Change Management in Industry: Key Insights

The only constant is change. This wisdom applies to businesses as well, especially in the face of rapid digital transformation. It is wise to actively embrace and remain agile in the midst of change through systematic change management. Only this way can growth be ensured, and opportunities, risks, strengths, and weaknesses constantly monitored.

For manufacturing industry companies, technological progress with smarter production methods is the central challenge. Competitiveness and cost-efficiency can only be maintained through smart processes in the future.

Digital transformation of manufacturing is critical today, and change management is the appropriate project tool. Every project, including change management, needs two wings to fly. In the case of manufacturing industry, both Technology 4.0 and Transformation Culture 4.0 are required. A smart change management process addresses both aspects. This blog focuses on the fundamentals of change management.

Change Management Definition

Change management aims to enable transformation processes in organizations and companies to bring about significant changes. Successful change management is measured by whether the transformation opens up new growth opportunities for employees, leaders, and the entire organization.

In the best case, change management generates a self-sustaining dynamic within the company because the majority of those involved understand the opportunity for change, actively participate in it, and leverage its benefits at the earliest possible stage.

Whether changes are in the business model, value chain, or in areas like production, it can be initiated from the bottom up or top down.

Triggers for Change Management

According to market research company CEB, specializing in technology-related change management insights, the most common triggers for changes in companies include:

Culture change
Leadership change
Market expansion
Mergers or acquisitions
Restructuring

According to research, only a minority of change processes are successful, with CEB reporting a success rate of only 34% out of over 400 examined change initiatives. A majority fails. A popular saying among managers is, “Culture eats strategy for breakfast,” meaning that existing corporate culture often consumes the desired new strategy for breakfast.

To ensure the success of change processes, change management processes should be actively initiated and controlled.

Why is Change Management Important?

To remain competitive
To replace or modify old processes
To align management methods with desired strategies and structures
To timely and profitably implement digital technologies
To increase resource efficiency
To establish a positive corporate culture

Elements for Successful Change Management

Successful change management fosters a “change mindset” within the company. This is easier said than done, for several reasons: Regulatory requirements often limit flexibility, and there are often resistance and fears associated with impending changes. Employees must bid farewell to what they have been familiar with for years and adapt to new processes.

In general, a change management process can be divided into different phases. Some models will be presented below because they provide structured action plans.

The Iceberg: The 3-Phase Model by Lewin

Kurt Lewin’s 3-phase model is widely used. He compares the situation of changes in social communities to an iceberg:

Unfreeze – thaw
Change– change
Refreeze – refreeze

While Lewin’s theory has been supplemented by numerous other change management phases and models, it remains a powerful image. (See also the Q&A section below).

„Progress is a nice word. But change is its motivator. And change has its enemies.“

Robert Kennedy

The Change Management Process

The success of change management depends on whether a proper process is established from the beginning. Three questions should always be kept in mind:

What is being changed?
How should the process proceed?
What measures are required?

The dimensions that provide clarity about the exact profile of the change process are:

Speed of implementation
Size of the change project
Predictability

The Right Approach

What is being changed?

First, it’s important to have a clear understanding of the changes required in various areas. One methodology for change management, used at FORCAM, is called “iterative process prototyping.”

At the start of the change management process, a complete “gamebook” or process playbook is created. It captures all the requirements of those involved in the change management process, from the workers to the management and individual departments. This creates a blueprint of all the requirements.

The process playbook encompasses four perspectives:

Executive View – Strategic goals from the perspective of senior management
Management View – Process flows and components from the perspective of department heads
Blueprint View – Management modules and specific processes
Technical View – Technologies and interfaces

How Does the Process Work?

Three things are important for a clear overall picture of the change process within change management:

Scope – Questions like: Is it a small, process-specific solution within a department, or is it about standardizing operations management across multiple plants?
Maturity – Define whether it is merely migration, implementation, or updating of ongoing processes, or if there is a fundamental change to the business model.
Time and Phases Plan – When does the project need to be fully implemented? When can it start? In what steps should it proceed? The answers to these questions affect how the process is managed and controlled. It’s important to build in time buffers for unforeseen events.

How to Identify the Right Measures?

Finally, concrete measures for change management must be decided upon. Helpful in defining these measures is considering the following dimensions:

Team: Which departments must be involved? The team aspect considers the degree of buy-in, meaning how high the acceptance of change is among management and employees. Are there enough incentives for a culture of change?
Scope: What project size aligns with the company’s mission and strategy? What skills and resources are already available? What is still needed?
Speed: How quickly must the project start and finish? The appropriate speed must be found. According to Kurt Lewin’s field theory, it’s assumed that performance and productivity initially decline significantly. This is due to learning curve effects.

Measures in change management should be defined along a clear phase plan. A commonly used guide for the stages of a change management process is John P. Kotter‘s 8-step model. In a graphic, we have compiled steps and measures according to Kotter, as well as tasks and challenges based on our own experience.

For planning and creating appropriate measures in a change management process, Wilfried Krüger’s 5-phase model has also proven effective.

