Common Paradigm of Change Organization IndividualsMost books on STRATEGIC CHANGE: Outline all the ORGANIZATIONAL levers you should pull to change the company so that INDIVIDUAL change will follow
New Paradigm of Change Individuals Organization To strategically change your organization, you must first change individuals
Unlock Individual Change People carry their own mental maps Successful strategic change requires a focus on individuals and redraw their mental maps If not remapped “Brain Barrier” To lead strategic change “Map Maker”
The “Map Makers” Over 80% companies listed leading change as one of the top 5 core leadership competencies Driving change is not easy People are resistant to change
Failure to See (Case: Motorola) Late 1980s - early 1990s Has the largest consumer market products (analog mobile phone) in U.S. New technology (digital mobile phone) The new technology would require new and expensive infrastructure Biggest competitor Nokia in Europe Motorola’s reaction denied that this new technology and competitor was anything to worry about
Failure to See (Case: Motorola) Year 1993 – 1997 Nokia’s revenue increased from $2.1 billion to $8.7 billion All of Europe adopted a common digital standard that allowed people to use mobile phones anywhere in the region Motorola’s reaction put more investment and effort into its analog phones Result (end of 2000) Motorola’s market share dropped from 35% to under 15% Nokia’s market share increased to 35% with profit share nearly 70% of all mobile phone handsets
Blinded By the Light If we fail to see the need for change, we will not change We often deny the visible need for change because we are blinded by the existing mental maps Why? Because the existing mental maps have worked well and successful
Distorted MapsTend to exaggerate some elements while diminishing others “You believe what you know is everything and what you don’t know is nothing” Implications: It works as long as we don’t venture outside the known area The distorted map leads us to stay within the exaggerated area
Distorted Maps (Case: Kellogg’s) Kellogg’s cereal has dominated the breakfast table of Americans (especially children) Problem: Kellogg’s view of its new products & markets very small compared to existing products & markets. U.S sales started to drop competitors increased their quality but offer lower price
Distorted Maps (Case: Kellogg’s) Kellogg’s solution: Increased their trade promotions Kellogg’s mistake: Did not explore new products no new brand between 1983 – 1991 Did not explore new markets even though they operated in roughly 30 countries, they still focus the majority of efforts and returns to U.S. markets.
Distorted Maps Key points: Just because a map works does not mean that it accurately reflects all the terrain. As long as the terrain in focus doesn’t change and you don’t venture outside the area of focus, the map continues to work fairly well. Even when signs start to emerge that the map is not working well, its distorted nature creates a logical incentive to stay at home. Even as evidence starts to show that the terrain has shifted, there are great pressures to respond by doing what you know how to do.
Central Position MapsTend to put yourself (and your country) in the center and have everything else revolve around you.
Central Position Map (Case:IKEA)IKEA is one of the largest retail furniture companies in the world.But IKEA failed in selling some items, specifically beds and sheets, when it expanded into U.S.
Central Position Map (Case:IKEA) IKEA was trying to sell low-priced, moderate-quality, metric-sized beds and bedding in U.S But U.S has different ways to measure beds and bedding king-size, queen-size, twin-size CEO of IKEA (Anders Dahlvig) said “We don’t adapt to local markets”
Central Position Map (Case:IKEA)The strategic maps of using metric to measure beds continued for 2 years. Why did IKEA persist in following its strategic map of metric sizing in U.S? Because it had worked well in the past, and IKEA was very good at it.
Strip Maps Has a restricted or narrow view of the terrain and a fixed sequence for getting from one place to anotherHow come we fall into strip-mapping?The path has proven to be successful, then we’d never think about other alternatives.
Strip Maps (Case: Barnes &Noble) Lennie Riggio opened SBX (Student Book Exchange) in 1965. By 1971, he owned 5 SBX college bookstores and bought Barnes & Noble. In 1979, he bought Marboro books which had 6 stores. Mental strip map: To sell more books, own more book shops
Strip Maps (Case: Barnes &Noble) Barnes & Noble continued to establish and reinforce the mental strip map: to increase sales, buy or build more stores and make them bigger The mental strip map was successful: By 1995, Barnes & Noble’s market share increased from 7% to over 15%. By July 1998, Barnes & Noble’s stock price reached $48 (220% increase over two years)
Strip Maps (Case: Barnes &Noble) In July 1995, Jeff Bezos started Amazon.com By 1998, Amazon.com had 8.4 million registered customer and Barnes & Noble had just 1.7 million Barnesandnoble.com was created in 1998 but Amazon.com already had 75% market share of all online book purchases.
Upright MapsTend to think the only way to see a map is the way it has been seen Given enough time and exposure to any map, it becomes the “right” map and diminish our capacity to see it any other way
Contrast Contrast is one of the key means by which the human eye distinguishes different objects. In complex organizational settings So many things to look at people tend to selectively focus on elements that are similar (rather than different). People tend to ignore key contrasts because of its complexity
Confrontation Fact: people don’t easily see contrasts in organizational and business settings. Leaders have to confront their people with the key contrasts between the past, present and future
Contrast-Confrontation Matrix High Contrast Low Low High Confrontation
Contrast-Confrontation Matrix Parade Old Shoe High contrast, low Low contrast, high confrontation confrontation People will be impressed It’s there confronting by the difference, but people, but remains the easily forget the need to same each day change Breakthrough Garbage Can High contrast, high Low contrast, low confrontation confrontation Commonly, leaders make Wasting time, money, 2 common mistakes energy
Mistake #1: TheComprehensiveness Mistake Happens when leaders make complex and comprehensive illustration of the contrasts between past and present (or future) Why? The reality is complex and leaders don’t want to appear simple-mindedBeware! Complexity allows employees to focus on what they want. Increase the chances that employees will select the wrong targets
Mistake #2: The “I Get It”Mistake Presenting the contrasts once and only once As the leader, you present it to the others one time and expect them to understand it instantly We tend to forget the process of understanding and end up thinking that saying it once to others is more than enough.
