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Change management-report

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  • 1. Report Of Change ManagementSubmitted to: Sir Sohail Saleem.Submitted by: Syed Hussain Zain ul Abiden L1f09mbam1138 Syed Ali Kamran L1f09mbam1165 Khurram Jameel L1f09mbam1188 Ali sher L1f09mbam1203 Akif Yaseen L1f09mbam
  • 2. UNIVERSITY OF CENTRAL PUNJAB LAHOREComplacency:“A feeling of contentment or self-satisfaction, especially when coupled with anunawareness of danger, trouble, or controversy”.Sources of Complacency: 1. No highly visible crisis existed. The firm was not losing money. No one had threatened a big layoff. Bankruptcy was not an issue. Employees saw no tornado- like threat. 2. The meeting was taking place in a room which screamed “success”. The corporate HQ was the same way: marble, rich woods, deep carpets and oil paintings. The subliminal message was clear: we are rich, we are winners, we must be doing something right. So relax 3. The standards against which these managers measured themselves were far from high. It was a common saying “ profits are up 10 percent over last year”. What was not said was that profits were down 30 percent from five years before and industry wide profits were nearly up 20 percent over previous one year 4. The organizational structure focused most people’s attention on narrow functional goals instead of broad business performance. Marketing had its indexes, manufacturing had a different set, personnel yet another. Only the CEO was responsible for overall sales, net income and return on equity 5. Various internal planning and control systems were rigged to make it easy for everyone to meet their functional goals 6. Whatever performance feedback people received came almost entirely from faulty internal systems. Data from external stakeholders rarely went to anyone 7. When enterprising young employees went out of their way to collect external performance feedback, they were often treated like lepers 8. Complacency was supported by the very human tendency to deny that which we do not want to hear
  • 3. 9. Those who were relatively unaffected by complacency sources mentioned above went into a false sense of security by senior management’s “happy talk”.Complacency A Killing Attitude:Complacency creeps into everybodys life at least once or sometimes more than once. Asecured job, adequate salary and a comfortable work place often puts people into such asituation where the learning curve stops. They start enjoying the other facets of life.While it’s very important to have a good personal life we need to ensure that our careersdo not take a back seat in this process.Often we find average people sticking to the job. This doesnt mean that company ishappy with their performance or they couldnt find an alternative. It’s often becauserecruitment is a painful, time consuming and expensive process.In Gulf countries to get a visa, driving license and ready-to-market time itself is 6 monthsfor every employee. Companies often ignore the lack of performance and give additionaltime for their employees to avoid another recruitment process.This may often send wrong signals to employees. They may assume that company ishappy with their performance or they couldnt find an alternative. This assumption iswrong.People working in HR department need to update themselves on organization behaviorand various HR trends. People in sales need to learn about global economics andeconomic conditions of the countries where they do selling. Marketing people have to beupdated about global trends and innovative ways they can reach the market effectively.Support engineers and consultants have to constantly update themselves with the latesttechnologies, products and vendors and earn latest certifications. Project managementshould learn from the successful projects implemented globally; how much time andresources they were able to save? How efficiently the project was executed? Finance andaccounting should learn from the corporate success stories and methodologies by whichbig companies maintain cash flow, execute projects with adequate funds, improvecollections and do efficient budget forecasting. Management also has to learn from thesuccess of companies in the same industry. Proper planning and execution has been a keyfactor for growing companies.
