Incremental Change Versus Transformation

"An organisation’s ability to survive is determined by its capability to implement incremental change or to transform"

Winston Churchill is credited for the quotation, “to change is to improve, to improve often is to perfect.” An organisation’s ability to survive is determined by its capability to implement incremental change or to transform. The terms ‘change’ and ‘transformation’ are used interchangeably, and although both are about improving an organisation’s performance they differ in terms of complexity and effort.


The Leadership of Change® defines that an organisation can improve performance in one of two ways:


Incremental Change: Small strategic improvements or adjustments that will improve organisational performance but will not alter the organisation’s core.


Transformation: Fundamental change which takes the organisation in a different direction. This could alter the structure, processes, systems, culture or strategy to improve long-term performance or market position. Transformations are usually driven by the C-Suite as they could include a change to the operating model which would fundamentally alter the way an organisation operates.


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It should be noted that these definitions will vary from organisation to organisation, as will the reasons for incremental change or transformation. However, for strategy execution to be successful, both incremental change and transformations will require change management support in terms of a change framework, models, processes and tools, including internal capability. These two change types are developed further below:

Incremental Change

Small strategic improvements or adjustments might include:

v Continuous or business improvement initiatives to make incremental improvements to manufacturing processes.

v Implementation of new computer systems to increase efficiencies.

v Reorganisation of a department to reduce the head count.

v Outsourcing the marketing department because it is no longer considered a strategic core capability.


Transformation

Fundamental changes to the organisation might include:

  • Digital transformation to integrate digital technology across the organisation.

  • The addition or removal of a product or service within the market.

  • Altering the distribution model, for example, a manufacturer starts to sell to the customers directly using e-commerce channels.

  • A shift in the business culture of an organisation.

  • Making the organisation more future proof to align with technology, competition, consumer trends, etc.

“Any organisation or leader who thinks they can implement a high number of major transformation programme simultaneously, probably does not understand the organisation capacity for change or their employee’s workload”

Other Considerations:

Organisation Change Capacity: An organisation only has so much capacity for change while normal day-to-day operations continue. Pushing too much change into the organisation will limit successful implementation. It could also put extra workload on the employees who may then resist the change or be unable to adopt the new way of working. There are typically four key organisational capacity components; normal day-to-day operations, unplanned work or rework, mandatory change capacity and finally strategic change capacity. A key question for organisation and leaders when implementing change is, ‘How much capacity for strategic change do we really have?’ Employee Workload: Workload and organisational change capacity should be a key consideration when changing technology, systems, or processes. If new and additional work is created by the change, then leaders need to remove some of employee’s original workload to enable them to have enough capacity for new activities. Employees who complete our change history assessment© (CHA©) consistently score ‘workload’ very low, indicating that the organisation does not consider their workload when implementing change.

“Organisation change capacity and employee workload are ignored in change implementation, until they become the reason for failure”


This blog is based on my book: Change Management Handbook - Leadership of Change Volume 3



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