Creating High Contrast Focus on the core 20% of what is different Enhance (even slightly exaggerate) the simple description between the old and new Create visual images, or pictures, of the old and new so that the contrast is understood as more than just words
Creating High ImpactConfrontation• Repeat the messages of the old and new maps over and over and over again• Create high impact, inescapable confrontation – Focus the experience on what you think are the core contrasts. Do not dilute it with too much complexity – Make sure that the experience involves as many of the senses as possible. – Physically ensure that people cannot easily avoid the experience but must take the brunt of it right between the eyes
Creating High ImpactConfrontation (Case: Samsung) Samsung Electronics is the leading consumer electronics company in Korea In U.S. markets, Samsung products were treated differently Samsung products were behind the market leader (Sony) Samsung products were sold in bargain bins of large stores in U.S. The experience created contrasts and confrontation to Samsung executives.
Brain Barrier # 2 People who fail to move are not dumb, they are actually smart. Failure to move, divided in 2 parts: Just because someone admits the old thing is wrong, does not mean that they directly see the new right thing the new right thing is not clear Even if the new thing is clear, they will focus on the fact that they will go from doing the wrong thing well to doing the right thing poorly
Strategic Change Matrix Right Thing Wrong Thing Old right thing becomes wrong Done Well X Can’t instantly be good at the new right thing Done Poorly
Many people preferred to be competent at the wrong thing than incompetent at the right thing How to tackle this problem? People must see and believe in a path that will take them from doing the right thing poorly to doing it well
BelievingSteps to help other people believe: Make sure others see the destination or target clearly Give them the skills, resources, and tools to reach the destination Deliver valuable rewards along the journey
Step 1: Destination Check how clearly others see where they are going (the destination).How? Ask people directly or indirectly to describe each element of the new map Ask them what the new destination will require from them in terms of personal capabilities Ask them to speculate about its possible implications
Step 2: ResourcesPeople must believe they have the necessary skills and tools to reach the destinationHow? Determining what you believe are the resources required to arrive at the new destination Assessing whether the employees believe they have the required resources (skills, knowledge, tools, manpower, etc) Providing any missing required resources (training, education, mentoring, coaching, etc)
Step 3: Rewards Reward ≠ moneyConsider this: Money often represents a means to something that people care about (security, status, health, fun, etc) Its effects are often much less powerful than we believe in most cases, the immediate and repeated reinforcements people receive are much more powerful than once-yearly bonuses.
ARCTIC Approach The ARCTIC approach encompasses major categories of values that people exhibit from a motivational perspective ARCTIC approach: Achievement Relations Conceptual/Thinking Improvement Control
ARCTIC ApproachAchievement Accomplishment: The need to meet or beat goals, to do better in the future than one has done in the past Competition: The need to compare one’s performance with that of others and do better than others do
ARCTIC ApproachRelations Approval: The need to be appreciated and recognized by others Belonging: The need to feel a part of and accepted by the groupConceptual/Thinking Problem Solving: The need to confront problems and create answers Coordination: The need to relate pieces and integrate them into a whole
ARCTIC ApproachImprovement Growth: The need to feel continued improvement and growth as a person, not just improved results Exploration: The need to move into unknown territory for discoveryControl Competence: The need to feel personally capable and competent Influence: The need to influence others’ opinions and actions
Motivating People Key to motivating people:Listen and identify the most powerful motivating factors for a given individual Fulfilling the motivating factors is a reward for the individualsWhat if I don’t have time to know people and provide customized rewards? Try this:Cascade this individualization of understanding and reward customization down the organization
Failure to FinishRemember: People do not change easily or quickly Impossible to implement change overnight (will take months or years)Consequence of the time lag: People will get lost People will get tired
Getting TiredIf you are trying to get employees to think and behave differently, their willingness relies on how much they trust you.
Getting Tired Change requires energy and effort The more substantial the change, the more energy and effort must be expended. People will get tired of attempting to change when the past has worked fine (from their perspectives)
Getting LostReasons why people are getting lost: Unsure of their position in the change process Unsure of the progress Unsure of how much farther it was to the destination
Providing ChampionsSteps of providing champions: Identify and designate some early launch sites Launch sites must be staffed with trained and motivated employees (champions) Stay close to the action to find the first successful result
Providing Champions The natural consequences of change: will likely to meet negative behaviorHow to counteract the negative behavior? Be close to the action Look for desired efforts – not results Counteract the natural negative consequences with positive ones
Charting ProgressTypes of progress charting Overall organization’s performance organization level Employees’ personal progress and achievement individual level Inform the employees about their individual progress and relates it with the overall organization’s performance
The CBA of Strategic ChangeFailure to See ConceiveFailure to Move BelieveFailure to Finish AchieveThree Gravitational Force Three Stages ofof Change Implementing Change Successfully
The CBA of Strategic Change Right Thing Wrong Thing Achieve Conceive Done Well Done Poorly Believe