CAM-I is an international collaborative research consortium comprised of sponsor organizations from all industry sectors, academicians, and consultancies. Research focuses primarily on cost, process, and performance management issues, and participants meet quarterly at various locations.

For the past 35 years, CAM-I member collaborations resulted in best practices, rich methodologies, and invaluable personal relationships along the way. However, much like other performance initiatives, these practices were not being sustained at a high success rate. Roughly 75% of cost management initiatives failed—essentially no different from enterprise resource planning or reengineering projects. Several of us at CAM-I had concluded that success with a performance initiative was minimally dependent on the technical aspects of the implementation and much more about the nontechnical, or people, side.

The prior summer had afforded the entire CAM-I organization an opportunity to hear from Daryl R. Conner, author of Managing at the Speed of Change and Leading at the Edge of Chaos. Daryl had graciously spent the better part of four hours helping us understand the concept of the change-resilient organization and how, on a personal level, each of us needed to build greater change capacity. He likened his change analogy to a sponge saturated with liquid, unable to absorb any more. When people in organizations become saturated with change and feel that they cannot cope with any more, they need to build more “sponge-space,” Daryl explained.

I was reflecting on that day and those concepts as I walked into the lodge for our first session. The room was full of people energized and eager to talk about the topic. It was September 10, 2001. We had a lively and energetic first session. Little did we know how the world as we knew it was about to change forever.

In the years since that day, each of us has come to view the world as more fragile. We see a deeper need for nurturing the relationships that bind us together and healing those that divide us.The challenge of change accelerates ever faster, and building the capability to adapt and learn has never been more important.

The interest group at CAM-I eventually decided to call itself the Change, Adaptation, and Learning Interest Group (CAL). Over the years, many CAM-I members from all sectors of public and private practice stopped by; some stayed awhile, and all freely gave of their time in contributing to the work you are reading. The following individuals have made significant contributions to the body of work you are about to read. Their enthusiasm and tenacity as an army of volunteers is without measure. We thank them for their contributions.

John Miller of Arkonas was instrumental in assisting the team in moving down the home stretch, by performing early edits and writing a couple of open capability sections. David Veech ignited the team with a powerful story on hurricanes and earthquakes and provided us with an understanding of dynamic stability. Alan Vercio, of Barclays Bank PLC, was helpful in providing an early critique of the document. Colonel Ray Naworol, U.S. Army, provided significant insight into the value of this work in the public sector environment. Frank Pollack, CEO of Pentagon Federal Credit Union, reviewed the Candor Bank case study and provided insightful comments.Thanks also to Jane Saly and Patricia R. Hedberg, associate professors from the University of St. Thomas in Minneapolis, for an early sanity check on the content.

After all the collaboration, research, and discussions, getting down to the final deliverable tends to thin a group out and crystallize the team into a core group that gets things done. Those hearty souls who hung in there with us and helped deepen and polish the ideas were Emily Asmus of Grant Thornton, Lori Feller of IBM Global Services, and Jim Jensen of Boeing. Their work in scrubbing the deliverable and initially authoring several capability sections is deeply appreciated.

Scott Isaacs, vice president of Global Professional Services and Delivery at SAS, has graciously supported my attendance and development at CAM-I over the years, and this book would not have seen the light of day without his encouragement and understanding.

Special appreciation goes out to Ashok Vadgama, president of CAM-I, who has supported the efforts of this team in reaching this point. He believes that without proper consideration of change, no initiative can be effectively sustained over time.

Finally, I would like to especially thank coauthor Doug Webster, previously of Grant Thornton and who recently served as the chief financial officer for the U.S. Department of Labor. Doug rejoined our group after an excursion to Iraq, where he served in the Coalition Provisional Authority as the Principal Finance Advisor to the Iraq Ministry of Transportation. Besides authoring the Change Challenge Framework section of the book, Doug provided thought leadership that was instrumental in developing a new model for change that was much easier to understand and apply to our work. He also gently nudged me out of my own fixed mindset at the appropriate times. Doug was also instrumental in writing several capability sections and helping scrub the final manuscript.Without his tenacity and commitment, we would have never reached the finish line.

If you feel you need to strengthen your knowledge about change so that you are more effective at dealing with it, this book is written for you. If you believe that with the right structure and leadership, change will take care of itself—this book is especially written for you.

