Leading change teigland

Leading Change: Integrating Theory and Practice

Robin TeiglandCenter for Strategy and

CompetitivenessStockholm School of Economics

[email protected]: RobinTeigland

www.knowledgenetworking.orgJan – May 2011

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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 deliver real business benefits for your organization

To provide participants with an interactive and reflective team experience in which everyone (participants and faculty) learns together

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Agenda

Afternoon1. Live Project Groupwork

2. Some Change Tools

Morning1. What is Change

2. Kotter’s 8 Stages

3. Groupwork

Going Forward

Jack Welch…

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"...when the rate of change outside an organization is greater than the change inside, the end is near...."

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Competitive advantage is increasingly based on an organization’s ability to change

Of original Forbes 100 in 191761 companies ceased to exist by 1987Of 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 1957Only 74 remained in 1997Of these only 12 outperformed S&P 500 in 1957-1998 period

Beer 2002

Only 20-30% of all change projects achieve full value Over 80% of anticipated value from M&A fails to materialize 75% of JVs fall apart after “honeymoon” Less than 50% of quality-improvement efforts make

satisfactory progress

Only 9% of all major software development applications in large organizations worth cost

31% of software implementation projects cancelled before completion

Irrespective success or failure, 53% software implementations result in cost overruns by up to 189%

High number of change initiatives unsuccessful!

But do change initiatives work?

Beer 2002, Gratton 2007, Maurer and Co

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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

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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 were the factors for success/failure? How did the change impact you and how did

you feel? What would you have done differently?

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Change focus

Burnes 2004

Small-scale change

Large-scale change

Rapid changeSlow change

Level: The organizationFocus: Structures & processes

Level: The organizationFocus: Culture

Level: Individual/groupFocus: Tasks & procedures

Level: Individual/groupFocus: Attitudes/behavior

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What triggers change?

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PESTEL – External pressures for change

Johnson & Scholes 1997

Political

Environmental Technological

Legal Social

Economic

Organization

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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

A new workforce is appearing…A new workforce is appearing…

Prensky 2001, Beck and Wade 2004, Mahaley 2008 Prensky 2001, Beck and Wade 2004, Mahaley 2008

““Digital Immigrants”Digital Immigrants”““Digital Natives”Digital Natives”

Company loyaltyWork ≠ Personal

Learning=Behind the desk

Company loyaltyWork ≠ Personal

Learning=Behind the desk

Professional loyaltyWork = Personal

Learning=Fun and games

Professional loyaltyWork = Personal

Learning=Fun and games

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Technical knowledge quickly outdated

50%knowledge

relevant

50%knowledgeoutdated

First year of technical-based

education Third yearof education

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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

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A new opportunity???

But every challenge is…..

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What are the critical success factors for

change?

Only 20-30% of all change projects achieve full value Over 80% of anticipated value from M&A fails to

materialize 75% of JVs fall apart after “honeymoon” Less than 50% of quality-improvement efforts make

satisfactory progress Only 9% of all major software development applications

in large organizations worth cost 31% of software implementation projects cancelled

before completion Irrespective of success or failure, 53% software

implementations result in cost overruns by up to 189%

Remember…. do change initiatives work?

Beer 2002, Gratton 2007, Maurer and Co

Why? According to Fortune 500 executives, resistance/people not accepting changes

Extent people more or less resistant, indifferent, or likely to lend support to change affected by how change perceived to affect them

Reasons for resisting change: loss of control too much uncertainty surprise confusion loss of face concerns about competence in new context increased workload change fatigue view that costs outweigh benefits past resentments real threats

Managers need to take affirmative

action to minimize these effects!

Why do people resist change?

Iles & Southerland, 2001, p.56-57

Innovators Leap with enthusiasm at change proposal and strongly support.Expect others to be active in pursuing change.

Early Adopters Rapidly persuaded, especially by early success. Likely to want to adapt change proposals to own circumstances.

Early Majority Want to see tangible outcomes to change proposals. Not convinced merely by idea or principle.

Late Majority Follow powerful person when agree and support change ideas. Commitment centered on political calculation.

Resistors (Laggards)

Predictable, Need considerable evidence – more vivid and directly observable, the better – before they can be mobilized. Relatively risk adverse.

People react differently...

Rogers, 1983, 1995 Rogers, 1983, 1995

Reactions to change distribution

Rogers, 1983, 1995 Rogers, 1983, 1995

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Helping stakeholders go through transformation

Currentsituation

Future situation

Transformatio

n

Organization•Historical heritage, tradition•Culture•Selective perception•Follow old patterns•Return to “the way it was”

Shock

Denial

Realism

Acceptance

The Change Process

Reaction

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 reactio

ns

Sven Hultín, IBM

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Getting through valley of despair

High

Uninformedoptimism(Security)

Informed pessimism

(Doubt)

Hopefulrealism(Hope)

Productivity

Time

Low

Optimism(Decision

PowerCommitment)

Successful ending

(Satisfaction)

Hultín, IBM

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Say the color, not the word

YELLOW BLUE ORANGE BLACKBLACK

GREEN PURPLE YELLOW RED

ORANGEORANGE GREEN BLACK BLUE

Stroop

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The challenge of change

ChangeLeadership

ChangeManagement

The WHATThe ‘hard’ edge:

Systems, processes, structures, and business

strategy

The HOWThe ‘soft’ side:

Culture, behaviors, values,

and people

Zwanenberg

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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

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1. Establish sense of urgency

Forces for

change

Forces for

stability

The status quo

Burnes 2004http://www.youtube.com/watch?v=U5802FBaMSI

Force field modelW

ho a

nd W

hat

Can

Ch

ange

Who a

nd W

hat

Can

Ch

ange

Lewin 1947, 1951; Iles & Southerland, 2001

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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

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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

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Who has informal power in the organization?

