Reduce Investment Risks In Change Projects

Change projects are investments – from a business point of view. You have to pay off the company; they are also associated with investment risks. Therefore, professional change management is necessary.

Change measures in companies must pay off; otherwise, they will not serve their purpose as investments. This means doing the right thing right at the right time.

A Risk Analysis Is Indispensable

Professional management of projects requires, among other things, a risk analysis. In general, the risks

  • evaluated according to the probability and the economic consequences of their occurrence and afterward
  • take preventive measures if necessary.

In practice, this consideration is often limited to operational risks of a structural nature. On the other hand, cultural factors such as acceptance problems are usually neglected, although they significantly impact the economic success of change projects.

If change processes are poorly accompanied, those responsible take the following risks:

  • Resources remain unused
  • The necessary energy for change is not generated or flags during the process,
  • Risks that could become problems are not recognized in time,
  • Managers and employees support the desired change only formally and
  • Key people quit (internally) because they do not identify with the desired goals and feel they are the losers of the process.

Also, Consider The Cultural Implications

The consequences are severe: on the one hand, the planned positive effects of the change either occur with a delay or do not occur; on the other hand, the lack of identification with the project causes friction losses and additional costs. These can even endanger the existence of a project.

If change processes are professionally accompanied, they run more efficiently, and the experience gained affects the organization. This means that everyone involved and affected knows what kind of support they need in which situations, and it is clear to everyone

  • which change measures in his area or team cause what and when
  • how he can influence the success of the project.

In other words: well-supported change projects harbor fewer risks than change projects that companies “let run.” The more professionally a change process is managed, the lower the investment risk of the individual change measures.

The Different Project Types

Changes always have a multidimensional effect. Therefore, the extent of change at the different levels varies from project to project and even within the phases of a project. This makes it difficult to measure change success. However, experience shows that it is possible

  • classify projects according to the extent of the structural and cultural differences they cause,
  • identify the associated risks and
  • to derive suitable change measures from this.

For this purpose, it makes sense to divide the projects into routine, innovation, acceptance, and change projects.

Routine Projects: These are measures such as sales projects or sales campaigns. Although they have the character of projects in the sense of a time limit and cross-departmental participation, they change the structural or cultural foundations of the organization only selectively. Typical for routine tasks are review workshops at the end, which aim, on the one hand, at a structural optimization of the process (standardization) and, on the other hand, at professionalization of the cooperation (feedback culture) and thus a reduction of the cultural risks.

Innovation Projects: They usually serve to develop further or renew organizational or technical structures within the existing strategic orientation (e.g., the introduction of an expert system to support quality assurance). In such projects, the focus of the support is usually on establishing the factual competence of those affected (training, training). If, for example, the multipliers involved learn to understand resistance to change as a typical behavior pattern of those affected and to deal with it appropriately, this reduces the risk of friction arising from frustration.

Acceptance Projects: Their design focus is on the cultural level, and their success manifests itself as a fundamental change in the behavior of those affected – for example, by understanding and using the introduced target agreement and performance appraisal system as a binding structural framework for an honest dialogue between managers and employees. In such projects, it is essential to take measures that create clarity early, enable permanent opportunities for feedback from the organization, and are suitable for gaining influential allies as multipliers.

Change Projects: This is the term used to describe far-reaching change processes with noticeable effects on all levels, such as those that occur in mergers or fundamental strategic realignments of a company. This is often about existential questions on all levels. For the pool of change measures, a high level of complexity is expected in the design of the change process. This must be reflected in the composition of the project management. What is needed is an experienced change manager who is aware of all facets of his task.

The Character Of A Project Often Changes

The above classification of projects facilitates an integrated view of the structural and cultural risks – regardless of whether a change process retains the characteristics of a project type in its course or its character changes in the system of the individual phases. The latter is often the case. A project can start as an innovation project and take on apparent traits of an acceptance project in the course of its development because implementing a new technical infrastructure leads to a change in the division of labor that requires a reorganization. Or a sales offensive with the character of a standard project becomes a change project because it is also intended to open up a new sales channel and intensify cooperation between office and field staff.

It is therefore essential to maintain an integrated view of the risks at each stage of change; In addition, to regularly review all measures from a profitability point of view to adjust them if necessary.

Also Read: How Hybrid Work Works: 10 Factors That Matter

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