3Learning Objectives After Studying Chapter 18, You will know What it takes to be world classHow to manage change effectivelyHow to create a successful future
4Managing ChangeThese executives are all talking about the same things: the difficulties and challenges of creating change, and the need to improve constantly in order to achieve world-class excellence and competitive advantage for the future. Change happens—constantly and unpredictably. Whatever competitive advantage you may have depends on particular circumstances at a particular time, but circumstances change. The economic environment shifts; competitors pop up everywhere; markets emerge and disappear. The challenge for organizations is not just to produce innovative new products—it is to balance a culture that is innovative and that builds a sustainable business. And for individuals, the ability to cope with change is related to their job performance and the rewards they receive.
5Becoming World ClassManagers today want, or should want, their organizations to become world classTo some this may seem like a lofty, impossible, unnecessary goal but it is a goal that is essential to survival and success in today’s intensely competitive business worldBeing world class requires applying the best and latest knowledge and ideas, and having the ability to operate at the highest standards of anyplace anywhereWorld-class companies create high-value products and earn superior profits over the long run
6Sustainable, Great Futures Over the years world-class companies have been widely admired, been considered the premier institutions in their industries, and made a real impact on the worldWorld class companies alsoTurn in extraordinary performance over the long runHave strong core values in which they believe deeply; and they express and live the values consistentlyThey do not focus on beating the competition; the focus primarily on beating themselvesGreat companies have core values, know what they are and what they mean, and live by them – year after year
7Sustainable, Great Futures This table displays the core values of several of the companies that were “built to last.” Note that the values are not all the same. In fact, there was no set of common values that consistently predicted success. Instead, the critical factor is that the great companies have core values, know what they are and what they mean, and live by them—year after year after year.
8The Tyranny of the ‘Or’Many companies, and individuals, are plagued by the tyranny of the orThis refers to the belief that things must be either A or B, and cannot be bothExamples includeChoose to either change or remain stableBe conservative or boldHave control and consistency or creative freedom
9The Genius of the ‘And’Organizational ambidexterity; genius of the ‘and’ refers to the ability to achieve multiple things simultaneouslyPurpose beyond profit and pragmatic pursuit of profitRelatively fixed core values and vigorous change and movementConservatism with the core values and bold business movesClear vision and direction and experimentationLong-term thinking and investment and demand for short-term resultsVisionary, futuristic thinking and daily, nuts-and-bolts execution
10Organization Development Organization development is a system wide application of behavioral science knowledge to develop, improve, and reinforce the strategies, structures, and processes that lead to organization effectivenessIt improves the organization’s ability to respond to external groups like customers, stockholders, governments, employees, and other stakeholdersIt has an important underlying value orientation – it supports human potential, development, and participation in addition to performance and competitive advantage
11Achieving Greatness Three are four key factors to achieving greatness Strategy – focused on customers, continually fine-tuned based on marketplace changes, and clearly communicated to employeesExecution – good people, with decision-making authority on the front lines, doing quality work and cutting costsCulture – one that motivates, empowers people to innovate, rewards people appropriately, entails strong values, challenges peopleStructure – making the organization easy to work in and easy to work with, characterized by cooperation and the exchange of information and knowledge throughout the organization
12Managing ChangeShared leadership is crucial to the success of most change effortsPeople must be not just supporters of change they also need to be implementersThere needs to be a permanent rekindling of individual creativity and responsibility, a true change in the behavior of people throughout the organizationThe essential task is to motivate people fully to keep changing in response to new business challenges
13Motivating People to Change People must be motivated to changeManagers tend to underestimate the amount of resistance they will encounterSome general for resistance include:Inertia – people don’t want to disturb the status quoTimingSurprisePeer pressure
14Motivating People to Change Some change-specific reasons for resistance includeSelf-interestMisunderstandingDifferent assessmentsManagement tactics
16A General Model for Managing Resistance Motivating people to change often requires three basic stagesUnfreezingMovingRefreezing
17Specific Approaches to Enlist Cooperation Most managers underestimate the variety of ways they can influence people during a period of changeSome effective approaches includeEducation and communicationParticipation and involvementFacilitation and supportNegotiation and rewardsManipulation and cooptationExplicit and implicit coercion
19Harmonizing Multiple Changes Total organization change involves introducing and sustaining multiple policies, practices, and procedures across multiple units and levelsTotal organizational changes canAffect the thinking and behavior of everyone in the organizationEnhance the organization’s culture and successBe sustained over timeThere are no “silver bullets” or single-shot methods of changing organizations successfully. Single shots rarely hit a challenging target. Usually, many issues need simultaneous attention, and any single, small change will be absorbed by the prevailing culture and disappear. Because companies introduce new changes constantly, many people complain about their companies’ “flavor-of-the-month” approach to change. That is, employees often see many change efforts as just the company’s jumping on the latest bandwagon or fad. The more these change fads come and go, the more cynical people become, and the more difficult it is to get them committed to making the change a success. Management needs to “connect the dots”—that is, integrate the various efforts into a coherent picture that people can see, understand, and get behind. You connect the dots by understanding each change program and what its goals are, by identifying similarities among the programs and identifying their differences, and by dropping programs that don’t meet priority goals with a clear results orientation. Most important, you do it by communicating to everyone concerned the common themes among the various programs: their common rationales, objectives, and methods. You show them how the various parts fit the strategic big picture, and how the changes will make things better for the company and its people. You must communicate these things thoroughly, honestly, and frequently.
20Leading Change Successful change requires managers to actively lead it Leaders must start by examining the current realities facing the organizationFrom here they can create a sense of urgencyThis slide has the steps of leading change listed. The steps include many of the concepts discussed in previous chapters therefore slides have not been added to describe each step.