  • 4. So it’s constant learning for each and everybody in the organization. Complacency in anypart will affect the individual concerned as well as the organization.Can we leave the stove on with the food in it? It will spoil the food. Can we let a child togrow on his or her own without nurturing it with the knowledge and good habits?You should deliver your top class performance as if your job is always under threat. Weshould learn as if there is a project tomorrow. We should prepare as if there is always achallenging assignment round the corner. We should sell as if everyday is a year end. Weshould plan well in advance so that we dont suffer with surprises during the execution.Many big organizations spend more time on planning and execution happens at the speedof a blink of an eye lid. So if you get time, plan for your individual career, for your rolein the company and assist your department in planning. Never let complacency creep inyour life. This attitude will kill your growth and affect your future.The Dangers of Complacency:The greatest threat hovering above an organization today is not the competition. Neitheris it the increasing demands placed by customers. Nor is the pace of change broughtabout by globalization. The greatest threat to the survival of organizations today iscomplacency of people inside organizations It is the number one enemy in large andsuccessful organizations today. When an organization is small and thriving, leaders areup and about in addressing customer service issues, quality problems and productivitychallenges. They are committed to do everything to stay competitive and win marketshare and grow the company. However, as the company started to grow in leaps andbounds and achieve considerable success, people begin to get too comfortable for theirown good. They begin to lull into complacency in every area of work which they onceplaced great importance to. And it is this sense of complacency that leads to the eventualdownfall of an organization.There are six grave dangers of complacency:1) Complacency Leads To Blind SpotsOne of the greatest dangers of complacency is that it creates blind spots in peopletowards the need for change and growth. Blind spots refer to those critical areas that needto be addressed but are not as people are not aware of them or refuse to acknowledgethem. In fact, prior to the Asian Financial Crisis, due to a string of successes achieved byorganizations, many leaders began to develop blind spots towards the need for better riskmanagement. They begin to expose their companies to excessive risk to the extent that
  • 5. one failed investment or venture can bring the whole organization down. Leaders insuccessful companies develop blind spots in many areas because of their refusal to seethe changes around them and their impact they have on their companies. The strings ofachievements and successes they have achieved have "blinded" them towards areas ofpotential dangers Often the success brings out the sense of arrogance and over confidencein leaders. These elements cloud their thinking and block their understanding of theactual issues that are happening. Blind spots developed because leaders are blinded bypast successes and thus have the vision of their future blocked.2) Complacency Leads To Poor QualityIn a booming business environment, whereby demand exceeds supply, it is easy forpeople in organizations to take the business for granted. In the rush to fulfill orders, the rade off is quality for quantity and they justified the extra effort for quality need not Count as they have a lot of customers. Many have taken the attitude that in view of thegood business, even if the company loses some customers that are fine as they still haveother customers. It is this sense of complacency that leads to poor quality of productsand service. In a booming business environment, this strategic flaw in products andservices are camouflaged by new customers as new customers are lost. The impact ofpoor quality is often not discerned until it is too late.The danger of poor quality is that its impact is strategic and long-term. Customers whoare not happy with a companys products or services will not only stop doing business butwill inform ten other people they know about their dissatisfaction. The tarnished imagefrom poor quality of products or services will undo millions and often billions of dollarsarising from the goodwill of advertisement and branding. It will cost five times more toget a new customer than to retain an existing customer. Customers who are not happywith the quality of products or services of a company give the business to thecompetitors.3) Complacency Leads To ExcessivenessOne of the great ills that come from complacency is the tendency towards excessiveness.Companies who are doing well become lax in their control of resources. Departments anddivisions become overstaff thus incurring unnecessary resources. Overtime and expensesof staff claims shoot up. Companies acquire a lot of unnecessary and unproductive assetssuch as excessive office renovations and décor.Granted company image is important to keep up with the success a company hasachieved, but going overboard with luxurious head office, generous perks for topexecutives such as huge executive rooms with expensive taste, expensive cars, bigexpense allowances and unjustifiable fat bonuses will certainly increase the overall costof the organization.Of course all these excessiveness affects the productivity and competitiveness of thecompany. A good indicator to watch out for excessive costs is to look at where theincrease in cost is coming from. If the increased in cost is due to increase investment andspending to increase revenue such as advertisement costs and additional staff to copewith increasing workload, that is fine.Increases in costs that have no direct or indirect impact on increasing the business have tobe curtailed as much as possible to prevent recurring.
