Leading Change Feb09

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A slideshow I use when I give a one-day talk on organizational change. Part of a three module executive education program at IFL - Stockholm School of Economics.

A slideshow I use when I give a one-day talk on organizational change. Part of a three module executive education program at IFL - Stockholm School of Economics.

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  • 1. Leading Change: Integrating Theory and Practice Robin Teigland Center for Strategy and Competitiveness Stockholm School of Economics [email_address] www.knowledgenetworking.org February 2009
  • 2. 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 1957-1998 period
    Beer 2002
  • 3. Jack Welch… "...when the rate of change outside an organization is greater than the change inside, the end is near...."
  • 4. 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 Spider-Web Organization. The Post-Industrial Organization . The Turbulent Organization. The Chaotic Organization…….. Beer 2002
  • 5. Average number of tools used by an organization during 2004 Bain 2007 Survey of 1221 international executives
  • 6. Top 10 tools Bain 2007 * Added 1996, ** Added 1998, *** Added 2000
  • 7. But do these initiatives work?
    • 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
  • 8. Average CEO tenure is falling Beer 2002 60% drop Number of years as CEO (In USA) Could this partly be due to the CEO’s inability to handle change in an increasingly turbulent environment??
  • 9. Many change programs result from a tacit collusion among senior executives, staff, and external consultants who avoid undiscussible issues For Executives : Appearance of quick, painless, measurable results For Consultants : A steady income stream For Internal Staff : Increased responsibility & visibility Short-term benefits
    • Lost time, energy, revenues, employees
    • Increased cynicism
    • Increased resistance to change
    • Learning about wrong aspects
    Long-term costs Beer 2002
  • 10.
    • 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
  • 11. 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
  • 12. Agenda
    • Afternoon
      • Live Project Groupwork
      • Some Change Tools
    • Morning
    • What is Change
    • Kotter’s 8 Stages
    • Groupwork
    Going Forward
  • 13. 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?
  • 14. What triggers change?
  • 15. PESTEL – External pressures for change Johnson & Scholes 1997 Political Environmental Technological Legal Social Economic Organization
  • 16. 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
      • Global, regional, and national political development (administration, political parties)
      • Taxation policy
      • Foreign trade regulations
      • Labour market politics
      • Government stability
    • Socio-cultural
      • 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
      • 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
    • Technological
      • 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
      • Development in price and competitive legislation
      • Labour market legislation
      • Product safety and approvals
  • 17. Source: Team aMBAssadors, SSE MBA Eurostat 2005, Global Insight 2007, McKinsey Population includes EU-27, excluding Slovenia, Slovakia, Czech Republic, and including Iceland Employers need to change tactics to win the talent war
    • Data is based on birth rates and age profiles of the EU.
    • Different regions have similar trends.
    EU Labor Pool Supply and Demand Millions of people “ Baby Boom” generation retires. Labor shortage Labor Supply : Worst case is if nothing changes Labor Demand : Assumes 0.5% annual growth Labor Supply : Best case is reaching 50/50 gender balance Labor shortage
  • 18. A new workforce is appearing… Mahaley 2008, Merrill Lynch 1999, Beck and Wade, Prensky “ Digital Immigrants” “ Digital Natives” Company loyalty Work ≠ Personal Professional loyalty Work = Personal
  • 19. Technical knowledge becomes quickly outdated 50% knowledge relevant 50% knowledge outdated First year of technical-based education Third year of education
  • 20. Organizational forces: Internal pressures
    • Need for improved performance
      • In current or new markets
    • Need for integration and collaboration
      • E.g., alliances, synergies, economies of scale
    • Power and politics
      • E.g., changes at top management and board level
    • Changes in surrounding organizations
      • E.g., key customers, suppliers, partners
  • 21. Pressures from one area can affect the entire organization Political Environmental Technical Legal Social Economic Culture Systems Vision Strategy Structure People
  • 22. But every challenge is….. A new opportunity???
