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Beyond Change Management: From Traditional Phase Models to More Robust Models of Transformation Amidst ChaosChris Worley and Sue MohrmanSenior Research ScientistsSenior Research ScientistsCenter for Effective Organizations
February 7, 2011
© 2011 University of Southern California
Lacey Leone McLaughlin
WelcomeWelcome
Director of Executive EducationCenter for Effective OrganizationsUniversity of Southern Californiaoffice: 213.740.9814direct: 310.849.7163email: [email protected]
© 2011 University of Southern California
All li li ill b d• All listener lines will be muted.
• Have a question during the presentation? You can type it in the chat box and press send.
Send your question to “Everyone.”
Lines will be unmuted after Sue Mohrman’spresentation for questions and discussion.
© 2011 University of Southern California
p q
• Yes, a PDF of the slide deck will be available online after the webinar.
• An audio file will also be available.
• We’ll send an email to attendees withWe ll send an email to attendees with the URL for these.
© 2011 University of Southern California
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Los Angeles
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March 29‐31, 2011Los Angeles
Accelerating Transformations and Building Agile
Strategic Partnership with ImpactOctober 19‐21, 2011Los Angelesg g g
OrganizationsApril 5‐7, 2011Los Angeles
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© 2011 University of Southern California
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The HCEO certificate program is designed for executives and high‐potential professionals preparing for a strategic role in their organizations.
It offers an integrated curriculum that develops the following five key competencies necessary to form strategic partnerships and to lead in today's changing business environment.y g g
• Business Strategy Analysis• Organization Designg g• Change Implementation• Talent Management and Leadership Development• Measurement and Analysis of Organization and Human CapitalMeasurement and Analysis of Organization and Human Capital
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© 2011 University of Southern California
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Certificate in Organization Design
More Information at http://ceo.usc.edu/programs
Upcoming seminars include:
Strategic Organization Design Workshop• June 14-17, 2011 (Los Angeles)• November 1-4, 2011 (Atlanta, Georgia)
Advanced Topics in Organization DesignAdvanced Topics in Organization Design • March 1-4, 2011 (Los Angeles)
Also of interest:
Accelerating Transformations and Building Agile Organizations
• April 5-7, 2011 (Los Angeles)
© 2011 University of Southern California
Some of Chris’ focuses
• Strategy formulation and implementation
• Organization design
• Longitudinal evaluation of strategic changeDr. Christopher G. Worley
• Sustainability and how to design complex collaborations to foster it
CEO Senior Research Scientist
© 2011 University of Southern California
Some of Sue’s focuses
• Widely known for organization design and effectiveness and large‐scale change research
• The design of knowledge‐based firms
• Knowledge creating systemsDr. Susan A. MohrmanCEO Senior Research Scientist
• Sustainability and how to design complex collaborations to foster it
• Examination of the research
CEO Senior Research Scientist
process itself
• How to create academic/company partnerships to yield useful
© 2011 University of Southern California
p p yknowledge
Beyond Change Management:Beyond Change Management: From Traditional Phase Models to More Robust Models ofto More Robust Models of Transformation Amidst Chaos
Chris Worley and Sue MohrmanS i R h S i ti tSenior Research ScientistsCenter for Effective Organizations
© 2011 University of Southern California
Nature of Episodic vs. Continuous Change
Episodic Change Continuous Change
f Change
f Change
Amou
nt of
Amou
nt of
• Relatively long periods of stability are
• Relatively higher levels of change over long
Time Time
ypunctuated by short bursts of transformational
of change over long periods of time
© 2011 University of Southern California
transformational change
Implications of Episodic vs. Continuous ChangeChange
Episodic Change Continuous Changemou
nt of C
hange
mou
nt of C
hange
Ch bilit l ki t d • Change capability embedded in
Am
Time
Am
Time
• Change capability lacking – rented when needed
• Focus on efficiency over innovation• Stability = Effectiveness
• Change capability embedded in organization design
• Focus on ambidexterity• Change = Effectiveness
• Change = Enemy• Performance reflects change pattern• Decision making centralized• Resources allocated through budgets
• Stability = Enemy• Performance reflects change pattern• Decision making shared/decentralized• Resources allocated through
© 2011 University of Southern California
Resources allocated through budgets Resources allocated through accountabilities
Which is the more effective i ti ?organization?
