Transcript Leading Change - Executive Accelerators

Leading Change:
Integrating Theory and
Practice
Robin Teigland
Center for Strategy and Competitiveness
Stockholm School of Economics
[email protected]
www.knowledgenetworking.org
February 2009
Competitive advantage is increasingly based
on an organization’s ability to change

Of original Forbes 100 in 1917
61 companies ceased to exist by 1987
Of remaining 39, only 18 stayed in top 100 and
their return was 20% less than overall market (1917
& 1987)


Of companies in original S&P 500 in 1957
Only 74 remained in 1997
Of these only 12 outperformed S&P 500 in 19571998 period

Beer 2002
2
Jack Welch…
"...when the rate of change
outside an organization is
greater than the change inside,
the end is near...."
3
Numerous tools for change
Globalization. Information Technology.
Total Quality. Benchmarking. Best Practices.
Customer Focused. Micromarketing. Outsourcing.
Flexible Manufacturing. Value Creation.
Core Competence. Partnering. Competitive
Advantage. Networks. Strategic Alliances. Delaying.
Information. Revitalization. Computer-aided Design.
Concurrent Engineering. Computer-aided
Engineering Mission.
Cross-functional Teams. The New Organization.
Diversity. Empowerment. The Information
Organization. The Hybrid Organization. Knowledge.
The Shamrock Organization. Restructuring.
Strategic Stretch and Leverage. The Post-Modern
Organization. The Cyclical Organization. The SpiderWeb Organization. The Post-Industrial Organization.
The Turbulent Organization. The Chaotic
Organization……..
Beer 2002
4
Average number of tools used by an
organization during 2004
Survey of 1221 international executives
Bain 2007
5
Top 10 tools
* Added 1996, ** Added 1998, *** Added 2000
Bain 2007
6
But do these initiatives work?

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
60% of companies implementing TQM
dissatisfied
Over 80% of anticipated value from M&A fails to
materialize
75% of JVs fall apart after “honeymoon”
A high number of change initiatives
are unsuccessful!
Beer 2002, Gratton 2007
7
Average CEO tenure is falling
Could this partly be due to the CEO’s inability to handle
change in an increasingly turbulent environment??
12
10,5
10
Number
of years
as CEO
(In USA)
60% drop
8
6
4,2
4
2
0
1990
2002
Beer 2002
8
Many change programs result from a tacit collusion among
senior executives, staff, and external consultants who avoid
undiscussible issues
Short-term
benefits
For Executives:
Appearance of
quick, painless,
measurable results
Long-term
costs
• Lost time, energy,
revenues,
employees
• Increased cynicism
For Internal Staff:
Increased
responsibility &
visibility
For Consultants:
A steady income
stream
• Increased
resistance to
change
• Learning about
wrong aspects
Beer 2002
9


If change is the only true constant in business,
how do managers deal with an ever changing
business landscape?
- Adapted from The Hartford
Without change, there is no leadership; but
without leadership, there is no change.
- Adapted from Prof. John Adair
10
Leading Change objectives



To expose participants to some Change
concepts, frameworks, and tools
To develop Change techniques and skills
through developing and discussing a live
change project
To provide participants with an interactive and
reflective team experience in which everyone
(participants and faculty) learns together
11
Agenda
Morning
1. What is Change
2. Kotter’s 8 Stages
3. Groupwork
Afternoon
1. Live Project Groupwork
2. Some Change Tools
Going Forward
12
What is change?
In pairs,


Think of a significant organizational change that has
impacted you in the past.
Discuss the following:






What were the reasons behind the change?
What was the purpose/goal of the change?
What actually happened? And why?
What was your role in the change?
How did the change impact you and how did you feel?
What would you have done differently?
13
What triggers change?
14
PESTEL – External pressures for change
Political
Legal
Environmental
Economic
Organization
Social
Technological
Johnson & Scholes 1997
15
1. What factors are affecting the industry?
2. Which of these are the most important at the present time?
3. Which of these are the most important in the next few years?

