By Paul Thomas, Senior Editor
Up to 70% of corporate change initiatives fail, notes Bill Wilder, director of the Life Cycle Institute, the training arm of Life Cycle Engineering (LCE). Oftentimes, it is because pharmaceutical and other manufacturers focus on products and processes, but not on people. Contrary to popular opinion, people generally don’t resist change, says Wilder. “They resist being changed when they don't know why.”
In this interview, Wilder shares insights into how drug manufacturers can better manage change and strengthen their organizations from within. (For an audio podcast of the interview, listen here.)
P.T.: You're an expert in change management. Let me give you a general question right off the bat: Where do companies most often go wrong in terms of change management?
B.W.: It's really pretty simple, actually. They start too late and they have no structured process. But let me back up for a minute and just make sure that we're clear on what we're talking about when we talk about change management. In the drug industry, this whole idea of management of change, or change management, is often discussed in terms of changes related to the manufacturing process or to the product that's being created.
But what we're talking about is a structured process and tools for leading people through a change. So it's really about engaging people in the process of changing their behavior, not the changes associated with producing the product.
In that regard, the two things that we see most often is that [manufacturers] think about it too late, so it doesn't come to mind until they already have a problem, and two, they don't really have a structured process. They have these little ideas of things to do, but it's not a structured process.
P.T.: You mentioned the people component being such a critical issue, in addition to the technical component. Are the people issues often over-looked or underappreciated? You mentioned that sometimes manufacturers start too late, but do they just not address the people issues enough?
B.W.: Yes, it’s very common. There's growing awareness of the fact that we can get the technology right, we can get the processes right, but if the people aren't embracing and adopting those, then the probability of achieving the business objectives are slim. In fact, Paul, over the last ten years, there have been a number of studies done on change initiatives, whether it be new systems or mergers or other types of changes, and consistently over this last ten years, 70% of those failed to meet the overall business objectives.
When you look at that 30% who achieved their business objectives, it's typically those that have sponsorship engagement, and have a structured process with dedicated resources to manage the change.
P.T.: You're saying that it's obviously behavioral changes that are needed, but you can have a very structured process to encourage behavior change?
B.W.: Yes. There are a number of different organizations out there that are studying this field. One in particular is a company called Prosci, who does a set of biannual research projects, and it’s their data that suggests that the 30% have a structured process with sponsor engagement and dedicated resources.
And what does that give you? It gives you that ability to help people understand why the change is necessary. Oftentimes, people don't resist change; they resist being changed when they don't know why. And secondly, it gives you a way to identify and manage resistance.
Typically what happens is that organizations will go through a change and then they don't start dealing with resistance until it surfaces and it becomes a problem, rather than being proactive, anticipating it and implementing plans and mitigating that resistance.
P.T.: You mentioned dedicated resources. Do manufacturers sometimes fear the “expense” of change management projects? I put expense in quotation marks because I think you would suggest that these projects would end up, by far, saving money in the long run.
B.W.: I think the data would suggest that that is the case; that in those cases where organizations have invested in a structured process and dedicated resources, that they've actually found that they've been more successful . . . And there's a growing body of evidence to support that.
There is often a bias—I’m not sure bias is the right word—but a resistance to investing in what’s perceived as being a soft area, an area you can't manage. It's hard to get your head around this specific, tangible result of making that investment. So it's easy to say, "Well, I bought this computer" or "I bought this software.” But behavior is sometimes difficult to evaluate in terms of effectiveness.
P.T.: Let's talk more specifically about drug companies and the drug industry. Is it a given that change management is harder in highly regulated industries?
B.W.: No, I don't think so. I think it's pretty consistent across organizations, and even the private sector or public sector . . . change management is hard across the board. As you know, technology and processes don't talk back, they don't resist, they do what you tell them to do. People sometimes are not as easy . . . [laughs] . . . to work with.
Now, I would say that this [pharma] sector is a very dynamic environment, and so I think perhaps the pace of change is higher than you might find at many other organizations, which gives you less room for error, less opportunity to do things right the second time, because there isn't a second time. There’s another change right on the heels of the one you just went through. So I do believe that drug companies tend to be in perhaps a more dynamic environment when it comes to change.
P.T.: Calling it a “dynamic environment,” I think that's sort of a nice way of saying that there's really been a lot of upheaval in the industry in terms of restructuring, mergers and acquisitions, and that start of thing. What special change management challenges, then, are drug manufacturers facing because of these types of changes?
