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10 Principles of Change Management
by John Jones, DeAnne Aguirre, and Matthew Calderone04/15/04
© 2004 BoozAllen Hamilton Inc. All rights reserved.
strategy 
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business
 
W
ay back when (pick yourdate), senior executives inlarge companies had asimple goal for themselves and theirorganizations: stability. Shareholders wanted little more than predictableearnings growth. Because so many markets were either closed or unde-veloped, leaders could deliver onthose expectations through annualexercises that offered only modestmodifications to the strategic plan.Prices stayed in check; people stayedin their jobs; life was good.Market transparency, labormobility, global capital flows, andinstantaneous communications haveblown that comfortable scenario tosmithereens. In most industries —and in almost all companies, fromgiants on down — heightened glob-al competition has concentratedmanagement’s collective mind onsomething that, in the past, it happi-ly avoided: change. Successful com-panies, as Harvard Business Schoolprofessor Rosabeth Moss Kantertold
s+b
in 1999, develop “a culturethat just keeps moving all the time.”This presents most senior execu-tives with an unfamiliar challenge. Inmajor transformations of large enter-prises, they and their advisors con-ventionally focus their attention ondevising the best strategic and tacti-cal plans. But to succeed, they alsomust have an intimate understand-ing of the human side of changemanagement — the alignment of thecompany’s culture, values, people,and behaviors — to encourage thedesired results. Plans themselves donot capture value; value is realizedonly through the sustained, collec-tive actions of the thousands — per-haps the tens of thousands — of employees who are responsible fordesigning, executing, and living withthe changed environment.Long-term structural transfor-mation has four characteristics: scale(the change affects all or most of theorganization), magnitude (it involvessignificant alterations of the statusquo), duration (it lasts for months, if not years), and strategic importance. Yet companies will reap the rewardsonly when change occurs at the levelof the individual employee.
Many senior executives know this and worry about it. Whenasked what keeps them up at night,CEOs involved in transformationoften say they are concerned abouthow the work force will react, how they can get their team to work together, and how they will be ableto lead their people. They also worry about retaining their company’sunique values and sense of identity and about creating a culture of com-mitment and performance.Leadership teams that fail to planfor the human side of change oftenfind themselves wondering why their best-laid plans have gone awry.
No single methodology fitsevery company, but there is a set of practices, tools, and techniques thatcan be adapted to a variety of situa-tions. What follows is a “Top 10” listof guiding principles for changemanagement. Using these as a sys-tematic, comprehensive framework,executives can understand what toexpect, how to manage their ownpersonal change, and how to engagethe entire organization in the process.
1. Address the “human side”systematically.
 Any significanttransformation creates “peopleissues.” New leaders will be asked tostep up, jobs will be changed, new skills and capabilities must be devel-oped, and employees will be uncer-tain and resistant. Dealing withthese issues on a reactive, case-by-case basis puts speed, morale, andresults at risk. A formal approach formanaging change — beginning with the leadership team and thenengaging key stakeholders and lead-ers — should be developed early,and adapted often as change movesthrough the organization. Thisdemands as much data collectionand analysis, planning, and imple-mentation discipline as does aredesign of strategy, systems, orprocesses. The change-management
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10 Principles of Change Management
Tools and techniques to help companies transform quickly.
by John Jones, DeAnne Aguirre, and Matthew Calderone
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approach should be fully integratedinto program design and decisionmaking, both informing andenabling strategic direction. Itshould be based on a realistic assess-ment of the organization’s history,readiness, and capacity to change.
2. Start at the top.
Because changeis inherently unsettling for people atall levels of an organization, when itis on the horizon, all eyes will turnto the CEO and the leadership teamfor strength, support, and direction.The leaders themselves mustembrace the new approaches first,both to challenge and to motivatethe rest of the institution. They must speak with one voice andmodel the desired behaviors. Theexecutive team also needs to under-stand that, although its public facemay be one of unity, it, too, is com-posed of individuals who are goingthrough stressful times and need tobe supported.Executive teams that work welltogether are best positioned for suc-cess. They are aligned and commit-ted to the direction of change,understand the culture and behav-iors the changes intend to intro-duce, and can model those changesthemselves. At one large transporta-tion company, the senior teamrolled out an initiative to improvethe efficiency and performance of itscorporate and field staff beforeaddressing change issues at the offi-cer level. The initiative realized ini-tial cost savings but stalled asemployees began to question theleadership team’s vision and com-mitment. Only after the leadershipteam went through the process of aligning and committing to thechange initiative was the work forceable to deliver downstream results.
3. Involve every layer.
 As transfor-mation programs progress fromdefining strategy and setting targetsto design and implementation, they affect different levels of the organiza-tion. Change efforts must includeplans for identifying leaders through-out the company and pushingresponsibility for design and imple-mentation down, so that change “cas-cades” through the organization. Ateach layer of the organization, theleaders who are identified and trainedmust be aligned to the company’svision, equipped to execute their spe-cific mission, and motivated to makechange happen.
 A major multiline insurer withconsistently flat earnings decided tochange performance and behaviorin preparation for going public. Thecompany followed this “cascadingleadership” methodology, trainingand supporting teams at each stage.First, 10 officers set the strategy,vision, and targets. Next, more than60 senior executives and managersdesigned the core of the change ini-tiative. Then 500 leaders from thefield drove implementation. Thestructure remained in placethroughout the change program, which doubled the company’s earn-ings far ahead of schedule. Thisapproach is also a superb way for acompany to identify its next genera-tion of leadership.
4. Make the formal case.
Individuals are inherently rationaland will question to what extentchange is needed, whether the com-pany is headed in the right direc-tion, and whether they want tocommit personally to makingchange happen. They will look tothe leadership for answers. Thearticulation of a formal case for
John Jones
(jones_john@bah.com) is a vice presidentwith Booz Allen Hamilton in New York.Mr. Jones is a specialist in organizationdesign, process reengineering, andchange management.
DeAnne Aguirre
(aguirre_deanne@bah.com) is a vicepresident in Booz Allen Hamilton’s SanFrancisco office. She has 18 years oforganizational and technology strategyexperience serving multinational clients.She is coleader of the firm’s strategicsecurity initiative.
Matthew Calderone
(calderone_matthew@bah.com) isa Senior Associate with Booz AllenHamilton in the New York Office.He specializes in organizationtransformation, people issues, andchange management.
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