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MANAGING COMPLEX CHANGE

Week 10December 15, 2013

Class Activities:Due in today’s Class: • Individual Assignment # 1

Due in Next Class (22Nov’13):• Group presentation by each group on ‘Brief details and analysis of any failed project(s)

in your organization’. Time 3-5 min.• Submit & discuss synopsis of your semester Project in next class (22 Nov’13)

Update on Semester Project• Semester project’s presentations on 05 Jan’2014 (13th week)

Three Phases of Change: How people experience change

Current State

Transition State

Future State

Successful change addresses both the technical and the people side

Solution is designed, developed

and delivered effectively(Technical side)

Solution is embraced, adopted and utilized

effectively(People side)

= CHANGE SUCCESS

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Project management

Change management

Current Transition FutureCurrent Transition Future

Management of Complex Change: Critical Components

• Vision – Strategic Planning

• Skills• Incentives• Resources• Action Plan

Management of COMPLEX CHANGE

=CHANGE

=CONFUSION

=ANXIETY

=GRADUALCHANGE

=FRUSTRATION

=FALSESTARTS

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VISION SKILLS RESOURCESINCENTIVESACTION

PLAN

SKILLS INCENTIVESACTION

PLANRESOURCES

INCENTIVES RESOURCESVISION

VISION

VISION

VISION

SKILLS

SKILLS

SKILLS INCENTIVES

INCENTIVES

RESOURCES

RESOURCES

ACTIONPLAN

ACTIONPLAN

ACTIONPLAN

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ORGANIZATIONAL CHANGE(CONT’D)

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Organizational change - overview How organizations really work

– organizations as machines;– organizations as political systems;– organizations as organisms;– organizations as flux and transformation.

• Models of and approaches to organizational change– Lewin, three-step model– Bullock and Batten, planned change– Kotter, eight steps– Beckhard and Harris, change formula– Nadler and Tushman, congruence model– William Bridges, managing the transition– Carnall, change management model– Senge, systemic model – Stacey and Shaw, complex responsive processes

• Summary and conclusions

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2-Bullock and Batten, planned change: machine

• Bullock and Batten’s (1985) phases of planned change draw on the disciplines of project management. – Bullock and Batten’s ‘steps to changing your organization’:

• • exploration;• • planning;• • action;• • integration.

– Exploration involves: • verifying the need for change, and • acquiring any specific resources (such as expertise) necessary for the change to go ahead

– Planning is an activity involving key decision makers and technical experts. • A diagnosis is completed and actions are sequenced in a change plan. • The plan is signed off by management before moving into the action phase.

– Actions are completed: • according to plan, • with feedback mechanisms which allow some re-planning if things go off track.

– The final integration phase is started once the change plan has been fully actioned. Integration involves: • aligning the change with other areas in the organization, and • formalizing them in some way via established mechanisms such as policies, rewards and company updates.

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2-Bullock and Batten, planned change: machine

• This particular approach implies the use of the machine metaphor of organizations– The model assumes that: • change can be defined and moved towards in a planned

way. • A project management approach simplifies the change

process by isolating one part of the organizational machinery in order to make necessary changes, – for example:

• developing leadership skills in middle management, or • reorganizing the sales team to give more engine power to key sales

accounts.

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2-Bullock and Batten, planned change: machine – comments (Cameron Change Consultancy)

• This approach implies that: – the organizational change is a technical problem that can be solved with

a definable technical solution.

• this approach works well with isolated issues, but works less well when organizations are facing complex, unknowable change which may require those involved to discuss the current situation and possible futures at greater length before deciding on one approach.– For example we worked with one organization recently that, on receiving a

directive from the CEO to ‘go global’, immediately set up four tightly defined projects to address the issue of becoming a global organization. • These were labeled global communication, global values, global leadership, and global balanced

scorecard. • While on the surface, this seems a sensible and structured approach, there was no upfront

opportunity for people to build any awareness of current issues, or to talk and think more widely about what needed to change to support this directive.

• Predictably, the projects ran aground around the ‘action’ stage due to confusion about goals, and dwindling motivation within the project teams.

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3-Kotter, eight-steps: machine, political, organism

• Kotter ’s (1995) ‘eight steps to transforming your organization’ goes a little further than the basic machine metaphor.

• Kotter’s eight-step model derives from analysis of his consulting practice with 100 different organizations going through change. – His research highlighted

• eight key lessons, and • he converted these into a useful eight step model.

• The model addresses: – some of the power issues around making change happen, – highlights the importance of a ‘felt need’ for change in the

organization, and – emphasizes the need to communicate the vision and keep

communication levels extremely high throughout the process

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3-Kotter, eight-steps: machine, political, organism

KOTTER’S EIGHT-STEP MODEL1. Establish a sense of urgency.