  • 23. What are the critical success factors for change?
  • 24. Helping stakeholders go through a transformation Current situation Future situation Transformation Organization
    • Historical heritage, tradition
    • Culture
    • Selective perception
    • Follow old patterns
    • Return to “the way it was”
    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
    Resistance reactions Sven Hultín, IBM Shock Denial Realism Acceptance The Change Process Reaction
  • 25. Getting through the valley of despair High Uninformed optimism (Security) Informed pessimism (Doubt) Hopeful realism (Hope) Productivity Time Low Optimism (Decision Power Commitment) Successful ending (Satisfaction) Hultín, IBM
  • 26. Say the color, not the word
    • YELLOW BLUE ORANGE BLACK
    • GREEN PURPLE YELLOW RED
    • ORANGE GREEN BLACK BLUE
    Stroop
  • 27. The challenge of change Change Leadership Change Management The WHAT The ‘hard’ edge: Systems, processes, structures, and business strategy
      • The HOW
    • The ‘soft’ side:
      • Culture, behaviors, values, and people
    Zwanenberg
  • 28. Kotter’s eight-stage process for change Kotter 1996 2. Form a powerful guiding coalition 1. Establish a sense of urgency 3. Create a vision 8. Anchor new approaches 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
  • 29. 1. Establish a sense of urgency Forces for change Forces for stability The status quo Burnes 2004
  • 30. But I’m so comfortable…
  • 31. 1. How to create a sense of urgency?
    • Create a crisis/rivalry
      • Benchmark within and outside industry
    • Find/develop a “red hot” burning issue
      • Align with a powerful sponsor
    • Revise existing or develop new standards
      • Income, profitability, effectiveness, efficiency, customer satisfaction
    • Get an outside opinion
      • Bring in consultants, customers, shareholders
    Adapted from Kotter 1996
  • 32. 2. Form a powerful coalition
    • Ensure shared understanding & right attitude
      • Ability to share vision
      • Trustworthy
      • Commitment to means and end
    • Has access to necessary resources
      • Formal position power
      • Expertise
      • Reputation
      • Leadership
      • Informal network position
    But look out for people with big egos or “snakes” Beer 2002, Kotter 1996 The small team that will lead the change
  • 33. Who has informal power in the organization? Teigland 2003
  • 34. 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)
      • To engage people through participation
      • To find their “passion”
      • To overcome forces for stability
    Adapted from Kotter 1996
  • 35. 4. Communicate the vision
    • How?
      • Use multiple channels
      • Regularly to reconfirm
    • What?
      • Keep it simple
      • Use metaphors and success stories
    • Who?
      • Walk the talk
      • Identify key opinion leaders
    But listen as well!! Adapted from Kotter 1996
  • 36. 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
  • 37. 5. Empower others to act on the vision 1. Does the organizational culture encourage individuals to act? 2.Do people have the necessary resources to act? 3.Do people have the appropriate skills and training to act? 4.Do people have the authority to act? 5.Are the organizational structure & systems aligned with the vision? Adapted from Kotter 1996
  • 38. 6. Plan for and create short-term wins 1. Create obtainable targets 2. Encourage & convince people that targets can be reached 3. Recognize and reward “winners” Communicate the wins Adapted from Kotter 1996
  • 39. Broadcast heroes and their success stories!
  • 40. 7. Consolidate improvements and produce more change Change Project 1 Change Project 2 Change Project 3 Time Scope of change Adapted from Kotter 1996
  • 41. 8. Anchor new approaches Company culture Physical artifacts activities and routines Underlying values, assumptions, beliefs, and expectations Intangible Adapted from Kotter 1996
  • 42. Kotter’s eight-stage process for change Kotter 1996 2. Form a powerful guiding coalition 1. Establish a sense of urgency 3. Create a vision 8. Anchor new approaches 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
  • 43. Tata Motors
  • 44. 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
  • 45. Groupwork - In your groups
    • Discuss how change was implemented at Tata Motors
      • 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?