  • 6. 4) Complacency Leads To Inaction And Status QuoSuccess is often achieved as a result of taking the necessary actions. In fact one of thehallmarks of successful companies is that they take a lot of actions. They undertakecustomer satisfaction survey and take quick action to address any customer complaints.They undertake market research and continuously improve their products and services tomeet the changing needs of customers. They innovate their products and services to fendoff competition and increase their market share. Leaders listen to staff and address theirneeds to enable them to stay productive. They plan, train and develop their staff toincrease the overall competency level of the organization. They take great effort inmotivating and rewarding people based on performance. However, success breedscomplacency which eventually leads to inaction. There are many stories of successfulcompanies which eventually fall, because people in organizations fail to take to continueto take those necessary actions which they had done before. The downfall begin whenthey stop improving, changing and growing the organizations. Many leaders and staffwho are in successful companies reach a point which they feel they no longer need totake those actions. They ride on their laurels. Instead of making things, happen, they areimmobilized by status quo. They become passive and wait for things to happen. Theyhope that the momentum created by the success will move things forward on their own.The truth is that things do not move on their own until people move them.5) Complacency Leads To Strategic VulnerabilitiesOne of the greatest dangers of complacency is the building up of strategicvulnerabilities. Strategic vulnerabilities refer to the weaknesses or flaws which exposethe company to risks of failure or collapse. Thus a company which do not undertakemarket survey to understand the changing customer need, may continue to produce thesame products or services which customers may no longer need. This is a strategic flawwhich in time will lead to the collapse of the company. Likewise, a company which haspoor cash management may find it is not capable of paying debtors and becomeinsolvent. This can lead to the demise of the company altogether. The danger of this kindof complacency is like cutting the wrist of the hand of a person and unless we stop thebleeding, death is the certain outcome.When leaders are complacent they no longer think strategically about the future of thecompany. They become too comfortable with their past and current success. Theirthinking has become too short-term, inward looking and narrow. They no longer assessthe threats facing the organization. By not taking actions or addressing strategic issuesfast enough, they are exposing the company to grave dangers. Thus, not addressing theentrance of a new competitor in the industry and not countering the threats posed by thenew products may create strategic vulnerabilities to the company. Complacency leads tothe underestimation of the danger posed by threats in the environment, leaving itvulnerable. This often proves fatal to many organizations.6) Complacency Leads To Deteriorating Bottom-line PerformanceComplacency affects the bottom line performance of the company in many ways, both inthe short-term and long-term. Being complacent, people may not explore new products,new services or new markets. The missed opportunities affect the potential revenue
  • 7. growth of the company. Complacent organizations which no longer put emphasis onaddressing quality problems and customer complaints will lose customers and salesrevenue. Complacent organizations have operation staffs who chalk up production costsand support staff that balloon up head office expenditures. This increases overall costsand squeezes profit margin. Complacent organizations develop blind spots whichexposed the company to excessive risk and often lead to losses.In a very competitive and fast changing environment, remaining status quo is the surestpath to losing market share. Organizations who become complacent who do not take fastactions to change and grow the company will see their profits evaporate quickly.Thus complacency brings a host of undesirable behavior of people which lead to thedeteriorating bottom line performance and eventually decimate the whole organization.Complacency and False UrgencyWe have a serious problem. It could grow more serious in the future if we don’t act now.What many people often see as the solution is not the solution. It can actually makematters worse. There is a real solution. You can find it in use today. It can produce theachievements we all want for organizations, nations, and ourselves.The problem is complacency. We have all seen it. Yet we underestimate its power and itsprevalence. Highly destructive complacency is, in fact, all around us.With complacency, no matter what people say, if you look at what they do it is clear thatthey are mostly content with the status quo. They pay insufficient attention to wonderfulnew opportunities and frightening new hazards. They continue with what has been thenorm in the past, whether it’s short hours or long, suits or jeans, a focus on products orsystems or not much of anything.As an outsider, you may correctly see that internal complacency is dangerous, that pastsuccesses have created sluggishness or arrogance, but complacent insiders—even verysmart people—just don’t have that perspective. They may admit there are difficultchallenges, but the challenges are over there in that other person’s department. Theythink they know what to do and they do it.In a world that moves slowly and in which you have a strong position, this attitudecertainly is a problem, but no more so than a dozen other problems. In a fast-moving and
