Leading Change teigland

Leading Change: Integrating Theory and Practice

Robin TeiglandCenter for Strategy and

CompetitivenessStockholm School of Economics

robin.teigland@hhs.seTwitter: RobinTeigland

www.knowledgenetworking.orgAugust 2013

Who am I? (LinkedIn Inmaps)

SSE

IFL

Swedish Industry

Research Wharton

Stanford

McKinsey

SSE MBA

3

Agenda

Afternoon1. Live Project Groupwork

2. Some Change Tools

Morning1. What is Change

2. Kotter’s 8 Stages

3. Groupwork

Going Forward

4

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 company

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

Jack Welch…

5

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

Competitive advantage increasingly based on organization’s ability to change

Of original Forbes 100 in 1917- 61 companies ceased to exist by 1987- 18 of remaining 39 underperformed market by 20%- Only 2 beat market index (GE & Eastman Kodak)- Only 1 (1%) today!

Average S&P 500 company lifespan 1920s – 67 years 2010s – 15 years

Dr. Richard Foster, Yale, Sept 2012 Today's rate of change is at faster pace than ever By 2020 prediction is >75% of S&P 500 will be

companies we do not know about today

http://www.fastcompany.com/3001444/what-zara-pg-and-berlitz-know-about-agility

Only 20-30% of all change projects achieve full value Less than 20% of anticipated value from M&A materialized Only 25% of JVs stay together 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!

So, are change initiatives successful?

Beer 2002, Gratton 2007, Maurer and Co

9

Your Experience with Change

Discuss in pairsChoose one of your more significant experiences with change (either successful or unsuccessful). Which events/phases of change from the Iceberg story do you recognize in your experience? Did you experience all the phases or only some of them? Why or why not?Do you recognize any of the key characters in this change experience? Freds, Alices, NoNos? Other? Reflect on your own role in this change experience. Which character(s) did you play in these?Was this change experience successful? Why or why not? How does the outcome differ from that of the Iceberg story?

www.ouricebergismelting.com

Organizational Change

An alteration of an organization’s environment, structure, culture, technology, or people A constant force An organizational reality An opportunity or a threat

Change agent A person who initiates and assumes the

responsibility for leading a change in an organization

10

12

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

13

What triggers change?

14

PESTEL – External pressures for change

Johnson & Scholes 1997

Political

Environmental Technological

Legal Social

Economic

Organization

PeoplePeople• “ “Net generation”Net generation”• 24x7 “mobile” 24x7 “mobile” workforceworkforce• Social entrepreneurshipSocial entrepreneurship

Technology Technology • Broadband accessBroadband access• Mobile hardware Mobile hardware • ICTsICTs• 3D printing 3D printing

Open Open SourceSource

• Software Software • HardwareHardware• PhysiblesPhysibles

Convergence of…..

FinanceFinance• Microlending/microfinancMicrolending/microfinance e • Crowdfunding/equityCrowdfunding/equity• Digital, non-fiat Digital, non-fiat currenciescurrencies

Only 20-30% of all change projects achieve full value Less than 20% of anticipated value from M&A

materialized Only 25% of JVs stay together 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%

Remember…. Are initiatives successful?

Beer 2002, Gratton 2007, Maurer and Co

Why? According to Fortune 500 executives,

resistance/people not accepting changes

Why do people resist change?

18Prentice Hall 2002

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

Reactions to change distribution

Rogers 1983, 1995

24

Say the color, not the word

YELLOW BLUE ORANGE BLACKBLACK

GREEN PURPLE YELLOW RED

ORANGEORANGE GREEN BLACK BLUE

Stroop

25

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

26

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

2727

Tata Motors

2828

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

29

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

30

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

32

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

33

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

34

Who has informal power in the organization?

Teigland 2003

35

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

Adapted from Kotter 1996

36

4. Communicate the vision

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!!

Adapted from Kotter 1996

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

38

5. Empower others to act on the vision

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?