Teigland 2003

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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


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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!!


Information + Involvementto build commitment & change

Increasin

g Commitment

Awarenessof desired change

Understandingof change direction

Translationto the work setting

Commitmentto personal change

Internalizationof new behavior

“Yeah, I saw the memo.”

“I understand where we need to go.”

“I know how we need to do our jobs differently.”

“OK, I’m ready to do it the new way.”

“This is the way we do things here.”

Stages of Individual

Behavior Change

Information with some involvement sufficient

here

Significant involvemen

t needed

Schreiber

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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?


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1. Create obtainable

targets

2. Encourage & convince people that targets can be reached

3. Recognize and reward “winners”

Communicatethe wins


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Change Project 1

Change Project 2

Change Project 3

Time

Scope of

change


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Company culture

Physical artifacts

activities and routines

Underlying values,assumptions,

beliefs, and expectations

Intangible


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Kotter 1996



3. Create a vision






4444

Tata Motors

4545

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

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Groupwork - In your groups

Discuss how change was implemented at Tata Motors What triggered the change? How does the change process map onto Kotter’s

eight stages? What is the real change? What are the lessons learned from the case?

Prepare a maximum 10 minute presentation Present groupwork Discussion

http://www.mckinseyquarterly.com/Leading_change_An_interview_with_the_managing_director_of_Tata_Motors_1908

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Adapting Kotter to your organization

Change at IBM A vision with clear objectives Compelling reason to act – burning platform Holistic approach Broad participation Measurable targets Effective project management Consistent executive ownership and

participation

Hultín, IBM

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Kotter 1996



3. Create a vision






1. Prepare

2. Implement

3. Manage

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Agenda

Morning1. What is Change?


3. Groupwork

Going Forward



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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 Change: To create real business benefits at your

organization Groups

You will work in your groups Topic

Your group will decide together on one topic for the change project

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Kotter 1996



3. Create a vision






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In your groups …..

Choosing the Change Project

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Criteria for the Change Project

It should involve a real organizational issue or challenge that at least one group member is currently facing in his/her part of 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.

The project should have a sponsor.”This is something we would like to do!!”

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Change focus

Burnes 2004

Small-scale change

Large-scale change

Rapid changeSlow change

Level: The organizationFocus: Structures & processes

Level: The organizationFocus: Culture

Level: Individual/groupFocus: Tasks & procedures

Level: Individual/groupFocus: Attitudes/behavior

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Better to choose a more

narrow, specific focus!

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You will present your projects

at end of program

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Discuss in your groups today

What are the current & 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?

How will you organize your work during the program? How will your coordinate with your Sponsor?

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Prioritize stakeholders

Low High

Low

HighLevel of interest•Visibility•Importance•Priority

Scholes 1998

Power•Formal•Informal

Keepinformed

Keyplayers

Minimaleffort

Keepsatisfied

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Stakeholder analysis

Stakeholder Bloc

kLet

Help

Make

Diagnosis of stakeholder position

Recommended action to move to desired position

Adapted from Nader, NTL

Current (C) & Desired (D) position regarding the Change

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The Change Project StatementName of Change Project and Business

Names of Change Project team members

Name of Sponsor

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?

…if you can´t s

ay it in a few words,

then keep discussing!

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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”!

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Agenda



3. Groupwork

Going Forward



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Tools to achieve the “transformation”

1. Conduct stakeholder analysis2. Develop clear project charter and roll out

plan3. Develop communication plan4. Conduct risk analysis5. Develop measurement plan

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Prioritize stakeholders

Low High

Low

HighLevel of interest•Visibility•Importance•Priority

Scholes 1998

Power•Formal•Informal

Keepinformed

Keyplayers

Minimaleffort

Keepsatisfied

Information + Involvementto build commitment & change

Increasin

g Commitment

Awarenessof desired change

Understandingof change direction

Translationto the work setting

Commitmentto personal change

Internalizationof new behavior

“Yeah, I saw the memo.”

“I understand where we need to go.”

“I know how we need to do our jobs differently.”

“OK, I’m ready to do it the new way.”

“This is the way we do things here.”

Stages of Individual

Behavior Change

Information with some involvement sufficient

here

Significant involvemen

t needed

Schreiber

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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?

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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!

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4. Continuously manage risk

Low High

Low

High

Probability of occurring

Impactof change

MonitorWork onreducing

Minimaleffort

Manage

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Risk analysis

RiskNo.

Description Proba-bility

Project impact

Priority Potential consequences

Proposed/ implemented actions

Status Respon-sible

1

2

3

4

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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!

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Measurement plan

Measure no.

Measure Description How directly impacted by

change project

Baseline measure

Measuring

frequency

1.

2.

3.

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The Change Project StatementName of Change Project and Business

Names of Change Project team members

Name of Sponsor

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?

…if you can´t s

ay it in a few words,

then keep discussing!

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3. GroupworkAfternoon

1. Live Project Groupwork 2. Some Change Tools

Agenda

Going Forward

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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

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Good luck with your projects!!

Leading change teigland

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