Nokia Loses More Ground to Its CompetitorsCompetitors
Wall Street Journal – 1/28/2011
Apple Profit Muscles Past IBMWall Street Journal – 10/18/2010
© 2011 University of Southern California
Long-term Performance in Telecom
Network/Communications ROA Performance
0.2
0.3
0.1
A
Industry Median
MOTOROLA INC
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
ROA
NOKIA
APPLE
AT&T
‐0.1
© 2011 University of Southern California
‐0.2
Nokia sees change as normal, a capability built into its organization designinto its organization design
Strategy• A truly elegant and supported futuring process
• A robust and flexible strategy, b d d lt ll
WorkProcesses
brand, and culture all captured in one phrase: “Connecting People” • An organization structure that
integrates change into the business model and supports
StructurePeople
business model and supports both innovation and execution
StructurePeople
• Human resource practices – twice
Management
• A bottoms‐up goal setting process that creates tension, and a transparent decision
yearly reviews, a range of rewards, and global leadership development – that support flexibility
© 2011 University of Southern California
ManagementProcessesRewards
transparent decision making process built on debate and consensus
support flexibility
Nokia Organization Structure
Group Executive Board
M bilNokia
Research
Mobile Solutions
MarketsResearch Center Mobile
Phones
Markets
Corporate Functions
Phones
© 2011 University of Southern California
Beyond Linear Views of ChangeBeyond Linear Views of Change
Sue MohrmanSenior Research Scientist
© 2011 University of Southern California
The Elements of Change Model
Prepare Direct Execute Assess Reinforce
© 2011 University of Southern California
Strategy is the key to diagnosis, design, d i l t tiand implementation
StrategyStrategygy
Laying the
gy
Laying theLaying the
Implementation
CRI Designing
Laying the Foundation
Valuing
Implementation
CRI Designing
Laying the Foundation
Valuing
Laying the Foundation
Valuing
Implementation&
AssessmentTER
Designing
Acquiring Diagnosing
S
MR
P
W
Implementation&
AssessmentTER
Designing
Acquiring DiagnosingAcquiring Diagnosing
S
MR
P
W
S
MR
P
W
IA
KnowledgeDiagnosing
S
MR
P
W IA
KnowledgeDiagnosing
KnowledgeDiagnosing
S
MR
P
W
S
MR
P
W
© 2011 University of Southern California
How we’ll describe it (and how it “should” go)…
CR
Strategy
Laying the Foundation
Implementation&
Assessment
IT E R I
Designing
Valuing
I A
AcquiringKnowledge
Diagnosing
© 2011 University of Southern California
How we’ll describe it (and how it “should” go)…
CR
Strategy
Laying the Foundation
Implementation&
Assessment
IT E R I
Designing
Valuing
I A
AcquiringKnowledge
Diagnosing
CR
StrategyValuing How it often looks and feels…
RITERI
Designing Laying what Foundation?DiagnosingImplementation
&Assessment
© 2011 University of Southern California
I A
Acquiring Knowledge
Work Streams/Initiatives
Performance Anomalies,
E i t l Ch
Strategy
Environmental Changes and Opportunities
High‐Level Change and Design Specifications
Flow‐Down of Initiatives/ Work StreamsFlow‐Down of Initiatives/ Work Streams
Leadership Development
Organization / Work Design
Human Capital Development
IT / Work Processes
Metrics and Rewards
© 2011 University of Southern California
Change Management
IT Initiative Overload, example• Symptom: There are many large initiatives underway to drive strategy and build
capabilities. There is no overall program management approach to integrate and align these efforts
• (to manage outcomes and maximize ROI)
Current State Desired State
Project #2Project #1Project #3
Strategy
Initiative I
Program C
Initiative I
Project #4Process
Program A
Initiative IIIInitiative II
Program BProgram A Program C
Initiative II
Program BInitiative IIIProject A
g
Project #1
g
Project #2
g
Project #3 Project #4
© 2011 University of Southern California
ojectEnablement
Designing a Change Structure for a Complex Transition, exampleexample
Executive Team / Change “Governance” Team
Program Office / Change Management / Transition