  • 8. changing world, a sleepy or steadfast contentment with the status quo can create disaster—literally, disaster.Far too often, managers think they have found the solution to this problem when they seelots of energetic activity: where people sometimes run from meeting to meeting,preparing endless PowerPoint presentations; where people have agendas containing along list of activities; where people seem willing to abandon the status quo; where peopleseem to have a great sense of urgency.Lets see how ants teach us at least five strategies for dealing with complacency:1. Ants never, ever give upPut something in front of them, and they will get around it, over it, under it or through it.If one way doesnt work, they will try another. If that way does not work, they will trystill another way. And so on until they find a way around the obstacle. Theres nothingwrong with feeling content. Its something that we all strive for in life.2. Ants are always getting ready for whats nextThey dont ever rest on their laurels. In the summer, they are thinking about the winterand getting ready for it.3. Ants are creatively industrious and resourcefulAnts dont complain about not having the right tools to do what needs to be done. Theytake what is available right in front of them and find a way to make it work.4. Ants are always hopefulIn the winter, when they are holed up in their little ant mound, they are using what theystored up all summer and know that as cold as it is, summer is coming, and they aregetting ready for it.5. Ants dont seem to believe in the concept of enoughThey store up all that they can for the winter. You have seen the acronym on restaurantsigns AYCE. I used to think that must be some kind of special brand of food. It took meforever to figure out that it stands for All You Can Eat.Instead of focusing on All You Can Eat, I think we would do better to focus on what theants do, AYCD, which stands for All You Can Do.If you constantly follow these five tips, you will consistently beat complacency. Think ofit as being content and always hungry to make things better.
  • 9. Sense of Urgency:“The quality or condition of being urgent; pressing importance: the urgency of the callfor help; pleading with urgency.”Pushing up the Urgency Level: 1. Create a crisis by allowing a financial loss, exposing managers to major weaknesses vis-à-vis competitors, or allowing errors to blow up instead of correcting at the last minute 2. Eliminate obvious examples of excess 3. Set revenue, income, productivity, customer satisfaction, and cycle-time targets so high that they cannot be reached by conducting business as usual 4. Stop measuring subunit performance based only on narrow functional goals. Insist that more people be held accountable for broader measures of business performance 5. Send more data about customers satisfaction and financial performance to more employees, especially that demonstrates weaknesses vis-à-vis the competition 6. Insist that people talk regularly to unsatisfied customers, unhappy suppliers, and disgruntled shareholders 7. Use consultants and other means to force more relevant data and honest discussion into management meetings 8. Put more honest discussions of the firms problems in company newspapers and senior management speeches 9. Bombard people with information on future opportunitiesCreating Sense of Urgency:1. Set a challenging goal with a deadlineA challenging goal creates a sense of urgency that inspires us to work harder to achieveit. A good example is John F. Kennedy’s goal of landing people on the moon before theend of the decade. The goal was challenging, and it had a clear deadline. That goal
