The pace of business is accelerating, and companies must change in response. Yet 50-75% of change programs fail. Companies that implement change effectively give themselves a significant competitive edge by focusing on the factors that are essential to success: ensuring Executional Certainty; establishing effective sponsorship, governance, and a program management office (PMO); enabling the extended leadership team; and engaging the broader organization. Companies need a comprehensive, systematic approach to implementing change that focuses on the components that matter most.
Most companies understand that the ability to deliver bold change is increasingly critical to competitive advantage. That means more comprehensive—and more frequent—change programs. Many boards have appointed CEOs and senior executives with that explicit mandate, and almost all leaders recognize the need to take even successful enterprises to new levels of performance. But organizational change initiatives have a very low success rate and executives need to understand the stumbling blocks that cause transformation efforts to fail. Per some leading global surveys, two factors have increasingly become recognized as the leading causes of failed change initiatives a) A lack of clearly defined milestones and objectives to gauge progress; and b) A lack of, or insufficient commitment, by senior management. Success requires overcoming these challenges head-on, through a comprehensive and structured change effort that includes the right mix of processes, governance, metrics, and behaviors. Moreover, building superior and lasting change capabilities has become a competitive advantage. Companies that are ready, willing, and able to face the challenges of change initiatives are better equipped to manage new changes over time. A lack of clearly defined milestones and a lack of or insufficient commitment by senior management have increasingly become recognized as the leading causes of failed change initiatives.
Methods used in successful change projects are all based on one fundamental insight: that major change will not happen easily for a long list of challenges as mentioned above. To be effective, a method designed to alter strategies, reengineer processes, or improve quality must address these challenges.
Therefore, for a change program to be successful following steps need to be undertaken: Creating a sense of urgency – driven by the management of the company, this is primarily the step where ‘tone’ is set at the top based on data which would be identifying major opportunities or potential challenges; Creating a guiding coalition/ team – it is important for the management then to identify a team of people with full autonomy and responsibility to make that change happen under the guidance of the management; Developing a vision and strategy for change – under this step that team through a workshop or a series of workshops identifies / defines the broad strategy / vision for change – depending on the scope of change this could either be to increase efficiency at a process level or entering / capturing new markets; Communicating the change vision – this is probably the most important step in the journey to’ change’ whereby, depending on the type of change (business, department/ function or process) the vision and strategy are effectively communicated to wider organization; Implementation road map and allocation of resources – a detailed implementation roadmap is prepared and ‘rigor tested’ to ensure that all the ‘key implementation steps’, risks, costs, performance indicators and timelines are agreed and implementation responsibilities fixed; Project management, ongoing reviews and celebration of small successes – Implementation is project managed using the ‘implementation life cycle methodology’ and periodic reviews are undertaken to ensure that all tasks are going as planned, costs are being managed to budget and risks are managed pro-actively. This will ensure that the ‘change team’ delivers as tasked; Project closure, learning and communication – project closure meetings are a key to developing a culture of change in the organization. Here not only are the successes, the near misses and learnings discussed by the project team, ongoing challenges are also discussed and new projects outlined. This ensures that ‘managing change’ becomes an ongoing process and becomes the DNA of the organization.
Companies can elect whether they just require Appleton Greene for advice and support with the Bronze Client Service, for research and performance analysis with the Silver Client Service, for facilitating departmental workshops with the Gold Client Service, or for complete process planning, development, implementation, management and review, with the Platinum Client Service. Ultimately, there is a service to suit every situation and every budget and clients can elect to either upgrade or downgrade from one service to another as and when required, providing complete flexibility in order to ensure that the right level of support is available over a sustainable period of time, enabling the organization to compensate for any prescriptive or emergent changes relating to: Customer Service; E-business; Finance; Globalization; Human Resources; Information Technology; Legal; Management; Marketing; or Production.
Change Management service will help companies ensure that the probability of success of their ‘change agenda’ increases significantly, with the use of a very well-articulated process. This process is rigorous enough to help companies assess measurable impact and risks & rewards as they go through this journey of change. The ambition of this service is for companies to move away from being reactive to change and to become pro-active to change by institutionalizing a culture of ‘leading change’ and not ‘Managing Change’. An good example of this is a multi-billion $ finance change program that was initiated by one of the leading financial services companies in the world. The objective of the program was to move from archaic and often disjointed finance processes to a slick and smart business support function. This entailed a complete overhaul of the three elements of people, process and systems at a global scale.
The program was initiated at a global scale and four years into it and after spending close to USD 150 Mio, the company realized that the project was actually failing given that they had made incorrect choices of leadership for the program and had grossly underestimated the impact/ scale of change. Realizing this the senior management jolted the system by creating a ‘sense of urgency’ among the ranks and re-vamped the entire team, while scaling down the spend to a focused pilot in its North American operations. By doing this, they dramatically increased the probability of change by bringing a sense of urgency and scaling back their global ambitions till the time the ‘pilot’ was successful. This was a ‘game changer’ the company successfully rolled out the program Globally and managed change incrementally and on a ‘business case’ basis. As they moved away from the approach of throwing money at a ‘big’ change idea to a well-articulated and manageable change program, they were able to establish a globally cohesive ‘finance function’ at optimal cost. The function today has change from being a ‘compliance’ function to a ‘business partner’ in decision making.