Team
Initiative / Project D
Business Leadership Team
Initiative / P j t A
Initiative /
Initiative / Project C
Teams
Project A Project BProgram Office Composition•Project Management•Organizational Effectiveness•Business RepresentationPl i
Program Office:
© 2011 University of Southern California
•Planning•Communication
•Aligns initiatives with strategy•Integrates the initiatives•Assures business input to initiatives
Design Implementation—Related Streams of WorkStrategy
Macro‐Design Ongoing Design, Staffing Decisions, Staged Implementation
StrategyBusiness Case
Criteria
Ongoing Communication
gOngoing
Ongoing Micro Design
Sub‐Units, Processes, Systems, LinkagesMicro‐Design
Team LearningOrientation, Dialogue & Conversation, Sense‐Making
Team Development, Inter‐team Development
Training & Development New Roles, Competencies
Training, Team Learning Training, Team Learning
Assessment, Feedback
Redesign and S l l D i
Implementation Assessment
Implementation & Evaluation Assessment
Training, Team Learning
© 2011 University of Southern California
Supplemental Design
Redesign Redesign
ANNUAL TIMELINE
Implementation Project Plan Timeline Tool
I. COMMUNICATIONa) Strategy, Business Case, Criteria:
Redesign NewsletterLarge Group Meetings
)
MARANNUAL TIMELINE
DEC JAN FEBJUL AUG SEP OCT NOVMAY JUNEAPR
b) Macro-DesignRedesign NewsletterLarge Group Meetings
c) Redesign UpdatesRedesign NewsletterMeetings as Necessary
d) Assessment Updates and Action PlansRedesign NewsletterMeetings as Necessary
II. ONGOING MACRO DESIGNa) Corporate Services Redesignb) Guiding Principlesc) Staffing—key slots
Process determinedCriteria determinedApplication and Selection
d) Change-over at top level) g pe) Process Design Teams
Planning, Direction SettingMetrics and Review ProcessesRewards SystemsCareer and Development/Competency Systems
© 2011 University of Southern California
BUT: Change Really IS Messy
• It happens in networks, not hierarchies• Multiple changes crash into each other• Multiple changes crash into each other• People only partially attend to change messages because they’re so busy runningmessages because they’re so busy running the business – they lose focus
• Everyone thinks they know best what the• Everyone thinks they know best what the business needs, and
ALL CHANGE IS IMPLEMENTED LOCALLY
© 2011 University of Southern California
Open Systems Networks During Change
Universities
Customer
LocalS.D.
LocalS.D. Local
S.D.
SuppliersCustomer
“Organization‐Wide”Self‐Designing
LocalS.D.
LocalS.D.Suppliers
CustomerChange Activities
S.D.
LocalS D
LocalS D
Suppliers
S.D.LocalS.D.
S.D.
Partners Customer
© 2011 University of Southern California
Industry Associations
Handling Chaos Through “Routines”
• An organization’s change capability depends on embedding routines for handling change. E.g.,
– When a unit is reorganized, pull all members together to decide how they’ll operate
– When a new initiative is formed, pull together a wide array of stakeholders from across the
i i ib id d lorganization to contribute ideas and learn
– Set up networks of champions
– When two change initiatives are clashing, set up a cross‐team to identify and resolve issues
© 2011 University of Southern California
Adaptability and Change “Routines”• Organizations make many incremental changes continuously
through time—in local units, with respect to particular work processes to hone a particular business model to capture anprocesses, to hone a particular business model, to capture an opportunity
• In today’s environment, many organizations continuously y , y g ymake more fundamental changes —e.g., restructure, enter new markets, introduce new channels and business models, create new virtual work arrangementscreate new virtual work arrangements
• Continuous transformation is being required as the global economy unfoldsy
• Change agility requires building this capability into the way an organization operates – into the routines of the
© 2011 University of Southern California
organization.