Initialize: Identify the actual need for action and communicate the necessary change to key leaders and employees, mobilizing them.
Conceptualize: Develop a clear strategy with specific goals and formulate appropriate concepts. What is planned with what outcomes?
Mobilize: Inform the workforce and involve them in a suitable way. Employees should be actively engaged so they recognize the benefits of the change, accept the process, and ideally, actively participate in it.
Implement: Now it’s time to make changes, ideally in manageable and clearly prioritized steps. The results of the measures should be regularly reviewed and adjusted.
Sustain: Successful changes should be embedded in daily work. This requires that work becomes easier, more pleasant, and more self-responsible.

Measures for User Acceptance

User Participation Involving users in the development and implementation process (“User Participation” or “User Involvement”).
Management Support Providing support from top or middle management in their change efforts (leadership style and communication).
Incentive Systems Implementing modified or new incentive systems within the company.
Training Empowering employees to work effectively and efficiently with the new system.
Organizational Support Additional measures provided by the company.
Peer Support Employees can be supported by colleagues and do not need to rely solely on the project team (appointing “ambassadors”).
Design Features Ensuring user-friendly design for new systems.

Q&A – Change Management in Manufacturing

The manufacturing industry is experiencing rapid technological advancement, with digital technologies making processes leaner and more cost-effective. Companies need to respond to such changes consistently and flexibly through systematic change management.

It’s essential to involve employees early on. Change can elicit reactions like fear and resistance. When employees are involved early, fears and resistance can be addressed, making an efficient change management process possible.

In the case of persistent resistance, employees and stakeholders should be interviewed about their motivations while also highlighting both the opportunities of change and the risks of not changing.
Build positive and strong relationships between development and manufacturing teams. This isn’t always easy as a change management process gets underway, but when both sides are on board, it will help introduce much-needed changes in manufacturing.

Tip: Encourage both teams to spend time “on the other side” to evaluate frustrations from a different perspective and foster mutual understanding.

Encourage and ensure open communication in all phases of the change management process. When change requests or change orders come in, consider whether they can be electronically or in paper form sent to both departments, allowing both sides to provide input and avoid potential pitfalls upfront.

When both parties are informed about the proposed changes in the change management process, much time can be saved as both can contribute and point out potential issues. This can improve the schedule and significantly boost productivity.

Keep change cycles short. Shortening your change management process and making it concise can help you achieve your time-to-market goals. Electronic change tools or software that can be updated for everyone reduce the time wasted waiting for responses or approvals and changes, regardless of the geographical location of those involved.
Kurt Lewin introduced a simple and widely recognized model for changes in social groups and communities. It consists of three phases: unfreeze, change, and refreeze. Lewin, a physicist, built his model around the idea of melting an ice cube, changing its state to water, and then reshaping it into a popsicle.

Applied to change management in businesses:

In the unfreeze phase, the company needs to:
- Recognize the need for change
- Assess what needs to change
- Promote new attitudes and behaviors (out with the old)
- Gain strong management support
- Address and overcome employee concerns and doubts
After this phase, the company moves to the change phase:
- Planning the desired and necessary changes
- Bringing these changes to life, implementing them
- Helping employees understand the new concepts and processes and the company’s standpoint
Finally, the third step is the refreeze phase:
- Stabilizing and reinforcing the changes: Make the changes part of the new norm and everyday experience – normalization of function.
- Reward and celebrate the successes of the changes made.
- If stumbling blocks arise: Choose ways to maintain the change.
Another accessible model for change in manufacturing is the Bridges Transition Model. It’s a people-centered approach that focuses on the transition to change and employees’ experiences rather than solely on the change element itself. The key component here is how employees let go of the old and accept the new and to what extent this transition happens smoothly for the company. This change management model is excellent for more substantial changes.

Step 1: Ending and Letting Go

In this initial phase, employees essentially let go of any emotional attachment to the old way of doing things to move forward with the new.

Step 2: Neutral Zone

Here, employees adapt to the new conditions. Clear communication is essential to prevent increasing frustration during the adjustment.

Step 3: New Beginning

Employees accept and recognize why the changes were necessary and understand why they had to happen. They see the benefits that the company gains.
A formidable model for change management in manufacturing is the Triangle of Constraint.

It states that there are initially three equal sides of a triangle, identified as follows:
- Budget/Cost
- Scopeg
- Time/Schedule
If one of these parameters changes and alters the sides of the triangle, something must be sacrificed from one or both of the other parameters to balance this change.

For example, if the schedule is drastically shortened, you must either increase the budget or the number of employees to complete the project on time, or reduce the scope. Possibly even both.

It’s an effective model for assessing where changes need to be made during the change management process and how these changes will impact the overall quality of the result.

In summary, in change management in manufacturing, all the points mentioned above need to be considered.
Communication, employee acceptance, training employees in new processes, and understanding how to deal with resistance or hindrances are the keys to successful change management.

Ensure that design and manufacturing teams are on the same page at the same time to avoid costly misunderstandings and to eliminate processes that may be entirely unnecessary in your change process.

Hold regular meetings with stakeholders and review boards to ensure that change cycles are not too frequent and that clustered changes can be made in each cycle to reduce disruption to the manufacturing process. This ensures that you operate as cost-effectively as possible in each change cycle.

Adopting technology should not be something to fear or resist, but rather an opportunity to keep processes streamlined and rationalized, paving the way for growth and a satisfied work culture and environment.