Adapted from Kotter 1996

Barriers to empowerment

39Kotter 1996

40

6. Plan for and create short-term wins

1. Create obtainable

targets

2. Encourage & convince people that targets can be reached

3. Recognize and reward “winners”

Communicatethe wins

Adapted from Kotter 1996

41

7. Consolidate improvements and produce more change

Change Project 1

Change Project 2

Change Project 3

Time

Scope of

change

Adapted from Kotter 1996

42

8. Anchor new approaches

Company culture

Physical artifacts

activities and routines

Underlying values,assumptions,

beliefs, and expectations

Intangible

Adapted from Kotter 1996

43

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

Involving people in the change

45http://www.mckinseyquarterly.com/What successful transformations share

People don’t resist change – they resist being changed

From recipients of change to co-creators of change

49

Your Iceberg Reflect on your organization. What is your iceberg and

what does it look like? Is it melting? Does it have fissures? Is there a clear and simple message about the future and

what it may look like that is understood by all? Are you and your team most concerned with success in

catching fish today or planning for what may come tomorrow?

What does your team look like? Reflect on who the Nonos, Freds, Alices, Buddies, etc. are. How well balanced is it in terms of having the “right” characters? Do you have enough/too many/too few? Who will adopt the necessary roles if no one else is doing it?

What do you have to do to lead/encourage/support the people 'stepping up'? What can you do about the Nonos?

50

Agenda

Morning1. What is Change?

2. Kotter’s 8 Stages

3. Groupwork

Going Forward

Afternoon1. Live Project Groupwork

2. Some Change Tools

55

In your groups …..

Choosing the Change Project

56

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 your 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 stakeholder.”This is something we would like to do!!”

57

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

58

Better to choose a more

narrow, specific focus!

59

You will present your projects in Module 3

60

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 Stakeholder?

61

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

62

Prioritize stakeholders

Low High

Low

HighLevel of interest•Visibility•Importance•Priority

Scholes 1998

Power•Formal•Informal

Keepinformed

Keyplayers

Minimaleffort

Keepsatisfied

http://www.mindtools.com/pages/article/newPPM_07.htm

63

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

Involving people in the change

64http://www.mckinseyquarterly.com/What successful transformations share

People don’t resist change – they resist being changed

From recipients of change to co-creators of change

67

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”!

68

Your Live Project Iceberg

Reflect on your live project. What is the iceberg and what does it look like? Is it melting? Does it have fissures?

What is the clear and simple message about the future that may be understood by all?

What does the set of stakeholders look like? Reflect on who the NoNos, Freds, Alices, Buddies, etc. are. Do you have enough/too many/too few? Who will adopt the necessary roles if no one else is doing it?

What do you have to do to lead/encourage/support the people 'stepping up'? What can you do about the NoNos?

69

Agenda

Morning1. What is Change?

2. Kotter’s 8 Stages

3. Groupwork

Going Forward

Afternoon1. Live Project Groupwork

2. Some Change Tools

70

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

87

Morning1. What is Change?

2. Kotter’s 8 Stages

3. GroupworkAfternoon

1. Live Project Groupwork 2. Some Change Tools

Agenda

Going Forward

Timeline

Sept 9 (8:00 am Stockholm): Change project statement, should be agreed with Project Stakeholder

Oct 7 (8:00 am Stockholm): Progress report Timeline to completion Progress to date, what achieved (Kotter, frameworks, method,

sources, etc.) Issues/challenges outstanding with project Ideas to overcome issues/challenges Update on communication with Stakeholder

Module 2: Respond to feedback and develop implementation plan

Nov 22 (8:00 am Stockholm): Progress report Communication plan Risk analysis Issues / challenges and how to overcome Update on communication with Stakeholder

Dec 5: Module 3 – presentation

89

Moving forward

Coordinate with Stakeholder and invite to Module 3 presentation

Provide brief update Friday morning on Thursday evening’s progress (remember Kotter’s 8 stages!)

Prepare and submit inter-module progress report By email

Module 2 Scheduled working time during Module 2 Each team submits its presentation

● By email

Prepare and submit inter-module progress report Submit by email

90

Moving forward

Coordinate with Stakeholder and invite to Module 3 presentation

Provide brief update Friday morning on Thursday evening’s progress (remember Kotter’s 8 stages!)

Prepare and submit inter-module progress report By email

Module 2 Scheduled working time during Module 2 Each team submits its presentation

● By email

Prepare and submit inter-module progress report Submit by email

92

Module 3 - Final Presentation Each team has 15 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 and Stakeholders will provide further comments Each team submits its presentation

● By email

93

See you in Module 3!!

Good luck with your projects!!