Change Management Specialist (CMS) An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage. Jack Welch
What is This Course About? By the end of this course you will be able to: Design and manage change programs, persuade people to change and respond to resistance to change
Why Change? By the end of this session you will be able to: Understand why some organizations fail in change management
Why Change? The purpose of this course is to familiarize you with the process of change management and help you understand why some companies succeed in implementing change while others fail.
Why Change? You will be introduced to a variety of theories on change management and best practice guidelines derived using comprehensive studies carried out by the scientific community on change. You will learn what needs to be done both behaviourally and structurally to make change stick.
Why Change? This course helps you understand why some people are afraid of change and resist it. You will be introduced to a number of techniques that are shown to be effective to overcome this resistance. You will also learn about coaching, mentoring, motivating and various management tools that can help you in the process.
Why Change? This session is about leadership and management, especially change management. Main causes of organization s failure in terms of change management are explored in this session. Different types of change are also explained to help you predict how your own organization might react to a changing environment. You will also learn about two established theories on change management and explore their application.
Why Organizations Fail Recent history shows that we have become good at creating companies around new concepts, ideas and technologies. Founders of these companies often have a vision for the use of the technology or methods they pioneer and use that vision to develop the company.
Why Organizations Fail An idea Mastering a new technology or method Founding a company Acquiring offices Setting up factory and starting to sell Success leads to more recruitment Growth requires management
Why Organizations Fail Once the company becomes more successful, it starts to dominate the market. This in turn leads to more growth which requires a more extensive organization. This is when the risk of failure starts to increase.
Why Organizations Fail The organization s priority changes to manage this growth and turns its focus inwards. Members of staff are trained mainly on management and not on leadership simply because there is a huge demand for managing various aspects of the organization as it grows. Employees learn how to solve problems, how to plan and how to manage resources but there is no emphasis on leading.
Management focuses on problem solving rather than leadership Increased bureaucracy Emergence of competitive middle managers; Elastic Band Focus changes to revenue generation than making great products Organizational culture increasingly resistive to change
Why Organizations Fail The strong focus on management leads to excess bureaucracy. Since the organization is dominant in the market, sales still continue and this lack of leadership and focus on external events goes unnoticed.
Why Organizations Fail Meanwhile, a new breed of competitive managers emerges within the company. They are totally focused on increasing efficiency and monitoring products and services in ever more imaginative ways and totally lose track of external opportunities or threats.
Why Organizations Fail There is no urgency in changing anything, because managers have always been encouraged and trained to maintain the current system. The focus is no longer on making great products or solving a customer s needs; instead, it is about maintaining market share and increasing revenue per customer to make more money.
Why Organizations Fail This inward managerial attitude leads to a damaging culture which is resistive to changes and lacks leadership. It easily misses the obvious trends in the market and sometimes even denies their existence.
Ignores or actively denies new trends in the market Too slow to change even when obvious Announces various profit warnings; reduces number of staff Share price goes down Further cuts and change in senior management
Why Organizations Fail Before long, a new competitor releases a vastly superior product to the market by which time it is too late and too difficult to turn the massive lingering corporate ship around.
Why Organizations Fail What follows is what we have heard many times; growth forecast warning, downsizing, political infighting, share price crashes and increased volatility, redundancies, a series of management changes, still losing market share and becoming increasingly irrelevant in the industry. In extreme cases the company may go bankrupt and leave a legacy of how not to do it.
Becoming more irrelevant Possible bankruptcy How not to do it
The Solution The solution is to initiate change early and create a culture of leadership. This is not about having one larger than life leader that goes around convincing everyone of a new vision. Large organizations are much too big for this.
The Solution Instead, many people need to get involved in leading the change and this must be embedded into the culture of an organization so it can always anticipate and react to market changes.
Is Change Inevitable? From a certain view, change is neither emergent nor planned. As an organization goes through cycles of growth it needs to respond to the changing environment. The following chart demonstrates an organizational life cycle and how various crises may develop as the organization grows (Greiner 1972).