– Discussing today’s competitive realities, – looking at potential future scenarios. – Increasing the ‘felt-need’ for change.

2. Form a powerful guiding coalition. – Assembling a powerful group of people who can work well together.

3. Create a vision. – Building a vision to guide the change effort together with strategies for achieving this.

4. Communicate the vision. – Kotter emphasizes the need to communicate at least 10 times the amount you expect to have to communicate. – The vision and accompanying strategies and new behaviors needs to be communicated in a variety of different ways. – The guiding coalition should be the first to role model new behaviors.

5. Empower others to act on the vision. – This step includes getting rid of obstacles to change such as unhelpful structures or systems. – Allow people to experiment.

6. Plan for and create short-term wins. – Look for and advertise short term visible improvements. – Plan these in and reward people publicly for improvements.

7. Consolidate improvements and produce still more change. – Promote and reward those able to promote and work towards the vision. – Energize the process of change with new projects, resources, change agents.

8. Institutionalize new approaches. – Ensure that everyone understands that the new behaviors lead to corporate success.

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Kotter’s Eight Steps of Leading Change

8 Step Change ModelJohn P. Kotter

“The rate of change is not going to slowDown anytime soon. If anything, competition

In most industries will probably speed upEven more in the next few decades.”

Source: Leading Change, John P. Kotter, 1998

The 8 Stage Process of Creating Major Change

Creating Major Change

1. Establishing a Sense of Urgency

2. Creating a Guiding Coalition

3. Developing a Vision & Strategy

4. Communicating the Change Vision

5. Empowering Broad-Based Action

6. Generating Short-Term Wins

7. Consolidating Gains & Producing More Change

8. Anchoring New Approaches in the Culture

Establishing a Sense of Urgency• Examining the market & competitive realities• Identifying & discussing crisis, potential crisis, major opportunities

Concepts:• Create a crisis: highlight major weaknesses, allow errors to compound• Eliminate obvious examples of excess (company facilities, services,etc• Set goals & targets unrealistically high• Distribute company-wide performance data highlighting deficiencies to more

employees• Force interaction with unsatisfied “customers, suppliers, shareholders.”• Use consultants to force more relevant & honest appraisals• Bombard people with information on future opportunities, rewards for capitalize

on those opportunities, & potential “lost opportunities.”

Source: Leading Change, John P. Kotter, 1998

Creating Major Change

Creating a Guiding Coalition• Putting together a group with enough power to lead the change• Getting the group to work together like a team

4 Key Characteristics of Guiding Coalition:• Positional Power: Are enough key players on board, especially the main line

managers, so those left out can not easily block progress?• Expertise: Are the various points of view, relevant to the tasks at hand,

adequately represented so that informed, intelligent decisions can be made?• Credibility: Does the group have enough people, with good reputations, that

its pronoucements will be taken serious by the other employees?• Leadership: Does the group include enough proven leaders to be able to

drive the change process?

Source: Leading Change, John P. Kotter, 1998

Creating Major Change

Developing a Vision & Strategy• Creating a vision to help direct the change effort• Developing strategies for achieving that vision

Characteristics of an Effective Vision• Imaginable: Conveys a picture of what the future will look like• Desirable: Appeals to the long-term interests of employees, customers,

stakeholders.• Feasible: Comprises realistic, attainable goals• Focused: Is clear enough to provide guidance in decision making• Flexible: Is it general enough to allow individual initiative & alternative

responses in light of changing condition.• Communicable: Is easy to communicate, can be successfully explained

within 5 minutes.

Source: Leading Change, John P. Kotter, 1998

Creating Major Change

Communicating the Change Vision• Using every vehicle possible to constantly communicate the new vision & strategies• Having the guiding coalition role model the behavior expected of employees

Key elements in communicating the vision:• Simplicity. All jargon & technobabble must be eliminated.• Metaphor, Analogy & Example. A verbal picture is worth a thousand

words.• Multiple Forums. Big meetings & small, memos, newspapers, formal and

informal meetings….• Repetition. Ideas sink in only after they have been heard many times• Leadership by Example. Behavior by important people that is inconsistent

with the vision overwhelms other forms of communication.• Explanation of Seeming Inconsistency. Unaddressed inconsistencies

undermine the credibility of all communications.• Give & Take. Two way communication is always more powerful and one-

way communication.

Source: Leading Change, John P. Kotter, 1998

Creating Major Change

Empowering Broad-Based Action• Getting rid of obstacles• Changing systems or structures that undermine the change vision• Encouraging risk taking & non-traditional ideas, activities & actions

Empowering People to Effect Change

• Communicate a sensible vision to employees. • Make sure structures are compatible with the vision.• Provide the training employees need.• Align information and personnel systems to the vision.• Confront supervisors who undercut needed change.