  • 10. inspired a whole generation of scientist to emerge and boost the productivity of the spaceprogram to a whole new level.You can set a challenging goal for yourself. Maybe you want to reach a certain level ofincome or write a book. Whatever it is, your goal should be specific so that you know forsure whether or not you have accomplished it. Besides, your goal should have a cleardeadline.2. Set a challenging deadline for a goalIn the previous tip, the goal is challenging, but the deadline is normal (that is, there isenough time for you to achieve the goal). You can also do it the other way: the goal isnormal, but the deadline is challenging. Since we usually deal with normal goals in ourdaily life, this trick can be used on many occasions.Suppose you have to write an article. That’s a normal goal – there’s nothing too big orchallenging about it. But you can create a sense of urgency by setting a challengingdeadline. This way you will be motivated to work harder and be more productive.3. Set a minimum time to work on somethingDeadlines give you a sense of urgency by setting a maximum amount of time to finishsomething. But sometimes it’s difficult to even get started. The task feels uncomfortableand we try to avoid it.In such case, we can create a sense of urgency in a different way: by setting a minimumamount of time to work on it. Before the time is up, you may not stop working. This way,there is pressure to keep yourself going until you meet the minimum time limit, and youtrick yourself to start working on an uncomfortable task.4. Make yourself accountableAnother way to give yourself a sense of urgency is by telling other people about yourgoal. By letting them know about your goal, you will feel the pressure to achieve it andmeet their expectations. This is one reason why I like to share my goals and visions withthe people I meet. They keep me stay motivated and on track.5. See yourself to be in the losing side
  • 11. This attitude – which is used by Bill Gates in the example above – is important to avoidcomfort zone. If we feel that we are already winning, there’s a danger that we will feelcomfortable and slow down. So look around and find someone who is better than you inan area. Then put yourself on the losing side and creates a sense of urgency to keep themomentum going.6. Be aware of potential dangerOne reason we have no sense of urgency is we are not aware of the danger that isthreatening us. If we can’t even feel the danger, how can we feel the urgency? So widenyour perspective and see what’s going on in this world along with its potential danger.Now that I’m aware of the danger, I have a sense of urgency to keep myself growing.Increasing a True Sense of Urgency:The Strategy“Create action that is exceptionally alert, externally oriented, relentlessly aimed atwinning, making some progress each and every day, and constantly purging low value-added activities – all by always focusing on the heart and not just the mind.”The Tactics 1. Bring the Outside In • Reconnect internal reality with external opportunities and hazards • Bring in emotionally compelling data, people, video, sites and sounds 2. Behave with Urgency Every Day • Never act content, anxious or angry • Demonstrate your own sense of urgency always in meetings, one-on-one interactions, memos and e-mail and do so as visibly as possible to as many people as possible
  • 12. 3. Find Opportunities in Crises • Always be alert to see if crises can be a friend, not just a dreadful enemy, in order to destroy complacency • Proceed with caution, and never be naïve, since crises can be deadly 4. Deal with the NoNos • Remove, or neutralize, all the relentless urgency-killers, people who are not skeptics but are determined to keep a group complacent or, if needed, to create destructive urgency.Cases of Complacency:1) TOYOTA COMPLACENCYThat crashing sound you hear is not an accident caused by sudden acceleration of yourhybrid car; it is the continuing toppling of idols, such as hybrid car companies, off theirpedestals. Listen hard, lest you be next.Toyota, the worlds leading auto company, faces a series of product problems causinga $2 billion recall, an investigation by the National Highway Traffic SafetyAdministration, and a galling loss of face for a company from face-conscious Japan. Thisfollows its first annual financial loss in 50 years, with profitability regained partlythrough cost-cutting.Sayonara for a while to Toyotas reputation for quality control and invincibility. But inDearborn, Michigan, there are no smug smiles. Ford announced that it is also fixingelectronic brakes in its hybrid cars after a damaging review by Consumer Reports andmore generalized concerns about electronics in cars.2) IBM COMPLACENCYIn Thinking Managers I have discussed the allied sickness of executive inertia, whenmanagers know what to do, and how to do it, but fail to act on their knowledge. In acompany thats blind to its failings, however, management may be energetic enough - butits energies will be misdirected. IBM, for example, poured tremendous effort into tryingto maintain its proprietary dominance, based on mainframes and once brilliantlysuccessful: but the company smugly missed the seismic shift to open systems andmicroprocessor-based technology.The trouble was partly that, inside IBM, almost everybody believed that they wereworking for the best of all possible companies, executing the best of all possiblestrategies in the best of all possible ways. The evidence in my book, The Fate of IBM,