SMALL Size of Organization LARGE Is Change Inevitable? Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Crisis of Control Crisis of Bureaucracy Next Crisis? Crisis of Autonomy Crisis of Leadership YOUNG Age Management of Organization and Strategy Institute MATURE
Is Change Inevitable? The above graph shows that as the organization grows, it passes through 5 distinct phases. As each growth period comes to an end, the organization goes through a short-lived crisis. This trend forms the evolution and revolution stages of a company as shown in the diagram. The flat lines are the evolution and the zigzags are the revolution. A typical life cycle pattern consists of the following (Clark 1994):
Life Cycle The Entrepreneurial Stage The Collective Stage The Formalization Stage The Elaboration Phase
The Entrepreneurial Stage Focus is on manufacturing products or providing the service. Key strategy is to survive. Success brings growth and the need to recruit. Employee need managing and organizational strategy becomes more complex.
The Collective Stage The organization is more formally shaped into departments. Professional managers are recruited who share the same vision as leadership. Further growth requires more management control and delegation. Responsibilities are well defined and there is a stronger sense of autonomy as it increases efficiency.
The Formalization Stage Systems of communication and control become more formal. Bureaucratization occurs. Systems of rewards and incentives, salary structures, and organizational hierarchy are formalised. Low level mangers become more autonomous as the organization grows. There is a differentiation between strategic management and management required to implement policy.
The Elaboration Phase Strategic change expected. The organization may reach a plateau or may even show the first stages of decline. Middle managers may need to learn new skills to achieve change. This stage may include rapid turnover and replacement of senior management.
Types of Change Companies don t always go through change uniformly and this can have a significant impact on the way they handle change or anticipate it. The following are the most popular patterns of change (Arnold et al. 1998).
HIGH Types of Change LOW Rate of Change Time
Smooth Incremental Change Change evolves slowly and follows a clear path. The changes are minor and people can cope with them.
HIGH Smooth Incremental Change LOW Rate of Change Time Range of Stability
Bumpy Incremental Change There is some degree of predictability in the external environment but it is difficult to predict frequency, duration or magnitude of change.
HIGH Bumpy Incremental Change LOW Rate of Change Time Range of Stability
Discontinuous Change Discontinuous change is a radical change and a significant shift away from the way currently things are done. This can be as a result of a crisis in the external environment, possibly affecting the whole industry and not just your organization. Alternatively, the crisis could be due to actions of a competitor. The key point is that the organization is under threat and needs to act fast, and change fast to accommodate. Because of the urgency, management is likely to provide instructions for change rather than consult for a way forward. The aim is short-term results and compliance. Once the crisis is over, management can proceed to gain long term commitment and anchor the change into organizational culture.
HIGH Discontinuous Change LOW Rate of Change Time Range of Stability
Punctuated Equilibrium This illustrates situations where periodically there is a sudden burst of activity. It suggests that the organization has carried on with the change within the range of stability, though every now and then people had to move out of their comfort zones to respond to various demands in the market and the environment.
HIGH Punctuated Equilibrium LOW Rate of Change Time Range of Stability
Continuous Transformation As communication technology has significantly changed the environment and has introduced dramatic changes, it seems that the incremental punctuated model of change will no longer be sufficient to keep pace. Instead, a continuous transformation model is proposed where an organization needs to proactively reinvent itself and initiate change while responding to environmental changes. It means that rate of change will frequently go out of the range of stability as the organization aims to stay on top.
HIGH Continuous Transformation LOW Rate of Change Time Range of Stability
Leadership versus Management Management is different from leading. Management is the set of processes used to run a complicated mix of people and technology smoothly. In contrast, leadership is the set of processes that creates an organization or leads it to change and adopt according to circumstances.
Leadership versus Management When it comes to change management, the distinction is critical. Transforming an organization depends a lot more on leadership than it does on management. Unfortunately, many want to manage change while in practice they should focus on leading the organization through change. Here is how management compares to leadership:
Leadership versus Management Management Leadership Organising Planning Budgeting Staffing Problem solving Controlling Resource management Providing policies and procedures Delegating Monitoring Vision Strategy Producing change to achieve the vision Influence direction and thought process Create teams Create coalitions that understand the change Motivating and energizing Overcoming bureaucratic barriers
Two Theories of Change There are two archetypes of theories of change as demonstrated by Michael Beer and Nitin Nohria (Price 2009). They are known as Theory E and Theory O.
Two Theories of Change Theory E Change based on economic value. Theory O Change based on organizational capability. HARD APPROACH SOFT APPROACH
Theory E: Change based on economic value. This is the kind of change that leads to headlines. It involves substantial redundancies, heavy use of economic incentives, downsizing, cost saving, selling parts of the business to save costs and so on. It is also known as the hard approach to change.