This service is primarily available to the following industry sectors:
The United States is a leader in the production and supply of energy, and is one of the world’s largest energy consumers. U.S. energy companies produce oil, natural gas, renewable fuels, as well as electricity from clean energy sources such as wind, solar, and nuclear power. U.S. energy companies further transmit, distribute, and store energy through complex infrastructure networks that are supported by emerging products and services such as smart grid technologies. Growing consumer demand and world class innovation – combined with a competitive workforce and supply chain capable of building, installing, and servicing all energy technologies – make the United States one of the world’s most attractive markets with total investment in the U.S. energy sector at $280 billion.
The United States is home to a thriving renewable energy industry, with globally competitive firms in all technology subsectors, including the wind, solar, geothermal, hydropower, biomass, and biofuels sectors. Today, the United States produces more geothermal energy than any other country (2,542MW); more biomass power than any other country (14,278 MW); enjoys the second largest wind industry (82,735 MW); the third largest hydropower industry (80,244 MW); and the fourth largest solar industry (41,825 MW). The International Renewable Energy Agency (IRENA) projects that by 2030, the share of renewables in the total U.S. energy mix could reach 27 percent (including almost 50 percent of electricity generation). This would mean an increase from 134 GW of renewable energy in 2010 to over 700 GW in just two decades. Even with less optimistic scenarios, the capacity is expected to double by 2030. On this trajectory, the United States already had the second highest new investment in the world in 2016, with nearly 23GW of added renewable energy capacity and $100 billion in clean energy transactions according to Bloomberg New Energy Finance. In 2016, while clean energy investments continued to slump in Europe and Brazil, the United States accounted for 20 percent of the world’s total new renewable energy investment.
With access to abundant natural resources, the pellet and ethanol industries are also increasing their capacity – particularly to serve overseas markets. America’s ethanol industry is the largest and most efficient in the world, incorporating technological innovations to produce over 15 billion gallons of ethanol annually. In addition, the industry is expanding to new markets. During 2016, the U.S. ethanol industry exported an estimated 1 billion gallons of ethanol – around 7 percent of its total production – to markets around the world. Investment opportunities also exist for the development of advanced biofuels utilizing new technologies and feedstocks, particularly in the aviation sector. U.S. wood pellet manufacturers can now produce over 13 million metric tons of pellets annually. Much of the production has been added in recent years to export to Europe. In 2016, over 4.7 million metric tons were exported and new pellet mills have been brought online to meet the growing demand.
For the first time in nearly two decades, the United States produced more oil domestically than it imported from foreign sources, and the United States is now the number-one natural gas producer in the world. Despite low prices for crude oil and natural gas, the United States remains a major source of growth in oil and gas exploration and development, especially in shale and ultra deep-water resources. U.S. companies are safely and responsibly developing our energy resources while advancing cleaner forms of energy, such as natural gas. U.S. companies have developed advanced and cost-competitive techniques for extracting hydrocarbons from shale and hard to reach offshore oil and gas deposits, altering the U.S. oil and gas sector and the domestic energy landscape. These techniques have allowed many U.S. producers to remain competitive even with low international crude oil and natural gas prices. Allowing U.S. producers to export crude oil as well as liquefied natural gas (LNG) has made the U.S. sector even more competitive. U.S.-produced crude oil can now reach global markets and compete with other major oil exporting countries. U.S. companies also exported LNG from the lower-48 states for the first time in 2016, sending shipments to major markets around the world.
As global oil and gas prices rise, production from U.S. shale formations is projected to increase substantially. In addition to shale, offshore oil and gas resources in the U.S. Gulf of Mexico and Alaska are highlighted as part of a five-year leasing program for high-resource areas under the U.S. Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022, which is under development by the Bureau of Ocean Energy Management within the U.S. Department of Interior.
The United States operates the most nuclear reactors, has the largest installed nuclear power capacity, and generates the most nuclear power in the world. Nearly 20 percent of U.S. electricity is produced at 99 nuclear reactors in 31 states. By 2021, new nuclear reactors are expected to come online, and license applications exist for 20 additional new reactors. Subsectors of the civil nuclear industry are represented by companies that produce nuclear components (reactors, nuclear monitoring instruments, boilers, heat exchangers, industrial valves, instrument modules, insulation, economizers for boilers, pumps and other reactor parts), nuclear fuel (uranium mining, conversion, enrichment, fuel assembly fabrication, and spent fuel storage), nuclear engineering and construction (site preparation, materials and equipment procurement, and construction), and nuclear advisory services (consulting on nuclear-related regulatory policies, human resources, and infrastructure; legal services; and operations and program management services). The international civil nuclear marketplace is estimated at more than $500‐740 billion during the next decade and has the potential to generate more than $100 billion in U.S. exports and thousands of new jobs.