B.W.: I think two things. One is that people become saturated with change or over-whelmed with change sometimes, and sometimes that can create a sense of helplessness . . . so sometimes it's hard to get people motivated for change because of how much they've gone through.
But really, probably the biggest thing is what I referenced earlier, which is this whole idea that there's very little time to learn from your mistakes, because it's just change after change after change. You go through this merger, this outsourcing, this restructuring. So it becomes much more important to get it right the first time.
P.T.: And of course, the time is a constraint, but also the resources are now a constraint because manufacturers are cutting staff, they're trying to do more with less. In fact, I think that has put a particular strain on middle managers, who are given mandates from executives that they're struggling to fulfill. Have you seen this in your work in terms of middle management having challenges with change management?
B.W.: Absolutely. A very good observation. I think we've all heard about the role of the middle manager and how critical they are in organizations—you know, they're trying to manage up and they're trying to manage down. And all those classic issues for the middle manager are true in this case as well.
There's no doubt that the role, the vital role, of the middle manager is underappreciated when you're going through a change; that it's very common to not adequately train or support middle management in their absolutely crucial role in successfully engaging into change. And the data consistently supports the fact that [the middle manager] is one of the most important people in a change process.
P.T.: And when you talk about training of middle management, what are you suggesting? Obviously your organization works with many middle managers. But what kinds of training can be done?
B.W.: I'll go back to this research that Prosci does—and as you might be able to tell, we've embraced Prosci. We've been doing change management for ten years, and last year engaged with them as an authorized training provider because of the fact that their model is research-based and it's a structured process.
And when we look at their research, it's clear that the person that has the most influence on an individual’s desire and ability to change is their immediate manager, that middle manager. So how we do support that individual? Well, first of all, they need to clearly understand the business need for the change, and really be able to articulate it. But more importantly, [they must understand] how the change is anticipated to affect individuals.
Because when we go through change—regardless of whether it's in connection with new processes, new technology, restructurings, outsourcing, M&A type activity—it’s the individual that changes, not the organization. And so the organization is just made up of a lot of different individuals going through change at their own pace. And guess who has the most influence on that individual's desire and ability to adapt in that change? It's their manager. That's the [person] they're looking to.
So what can we do to help them? One is to make sure they're clear on the change from an organizational point of view and how it affects the individual, and then two, helping them understand how individuals go through change . . . and equipping them to be able to coach individuals through a change.
So there's the understanding of what the change is, but then there's also . . . that process that every human being goes through when they undergo a change, and helping the manager understand what that process is and how to assess where each individual in their area of responsibility is in that change, and how to help them through to the next stage. It’s a structured process that people go through, but they go through it at their own pace.
P.T.: And I know part of that process, obviously, is awareness, and I'm guessing that you would say that making middle managers, executives, and people on the shop floor aware that there's a change process that they’re going through is an important step.
B.W.: Crucial, absolutely. However, just knowing that the change is taking place is clearly not enough, because now you've got to get me to want to make that change. Just because I know we're going through a merger doesn't necessarily mean I like it, or that I support it.
So when we think about change—again, going back to the Prosci model—it goes through awareness and desire—and desire is the area where the middle manager has the most influence and is the most critical. . . .
Then there is the ability to execute the change—this is the second most important role for the manager because this is where they coach the individual in their ability.
In change management, you may hear the phrase ADKAR, and basically that's the Awareness, Desire, Knowledge, Ability, and Reinforcement. And that's the way individuals go through change.
P.T.: In your mind, is there at least more of a recognition within the drug industry these days that change management is a necessary part of what they have to do in their daily work?
B.W.: Yes, Paul. I definitely believe that, and I think that we see more and more folks who are focused on that. In our experience, it starts within the IT organization, having to do with systems, but then evolves into other changes. And I think in most of the major drug companies, you will probably find someone in the organization who has this responsibility, who has “change” in their title. . . .
In fact, across the board, there's growing awareness of this discipline. Just this year, an association called the Association of Change Management Professionals was formed to begin to establish some very rigorous standards of performance and credentialing for folks in this discipline, much like you would have in project management for the Project Management Institute, or a variety of other disciplines.
And I think all of that shows that organizations are definitely waking up to the idea that [in managing change] you've got to have the people along with the tools and the processes.