Theory O: Change based on organizational capability. Here, the goal is to develop a corporate culture through organizational training and learning. It is a long term approach and involves self-reflection, feedback, implementing more changes and gradually developing a new corporate culture with new ways of working. It is also known as the soft approach to change.
Aims Focus Theory E Increase and Increase and maximize maximise shareholder value shareholder value Focus on cost Focus on cost saving, saving, efficiency efficiency and systems and systems Theory O Improve organisational capability Improve organizational capability Focus on corporate Focus on corporate culture, culture, attitudes and attitudes and employee mentality employee mentality Results Focus on short-term Focus immediate on short-term results without which the organization may immediate results not survive Focus on long terms goals to long terms change course and end up with persistent goals gains
Theory E Theory O Leadership Top down change management Top down change management Bottom up change management Bottom up change management Process Plan specific programs Plan specific programs Experiment and Experiment and evolve evolve
Theory E Theory O Use of Consultants Consultants analyse Consultants the organisational are used to analyze the organizational problem and provide problem and shape and solutions provide and shape solutions Consultants provide support to the management and employees and to employees come up with their own solutions Consultants provide support to the come up with their own solutions Rewards Provide financial incentives motivate to motivate Provide financial incentives to Use commitment and Use commitment increased and increased responsibility as incentives responsibility motivate as incentives motivate
Two Theories of Change Theory E and O are not always used in isolation; they can be combined to achieve better results. The combination allows the organization to quickly cut costs and increase efficiency and therefore avoid immediate financial disaster or serious cash flow problems.
Two Theories of Change Meanwhile, the organization can embark on a corporate cultural change to shift its focus to more profitable areas and respond to the changing environment by permanently modifying the way they work.
How Change Affects People By the end of this session you will be able to: Understand how people handle change and why their reactions matter
How Change Affects People This session explores various ways in which people respond to change. This helps you understand what people are going through as a result of the change and allows you to plan accordingly to provide support, training, mentoring, coaching and resources.
How Change Affects People You will also learn about how ideas spread which further helps you see how people react to these new ideas which again can help you to plan ahead as you go through different stages of change.
How We Respond to Change The following model known as the The Personal Transition Curve was developed by John Fisher. It captures how individuals deal with change. This is a useful model for change managers and those who need to be aware of the consequences of change so they can provide support as the change unfolds.
HIGH What is going to happen? LOW Acceptance Anxiety Time
Anxiety Thought: What is going to happen? Concept: Not knowing how to cope with future change. Becoming anxious because the events lie outside of an individual s control.
HIGH Finally, something is going to change. Happiness LOW Acceptance Anxiety Time
Happiness Thought: Finally, something is going to change. Concept: Anticipating change and positively looking forward to it, hoping that things will progress forward. Confirmation of thoughts that something was indeed wrong and needed change and hence welcoming the change. This stage can lead to unrealistic expectations if not managed well.
HIGH Can I handle this? Happiness LOW Acceptance Anxiety Fear Time
Fear Thought: Can I handle this? Concept: There is a fear that something significant is going to change and will have an effect on everything. How would the individual handle this?
HIGH This is big and can disrupt my life. Happiness LOW Acceptance Anxiety Fear Threat Time
Threat Thought: This is big and can disrupt my life. Concept: The change is perceived as a threat to lifestyle habits or a disruption to the normal state of affairs in the current environment. The individual is afraid to end up with limited choices in the future or how the change can impact others perception of him.
LOW Acceptance HIGH Did I really behave that way? Happiness Anxiety Fear Threat Guilt Time
Guilt Thought: Did I really behave that way? Concept: The individual compares his past actions and reactions and explores alternative interpretations. The selfawareness and discovery can lead to guilt, causing the person understand the extent of what was wrong and how it had impacted others.
HIGH This is hopeless. Happiness LOW Acceptance Anxiety Fear Threat Guilt Depression Time
Depression Thought: This is hopeless. Concept: The individual is de-motivated and confused. He cannot see how he can fit into this new future. The individual does not identify with the change and is somewhat lost.
HIGH This is not for me. I cannot be like this. Happiness LOW Acceptance Anxiety Disillusionment Fear Threat Guilt Depression Time
Disillusionment Thought: This is not for me. I cannot be like this. Concept: The individual loses motivation and is in despair. His values and beliefs are disrupted and are incompatible with those of the organization or what the change dictates. The individual is unmotivated and gradually withdraws by providing minimum effort, constantly criticising or complaining. The individual may also resign to fully disengage from the change.
