Sustaining Sponsor Sustaining Sponsor
BU Change Agents
Change Targets
BU Change Agents
Change Targets
Initiating SponsorSteer Committee
Sustaining Sponsor Sustaining Sponsor
BU Change Agents
Change Targets
BU Change Agents
Change Targets
Building
Internal Change Capability
To Support
Rapid
Deployment
Business Transformation Office
45
Change Networks Accelerate Change Deployment
• Acting as a ‘sensing network’ identifying business specific issues, escalates change barriers and assisting in identifying current skill and knowledge levels of target groups
• Being involved in deployment of communications, design, delivery and evaluation of learning solutions locally
• Having credibility with target groups and ensure overall alignment of change to business culture—they bring business perspective and language to the change implementation and know what works for sustainability of change
• Building local acceptance and commitment of the change—accelerating targets through the change curve, managing transition issues associated with change
• Maximizing speed to competency and overall time to productivity and performance
Change networks support rapid deployment of business change
46
Change Agent Time Requirements
The estimated time commitments required of a successful Change Agent are identified below, and may increase with later stages
• Half day workshop
• TBD (Project Project-specific)
• TBD (Project Project-specific, close to rollout date)
One-time / Periodic• Change Agent Kickoff
Workshop
• Confirm training needs analysis and training curriculum for organization
• Support training effort
Specific Activities
Time Commitment
• 2 hours
• 1 hour
• 1-2 hours
• 2-3 hours prep and delivery time ~ every other month
• 2 hour8-12 hours / month
Monthly• Monthly Change Agent Briefing
• Pre-reads / review of communication materials
• Periodic informal communication with associates
• Periodic formal communication delivery with associates
• Sharing feedback / communicating questions & concerns with the PMO
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Motivating Change Agents
Participation in the Change Network requires hard work, so Change Agents must believe their contribution and input is valued and respected
Recommendation
Increase Visibility
Development Opportunity
Recognition
• Develop extended network of support
• Expand sphere of influence
• Expand view of potential career opportunities
• Increase skills and leadership competencies
• Experience documented
• Letter of commendation from Senior Executive
• Spotlights in Business Communication Channels
• Promotional / thank you “awards” based upon contribution and participation
• Team One Awards
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Reviewer Metric ToolMeasures
• Activity completion
• Meeting attendance
Change Management Team
Controllers Committee
Advisory Committee
Activity Tracker
Change Network Member
Effectiveness Survey
• Approachability
• Interpersonal skills
• Informative
• Reliability
Peers
Supervisors and Managers
Monitoring the Network
To provide on-going coaching and continuously improve, implementing mechanisms to measure overall effectiveness of the network