The market for achieving greater energy efficiency in the United States is large and growing. Combined financing and investment in building, industrial, and supply side energy efficiency doubled in 2012, exceeding $15 billion in funds. Existing policies, such as Federal appliance standards, along with other Federal and State policies, and market forces are drivers of energy efficiency in the United States.
The United States is an international leader in the development and deployment of smart grid technologies and services. The smart grid subsector is defined by the electric grid equipment and services required for the modernization of distribution and transmission systems, as well as the information and communication technologies (ICT) that support a fully networked grid and enable two-way communications and electric flows. This sector is gaining a renewed focus on investment. Reasons for increased investment include reliability enhancement, connecting to renewables, demand shifts, cost increases, and market reforms that create more options for independent generators and as such require new connections to transmission systems. This includes a strong interest from U.S. utilities to address the potential effects of distributed energy resources. Since 2009, investment in the modernization of America’s electricity infrastructure has increased dramatically, in large part due to the nearly $8 billion in 99 public-private Smart Grid Investment Grant (SGIG) projects involving more than 200 electric utilities. These projects have helped push the deployment of smart meters to more than 40 percent of the country’s 144.51 million electricity consumers. In addition to public-private programs like the SGIG, investor-owned utility investment in grid modernization continues to rise. For example, since 2001 investor-owned utility transmission system investment grew at a compound annual growth rate of over 20 percent reaching almost $20 billion.
The U.S. manufacturing industry employed 12.4 million people in March 2017, generating output (nominal GDP) of $2.2 trillion in Q3 2016, with real GDP of $1.9 trillion in 2009 dollars. The share of persons employed in manufacturing relative to total employment has steadily declined since the 1960s. Employment growth in industries such as construction, finance, insurance and real estate, and services industries played a significant role in reducing manufacturing’s overall share of U.S. employment. In 1990, services surpassed manufacturing as the largest contributor to overall private industry production, and then the finance, insurance and real estate sector surpassed manufacturing in 1991. Since the entry of China into the World Trade Organization in December 2001, the decline in manufacturing jobs has accelerated. The U.S. goods trade deficit (imports greater than exports) with China was approximately $350 billion in 2016. The Economist reported in January 2017 that manufacturing historically created good paying jobs for workers without a college education, particularly for men. Unions were strong and owners did not want to risk strikes in their factories due to large capital investments. Such jobs are much less available in the post-1990 era in the U.S. and other developed countries, leading to calls to bring those jobs back from overseas, establish protectionism, and reduce immigration. Manufacturing continues to evolve, due to factors such as information technology, supply chain innovations such as containerization, companies un-bundling tasks that used to be in one location or business, reduced barriers to trade, and competition from low-cost developing countries such as China and Mexico.
Banking & Financial Services
Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises. Financial services companies are present in all economically developed geographic locations and tend to cluster in local, national, regional and international financial centers such as London, New York City and Tokyo.
Assets of the largest 1,000 banks in the world grew by 6.8% in the 2008/2009 financial year to a record US$96.4 trillion while profits declined by 85% to US$115 billion. Growth in assets in adverse market conditions was largely a result of recapitalization. EU banks held the largest share of the total, 56% in 2008/2009, down from 61% in the previous year. Asian banks’ share increased from 12% to 14% during the year, while the share of US banks increased from 11% to 13%. Fee revenue generated by global investment banking totaled US$66.3 billion in 2009, up 12% on the previous year.
The changing economic environment has a significant impact on banks and thrifts as they struggle to effectively manage their interest rate spread in the face of low rates on loans, rate competition for deposits and the general market changes, industry trends and economic fluctuations. It has been a challenge for banks to effectively set their growth strategies with the recent economic market. A rising interest rate environment may seem to help financial institutions, but the effect of the changes on consumers and businesses is not predictable and the challenge remains for banks to grow and effectively manage the spread to generate a return to their shareholders.
The management of the banks’ asset portfolios also remains a challenge in today’s economic environment. Loans are a bank’s primary asset category and when loan quality becomes suspect, the foundation of a bank is shaken to the core. While always an issue for banks, declining asset quality has become a big problem for financial institutions.
There are several reasons for this, one of which is the lax attitude some banks have adopted because of the years of “good times.” The potential for this is exacerbated by the reduction in the regulatory oversight of banks and in some cases depth of management. Problems are more likely to go undetected, resulting in a significant impact on the bank when they are discovered. In addition, banks, like any business, struggle to cut costs and have consequently eliminated certain expenses, such as adequate employee training programs.
Banks also face a host of other challenges such as ageing ownership groups. Across the country, many banks’ management teams and board of directors are ageing. Banks also face ongoing pressure by shareholders, both public and private, to achieve earnings and growth projections. Regulators place added pressure on banks to manage the various categories of risk. Banking is also an extremely competitive industry. Competing in the financial services industry has become tougher with the entrance of such players as insurance agencies, credit unions, cheque cashing services, credit card companies, etc.