HIGH I cannot accept this. This is not right. Happiness LOW Acceptance Anxiety Fear Threat Guilt Depression Time Disillusionment Hostility
Hostility Thought: I cannot accept this. This is not right. Concept: The change has not been accepted and is in constant friction with the individual s current beliefs. The new processes are either ignored or are actively undermined.
HIGH There is no Change. Happiness Denial LOW Acceptance Anxiety Disillusionment Fear Threat Hostility Guilt Depression Time
Denial Thought: There is no Change. Concept: The change is not accepted and its presence denied. The individual falls back to old processes and habits ignoring the need for change or evidence that supports ideas that are contrary to his beliefs.
HIGH I can see how I would fit into this future. Happiness Denial LOW Acceptance Anxiety Fear Threat Guilt Depression Time Disillusionment Gradual Acceptance Hostility
Gradual Acceptance Thought: I can see how I would fit into this future. Concept: The individual can see how to handle the change and how it can work for him. He is beginning to see a future which is better as the result of the change.
HIGH This is great. The change is working. Happiness Denial Moving Forward LOW Acceptance Anxiety Fear Threat Guilt Depression Time Disillusionment Gradual Acceptance Hostility
Moving Forward Thought: This is great. The change is working Concept: The individual can see how the change can directly benefit him and how to exploit these changes to move forward both individually and also as an organization.
Why Reaction to Change Matters The Personal Transition Curve is a great tool in recognizing what is needed at each stage. As a manager who is leading the change, you need to be aware that most people may not clearly understand which part of the curve they are in.
Why Reaction to Change Matters It is your job to recognize this, communicate appropriate information and provide support to help them through these stages.
Why Reaction to Change Matters As you may have noticed, many of the stages on the transition curve are highly emotional. Management must take steps to address these emotional upheavals as they occur and control their impact in order to minimize the spread of negativity throughout the organization.
Why Reaction to Change Matters Another important concept is that different people transit through the curve at different speeds. Hence, you will end up with a team where each person thinks slightly differently about the change and hence behaves differently. This is why the management needs to provide a tailored solution to accommodate various needs and reassure the staff accordingly.
How Ideas Spread Another useful classification of how people react to change and how ideas spread through culture is the Diffusion of Innovations theory by Everett Rogers. Diffusion is a process where a change or an innovation is communicated in a social network through various channels over time.
Innovators Laggards Early Adaptors Early Majority Late Majority How Ideas Spread 34% 34% 13.5% 2.5% 16% Time
Innovators Willing to take risks Slightly radical Crave change and innovation Cope well with uncertainty Well informed with multiple sources of information
Early adopters Gatekeepers of new ideas into a system The opinion leaders
Early majority Take more time to adopt Can be influenced by early adopters Seldom hold a position of opinion leadership
Late majority Sceptical to change Might adopt as a result of increased pressure from peers
Laggards Isolated from social network Will be the last to change Suspicious of change agents Show little or have no opinion leadership The adoption of innovation or change follows an S Curve when plotted over time. Here is how it looks like:
Innovators Early Adaptors % of Population Early Majority CHASM @ 16% Late Majority Laggards 100% 50% Time 0%
How Ideas Spread A related area of work to diffusion of innovation is the epidemics of memes. Malcolm Gladwell is his book, The Tipping Point defines tipping point: The tipping point is the magic moment when an idea, trend, or social behaviour crosses a threshold, tips, and spreads like wildfire. The book discusses a variety of conditions that contribute to this and is a great read for anyone interested in engineering a tipping point for the idea of change.
Adoption Stages Individuals go through 5 stages during the adoption process:
Adoption Stages Knowledge Persuasion Decision Implementation Confirmation Exposed to Innovation Not Inspired Interested Actively Seeks Info Weight Concepts Decides? ADAPT REJECT Considers Use Seeks Info to Understan d Benefits Finalises Decision
Knowledge An individual is exposed to the innovation or new idea, but lacks knowledge Is not inspired to find more information about it.
Persuasion Has become interested in the innovation Actively seeks information
Decision Weighs the concept of change and considers advantages and disadvantages of using it Decides to adopt or reject
Implementation Considers implementing the change or innovation to various degrees Seeks information for better understanding
Confirmation Finalizes decision to continue using the innovation and may end up with total commitment to use it to its full potential
Continued Please continue to Lesson #2