Political

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

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
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Population demographics
Income distribution
Social mobility
Lifestyle changes
Attitudes to work and leisure
Attitudes to consumerism
Levels of education
Changes in values/attitudes
Education conditions
Work environment conditions
Health conditions
Environmental





Ecology
Pollution conditions
”Green” energy
Energy conservation
Waste handling
Economic

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Socio-cultural


Global, regional, and national political
development (administration, political
parties)
Taxation policy
Foreign trade regulations
Labour market politics
Government stability

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Technological

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Business cycles
GNP trends
Interest rates & Exchange rates
Money supply
Inflation
Unemployment
Wage level
Private consumption and disposable
income
Public finances
Energy availability and cost
Government spending on research
Government and industry focus of
technological effort
New discoveries/development
Speed of technology transfer
Rates of obsolescence
New patents and products
Legal

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Development in price and competitive
legislation
Labour market legislation
Product safety and approvals
16
Employers need to change tactics to win
the talent war
EU Labor Pool Supply and Demand
Millions of
people
Labor Demand:
Assumes 0.5%
annual growth
Labor Supply:
Best case is reaching
50/50 gender balance
Labor shortage
Labor Supply:
Worst case is if nothing
changes
“Baby Boom”
generation retires.
• Data is based on
birth rates and age
profiles of the EU.
• Different regions
have similar trends.
Source: Team aMBAssadors, SSE MBA
Eurostat 2005, Global Insight 2007, McKinsey
Population includes EU-27, excluding Slovenia, Slovakia, Czech Republic, and including Iceland
17
A new workforce is appearing…
“Digital Natives”
Professional loyalty
Work = Personal
“Digital Immigrants”
Company loyalty
Work ≠ Personal
Mahaley 2008, Merrill Lynch 1999, Beck and Wade, Prensky
18
Technical knowledge becomes quickly
outdated
50%
knowledge
outdated
50%
knowledge
relevant
First year of
technical-based
education
Third year
of education
19
Organizational forces: Internal pressures

Need for improved performance


Need for integration and collaboration


E.g., alliances, synergies, economies of scale
Power and politics


In current or new markets
E.g., changes at top management and board level
Changes in surrounding organizations

E.g., key customers, suppliers, partners
20
Pressures from one area can affect the entire
organization
Economic
Vision
Social
Strategy
Political
Structure
People
Technical
Legal
Culture
Systems
Environmental
21
But every challenge is…..
A new opportunity???
22
What are the critical
success factors for change?
23
Helping stakeholders go through a transformation
Future
situation
Acceptance
Realism
Current
situation
Reaction
Denial
Shock
Individuals
•Resistance to change something that is
familiar and feels safe
•Difficult to 'say goodbye’ to old
patterns and habits
•Insecurity around what future will bring
Organization
•Historical heritage, tradition
•Culture
•Selective perception
•Follow old patterns
•Return to “the way it was”
Sven Hultín, IBM
24
Getting through the valley of despair
High
Low
Uninformed
optimism
(Security)
Informed
pessimism
(Doubt)
Optimism
(Decision
Power
Commitment)
Successful
ending
(Satisfaction)
Hopeful
realism
(Hope)
Time
Hultín, IBM
25
Say the color, not the word
YELLOW BLUE ORANGE
GREEN PURPLE YELLOW
ORANGE
GREEN
BLACK
BLACK
RED
BLUE
Stroop
26
The challenge of change
Change
Leadership
The HOW
The ‘soft’ side:
Culture, behaviors,
values, and people
Change
Management
The WHAT
The ‘hard’ edge:
Systems, processes, structures,
and business strategy
Zwanenberg
27
Kotter’s eight-stage process for change
1. Establish a sense of urgency
2. Form a powerful guiding coalition
3. Create a vision
4. Communicate the vision
5. Empower others to act on the vision
6. Plan for and create short-term wins
7. Consolidate improvements and produce more change
8. Anchor new approaches
Kotter 1996
28
1. Establish a sense of urgency
Forces
for
change
The
status
quo
Forces
for
stability
Burnes 2004
29
1. How to create a sense of urgency?

Create a crisis/rivalry


Find/develop a “red hot” burning issue


Align with a powerful sponsor
Revise existing or develop new standards


Benchmark within and outside industry
Income, profitability, effectiveness, efficiency,
customer satisfaction
Get an outside opinion

Bring in consultants, customers, shareholders
Adapted from Kotter 1996
31
2. Form a powerful coalition

The small
team that
will lead the
change
Ensure shared understanding &
right attitude




Has access to necessary
resources

But look out for
people with big
egos or
“snakes”
Ability to share vision
Trustworthy
Commitment to means and end




Formal position power
Expertise
Reputation
Leadership
Informal network position
Beer 2002, Kotter 1996
32
Who has informal power in the organization?
Teigland 2003
33
3. Create (and operationalize) a vision

Create the vision



To direct the change effort
To coordinate across and outside the
organization
Develop a strategy to achieve the
vision (operationalize)

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To engage people through participation
To find their “passion”
To overcome forces for stability
Adapted from Kotter 1996
34
4. Communicate the vision

How?

