Managing Director & Senior Partner
Related Expertise:Change Management
"No battle plan ever survives contact with the enemy," claimed Helmuth von Moltke the Elder in the 19th century. The same holds true for change management, where few plans remain unaltered during implementation. Companies often fail to anticipate and react to the full range of pitfalls that can harm their change programs. That’s one reason why 50% of straightforward change efforts and 75% of more complex ones are considered failures.
But there is a solution. Companies can develop the capability to identify and manage known risks—typically characterized by a combination of ambiguity, cross-functionality, and technical and organizational complexity. BCG has developed three tools that identify critical risks and interdependencies in change efforts and, more importantly, regularly test for them. By applying these tools—the roadmap, DICE, and the rigor test—organizations can develop the capability and confidence to manage known risks and interdependencies, thereby creating the bandwidth to handle the risks that could not have been anticipated.
Major change programs are made up of several initiatives. BCG's roadmap tells the story of each initiative, capturing it in such a way that executives can understand, based on monthly updates from the roadmap owner, what is happening and can make course corrections to ensure success. The roadmap accomplishes this by breaking the initiative into milestones (typically 15 to 25), which identify critical risks and interdependencies. These milestones link to indicators of when and how financial and operational impact will be delivered, with sufficient early warning to highlight potential slippage. The roadmap is essentially a communication tool between initiative owners and leadership. It allows leaders to understand—and get ahead of—an initiative's inevitable risks.
Rigor testing is how companies ensure, prior to implementation, that the roadmap has all the necessary components.
A rigor test consists of a 30-minute to 60-minute discussion among key stakeholders: the initiative sponsor, the roadmap owner (accountable for implementing the roadmap) and two to three key team members, and the program management office. Other possible additions include representatives from finance, HR, and IT. The discussion consists of three sets of questions:
The rigor test strengthens communication, subjects the roadmap to more scrutiny, and establishes accountability. Although the questions may seem obvious, the benefit lies in setting expectations early; you must ask the right questions, from the right people, at the right time. In our experience, obvious questions are often left unanswered prior to initiatives being launched. Critically, the rigor test also addresses cross-departmental cooperation, a common impediment to effective execution.
A version of BCG’s rigor test is now available online. In this assessment, a roadmap owner, sponsor, or the PMO can answer questions on a scale from “strongly agree” to “strongly disagree.” Based on the results, and the complexity of the initiative, the project will receive one of four possible assessments: fail, good, very good, or excellent.
We analyzed thousands of rigor tests over several years. The results were clear: the rigor test helps companies realize greater success with their change efforts. The roadmaps in which rigor tests earned “excellent” ratings captured an average of 130% of their target value, even if they had to be altered along the way. Roadmaps with poor scores should not be approved until the company has more thoroughly addressed potential showstoppers.
Over the course of several years, not one change initiative with an “excellent” roadmap rating has fallen short in implementation. Leaders knew about problems months in advance and were able to offset any shortfalls. The key to success is transparency; by providing insight into the process, senior leaders with limited bandwidth can take decisive action early.
Take this example: a large mining company recently launched a change program to boost output from its extraction operations. A key milestone in its manpower initiative was recruiting miners with certification in occupational health, safety, and environment (OHSE) in order to launch an additional shift. The change team seemed likely to fall short of this goal at first, as it couldn’t find enough OHSE-certified miners.
When the team updated its roadmap to indicate that it had only received 45 resumes for 50 open positions, the milestone was red-flagged. Top management immediately understood the severity of the issue given the industry-wide skills shortage and the impending need for additional OHSE certified miners. The chief HR officer set up a temporary task force to boost hiring for the next two months, which enabled the company to find additional recruits and launch the new shift on time. In this case, bad news became good news as the organization got an opportunity to act in time.
Plans inevitably encounter challenges, and this is especially true for complex change initiatives. By building roadmaps and rigor tests and updating them (typically on a monthly basis), companies can better manage disruptions and maximize the economic value of the change program. Individuals and teams will steadily build confidence, not only in the success of one transformation effort but also in their ability to succeed at more ambitious change programs in the future.