Source: Leading Change, John P. Kotter, 1998

Creating Major Change

Generating Short-Term Wins• Planning for visible improvements in performance, or “wins”• Creating those wins• Visibly recognizing & rewarding people who made the win possible

1. Provides evidence that sacrifices are worth it.2. Reward change agents.3. Helps fine-tune vision & strategies.4. Undermine cynics and self-serving registers.5. Keep bosses on board.6. Build Momentum.

Source: Leading Change, John P. Kotter, 1998

Creating Major Change

Consolidating Gains & Producing More Change• Using increased credibility to change all systems, structures & policies that don’t fit together and don’t fit the transformation strategy• Hiring, promoting, & developing people who can implement the change vision• Reinvigorating the process with new projects, themes & change agents

• More change, not less. The guiding coalition uses the credibility afforded by the short-term wins to tackle additional and bigger change projects

• More Help. Additional people are brought in, promoted and developed to help with all the changes

• Leadership from Senior Management. Senior people focus on maintaining clarity of shared purpose, keeping urgency levels up.

• People management & leadership from below. Lower ranks in the hierarchy provide both leadership & management for specific projects.

• Reduction of unnecessary interdependencies. To make change easier in both short/long-term, managers identify and eliminate unnecessary organizational interdependencies.

Source: Leading Change, John P. Kotter, 1998

Note: Resistance is always waiting to reassert itself!

Creating Major Change

Anchoring New Approaches in the Culture• Creating better performance through customer- & productivity oriented behavior, more and better leadership, & more effective management• Articulating the connections between new behavior & organizational success• Developing means to ensure leadership development & succession

Concepts:• Culture changes come last, not first. Most alteration in norms & shared values come at

the end of the transformation process• Results matter. New approaches usually sink into a culture only after it is very clear that

they work and are superior to the old methods.• Requires a lot of talk. Without verbal instruction and support, people are reluctant to

admit the validity of new practices.• May involve turnover. Sometime the only way to change a culture is to change key

people.• Makes decision on succession crucial. If promotion processes are not changed to be

compatible with the new practices, the old culture will reassert itself

Source: Leading Change, John P. Kotter, 1998

Creating Major Change

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3-Kotter, eight-steps: machine, political, organism – comments (Cameron Change Consultancy)

• This eight-step model is one that appeals to many managers with whom we have worked.

• However, what it appears to encourage is an early burst of energy, followed by delegation and distance. – The eight steps do not really emphasize the need for

managers to follow through with as much energy on Step 7 and Step 8 as was necessary at the start.

– Kotter peaks early, using forceful concepts such as ‘urgency’ and ‘power’ and ‘vision’. • Then after Step 5, words like ‘plan’, ‘consolidate’ and ‘institutionalize’

seem to imply a rather straightforward process that can be managed by others lower down the hierarchy.

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3-Kotter, eight-steps: machine, political, organism - comments

• In our experience the change process is challenging and exciting and difficult all the way through.– we use our own model of

organizational change (Figure 3.3), which is based on our experiences of change, but has close parallels with Kotter’s eight steps. • We prefer to model the change

process as a continuous cycle rather than as a linear progression, and

• in our consultancy work we emphasize the importance of management attention through all phases of the process.

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4-Beckhard and Harris, change formula: organism

• Beckhard and Harris (1987) developed their change formula from some original work by Gelicher.

• The change formula is a: – concise way of capturing the process of change, and – identifying the factors that need to be strongly in place for change to happen.

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4-Beckhard and Harris, change formula: organism

• Beckhard and Harris say:– Factors A, B, and D must outweigh the perceived costs [X] for the change to occur. – If any person or group whose commitment is needed, is NOT:

• sufficiently dissatisfied with the present state of affairs [A], • eager to achieve the proposed end state [B], and • convinced of the feasibility of the change [D],

– then the cost [X] of changing is too high, and that person will resist the change.– … resistance is normal and to be expected in any change effort. Resistance to change takes

many forms; change managers need to analyze the type of resistance in order to work with it, reduce it, and secure the need for commitment from the resistant party.

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4-Beckhard and Harris, change formula: organism – comments (Cameron Change Consultancy)

• This change formula is deceptively simple but extremely useful. – It can be brought into play at any point in a change process to analyze how things are

going. – When the formula is shared with all parties involved in the change, it helps to illuminate

what various parties need to do to make progress.

• This can highlight several of the following problem areas:– • Staff are not experiencing dissatisfaction with the status quo.– • The proposed end state has not been clearly communicated to key people.– • The proposed end state is not desirable to the change implementers.– • The tasks being given to those implementing the change are too complicated, or ill-

defined.

• We have noticed that depending on the metaphor in use, distinct differences in approach result from using this formula as a starting point.

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THANK YOU