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
What?



But listen as well!!
Use multiple channels
Regularly to reconfirm
Keep it simple
Use metaphors and success
stories
Who?


Walk the talk
Identify key opinion leaders
Adapted from Kotter 1996
35
When do people support the vision?





Relate to the vision
Expect personal gain (make their world a
better place)
Can give input
Respect the leader
Believe the time is right
“Coming together is a beginning,
staying together is progress, and
working together is success.”
-Henry Ford
36
5. Empower others to act on the vision
5.Are the organizational
structure & systems
aligned with the vision?
3.Do people have the
appropriate skills and
training to act?
4.Do people have
the authority to act?
2.Do people have
the necessary
resources to act?
1. Does the organizational
culture encourage
individuals to act?
Adapted from Kotter 1996
37
6. Plan for and create short-term wins
3. Recognize
and reward
“winners”
1. Create
obtainable
targets
Communicate
the wins
2. Encourage
& convince
people that
targets can be
reached
Adapted from Kotter 1996
38
Broadcast heroes and their success stories!
39
7. Consolidate improvements and
produce more change
Scope of
change
Change
Project 3
Change
Project 2
Change
Project 1
Time
Adapted from Kotter 1996
40
8. Anchor new approaches
Physical
artifacts
Intangible
activities and routines
Underlying values,
assumptions,
beliefs, and expectations
Company culture
Adapted from Kotter 1996
41
Kotter’s eight-stage process for change
1. Establish a sense of urgency
2. Form a powerful guiding coalition
3. Create a vision
4. Communicate the vision
5. Empower others to act on the vision
6. Plan for and create short-term wins
7. Consolidate improvements and produce more change
8. Anchor new approaches
Kotter 1996
42
Tata Motors
43
Tata Motors

India’s largest commercial vehicle maker for
decades




World’s fifth largest manufacturer of medium and
heavy trucks
India’s largest automobile company (#1 in
commercial and #2 in passenger)
Building global presence (e.g., partnership/acquisition
with Fiat, acquisition of Jaguar/Land Rover)
Major turnaround 2001 to 2007


March 2001 - $110 mln loss for fiscal year, corporate
India’s biggest loss
3Q 2007 - $132 mln profit
http://www.youtube.com/watch?v=rOnQpP5haUQ
44
Groupwork - In your groups

Discuss how change was implemented at Tata
Motors
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


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
Prepare a maximum 10 minute presentation
Present groupwork


What triggered the change?
What is the real change?
How does the change process map onto Kotter’s eight
stages?
What are the lessons learned from the case?
One group will be chosen to present its work
and another group will comment
Discussion
http://www.mckinseyquarterly.com/Leading_change_An_interview_with_the_managin
g_director_of_Tata_Motors_1908
45
Adapting Kotter to your organization
Change at IBM
 A vision with clear objectives
 Compelling reason to act – burning platform
 Holistic approach
 Broad participation
 Measurable targets
 Effective project management
 Consistent executive ownership and participation
Hultín, IBM
46
Kotter’s eight-stage process for change
1. Establish a sense of urgency 1. Prepare
2. Form a powerful guiding coalition
3. Create a vision
4. Communicate the vision
2. Implement
5. Empower others to act on the vision
6. Plan for and create short-term wins
3. Manage
7. Consolidate improvements and produce more change
8. Anchor new approaches
Kotter 1996
47
Agenda
Morning
1. What is Change?
2. Kotter’s 8 Stages
3. Groupwork
Afternoon
1. Live Project Groupwork
2. Some Change Tools
Going Forward
48
Overview
Purpose

●
●
●
Concepts: To develop change management techniques
and skills through developing and discussing a real
change project
Competence: To apply change management frameworks
and tools
Capital: To strengthen your personal networks
Groups

●
You will work in your groups
Topic

●
Your group will decide together on one topic for the
change project
49
Kotter’s eight-stage process for change
1. Establish a sense of urgency
2. Form a powerful guiding coalition
3. Create a vision
4. Communicate the vision
5. Empower others to act on the vision
6. Plan for and create short-term wins
7. Consolidate improvements and produce more change
8. Anchor new approaches
Kotter 1996
50
The Change Project Timeline
Module 1
Choosing the Change Project
Structuring future work
Working in virtual teams
Identifying stakeholders & powerful coalition
Creating a vision
Module 2
Developing an implementation plan
Defining impact measurement
Working in virtual teams
Developing a communication plan
Performing a risk analysis
Module 3
Final Presentation
52
Choosing the Change Project
In your groups …..
53
Develop a Change Project
Criteria
 It should involve a real organizational issue or
challenge that at least one group member is
currently experiencing at your organization.
 It should lead to a real change in your organization.
 The change should lead to improved business
performance that is both identifiable and
measurable.
”This is something we would like to do!!”
54
Better to choose
a more
narrow, specific
focus!
56
You will present
your projects
in Module 3
57
Discuss in your groups today

What are the current and future pressures for the
change?