21Leading ChangeThe leader’s first step in a change process is to create a sense of urgency. This requires examining current realities and pressures in the marketplace and the competitive arena, identifying both crises and opportunities, and being frank and honest about them. This is an important component, in part because so many large companies grow complacent. This figure shows some of the common reasons for complacency. To stop complacency and create urgency, the manager can talk candidly about weaknesses compared to competitors, making a point of backing up statements with data. Other tactics include setting stretch goals, putting employees in direct contact with unhappy customers and shareholders, distributing worrisome information to all employees instead of merely engaging in management “happy talk,” eliminating excessive perks, and highlighting to everyone the future opportunities that exist but that the organization so far has failed to pursue. Ultimately, urgency is driven by compelling business reasons for change. Survival, competition, and winning in the marketplace are compelling; they provide a sense of direction and energy around change. Change becomes not a hobby, a luxury, or something nice to do, but a business necessity.
22Shaping the FutureA newspaper reporter found a variety of forecasts about the global future, but clear agreement on two thingsA very different world is roaring up on usThe history of our times will be the story of how we prepared for this different world – which so far, is mostly a story of how we have failed to prepare
23Shaping the Future Most change is reactive Reactive change is in response to pressure; it is problem driven changeImplies that you are a follower not a leaderProactive change means anticipating and preparing for an uncertain futureIt implies being a leader and creating the future you wantOn the road to the future will you be:The windshieldThe bugOr the driver
24Thinking about the Future If you think only about the present, or wallow in the uncertainties of the future, your future is just a roll of the dice“The global economy could be on the cusp of anage of innovation equal to that of the past 75 years. All the right factors are in place: Science is advancing rapidly, more countries are willing to devote resources to research and development and education, and corporate managers, too, are convinced of the importance of embracing change” - Business Week
25Creating the FutureCompanies can try different strategic postures to prepare to compete in an uncertain futureAdapters take the current industry structure and its future evolution as givensShapers try to change the structure of their industries, creating a future competitive landscape of their own designThe challenge is not to maintain your position in the current competitive arena, but to create new competitive arenas, transform your industry, and imagine a future that others don’t seeCreate your own advantages
26Creating the FutureThis figure illustrates the vast opportunity to create new markets. Articulated needs are those that customers acknowledge and try to satisfy. Unarticulated needs are those that customers have not yet experienced. Served customers are those to whom your company is now selling, and unserved customers are untapped markets. Business-as-usual concentrates on the lower-left quadrant. The leaders who recreate the game are constantly trying to create new opportunities in the other three quadrants.
27Shaping Your Own Future If you are an organizational leader, and your organization operates in traditional ways, your key goal should be to create a revolution, genetically reengineering your company before it becomes a dinosaur of the modern eraCreating the future you want for yourself requires setting high personal standardsDon’t’ settle for mediocrityBecome a life long learnerConsciously and actively manage your own careerBecome indispensable to your organization
28Shaping Your FutureThis table helps you think about how you can continually add value to your employer, and also to yourself, as you upgrade your skills, your ability to contribute, your security with your current employer, and your ability to find alternative employment if necessary. The most successful individuals will take charge of their own development just like an entrepreneur takes charge of a business.
29Learning and LeadingContinuous learning is a vital route to renewable competitive advantage; organizations and people should constantlyexplore,DiscoverTake actionThe philosophy of continuous learning helps your company achieve lower cost, higher quality, innovation, and speed – and helps you grow and develop on a personal level
31Learning and LeadingA leader should be able to create an environment in which others are willing to learn and change so their organizations can adapt and innovate [and] inspire diverse others to embark on a collective journey of continual learning and leadingTo do this you will need to commit to life long learningLife long learning requires occasionally taking risks; moving outside of your ‘comfort zone’; honestly assessing the reasons behind your successes and failures; and being open to new ideas
32Learning and LeadingAs a leader you will inhabit and grow into different stages in lifeThis suggests that you not only do these things but you do them wellThese stages are:Level 1 – Highly capable individualLevel 2 – Contributing team memberLevel 3 – Competent managerLevel 4 – Effective LeaderLevel 5 – Level 5 executive
34The futureA successful future derives from adapting to the world and shaping the future; being responsive to others’ perspectives and being clear about what you want to change; encouraging others to change while recognizing what you need to change about yourself; understanding current realities and passionately pursuing your vision; learning and leading.
35Concluding ThoughtFor yourself, as well as for your organization, be ambidextrous: recognize and live the genius of the and.
36UnfreezingUnfreezing – management realizes that its current practices are no longer appropriate and the company must break out of its present mold by doing things differentlyAn important contributor to unfreezing is the recognition of a performance gapA performance gap is the difference between actual performance and desired performanceA performance gap can also be between what is and what could beManagement must use care not to blame people for performance gapsReturn
37Moving Moving is the process instituting the change Begins with establishing a vision of where the company is headingOne technique that helps to manage the change process is force-field analysisForce-field analysis is an approach to implement Lewin’s unfreezing, moving, refreezing model; it involves identifying the forces that prevent people from changing and those that will drive people toward changeReturn
38RefreezingRefreezing means strengthening the new behaviors that support the changeImplementing control systems that support the changeApplying corrective action when necessaryReinforcing behaviors and performance that support the agendaGiven the dynamic nature of today’s business world refreezing is not always the best third step, if it creates new behaviors that are as rigid as the old onesRefreezing is appropriate when it permanently installs behaviors that maintain essential core valuesReturn