This guide is part of a progression set comprised of Core, Advanced, and Emerging Strategic Change Management practices.

What it is

The pace of change has grown exponentially. Information is now more readily available as technology advances and the lines between work and personal life blur. In response, many organizations strive to foster a resilient culture, responding positively to change and constantly looking for ways to transform. Disrupting company culture to create one that embraces change and innovation takes focus, strong leadership, processes, and policies that reward the right behaviors, and open and honest dialogue with the workforce. Based on the organization’s current culture and size, it could take months to years to fully instill a change mindset and resilient ways of working.

Change capacity is an organization’s ability to either effectively prepare for or respond to an increasingly unpredictable and volatile environment. Organizational Change Capacity (OCC) is the ability of an organization to plan, design, and implement all types of change efficiently with committed stakeholders, causing minimal negative impacts on people and operations so that desired business and cultural results from change are consistently achieved and integrated seamlessly into operations to deliver maximum Return on Investment (ROI). 

Many research articles, books, and publications describe aspects of OCC. One of the more comprehensive approaches, published by Saylor Academy, consists of eight dimensions:

• Trustworthy leaders. The extent to which an organization is perceived to be led by trustworthy leaders. A trustworthy leader is not only perceived to be competent in leading but also as someone who has the organization's best interests as their priority. 
  
  
• Trusting followers. The overall level of trust held by employees of the organization. When an organization is filled with a critical mass of hopeful, optimistic, and trusting individuals, it is well-positioned to experiment with new ways of operating.
  
  
• Capable champions. Experts in building formal and informal coalitions to make changes and get things done in the organization. They know how to, directly and indirectly handle political opposition. They often lead a group of “mavericks” and “bend the rules” to bypass bureaucratic obstacles.
  
  
• Involved middle management. Those who link top executives to frontline workers. Middle managers can passively or actively block change initiatives due to their unique position within the organization.
  
  
• Systems thinking. The rules, structural arrangements, and budgetary procedures that facilitate or hinder organizational change. Systems thinking can enhance an organization’s ability to experiment, adapt, and learn new operating and thinking methods. 
  
  
• Communication systems. Effectively designed and delivered two-way channels to formally and informally share information across an organization (i.e., emails, chats, face-to-face meetings, phone calls, and corporate announcements).
  
  
• Accountable culture. The degree to which an organization holds its members accountable to their commitments. Accountable cultures focus less on how the work gets done and more on the outcomes that are produced. 
  
  
• Innovative culture. A culture that promotes constant exploration and challenging of the status quo among employees at all levels of the organization. Companies that foster innovation also encourage discovery and find ways to reward time spent on the research required to generate new products and ideas. 

It is critical that the executive team supports and, even better, sponsors this effort. While building change capability is often done across an entire organization, it can also be successful as a more focused effort in only one or two functions if there is not an appetite to take on this work holistically. In a more focused effort, it is critical to have sponsorship from the functional leaders and their direct reports.

Why Use it

Companies with solid change leadership and change capability are more profitable, with margins twice those with low change capability. In addition, companies with high change capability have leaders and cultures that rate significantly higher in the eyes of their employees than those with low change capability, and their employees feel more inspired and engaged. The higher the aggregate organizational change capacity is, the higher the environmental and financial performance.

Outcomes

Leveraging the practices at this level brings a more refined and detailed view into the assessment of an organization’s change capacity, mainly focused on factors related to the behaviors of leaders and managers, culture, the level of trust and accountability that exists, and the capabilities of existing change champions who can lead the organization by example and their words. It creates a formal corporate function focused on managing the range of changes that the organization installs and experiences in a structured, automated, and disciplined manner. It develops and actively manages a culture that operates, actively embraces, and rewards its ability to change, innovate, and continuously learn from its successes and failures.

Practice guides at this level

Evaluating organizational change capacity to create change strategies that positively impact awareness, acceptance, and adoption.

Identifying the level at which the organization is currently prepared to embrace change and innovation to create the focus, leadership, processes and policies that reward the right behaviors and open dialogue with the workforce.

Managing the organization’s change portfolio with a structured and formally governed model.

Proactively managing and planning all large-scale changes as a portfolio leveraging a formal change management infrastructure.

Fostering a culture that embraces change through active employee engagement and reinforcing organizational mechanisms.

Adapting cultural conditions to be supportive of the new behaviors that are required to adopt changes and ensure that the entire organization contributes to effectively changing the culture.