What is the sense of urgency for the change?




Internal
External (PESTEL)
For whom? How urgent?
What can be done to strengthen the sense of urgency?
What is the vision or real change that your project
will lead to?
How will the change improve business performance?


Identifiable?
Measurable?
58
Organizational forces: Internal pressures

Need for improved performance
●

Need for integration and collaboration
●

E.g., alliances, synergies, economies of scale
Power and politics
●

In current or new markets
E.g., changes at top management and board level
Changes in surrounding organizations
●
E.g., key customers, suppliers, partners
59
PESTEL – External pressures for change
Political
Legal
Environmental
Economic
Organization
Social
Technical
Johnson & Scholes 1997
60
The Change Project Statement
Name of Change Project
Names of Change
Project team members
What are the drivers for
your Change Project?
What will be the change
resulting from your
Change Project?
How will you measure the
impact of your Change
Project?
When do you expect to
see results from your
Change Project?
62
Today’s Coaching Session


Each Group will present its Change Project to the
others, max 10 minute presentation
One Review Group will be appointed to lead the
following discussion, max 5 minutes:




How well does the Project fulfill the Change Project
criteria?
What challenges are foreseen for the Project?
How could these challenges be overcome?
Promote learning through “Assess, Challenge,
Support”!
63
Agenda
Morning
1. What is Change?
2. Kotter’s 8 Stages
3. Groupwork
Afternoon
1. Live Project Groupwork
2. Some Change Tools
Going Forward
64
Leading is looking in all directions
Stakeholders
Upwards
Backwards
Inwards
Sponsor or
Steering Group
Outwards
Project Leader
Forwards
Project Team
Downwards
Briner et al 2004
65
Tools to achieve the “transformation”
1.
2.
3.
4.
5.
Conduct stakeholder analysis
Develop clear project charter and roll out plan
Develop communication plan
Conduct risk analysis
Develop measurement plan
66
Why use tools?
Reducing
complexity to
something
manageable
Highlighting
interdependence
between actors
and tasks
Identifying priorities
and importance,
sequence of
activities
My view….
Making views
explicit
Creating a common
language
67
1. Identify internal and external stakeholders
Economic
Vision
Political
Social
Strategy
Structure
People
Technical
Legal
Culture
Systems
Environmental
68
Prioritize stakeholders
Level of interest
•Visibility
•Importance
•Priority
High
Keep
informed
Key
players
Low
Minimal
effort
Keep
satisfied
Low
High
Power
•Formal
•Informal
Scholes 1998
69
Stakeholder analysis
Current (C) & Desired (D) position regarding the Change
Stakeholder
Block
Help
Let
Make
Diagnosis of
Recommended action
stakeholder position to move to desired
position
Adapted from Nader, NTL
70
Helping stakeholders go through a transformation
Future
situation
Acceptance
Realism
Current
situation
Reaction
Denial
Shock
Individuals
•Resistance to change something that is
familiar and feels safe
•Difficult to 'say goodbye’ to old
patterns and habits
•Insecurity around what future will bring
Organization
•Historical heritage, tradition
•Culture
•Selective perception
•Follow old patterns
•Return to “the way it was”
Hultín, IBM
71
2. Develop clear project charter and roll out plan

Spend sufficient time specifying







What are the vision and goals/objectives?
How are resources to be supplied?
What are the importance and priorities of tasks?
What training is necessary?
What roles need to be updated?
What union contacts, if any, need to be developed before?
What and when are the short term wins?
72
Successful change requires attention to all
relationships
Economic
Vision
Political
Social
Strategy
Structure
People
Technical
Legal
Culture
Systems
Environmental
73
3. Develop communication plan
Who?
 What?
 Why?
 How?
 When?


