How Do Risk and Change Fit Together?

Ruth Murray-Webster, the author of chapter 18 on organizational change management and risk argues that (i) all organizational change is risky and (ii) most organizations need to change some things in order to get the benefits from risk analysis and management.

Before unpicking these statements a little, it is interesting that discussions about organizational change in professional bodies, academia and practice often focus on the binary notions of ‘success’ or ‘failure’. 

The Association for Project Management has a vision for a ‘world in which all projects succeed’.  Many learned books and consultants start any conversation about change by stating the popular myth that ‘70% of all change initiatives fail’.  It seems to Dr Murray-Webster that these binary discussions miss the point.  Most organizational changes are at the same time wildly successful and spectacularly disappointing, and everything in between, depending on the point of view of the stakeholders involved.  We only have to look at the organizations we are part of (at work, Church, football club) or to read newspapers to know this is the case – it’s a sad truth that we rarely please all of the people, all of the time.

In all cases, organizational level objectives for change require people to change the way they do things – use different processes, different systems or to behave in a different way. The research underpinning this chapter highlights the fact that people do not change the way they perform tasks unless their internal thoughts, feelings and intentions for the work first change. Many change initiatives focus on macro level plans, but do not focus on the people with the power to make the change fly, or sink without trace.  Understanding stakeholders, particularly those who are the recipients of change, those whose work is intended to change is vital. 

Nobody tends to argue with this point, but it is surprising that often the link between stakeholder engagement and risk analysis and management is not made.

In The Risk Management Handbook the chapter on managing stakeholder risks makes the case for having a really good understanding of stakeholder perceptions and the risks associated with these.  This chapter highlights tried and tested ways of analyzing stakeholders and predicting how they might behave in different circumstances.

Such methods are really important in organizational change management but the argument made by Ruth is that the need for understanding stakeholder points of view about change and the need to understand perceptions of risk to change objectives are so related that we should manage them together.  Why have a ‘stakeholder analysis’ process that does not share objectives with the ‘risk identification’ process? Every conversation with a stakeholder is an opportunity to understand points of view and to uncover current views about risks. Conversation is key to uncovering what people really think and we are much more likely to uncover ‘real’ perceptions of risk from people when we truly engage them as individuals.

There are pitfalls to avoid however in this process.  Conversations about risk can be tricky because, by definition, risks are potential future events and perceptions are influenced by a myriad of different rational and biased mental processes.

For example, we need to understand perceptions of what is risky and why when we are pulling together the business case for change - deciding how much to invest and when – but the risks may be downplayed or emphasized in early lifecycle depending on whether the stakeholder’s objectives are to get the change approved, or to be accountable for delivering the change over time.

Similarly, we need to understand what might happen to deflect us from plan in order to guide and protect delivery – but the perceptions of the people who are the recipients of change are likely to be very different from the perceptions of the project team who just want to get the change done.

Nevertheless, we avoid these tricky conversations at our peril if we want to deliver organizational change. 

The binary notions of ‘success’ or ‘failure’ in organizational change are not very helpful.  We would be foolish to ignore evidence of the ‘critical success factors’ for organizational change but these are necessary but not sufficient.  We would also be foolish to follow a risk management process during organizational change without recognizing that the best way to understand risk is to really engage the stakeholders with the power to make or break the change effort.