How leaders mobilize for

radical change

DNB NXT

September 27, 2017

Inger G. Stensaker, NHH

Research on radical change

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Radical change is difficult, costly and risky

Radical change alters the power balance

Radical change will trigger resistance

Radical change involves uncertainty

Yet, no change = death

75-90% of planned change intiatives

FAIL

Model of how radical change happens #1

Punctuated equilibrium model

3

Long periods of incremental change

Punctuated by radical transformation

- Driven by external change esp. technological dvpmt

- Competence destroying

- Brings disorder, uncertainty and identity crisis

- Coexistence and competition between various

technological & organizational solutions

Outcome is unpredictable

- Not always the technologically superior that wins

- Social & political process

- Many established firms die in the process

Implications for leadership:

- Change needs to be driven from top

- Requires external resources and

perspectives

- Change involves tough decisions

- Need to keep change agents separate

from existing organization

Tushman & Anderson, 1986; Anderson & Tushman, 1990 Romanelli & Tushman, 1994

Model of radical change happens #2

Disruptive innovation & the innovator’s dilemma

Competition from low-end - Technological development key driver - Initially inferior products/services replace

existing - Established business models and ecosystems

are replaced - Disruptive because it’s simpler - Starts in the low end of the market but then

expands - Game changers

Christensen, 1997

Implications for leadership

- Place your bets on the newcomers - Established firms – huge disadvantage!

Million dollar question remains the same

How can an established firm innovate and develop new business that

potentially cannibalizes the existing business, while maintaining sufficient

focus on existing business?

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But, this time it’s different….

Greater uncertainty

Higher pace of change

Collective sense of urgency

Leading radical change in established firms

7

Designing an organization that

facilitates and supports change

“The design issue”

Mobilizing people in and

around the organization for

change

“The people issue”

Mobilizing for radical change – 3 organizational solutions

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The

ambidextrous

solutions

The

decentralized

solution

The (speedy)

sequential

solution

Birkingshaw, Zimmermann & Raisch, 2016

CEO

Existing business

New opportunities

The ambidextrous solution

CEO

Existing business

New opportunities

9

Key features: • Maximum separation to avoid cross-

contamination

• New unit more entrepreneurial mindset

• Mobilizes people through specialization;

seeing is believing

Implications • CEO/leaders must have dual focus

• Alliances & collaborations target new unit

– provide solutions/opportunities

• Similar entrepreneurial mindset

Examples: Schibsted, BBC, Nestlé

The decentralized solution

10

Key features: • Minimum separation

• High-competence employees who handle

both exploration & exploitation

• Mobilizes by empowering individuals

Implications • All employees must have dual focus

• Potential for alliances & collaborations

spread out in the organization

• New alliances must understand how

decentralized org’s function

Ex: GlaxoSmithKline, Schibsted?

The (speedy) sequential solution

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Key features: • Sequential emphasis

• Consolidation – innovation - consolidation

• Mobilizes people by allowing full focus

Implications • Employees need ability to shift over time

• Timing is everything!

• Potential alliance partners must target

innovation period

Ex: BMW

Which model is superior?

Depends on firm history, vision & culture

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The

ambidextrous

solutions

Unifying vision

Complementary unit goals

Dec.mak authority w/i units

Multiple career tracks

The

decentralized

solution

Allow contradictory goals

Entrepreneurial &

commercial orientation

Accountability

The

sequential

solution

Long-term orientation

Common identity

Tight alignment

Job rotation

Birkingshaw, Zimmermann & Raisch, 2016

Thanks for your

attention!