The book is organized into three parts: Awareness, Assessment, and Assimilation. It begins with change basics and a model for understanding how the environment sets the stage for change. It covers some key concepts about the multidimensionality of responses to change demands and proceeds to an assessment of core organizational capabilities to respond effectively to requirements for change. It finishes with some specific strategies, references, and tools that are currently available to enable your organization to be more effective in its unique change challenges. Two case studies are included to specifically illustrate and apply the change and capability assessment model: a high-level assessment of the Katrina Hurricane catastrophe and the Candor Bank case study, which links the assessment to the strategic planning process.

A multitude of books on how to manage change effectively have been written, and numerous sources are quoted in this one. Many of these books make excellent references within a change initiative and provide valuable suggestions for implementing organizational change. However, despite the number of books available on change, the literature still is lacking. Absent is a sound model that addresses the multidimensionality of change in the organization. So many organizations take a single-dimensional perspective on change, then implement technology or redesign the organizational structure in response to change challenges. Rare is the organization that attempts to understand the strategic drivers of change, then link them to specific cause-and-effect actions within the organizational culture on personal and individual levels. Without an understanding of how to manage and integrate change across all dimensions, change initiatives too often apply change management in a one-size-fits-all manner.Without a structured framework to managing change, we cannot target those areas most in need of change management intervention and apply limited resources where they will have greatest value. This book seeks to fill that gap.

Our premise is that there are two audiences for our work: those who have limited experience and knowledge of change management and those who already have a good foundation for change. For those whose experience and knowledge of change management is limited, the material in this book provides the necessary context to better understand change and its impact on personal and organizational effectiveness. As your knowledge about change deepens, there is additional opportunity for learning by using an analytical assessment tool to help you measure change capacity. The knowledge you gain from this book will provide a foundation for further learning about change management and provide an important framework for linking together new insights on managing change and taking the action necessary to drive successful change initiatives.

For those readers who already have a good foundation for change this work will orient you quickly in change concepts—some familiar and perhaps some new thinking. From there, we hope to leverage existing knowledge into the change challenge framework and organizational capability assessment tool in order to allow you to take appropriate action. With the framework provided in this book, you will be better able to prioritize and focus change management initiatives into those areas of the organization that will provide greatest return on the change management investment.

For both audiences, this body of knowledge can facilitate a deeper understanding of additional capabilities required by the organization and the people who comprise it in order to build change capacity. Many people believe that change management consists exclusively of stakeholder analysis, training, and communications. Although these things are important, we contend that more is required to sustain change.

Managing change is much broader than managing projects that implement change. The Project Management Institute (PMI) is widely known for its contributions to the Project Management Book of Knowledge (PMBOK). As the international standard for project management, the PMBOK provides the structure for project planning and execution. However, this traditional approach focuses primarily on structure and minimally on the relationships and people responsible for implementing the change. For example, in the human resources area, the PMBOK addresses the structure of the project team but does not address the organizational and personal mindsets of stakeholders who may be impacted by changes resulting from the project team’s effort. In the communications area, stakeholder analysis and communications planning are very high level and oriented toward structure and reporting rather than understanding and acceptance. Considerations on gaining stakeholder buy-in and overcoming obstacles such as resistance to change through changing organizational and personal mindsets are largely absent. Although it may have never been the intent of PMI to address the softer side of change, the multidimensional analytical approach presented in this book provides tools to enable exploration of critical organizational capabilities required for an effective change response rather than a one-size-fits-all methodology.

This book offers a systematic framework to facilitate diagnosis of change requirements from a cause-and-effect perspective. In addition, we provide a tool to assess organizational and personal capabilities.The outputs from the assessment tool can then act as inputs to a change plan template, in order to address change requirements.

Members of the research consortium at CAM-I have collaborated on significant methodologies and best practices in cost management for over 30 years. Breakthrough methods and concepts have been reflected in concepts such as the CAM-I Cross, ValueQuest, Target Costing, and Process Management deliverables.Yet even with these best practices, performance initiatives still fail at an unacceptable rate. Some failures may be attributed to lack of a strong business case, lack of operations involvement, or a lack of understanding and managing change. We believe the technical aspects of an initiative are well understood and generally well supported.What is not well recognized is the critical importance of the social aspects of an initiative: how to lead and sustain change.

