Lecture 2

1. Make the organization aware of the crisis or create a crisis

2. Identify a transformational vision

3. Transformational leadership

4. Identify common/shared goals and achieve them

5. Information and education

Use PESTEL factors

Relevant targets of an organization

Experiences with previous changes and change conditions

Organizational vision for change

Culture/habits in how to change

Experienced time pressure

E.g. incremental vs. radical

› Solving the ‘right’ problem

› Who defines the problem and in what terms?

› The degree of change required in terms of realignment or transformation

Example: radical - lean philosophy and many new practices

The degree to which relevant capabilities are available to bring about the change

• Individual level

• Managerial level

• Organizational level

› Kind of capabilities

- Technical knowledge and skills (related to the what to change)

- Project management knowledge and skills

- Problem solving skills (creativity, analysing skills, method skills

- Communication skills (convince, negotiate, inspire and open to dialogue, explain, motivate, knowledge transfer

Example:

• Few people with technical/lean knowledge/skills

• Limited communication skills

• Limited diversity management skills

Cognitive component of change readiness (beliefs and thoughts):

• Belief that change is needed (discrepancy, see need for change)

• Proposed change is appropriate

• Belief that perceived capability to implement is available (efficacy)

• Belief organization will provide tangible support (principal support)

• Evaluation of the benefits or costs of a change for own job and role

Affective component of change readiness (positive feelings, emotions):

• Currently experienced positive feelings regarding the change

• Imagining (emotions in the future)

• Examples: Hope, joy, delight, excitement,

Understanding the power dynamics in an organization is crucial in a successful change process

1. Resource power—the access to valued resources in an organization. These include rewards, sanctions, coercion, authority, credibility, expertise, information, political affiliations, and group power. Resource power is very similar to the individual power

2. Process power—the control over formal decision-making arenas and agendas. Examples of process power would be the power to include or exclude an item on a discussion agenda. Nominating committees have significant process power as they determine who gets to sit on committees that make decisions.

3. Meaning power—the ability to define the meaning of things. Thus, the meaning of symbols and rituals and the use of language provide meaning power. For example, a shift from reserved parking and large corner offices for executives to first-come parking and common office space can symbolize a significant move away from the reliance on hierarchical power.

• Time available

• Money: investments, training, meetings

• Information processing

The degree that preservation is relevant: what does the company wants to maintain, protect, keep the same?

For example:

• Ways of working

• Cultural aspects

• Employees with particular skills, characteristics, competencies

• Mix of employees

• Maintain the collaboration with specific suppliers, clients

Opportunities:

• Motivation and support from top-management

• Lean experts and knowledge within the company

• Competitive advantage by learning from one another

Risks:

• Complex change:

• Need for change: not everybody experiences a need for change (resistance), multiple perspectives, multiple interests

• Scope, UOA

• Culture and habits vary between the subsidiaries

• The change process won’t energize people until they begin to understand the need for change. People may have a general sense that things are amiss or that opportunities are being missed, but they will not mobilize their energies until the need is framed, understood, and believed. An organization may have amassed data on customers, production processes, suppliers, competitors, organization financials, and other factors, but nothing will happen until someone takes the information and communicates a compelling argument concerning the need for change

• The challenges at this stage for change leaders are to develop the information they need to assess the situation, develop their views on the need for change, understand how others see that need, and create awareness and legitimacy around the need for change when a shared awareness is lacking. To make headway on these questions and challenges, change leaders need to seek out and make sense of external data, the perspectives of stakeholders, internal data, and their own personal concerns and perspectives

• In short, the need for change needs to be understood, and awareness and legitimacy needs to be created

• Change leaders should scan the organization’s external environment to gain knowledge about and assess the need for change. Getting outside one’s personal perceptual box helps to avoid blind spots that are created by “closed-loop learning.

  • Closed-loop learning is learning that focuses on current practices and perspectives rather than developing a deeper understanding of the complex interactions underpinning the situation, including the impact of the external environment

• First, a disciplined approach is needed to gather data. The absence of a disciplined approach to data gathering may mean that time is wasted, that potentially important data go uncollected or are forgotten, or the data are never translated into useful information for the organization.

• Some sources for data will be concrete (trade papers, published research, and news reports), while others will be less tangible (comments collected informally from suppliers, customers, or vendors at trade shows).

• The change leader should consider engaging others in processes related to framing the questions, identifying and collecting data, and systematically interpreting the results in a timely fashion. This makes the task more manageable, increases the legitimacy of the data and the findings, builds awareness and understanding of the need for change, and creates a greater sense of ownership of the process.

