Knowledge base At the Institute of Asset Management, we recognise that management of change is necessary, but the need for change management is often ignored. Here, Mark Knight and Tim Creasey look at why it should be applied to the AM field In our VUCA world where change is volatile, uncertain, complex and ambiguous asset management approaches and methods must continuously evolve. Asset management is the coordinated activities of an organisation to realise value from assets. This involves information sharing and process integration, and that requires managing the people side of change. Change management defined Have you ever experienced an unsuccessful change in your organisation? Have you ever installed an expensive CRM platform or a new CMMS system that your organisation cant get people to use? Have you implemented a new process employees dont like and choose to work around after you leave? How about a company merger that left teams feeling disgruntled and divided instead of energised and unified? No matter how great a solution is, if people dont adopt and use it, it wont deliver the value your organisation expects. Fortunately, we dont need to leave the people side of change to chance. Organisations can mitigate or avoid such failed changes through effective change management: the application of a structured process and set of tools for leading the people side of change to achieve a desired outcome. Its the process we use to support the individuals who are impacted by important changes, so they can successfully adopt and use them in their daily work. We all know that people do asset management. And the application of a structured process and set of tools to achieve a desired outcome is exactly what asset management is about. Why risk leaving benefits on the table by neglecting change management? Project challenge vs adoption challenge To understand the importance of change management, it helps to think about a change in terms of whether success is highly dependent upon people adopting and using it. Consider two simple projects. Project 1 involves installing wireless asset health monitors (i.e., temperature and vibration sensors). Project 2 involves installing sophisticated diagnosis recorders not integrated with analysis systems. Project 2: some sensors are not integrated with analysis systems (rely on a manual process) Project 1: wireless vibration sensors on a motor Project 1 does not require people to adopt and use the change because the sensors will automatically send an alarm back to an operators dashboard. Project 1 is a project challenge with no adoption challenge associated with it. The projects success is not people dependent. However, the success of Project 2 is highly dependent on people adopting and using the change. Putting in more sophisticated diagnosis instrumentation without automating the data collection means that technicians must change their work to include checking on the instrumentation, as well as learning what information to collect and why. People must change their behaviour to ensure benefits realisation and value from the project. Now, apply this logic to a complex project, such as an electric utility that is modernising its grid, involving an investment of hundreds of millions of dollars. The project also involves thousands of processes and new devices that need to be coordinated to realise the benefits. Investment and changes like this often take place over a decade. What percentage of the projects success depends on people adopting and using it? Seventy-five per cent? Eighty per cent? More? This percentage represents the people-dependent portion of return on your investment. Change is a process we all go through People experience change in predictable and human ways. During any type of change, we move through three states: Current the known state of how things are done today Transition the unpredictable, challenging state where we accept and learn to do things the new way Future where we are trying to go as a result of the change. States of change Current Transition Future If we dont support people through their individual transitions, research shows that they will resist the changes, revert to the old ways of doing things, and negatively impact the projects success. In our Project 2 example above, technicians who did not remember how to use the new equipment simply disconnected it and claimed it wasnt working. Workarounds like this are common with a poorly managed change. Instead of successful outcomes and positive return on investment, the project will suffer delays, missed milestones, unexpected obstacles, increased costs, and even abandonment. Proscis benchmarking research shows that projects with successful change management are six times more likely to achieve project objectives, five times more likely to stay on or ahead of schedule, and twice as likely to stay on or under budget. Why management of change needs change management As asset managers, we all know that management of change is one of the internationally accepted 39 Subjects that define the scope of asset management. Its one of the topics in the Risk & Review group of topics. Yet change management is not commonly applied to changes in our field. Heres why it should be: 1. Continuous improvement requires change Ideally, asset management embraces continuous improvement, which requires changing the way things are done to make those improvements. As organisations change, change management enables us to understand the impacts, communicate effectively, and remove barriers for the people impacted by those changes. The IAMs new 10-box maturity model recognises this and includes continual improvement as a new area. IAM Framework for Maturity Assessment Purpose and context Review and continual improvement Op er Value and outcomes Life-cycle delivery dis pos e nt ain Asset management decision-making / ew Ren Leadership, people and culture te a re c / e at Strategy and planning Acq uir e Governance i a M Risk management Information management 2. Value realisation comes from adoption Asset management is the coordinated activity of an organisation to realise value from assets. Change is an instrumental part of those coordinated activities. Because value comes from changes that get adopted and used, we need change management to enable people to adopt and use them. 3. Coordination and collaboration are essential One of the simplest yet most important aspects of the 39 Subjects of asset management is that they do not sit in any one area of an organisation. For asset management to be effective, asset management crosses organisational boundaries, requiring coordination and collaboration among people who must engage, adopt and use important changes. 4. Resilience requires threat mitigation In resilience planning, we consider the outcomes of threats and how to mitigate them. Poor adoption of changes results in an inflexible organisation, which amplifies the threat instead of mitigating it. 5. Adaptability is critical to risk mitigation The flexibility of people to adapt to changes and accept new ways of doing things is more important today than ever. Management of change can help with the avoidance of some risks, but people still need to adopt and use the changes. 6. Change saturation and fatigue are dangerous With changes becoming more commonplace, the number of disruptive changes in an organisation can exceed the organisations ability to adopt them. Change fatigue is the result, leading to apathy, negativity, burnout and resistance. Effective change management helps you avoid and mitigate change fatigue and keep critical asset management efforts moving forward. 7. Technology requires people using information Data and information assets may be among the most fragile and temporal of all assets, and among the most valuable and useful. As the Industrial Internet of Things (IIoT) grows more prevalent in organisations, it is impacting how we collect and process data, which creates an important role for change management because people use information to make decisions in their daily work. 8. Cross-functional coordination is a change Successful change depends on all stakeholders having a clear understanding of their roles and responsibilities. This requires coordinated efforts among internal and external parties who will be involved in and impacted by the changes. 9. Root causes of failures can be obscured by people How can we effectively identify root causes if new processes are rejected because we already know why the asset failed? The purpose of root cause analysis is to identify the factors influencing an asset prior to failure to identify what behaviours, actions or conditions need to be changed to prevent recurrence of a similar failure. If employees fail to perform the analysis because it seems obvious to them why a failure occurred, how are we supposed to uncover the underlying links? Change management is the process that enables us to identify root causes in the people side of changes. Asset management needs change management It has been said that organisations dont change, people do. Changes to the way people work and interact is what ultimately results in value to the organisation in the form of improvements, risk avoidance and threat mitigation, increased flexibility and adaptability, and more. If we recognise that management of change is critical to our success, we must also acknowledge that change management is vitally important to an organisations asset management capabilities. Organisations change one individual at a time Managing organisational changes effectively starts with applying an individual change model. Proscis ADKAR Model is a popular framework for change management because of its simple and logical approach. It is based on the understanding that organisational change can only happen when individuals change. ADKAR is an acronym for the five outcomes that an individual must achieve to move successfully through their transitions: A D K A R Awareness of the need for change Desire to participate and support the change Knowledge on how to change Ability to implement desired skills and behaviours Reinforcement to sustain the change Using the ADKAR Model, leaders and change management teams help people and teams through the change process. They ensure that people are supported and equipped to achieve each outcome and move successfully through their individual transitions. A key reason why the ADKAR Model is so effective is because it focuses on the business-orientated goals we want to achieve, the personal impacts on people that result from the changes we implement to reach those goals, and then identifying and addressing the individual barriers to solution adoption.