    • Prepare a maximum 10 minute presentation
    • Present groupwork
      • 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_managing_director_of_Tata_Motors_1908
  • 46. Adapting Kotter to your organization
    • Change at IBM
    • A vision with clear objectives
    • Compelling reason to act – burning platform
    • Holistic approach
    • Broad participation
    • M easurable targets
    • Effective project management
    • Consistent executive ownership and participation
    Hultín, IBM
  • 47. Kotter’s eight-stage process for change Kotter 1996 2. Form a powerful guiding coalition 1. Establish a sense of urgency 3. Create a vision 8. Anchor new approaches 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 1. Prepare 2. Implement 3. Manage
  • 48. Agenda
    • Morning
    • What is Change?
    • Kotter’s 8 Stages
    • Groupwork
    Going Forward
    • Afternoon
      • Live Project Groupwork
      • Some Change Tools
  • 49. 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
  • 50. Kotter’s eight-stage process for change Kotter 1996 2. Form a powerful guiding coalition 1. Establish a sense of urgency 3. Create a vision 8. Anchor new approaches 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
  • 51. 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
  • 52. 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
  • 53. In your groups ….. Choosing the Change Project
  • 54. 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!!”
  • 55. Change focus Burnes 2004 Small-scale change Large-scale change Rapid change Slow change Level: The organization Focus: Structures & processes Level: The organization Focus: Culture Level: Individual/group Focus: Tasks & procedures Level: Individual/group Focus: Attitudes/behavior
  • 56. Better to choose a more narrow, specific focus!
  • 57. You will present your projects in Module 3
  • 58. Discuss in your groups today
    • What are the current and future pressures for the change?
      • Internal
      • External (PESTEL)
    • What is the sense of urgency for the change?
      • 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?
  • 59. Organizational forces: Internal pressures
    • Need for improved performance
      • In current or new markets
    • Need for integration and collaboration
      • E.g., alliances, synergies, economies of scale
    • Power and politics
      • E.g., changes at top management and board level
    • Changes in surrounding organizations
      • E.g., key customers, suppliers, partners
  • 60. PESTEL – External pressures for change Johnson & Scholes 1997 Political Environmental Technical Legal Social Economic Organization
  • 61. Pressures from one area can affect the entire organization Political Environmental Technical Legal Social Economic Culture Systems Vision Strategy Structure People
  • 62. The Change Project Statement … if you can ´t say it in a few words, then keep discussing! 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?
  • 63. 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” !
  • 64. Agenda
    • Morning
    • What is Change?
    • Kotter’s 8 Stages
    • Groupwork
    Going Forward
    • Afternoon
      • Live Project Groupwork
      • Some Change Tools
  • 65. Leading is looking in all directions Sponsor or Steering Group Project Team Project Leader Stakeholders Downwards Outwards Forwards Inwards Upwards Backwards Briner et al 2004
  • 66. Tools to achieve the “transformation”
    • Conduct stakeholder analysis
    • Develop clear project charter and roll out plan
    • Develop communication plan
    • Conduct risk analysis
    • Develop measurement plan
  • 67. Why use tools? Reducing complexity to something manageable Identifying priorities and importance, sequence of activities Highlighting interdependence between actors and tasks Creating a common language My view…. Making views explicit
  • 68. 1. Identify internal and external stakeholders Political Environmental Technical Legal Social Economic Culture Systems Vision Strategy Structure People
  • 69. Prioritize stakeholders Low High Low High
    • Level of interest
    • Visibility
    • Importance
    • Priority
    Scholes 1998
    • Power
    • Formal
    • Informal
    Keep informed Key players Minimal effort Keep satisfied
  • 70. Stakeholder analysis Adapted from Nader, NTL Current (C) & Desired (D) position regarding the Change Stakeholder Block Help Let Make Diagnosis of stakeholder position Recommended action to move to desired position
  • 71. Helping stakeholders go through a transformation Current situation Future situation Transformation Organization
    • Historical heritage, tradition
    • Culture
    • Selective perception
    • Follow old patterns
    • Return to “the way it was”
    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
    Resistance reactions Hultín, IBM Shock Denial Realism Acceptance The Change Process Reaction
  • 72. 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?