The book Beyond Change Management makes reference to Michael Hammer’s hindsight view of the reengineering efforts of the 1990s. It picked up on the fact that most of those efforts failed because of overlooking the “less tangible domain of culture and people.”¹ Hammer said, “I was reflecting my engineering background and was insufficiently appreciative of the human dimension. I’ve learned that’s critical.”

Our world is changing at an accelerating pace. Brands that once were household names no longer exist. Institutions and industries once viewed as bastions for lifetime employment have faded away. Skills in high demand become obsolete as they are commoditized and easily replicated offshore at lower cost.Transition from an industrial economy to a knowledge economy is creating a lot of anxiety and insecurity for millions of people. As evidence of the need to learn and remain flexible in the face of global change, Daniel Pink, author of the acclaimed best-seller Free Agent Nation and A Whole New Mind, suggests these questions for individuals and organizations to ponder:

Global competition and continuous cost pressures on products and services have produced wave after wave of outsourcing in organizations. Like it or not, this is the “new normal.” Eroding profit margins are causing a full retreat to core capabilities internally and policies to outsource everything else. Even governmental institutions face the same demands, as core capabilities are retained while nonessential activities are privatized.

This mandate for change impacts us on several levels—at an organizational cultural level and on a personal level. Events don’t just happen in a single-threaded, linear fashion these days. The ability to trace an effect from a single root cause, given the abundance of variables, is rare. Multiple waves of challenges and opportunities abound, often simultaneously, and at an accelerating pace. Analysis of multiple dimensions and prioritizing among them can become a frustrating experience when everything appears to be critical.

American innovation and ingenuity have always been core strengths. They can continue to be global differentiators in a world of commodity products and services. However, a diminishing number of successes will be possible with an organizational mindset to effect change along a single dimension. Building the organizational agility to anticipate and respond to changes in the environment is one of the most important capabilities you and your organization can possess to compete effectively in this new paradigm. And . . . that’s why you should consider reading this book.

Einstein remarked that doing the same things over and over while expecting different results was the definition of insanity. Attempting to implement change in response to these nonlinear challenges requires new thinking and a new approach, or it is likely we will get the same results—not the success we expected.

The objectives in writing this book are to provide you with:

The book begins with a story on hurricanes and earthquakes to lock in the concept that the environment is continually shifting and that wisdom can be found in continuous monitoring of environmental factors and their potential impacts. From there we present a framework for understanding how the environment drives and demands change responses on organizational and individual levels.

Chapters 6-20 provide an assessment framework for building change capacity. We have identified 13 core capabilities that can be evaluated and further developed to enable greater learning and adaptation to change. Each of these capabilities is described in this format:

In addition, Chapter 20 provides a Master Grid to summarize the collective capabilities within the individual capability chapters.

Once a baseline understanding of aggregate current capabilities and required development is in place, putting the organizational learning to work in building the change plan follows. Discussion of the three types of change is important additional content in this area, where incremental, transitional, and transformational change concepts are clarified.

The Candor Bank case study describes where these models have been used within the strategic planning process. A second case study on the Hurricane Katrina catastrophe in New Orleans also illustrates the assessment of organizational and personal change capacities in response to a major environmental challenge. Finally, Chapter 19 describes the change journey and the orchestration process is provided to integrate the required capabilities, summarize key points, and provide potential next steps.

In order to survive in the future, it is critical that today’s organizations continuously monitor the environment. We all may be aware that technology and globalization are major impact factors, yet subtle changes are occurring that have a lot to do with the level of change we will face in the future. The Industrial Era machine-model mindset was conducive to high productivity and efficiency in the past, but the very nature of its processes has allowed other global competitors to replicate them at drastically reduced costs.

Thinking about change gets quite messy quickly—especially when the end point is vague or undefined. Sometimes you just have to trust the process. We’ve had a parade of people visit our interest group, share what they’ve experienced, and listen to what we’ve learned. It seems like the dynamics of this group changed with every quarterly meeting, but isn’t that the nature of change?

We believe that the things we’ve learned can have a profound and positive impact on every interest group at CAM-I or any organization that takes the time to think, adapt, and learn about change. The more we learn, the more we appreciate the complexity of this topic and how much we don’t know.The journey’s never finished.