• Change leaders need to be aware of the perspectives of key internal and external stakeholders and work to understand their perspectives and reasons for supporting or resisting change. This will inform and enrich a change agent’s assessment of the need for change and the dynamics of the situation, and allow them to frame their approaches in ways that have a greater chance of generating needed support.

• Externally, these stakeholders may include suppliers, bankers, governmental officials, customers, and alliance and network partners. Internally, the stakeholders will include those individuals who are directly and indirectly affected by the change

• If the change leader hopes to enlist their support or at least minimize their resistance, the leader needs to capture and consider their perspectives and the underlying rationale.18 Particular stakeholders may still remain ambivalent or opposed to the change, but not seeking them out and listening is likely to make things worse.

• By openly engaging stakeholders in dialogue, listening and responding with care and consideration, and then proceeding to the next stage in the change process. Too many executives underestimate the need for communication and its importance as two-way. There can never be too much top-level communication and support, but unfortunately, there is often far too little listening.

• Change agents who command internal respect and credibility understand the fundamentals of what is going on within a firm. Change leaders need to know what can be inferred from internal information and measures, how these are currently being interpreted by organizational members, and how they may be leading the firm down the wrong path. Some of this will be in the form of so-called hard dat —the sort that can be found in the formal information system and it is often numeric in nature (e.g., customer retention and satisfaction, service profitability, cycle time, and employee absenteeism).

• Other valuable information will be soft data, the intuitive information gathered from walking around the building and work areas and having discussions with critical stakeholders. For example, do employees generally pick up litter such as candy wrappers, or is that task left exclusively to the janitorial staff? The former often indicates widespread pride and feelings of ownership in an organization.

• Many change leaders have difficulty publicly owning the fact that they do not have all the answers and demonstrating a real interest in listening and learning.

• Reputations for skill, judgment, and success develop over time, and this development is aided by a greater willingness to look, listen, and learn before committing to a course of action

• People will build trust in your judgment, knowing that you’ve done your homework and considered the situation seriously, and show others that a little humility in one’s judgment never hurts

• The answer to “Why?” is a prerequisite to the “What?” and the “How?” of change

• While dissatisfaction with the status quo by senior managers is certainly very helpful in advancing change, it is unlikely to be a sufficient condition

• Dissatisfaction among others is needed. This dissatisfaction can be developed by sharing competitive information, benchmarking the organization’s performance against others, challenging inappropriate behaviors through highlighting their impact, developing a vision for the future that creates frustration with the present state, and simply mandating dissatisfaction if one has the clout.

• Change initiators may understand the need for change, but other key stakeholders may not be prepared to recognize that need or believe it is strong enough to warrant action.

Organizational readiness for change is determined by the previous change experiences of its members; the flexibility and adaptability of the organizational culture; the openness, commitment, and involvement of leadership in preparing the organization for change; and member confidence in the leadership. It is also influenced by the organizational structure, the information members have access to, reward and measurement systems, resource availability, and the organization’s flexibility and alignment with the proposed change

• Previous experiences affect individual readiness for change. If organizational members have experienced more gain than pain from past change initiatives, they will be more predisposed to try something new. However, there is also the risk that they may resist changes that divert them from initiatives that have worked in the past.

• If previous change experiences have been predominantly negative and unproductive, employees tend to become disillusioned and cynical (“we tried and it didn’t work” attitude). However, under the right conditions, this situation may produce increased resolve concerning the need for change.

Cultures and systems that encourage the collection and objective interpretation of relevant environmental, competitive, and benchmark data tend to be more open to change and provide members of the organization with the information they need to provoke their thinking concerning the need for change. If the culture supports environmental scanning and encourages a focus on identifying and resolving problems rather than “turf protection,” organizations will be more open to change.

1. Trustworthy leadership—the ability of senior leaders to earn the trust of others and credibly show others how to meet their collective goals

2. Trusting followers—the ability of nonexecutives to constructively dissent or willingly follow the new path

3. Capable champions—the ability of the organization to attract and retain capable champions

4. Involved middle management—the ability of middle managers to effectively link senior managers with the rest of the organization

5. Innovative culture—the ability of the organization to establish norms of innovation and encourage innovative activity

6. Accountable culture—the ability of the organization to carefully steward resources and successfully meet predetermined deadlines

7. Effective communications—the ability of the organization to effectively communicate vertically, horizontally, and with customers

8. Systems thinking—the ability of the organization to focus on root causes and recognize interdependencies within and outside the organization’s boundaries.

