The Scientific Reason for CRM Failure, Part 2

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In this column last month I wrote about the cause of CRM failures--a tiny, almond-shape part of our brain called the amygdala. It's the part of the brain that interprets change as threatening, and kicks in the biochemical hormones that say You are in danger. As a result, people have involuntary reactions of freeze or fight or flight, which can also be characterized as resistance. Unless resistance is handled well, a CRM project will end up with longer time lines, scope creep, missed milestones, higher implementation costs, and fewer realized benefits. Shackled by employee resistance, one implementation at a high-tech consumer electronics company was heading in this unfortunate direction. The company was replacing six or so separate legacy computer systems (some were more than 20 years old) with a new CRM system. The change would affect 80 percent of the organization. Multiple previous attempts to replace the legacy systems had failed. Users had not seen the connection between upgrading the technology and the ability to better serve their customers, which is one reason why the amygdala kicked in. Company leaders kept admonishing employees for their reaction and, consequently, the company saw more resistance from the siloed organizations and saw extreme apathy from end users and line management. Additionally, the ROI (or stated benefits) was never realized, and the new processes or systems were often only adopted by a small part of the organization. When projects went live critical business systems halted, causing loss of revenue, increased costs, dissatisfied customers, and frustrated employees. Plus, projects ran over budget and were late or never completed. Despite previous failed upgrade attempts, company leaders agreed that failure was not an option anymore, and nor were mediocre results. They wanted business process changes to mirror Figure 1, but acknowledged that the reality usually matched Figure 2. Then they realized that a change management (CM) program is required: The consumer electronics company created a business case for change, showing why the organization must do the CRM project, the risks of not changing, and how the project will benefit individuals and the organization.

The disruptive impact of the change had to be minimized; executives, after participating in risk-mitigation meetings and establishing goals for the new system, gained tools they never knew existed or knew were effective. They then successfully led individual and organizational transitions. These skills carried over into all aspects of their leadership, making these C-levelers more effective and employees more responsive. To further end-user adoption, high-impact multidisciplinary teams were tightly aligned with human resources and IT departments, all following a CM methodology throughout the project. Also, some business process mapping from the customer's point of view assured that the technology would not provide bad service, faster. The company held a CRM kickoff event and included demonstrations of the new technology. This helped end users to understand and appreciate the value of the system, providing justification for their cooperation. By identifying and minimizing the personnel risks associated with the implementation of new systems, processes, and organizational structure, the company had a framework for creating successful change. This CM framework helped the company obtain a 97 percent training attendance and achieve 100 percent adoption by end users at go-live. It also reduced siloed teams, increasing collaboration, accountability, and cooperation. The CM framework helped to minimize work disruption and extra costs. The company completed the project on time, within scope and budget. To boot, sales doubled in half the time expected and the overall improvement amounted to more than $6 million in annual savings. Natalie Petouhoff, Ph.D., is a CRM thought leader at Hitachi Consulting's Customer and Channel Solutions Group and the author of Integrating People, Process and Technology. Contact her at npetouhoff@hitachiconsulting.com
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