My first lessons in change management came from manufacturing. As a plant manager early in my career, I managed the operations of an integrated steel plant for five years. During that experience, I learned an enduring lesson about change -- the human tendency to let go too soon. Since that time, I've conducted research on the topic and consulted with a variety of organizations. I've discovered that the failure pattern is widespread across industry lines. Let me cite some real examples from manufacturing firms and then offer some interpretation.
Delivery: A major railroad struggled to deliver bulk-head flat cars to its customer base. On-time delivery performance had chronically hovered around 80%. Customers lived with it, but over time lower cost intermodal shipping solutions became available, so customers started to defect. The railroad of course launched a major initiative to fix the problem. After a full eighteen months of work, on-time performance climbed to a best-in-class 92%. Another eighteen months later, performance unspooled to former levels.
Quality: An industrial valve producer released a new angle valve to the market. First, there was a seal problem, then an actuator problem and finally a metering problem. All were symptoms of an inability to design quality into the product. During the next product development cycle, the organization adopted the SixSigma DMAIC methodology and saw to it that quality was embedded in every step of the design and production process. The next new valve had flawless quality and met immediate commercial success. But the one after that revealed several quality problems that reflected an inability to maintain the quality process that had been put in place.
Inventory: A major grain processor was struggling to reduce its finished goods inventory from 35 to 21 days on the ground. Senior leadership initiated a number of lean manufacturing and kanban replenishment measures to reach the goal. After seven months of hard work, finished goods inventory fell to 19 days. Six months later, inventory levels swelled back to 35 days.
Throughput: A packaged foods manufacturer wanted to reduce costly downtime on a production line. Changeovers between product runs were averaging 45 minutes. Through a combination of efforts, including some process redesign, equipment upgrades, and training, the team cut the average turnaround to 25 minutes. Four months later, turnarounds averaged 45 minutes once again.
Late-Stage Failure: Why is it so hard to sustain the gains? What many leaders fail to understand is that change remains fragile for some time after it has produced the sought-for results. When a change initiative yields results, but then uncoils and ends in failure, we consider this a late-stage failure. Unfortunately, the pattern is extremely common. There are of course several reasons, but in the hundreds of postmortems I've done on major change projects, I've discovered a dominant failure pattern -- leaders simply letting go too soon.
The tragedy of this kind of late-stage failure is that it's almost always preventable. Change initiatives involve many factors, including technical, systems, and structural elements, but they are first and foremost "organizational" changes. Unless change becomes firmly established, creating a new equilibrium, it remains partially or wholly reversible. Backsliding is a constant threat until behavioral norms reinforce a new way of doing things.
Unfortunately, there are a number of perverse incentives that motivate leaders to let go of change initiatives too soon. Some leaders get bored easily. Others get tired. Some organizations shift priorities and whipsaw leaders from initiative to initiative. Some leaders seek the limelight and know that rewards and recognition dry up on the back side of change, so they let go because they don't have the capacity to toil in obscurity. All of these motives account for late-stage failure, but there is yet another mistake that many of the best leaders continue to make.
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