Change Management and Blue Ocean strategies
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Change Management and Blue Ocean strategies

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A talk delivered by Mukesh Sharma at General Motors Technical Center , Bangalore , India

A talk delivered by Mukesh Sharma at General Motors Technical Center , Bangalore , India

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Change Management and Blue Ocean strategies Change Management and Blue Ocean strategies Presentation Transcript

  • Change management : A tool for Total Quality Organization (TQO) and Blue Ocean Strategies General Motors Technical Center , Bangalore,India 10th September 2009 Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Scope • Change management • Frame work for Total quality organization (TQO) • Adopting Blue Ocean Strategy • Case Study – Dashman company Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • • YOU must be the change you wish to see in the world Mahatma Gandhi Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Change Management • What is change • Resistance to change • Organizational change • Change triggers & Change drivers • Change Agents • Change management framework Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • .000001% D .001% e g r 1% e e o 2.5% f c 25% h a 50% n g 100% e Individual Group Department Division Orgn. Nation Intern. Scope of change Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Shock value of change Shock value of Time to implement change change High Low High Intensity of change Low Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • What is change • Newton’s first law of motion – An object at rest tends to stay at rest, and an object in motion tends to stay in motion with the same speed and in the same direction unless acted upon by an unbalanced force. • First law of change management – Any situation, organization , culture , set of beliefs, way of life remains in the same state unless acted upon by an external change force. Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • • Newton’s second law of motion : The acceleration of an object as produced by a net force is directly proportional to the magnitude of the net force, in the same direction as the net force, and inversely proportional to the mass of the object. • The larger the mass the larger the force F = m.a • Second Law of change management : The more people, organization or systems have invested in the past, the more difficult it is for them to Change into the future. Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Why inertia • Organization goals create narrow , self affirming views that reinforce past behaviors • Successful strategies survive because they were successful earlier • Political factors in organisation to run old strategies • Programs and procedures are outcome of complex process therefore to change them requires effort and reconciliation Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • • Newton’s third law of motion – Action is equal to reaction of equal magnitude and opposite direction • Third law of change management – When we try to change people , they will resist with an equal and opposite force. Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Resistance to Change : Individuals Sources of resistance • Habit • Security • Economic Factors • Fear of the Unknown Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Resistance to Change: Individuals • Habit - programmed responses helps us cope with complexities of life; when confronted with change this tendency to respond in our accustomed ways becomes a source of resistance • Security – People with a high need for security are likely to resist change because it threatens their sense of security • Economic Factors – Concern that changes will result in lower income; Fear that they cannot perform new tasks or routines especially when pay is closely tied to productivity • Fear of the unknown – Change substitutes ambiguity and uncertainty for the known; You trade known for the unknown and the fear and insecurity that goes with it Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Resistance to Change: Organizations • Organizations are conservative – actively resist change through structural and group inertia • Organizations have built-in mechanisms to produce stability – systematically select certain people and certain people out, people are hired into an organization are chosen for and then shaped and directed to behave in certain ways • Sull’s theory of organisational resistance and failure Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Why organizations fail to respond • Managers focus and improve one strategy, which leads to active inertia and failure. Four things occur that manifest active inertia: Strategic Frames Blinders Processes Routines Relationships Shackles Values Dogmas People Change Survivors Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Dynamics of change process F = MA Fr= Us.Mg Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • What should the manager do? 1. Initiating change is an important part of the manager’s job 2. Expect resistance to change come in a number of forms 3. Prepare to undermine this resistance Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • How to undermine resistance • Provide rewards for accepting change • Communicating reasons for why change is necessary • Including people who will be effected by the change to participate in change decisions Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Emotional Reactions to Change Stability at the Point of change Anger Inability Bargaining to act Denial Acceptance Active Emotional response Testing Depression Passive Time Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Use Participation To Reduce Resistance to Change •A potent force for combating resistance to change •Participation can reduce resistance, obtain commitment and increase the quality of the change decision •Adequate time to participate •Organizational culture support staff involvement Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • State of dynamic stability F = MA Fr= Uk.Mg •“ State of dynamic stability “ • Incremental change Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Community of followers • Inclusivity – sense of belonging , sense of community • Positive culture – socialization ,sense of cooperation • Caring and trust- Sense of commitment • Shared leadership- Sense of dependability • Conversation – sense of open communication Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Management framework for total quality organization (TQO) • Leadership and team work • Highly motivated employees – community of followers • Never ending improvement – dynamic stability • Identify change triggers • Identify change drivers • Deploy change agents Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Change triggers & drivers • Globalization of industries and markets – All companies going for “multinational character” • Leapfrogging technology – constant innovation , new products , new processes • Industry transformation – collapse , mergers , acquisitions • Socio demographic shifts – stagnant population growth , per capita income • Political revisions Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Change agents – 5C’s • Connect • Communicate • Collaborate • Create • Cultivate Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Case –General Electric • "The idea flow from the human spirit is absolutely unlimited. All you have to do is tap into that well." - Jack Welch • Jack welch stripped down 350 SBU’s to 13 in mid eighties. • By the mid-1990s GE had become the strongest company in the United States and the most valuable company in the world, as measured in market capitalization • Jack Welch wrote in a letter to shareholders: "If you want to get the benefit of everything employees have, you've got to free them – make every body participant • Everybody has to know everything, so they can make the right decisions by themselves. Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • General Electric • Improving Connectivity: Creating a Seamless Link between Strategy, Management, and Employees • Harnessed the collective power of GE employees • Encourage free flow of ideas – town hall meetings • Redefined relationships between boss and subordinates • Cross pollination of ideas • In the Welch-led GE culture , traditional barriers dividing employees, co-workers, and management give way to tethers of interdisciplinary and interdepartmental cooperation • Change Acceleration Program (CAP), was implemented by Jack Welch to help drive change throughout the organization. Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • General Electric • Welch says , "If the rate of change inside an organization is less that the rate of change outside... their end is in sight". • Reassessing Performance and Benchmarking Employees Continuously • Proactive change management and constant reassessment • Annual review – 70-20-10 Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • change management framework •A systematic step by step approach •Skipping any step is suicidal Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Self Orientation • Establish rapport with the important nodes of an organization • Important to buy mind share before you sell them an idea Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Understanding best practices • Allow people to express their strengths and weakness • Calibrate your scale based on their input • Interpolate and extrapolate the degree of change Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Establish a Sense of Urgency • Examine external realities • Identify and discuss crises, potential crises, or major opportunities • Communicate the concern Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Establishing a shared commitment • Concern and sense of urgency • Assemble a group with enough power to lead the change effort • Encourage the group to work as a team Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Participative decision making - Create a Vision • Create a vision to help direct the change effort • Develop strategies for achieving that vision • PDM decreases the resistance to change Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Wide communication Strategy • Use everything possible to communicate the new vision and strategies • Teach new behaviors by the example of the guiding coalition Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Empowering team members to Act on the Vision • Get rid of obstacles to change • Empower people to lead and stabilize change • Change systems or structures that seriously undermine the vision • Encourage risk taking and nontraditional ideas, activities, and actions Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Reward establishment of change • Plan for and Create Short-Term Wins • Plan for visible performance improvements • Create those improvements • Recognize and reward employees involved in the improvements Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Consolidate change and Produce Still More Change • Keep the purpose dynamic • Reinvigorate the process with new projects, themes, and change agents • Hire, promote, and develop employees who can implement the vision Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Institutionalize and Internalize change • Articulate the connections between the new behaviors and organizational success • Develop the means to ensure leadership development and succession Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Elements of successful S O R change C Strategy Operations Culture Rewards Successful •Resources •Incentives Vision •Action plan People •Motivation change Operations Culture Rewards •Resources People •Incentives Confusion •Action plan •Motivation Strategy Culture Rewards Vision People •Incentives Frustration •Motivation Strategy Operations Rewards Anxiety & •Resources •Incentives Vision •Action plan •Motivation Resistance Strategy Operations Culture Gradual •Resources Vision •Action plan People Change Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Blue ocean strategies • Do Strategies have color • Red ocean strategies – conventional • Blue ocean – uncontestable • Creating wealth rather than redistribution • Value innovation – cornerstone of blue ocean strategy Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Value innovation Cost Eliminate Reduce Value innovation Raise Create Buyer value Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Red ocean vs Blue ocean Red Ocean Blue Ocean Compete in existing market space Create uncontested market space Beat the competition Make the competition irrelevant Exploit existing demand Create and capture new demand Make the value cost trade off Break the value cost trade off Align firm’s strategy to Align firm’s strategy to Differentiation OR low cost Differentiation AND low cost Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Cirque du Soleil •A group formed by street performers of Canada in 1984 •Declining circus industry -Supplier power was strong due to star power -Buyer power was high - highly competitive industry – red in color - readily available means of entertainment like play stations , video games , TV etc -Children no more audience for circus - dead industry Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Blue ocean strategy of CDS • Did not try to capture declining customers of circus • Created another market with high art and popular art mix • Appealed to intellectual and sophisticated adult audiences • Reinvented the circus • The only way to beat the competition is to stop trying to beat the competition • Market always tries to move towards state of blood red perfect competition • Blue ocean strategies moves you away from perfect competition Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Blue ocean strategy of CDS • Red ocean – industry boundaries are defined and accepted by companies, rules of the game are known • Blue ocean – new industry boundaries are created within red ocean , rules of the game are still to be written Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Cricket After IPL 120 100 80 20-20 60 one day test cricket 40 20 0 Spectator time Classic technique value of team Entertainment Speed of game Definite results City loyalty reputation x c x Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Trajectories of industry change CORE ACTIVTIES Threatened Not threatened Threatened Radical Creative CORE change change - ASSETS Not Intermediate Progressive Threatened change change Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Case – Dashman Company • What happened to plants – why there was no communication • What mistakes Mr. Post committed. • How he should have brought the change Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10
  • Thank you for your patience Indian Institute of Management , Bangalore © Mukesh Sharma , EPGP 2009-10