  • 13. made it clear that this comforting and complacent inner view had been dangerouslyuntrue for many years. For almost as long, a quite different and far less flatteringperception had been held by well-placed observers outside the company - including someimportant customers. The reality eventually appeared in still less flattering results.Yet only a few weeks ago, a former IBMer wrote me a pleasant letter about the book,extolling his previous employer - apparently quite oblivious of its follies and failures,including its lapse into heavy loss and massive lay-offs. Rather, he was impressed byhow IBM had survived so successfully despite missing many golden opportunities,having turned down just about every major business innovation - including xerography.The only conclusion I and any other IBMer can come to is that to put the customers firstand solve their problems is the soul of real marketing, and that is what being an IBMer isall about.3) HINDUSTAN MOTORS IS A CASE STUDY OF COMPLACENCY:In October 1998, Hindustan Motors (HM), makers of one of Indias best known cars - theAmbassador - launched a new car, the Mitsubishi Lancer (Lancer). The launch of Lancer,a new car from the HM stable after nearly two decades, was reported to be veryimportant for the company, whose market share was on the decliHM was reportedlybanking heavily on the Lancers success to fight competition from other car companies.Lancer was positioned in the mid-size luxury car segment, which was dominated byMaruti Udyogs (MUL) Maruti Esteem and Hondas Honda City.Lancer was received very well by automobile experts throughout the country, largely dueto its technical finesse. The cars sales reached 2,866 units by the end of the fiscal 1998-99. Much to HMs delight, Lancer was even ranked as the top vehicle in India for thethree consecutive years (1999, 2000 and 2001) by J. D. Powers1 for the least number ofdefects and high customer satisfaction in a countrywide survey of car ownersne.However, the companys euphoria was short-lived as Lancers sales failed to pick up asexpected. While 7,621 cars were sold in 1999, HM managed to sell only 7,635 cars in2000-01 against a forecast of 8,000.2 On the other hand, sales of Honda City increased to10,011 in 2001 from 9631 in 1999 (Refer Exhibit I for the sales comparison).Meanwhile, HMs other offerings Ambassador and Contessa were also faring badly.In 1999, Ambassadors sales were down to 15,374 from 18,312 in 1998 and Contessas to285 from 575 in 1998. This poor performance took a heavy toll on the companysbottomline and HM reported a net loss of Rs 615.8 million for the fiscal 1999-00. (ReferTable I). The company had reportedly accumulated losses worth Rs 1.1 billion during1999-2001.3 In late 2001, HM announced its plans to launch another car, the MitsubishiPajero. The company planned to import fully assembled cars and sell them by early 2002.
  • 14. Analysts remarked that the Pajero could do little to revive the companys fortunes asdespite many efforts to turn itself around, HM had failed to regain its 4-decade longleadership in the Indian passenger car market. Its 3.3% market share in the half-yearending September 2001, proved beyond doubt that the company was struggling to stayafloat.Hindustan Motors Struggle for SurvivalBackground NoteHM was incorporated in 1942 by the GP-CK Birla Group of companies in collaborationwith General Motors (GM), USA. The CK Birla group was one of the well knownfamily-owned business houses in India, with 17 companies in businesses such asautomobiles, engineering, paper, and auto-componentsSome of them were Hyderabad Industries Ltd., Oriented Papers & Industries Ltd.,National Engineering Industries Ltd., Gujarat Instruments Ltd., Hindustan PowerplusLtd., India Gypsum Ltd., Malabar Building Products Ltd., Birla Horizons InternationalLtd., and Birla Techneftegas Ltd. HMs manufacturing facilities were located at Uttarparain West Bengal, Pithampur in Madhya Pradesh, Thiruvallur and Hosur in Tamil Nadu,and Pondicherry. Over the years, HM built up a vast dealer network comprising 115dealers, 50 service and parts dealers and 60 additional exclusive parts dealers. Initially,the company concentrated on its auto components business, producing its first car only in1949. In 1954, HM started production of the Landmaster in technical collaboration withUK-based Morris Motors Ltd. (Morris)The company upgraded the Oxford model of Morris and launched it as the Ambassadorin 1957 - the car went on to become the flagship brand of the company in the years tocomeIn 1963, HM commenced the production of Ambassador Mark 2, made available in twovariants - diesel and Ambassador ISZ. HM entered the earth moving equipment businessin 1971 and the power products business in 1983 (Refer Exhibit II for the sales break upof HM from various units). Until the 1980s, HMs Ambassador and Premier AutomobilesLtds (PAL) Padmini were the only two cars available in the Indian market. Ambassadorwas the vehicle of choice, Government of India, and the official car for almost everyIndian Prime Minister after independence. Though there was no executive order that saidthat the government departments have to buy only Ambassador cars HM derived a majorpart of its sales from senior politicians, top civil servants, bank managers and defencepersonnel...