1. Make the organization aware that it is in or near a crisis.

   1. If mishandled, it may be viewed as manipulative and result in heightened cynicism and reduced commitment. The change leader’s personal credibility and trustworthiness are then at stake.

2. Identify a transformational vision based on higher-order values.

   1. Transformational visions tap into the need for individuals to go beyond themselves, to make a contribution, to do something worthwhile and meaningful, and to serve a cause greater than themselves. These appeals can provide powerful mechanisms to unfreeze an organization and create conditions for change. In addition, transformational visions pull people toward an idealized future and a positive approach to needed change.

3. Find a transformational leader to champion the change.

   1. Charismatic appeals can prove powerful and helpful, but there are good reasons for people to be suspicious of charismatic appeals because history demonstrates that personal magnetism is not always directed toward desirable outcomes.

4. Take the time to identify shared goals and work out ways to achieve them.

   1. Shared interest in and commitment to higher-order goals can provide a powerful stimulus for commitment and mobilization

5. Use information and data to raise awareness of the need for change.

   1. Reluctance to change may be a result of lack of information, or confusion about conflicting sources of information. This can be overcome with a well-organized communications campaign that provides employees with needed information, such as best practices in a specific area; benchmark data about the practices and approaches of others; visits to other organizations to see and hear about their practices; or competitive data on the specific topic

All too often, strategists will introduce a new direction and seek to change the organizational culture without attending to the question of the impact of cultural artifacts on the desired change.63 Cultural artifacts are the stories, rituals, and symbols that influence employees’ attitudes and beliefs; they are important because they help to define and give life to the culture.

• Strategic frames, those mental models of how the world works become blinders to the changes that have occurred in the environment;

• Processes harden into routines and habits, becoming ends in themselves rather than means to an end;

• Relationships with employees, customers, suppliers, distributors, and shareholders become shackles that limit the degrees of freedom available to respond to the changed environment;

• Values, those deeply held beliefs that determine corporate culture, harden into dogma, and questioning them is seen as heresy

• Change leaders use visions to create and advance the mental pictures people have of the future. Developing a new vision is a key part of defining a future state: the change leader needs to articulate the gap between where an organization is today and where it wishes—ideally— to go in the future.

• It addresses such questions as “What does this organization stand for?”

• Change agents often create “sub-visions” in different department units to generate emotional energy and directional clarity for a large-scale organizational change.

• Once the vision is clear, the issue becomes one of enactment by employees. Storytelling is a technique employed by change leaders to communicate a vision and mobilize awareness and interest. Because people identify with and remember stories, change agents can use stories in several ways: to create contextual awareness of how an organization got to its problematic condition; to demystify data; to clarify a change initiative and why a particular course of action makes sense; to relieve or increase tension and awareness; and finally, to instill confidence.

• There are three ways:

  • A leader-developed vision is done largely in isolation from others. Once it has been created, it is announced and shared with others in the organization.

  • Leader-senior teamdeveloped vision casts a broader net. Members of the senior team are involved in the process of vision formation. Once completed, it is then shared with others.

  • Bottom-up visioning, or an employee-centric approach, is time consuming, difficult, and valuable in facilitating the alignment of organizational members’ vision with the overall vision for change

• Three key messages:

  • (a) the mission or purpose of the organization, (b) the strategy for achieving the mission, and (c) the elements of the organizational culture that seem necessary to achieving the mission and supporting the strategy

• While the rules for crafting a vision remain the same, the focus of the vision shifts depending upon the level and position of the change leader. Different parts of the organization will focus the vision for their areas in ways that reflect the aspirations for their part of the enterprise. They should be aligned with the overarching vision but differentiated in ways that generate meaning and energy for those involved with that part of the organization.

• In other words, it is focused on the specific changes to be implemented. By definition, they are designed to contribute to the vision of the organization but are focused in their scope, and often require the cooperation of others to bring them to fruition

• This is easy to understand if subunits, such as divisions, are involved with different products and/or services and/or different markets. However, it also holds for other functions within the organization, such as manufacturing, marketing, or accounting services.

• Change leaders’ goals are advanced when they develop compelling messages that appeal to the particular groups of people critical to the change initiative. However, in practice, there will be tensions between the changes proposed and what other parts of the organization are attempting to accomplish.

• When change leaders develop their vision for change, they are challenged with the question of where to set the boundaries. A narrower, tighter focus will make it easier to meet the test of Jick’s characteristics of an effective vision for a specific target audience, but it may also reduce the prospects for building alliances and a broad base of support across an organization.