Full Sail Partners Blog

A friend comes to you and asks for your advice regarding a great investment they discovered with a huge money down initial investment but with – and here’s the kicker – no idea of the ROI. 

Your advice?  Never invest unless you know what you’ll get in return, right?

Yet, thousands of companies today are operating their business without knowing if there will be any return on the investments on initiatives or significant purchases each day.   

WHY do companies do this and HOW can they realize the necessary ROI?

They answer is right in front of us - effective management of change.

This article is the first in an exciting and informative series where we focus our attention on this invasive corporate conundrum and how an effectively run Management of Change Program can positively impact your bottom line.  What’s even more engaging about this series is that we will look at the benefits of change management from a variety of perspectives:  Executive, Finance, Project Management, Marketing, and HR. 

In this introduction piece, we will concentrate on two key definitions including change management and user adoption.

Change Management

Change Management is a term often bandied about as the vague yet intended scapegoat for why things don’t go well in an organization.  While many people certainly understand the concept, there is in fact a real definition.  Generally, change management is the process of moving an organization from its current status to a defined desired status.  However, few understand the importance or the specifics as to what makes an effective management of change program. 

According to mindtools.com’s article “Change Management Making Organization Change Happen Effectively,” “Change management is a structured approach for ensuring that changes are thoroughly and smoothly implemented, and that the lasting benefits of change are achieved.  The focus is on the wider impacts of change, particularly on people and how they, as individuals and teams, move from the current situation to the new one.”  I’ve added the boldface font to make two very important points:  1) that change management requires a structured approach for lasting benefits and 2) change management requires not only a change in process but a change in the people involved. 

User Adoption

Which brings us to our next definition regarding the people involved in the change, User Adoption.  Broadly, it means the people in the company using and taking full advantage of the changed environment.  We all know that getting people to change is always a difficult task:  people are naturally resistant to change - even if change means their work lives will be easier - because the initial adjustment to their lives seems too big a barrier.  Now, taking that broad definition into a more specific level, we can clarify it as the following:  successful user adoption requires a clearly defined and financially measured goal requiring training, clear communication/marketing and leadership buy-in in order to be successful. 

Management of Change and ROI

Now, let’s get back to ROI.

For a change to be considered advantageous, there has to be a compelling business case which will look at the cost of the project weighted against the benefits the company will gain. If the benefits outweigh the costs, the ROI is positive.  The formula for calculating Return on Investment (ROI)[2] is:

NATALIE PETOUHOFF, PHD, TAMRA CHANDLER and BETH MONTAG-SCHMALTZ, “The Business Impact of Change Management,” 2006 Volume 9 Issue 3.

In other words, the difficulties of change must be overcome by the positives, i.e. an ROI both financially and personally for those involved. 

Two other important items that many people forget when calculating ROI are a) the amount of resources and time change takes as well as b) the opportunity and efficiency costs of NOT making the change both of which also directly impact ROI

Looking forward …

We have established our key terms, change management and user adoption.  Now let’s look at management of change programs - which reap the benefits to your organization’s bottom line - from the different perspectives mentioned above through focusing on user adoption.  Next week, An Executive’s User Adoption Story.