Do for each
group of
stakeholders
Remember to communicate even to
those who are not impacted
Around 20% of your project activity!
74
Ensure continuous communication
of big picture
Stakeholders
Sponsor or
Steering Group

Balance and respect all
stakeholder interests


Project Leader
Link “big picture” with “little
picture”


Project Team

All interests important
Balance long-term vision with
everyday operations
Avoid parochialism resulting
from stakeholders receiving
different information due to
division of labor
Communicate timely and
continuously
75
Create trust through open communication
Provide open forum for discussion between stakeholders,
e.g., virtual project space
76
Engage and ensure interaction!

Involve stakeholders in joint tasks from very
beginning of project


Example: Development of project objectives
Use boundary objects to facilitate understanding
77
Communication Plan, phase 1: Before the
start of a project (Decision making)
Project idea
Commitment
Change must be done
 Lose customer
 No new business
What can be done ?
 Competitors
 Customer demands
Testing idea
Walk to talk
 What do others
think?
Formal Document
Understanding need of change
 But what does this mean?
Star model
Finding proof
 Trends
 Customer
 Business owner
 Project def
 Project plan
Decision
Clear picture
 Who
 What
 Why
 How
 When
Pilot
Communication
 Meetings
 Webcast
 Mail
No change without pain
From BETE 16
78
Communication Plan, phase 2:
Project implementation
Project start
Target setting for
project, individuals
and teams
 Virtual (video)
 Meeting
Tools
Virtual Project space
 Stakeholders
 Public forum
 Project members
 Scorecard
 Common language
 Common terminology
 Risk analysis
Quality
Information to
Stakeholders &
Public information
Plans are sent
for internal
audit
Status,
Result achieved
Stakeholder statement
 Business owner
 Customer
Status
Follow up reaching of
targets
Project FINISHED
Report
Sharing of Best
practice
From BETE 16
79
4. Continuously manage risk
High
Monitor
Work on
reducing
Low
Minimal
effort
Manage
Low
High
Impact
of change
Probability of occurring
80
Risk analysis
Risk
No.
Description
Probability
Project
impact
Priority
Potential
consequences
Proposed/
implemented
actions
Status
Responsible
1
2
3
4
From BETE 16
81
5. Measuring impact



What are the key milestones of the operational
part of the change?
How will the overarching effects of the Change
Project on the organization’s performance be
measured?
When do you expect to see an impact on the
organization’s performance?
82
Match the measures to the impact of the
change
Vision
Strategy
Structure
People
Culture
Systems
83
Developing appropriate measures and timing

Measures

Are there any existing measures that can be used?


What new ones, if any, should be developed?



Balanced scorecard?
Internal vs external?
Maximum of three measures
Timing



When should the baseline measure be done?
How often should measures be taken?
When do existing measures occur in relation to
these?
What gets measured, gets done!
84
Measurement plan
Measure
no.
Measure
Description
How directly
impacted by
change project
Baseline
measure
Measuring
frequency
1.
2.
3.
85
The Change Project Statement
Name of Change Project
Names of Change
Project team members
What are the drivers for
your Change Project?
What will be the change
resulting from your
Change Project?
How will you measure the
impact of your Change
Project?
When do you expect to
see results from your
Change Project?
87
Agenda
Morning
1. What is Change?
2. Kotter’s 8 Stages
3. Groupwork
Afternoon
1. Live Project Groupwork
2. Some Change Tools
Going Forward
88
The Change Project Timeline
Module 1
Choosing the Change Project
Structuring future work
Working in virtual groups
Identifying stakeholders & powerful coalition
Creating a vision
Module 2
Developing an implementation plan
Defining impact measurement
Working in virtual groups
Developing a communication plan
Performing a risk analysis
Module 3
Final Presentation
89
Module 2


Scheduled working time during Module 2
Each team submits its presentation
●
By email to Robin
90
Module 3 - Final Presentation

Each team has 20 minutes maximum to present its Change
Project, including the following (in ppt):
●
●
●
●
●

One team will then lead feedback to the Presenting Team for
10 minutes maximum
●


Purpose and rationale for change
Use of tools, eg stakeholder analysis, risk analysis, etc.
Measuring impact and preliminary results
Plan for moving forward
Lessons learned
The purpose of this feedback is to spur lively debate and help advance
each Change Project as much as possible
Faculty will provide further comments
Each team submits its presentation
●
By email to Robin
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Leading and learning
Leadership and learning are
indispensable to each other.”
- John F. Kennedy
Leadership, teaching, and
learning are inextricably
interlinked.
- Jack Welch
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See you in Module 3!!
Good luck with your projects!!
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