  • 73. Successful change requires attention to all relationships Political Environmental Technical Legal Social Economic Culture Systems Vision Strategy Structure People
  • 74. 3. Develop communication plan
      • Who?
      • What?
      • Why?
      • How?
      • When?
      • Remember to communicate even to those who are not impacted
    Do for each group of stakeholders Around 20% of your project activity!
  • 75. Ensure continuous communication of big picture
    • Balance and respect all stakeholder interests
      • All interests important
    • Link “big picture” with “little picture”
      • Balance long-term vision with everyday operations
      • Avoid parochialism resulting from stakeholders receiving different information due to division of labor
    • Communicate timely and continuously
    Sponsor or Steering Group Project Team Project Leader Stakeholders
  • 76. Create trust through open communication
      • Provide open forum for discussion between stakeholders, e.g., virtual project space
  • 77. 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
  • 78. Communication Plan, phase 1: Before the start of a project (Decision making)
    • Change must be done
    • Lose customer
    • No new business
    • What can be done ?
    • Competitors
    • Customer demands
    • Walk to talk
    • What do others think?
    • Trends
    • Customer
    • Business owner
    • Understanding need of change
    • But what does this mean?
    • Star model
    • Project def
    • Project plan
    • Clear picture
    • Who
    • What
    • Why
    • How
    • When
    • Pilot
    • Meetings
    • Webcast
    • Mail
    Project idea No change without pain Testing idea Finding proof Commitment Decision Communication Formal Document From BETE 16
  • 79. Communication Plan, phase 2: Project implementation
    • Target setting for project, individuals and teams
    • Virtual (video)
    • Meeting
    • Virtual Project space
    • Stakeholders
    • Public forum
    • Project members
    • Scorecard
    • Common language
    • Common terminology
    • Risk analysis
    • Business owner
    • Customer
    Plans are sent for internal audit Status, Result achieved Follow up reaching of targets Report Sharing of Best practice Project start Tools Quality Stakeholder statement Status Project FINISHED Information to Stakeholders & Public information From BETE 16
  • 80. 4. Continuously manage risk Low High Low High Probability of occurring Impact of change Monitor Work on reducing Minimal effort Manage
  • 81. Risk analysis From BETE 16 Risk No. Description Proba-bility Project impact Priority Potential consequences Proposed/ implemented actions Status Respon-sible 1 2 3 4
  • 82. 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 ?
  • 83. Match the measures to the impact of the change Culture Systems Vision Strategy Structure People
  • 84. Developing appropriate measures and timing
    • Measures
      • Are there any existing measures that can be used?
        • Balanced scorecard?
      • What new ones, if any, should be developed?
        • 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!
  • 85. Measurement plan Measure no. Measure Description How directly impacted by change project Baseline measure Measuring frequency 1. 2. 3.
  • 86. 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
  • 87. The Change Project Statement … if you can ´t say it in a few words, then keep discussing! 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?
  • 88. Agenda
    • Morning
    • What is Change?
    • Kotter’s 8 Stages
    • Groupwork
    • Afternoon
      • Live Project Groupwork
      • Some Change Tools
    Going Forward
  • 89. 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
  • 90. Module 2
    • Scheduled working time during Module 2
    • Each team submits its presentation
      • By email to Robin
  • 91. Module 3 - Final Presentation
    • Each team has 20 minutes maximum to present its Change Project, including the following (in ppt):
      • 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
    • One team will then lead feedback to the Presenting Team for 10 minutes maximum
      • 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
  • 92. Leading and learning Leadership and learning are indispensable to each other.” - John F. Kennedy Leadership, teaching, and learning are inextricably interlinked. - Jack Welch
  • 93. See you in Module 3!! Good luck with your projects!!