Fundamental (transformative) Change “Routines”
• Organizations may have to continuously introduce new capabilities in order to stay ahead of or keep up with competitorscompetitors
• New competitors are not locked into a rigid way of functioning, and can be fast and agile in moving into g, g gnew spaces and defining new and sometimes game‐changing capabilities
• Change “routines” sounds like an oxymoron – yet there are predictable dynamics and elements of f d t l h AND i ti ffundamental change, AND, many organizations face environments that demand recurring and often multiple simultaneous fundamental changes
© 2011 University of Southern California
multiple simultaneous fundamental changes
Implementing Change is a Core Work Process
• It happens at all levels and throughout the organization
• Change agility requires building this capability into the way an organization operates – into the routines of the organization
• Change competency cannot be the province of a special staff group
• Changes should have goals, measures, and rewards
© 2011 University of Southern California
Example: The Cleveland Clinic
W ki t hi t id l dWorking to achieve system‐wide leverage and synergy in a system that was historically fully d t li d h d t d t kdecentralized, has adopted a network approach to change in many areas: Moving to a cross discipline institute structure
Ecological sustainability initiatives
Patient experience initiatives
Electronic medical record development and implementation
And many more…..
© 2011 University of Southern California
Change Routines, Cleveland ClinicIt address its dynamic and uncertain environment with a routine that actively links the various (often decentralized) units to an unfolding strategic direction:
1 E fi lf id if idl d i d i l1. Encourage first movers to self‐identify to rapidly design and implement various new approaches.
2. Provide resources and consultation with the objective to rapidly learn from experience.
3. Create a network with a small team from all major units to convene and talk about what they’re doing, what they’re accomplishing, and what they are learning – for key change directions executive sponsorship is critical, but executive participation may not be necessary.
4. Challenge all units to develop approaches that will work for them and to come to the next network meeting ready to share what they’ve learned.
5. Have the network design a measurement system so different units can see how they “measure up” and their comparative progress through time.y p p p g g
6. Incorporate the measures into the dashboard.7. Continually seek out “first movers” to try and share new approaches to
continue the cycle of learning
© 2011 University of Southern California
.
Establishing a Cycle of Change and Learning Across the Organization Workshopsthe Organization
Identification of Strategic Need
Workshops for sharing & learning
First Mover Action/Change Localct o /C a ge Local
action & learning
Identification of common goals, needs & approaches
Building a Learning NetworkRepresentatives from Different Units• Share first mover experiences
• Workshop learning• Identification of local goals
Development of tools / metrics (dashboard)
© 2011 University of Southern California
Identification of local goals ( )
SM94T
Sustainable Health Care in a Dynamic Ecosystem Requires Ongoing AdaptationOngoing Adaptation
• When resources are plentiful, actors are attracted to the eco‐system and can co‐exist while not interfering witheco system and can co exist while not interfering with each others’ success waste and redundancy and proliferation of actors within the status quo
• When resources become limited, actors look for symbiotic alliances and partnerships, and to find ways to conserve and leverage resourcesand leverage resources
a reconfiguring of the eco‐system with new actors emerging and existing actors adapting or disappearingemerging and existing actors adapting or disappearing
The sustainable healthcare eco‐system will look quite different than it does today
© 2011 University of Southern California
y
Adaptation at Multiple Levels
• Multiple populations, or types, of agents—each pursuing their own goals (to adapt to a changing environment)
• Agents are at multiple levels of ge s a e a u p e e e s oaggregation‐‐individuals, teams, and organizational units all take measures continually to adapt tomeasures continually to adapt to the changing context
• Adaptation is from the perspective of the agent—with respect to its own criteria of success
© 2011 University of Southern California
Changing Success Criteria
Achieving sustainability in health care (or any system) may entail changing the success criteria y ) y g gof the actors—to include sustainable use of resources and new effectiveness outcomes.
To adapt to a changing eco‐system, change p g g y , gleaders may have to take measures to change the success criteria of the agents.change the success criteria of the agents.
© 2011 University of Southern California
The Limits to Top Down Change in a Complex SystemSystem Change can only partially be hierarchically driven. The challenge is to change interaction patterns of agents.g p g
Increases in sustainable effectiveness will require a combination of:
– imposed change mechanisms—such as by designing and introducing new organizational features (e.g., organizational structures and processes) or by policies that change the “rules” through which people interact with eachpolicies that change the rules through which people interact with each other.
– internal change mechanisms—continual adjustments that result from the processes and norms within the system that govern how agents interactprocesses and norms within the system that govern how agents interact, learn and adjust
–explicit self design processes – when an individual, team or unit takes action
© 2011 University of Southern California
to initiate new ways of organizing resources and dealing with other parts of the organization
High Leverage Interventions in Complex SystemsSystems
In many complex systems a small input (change) can produce major directed change by creating an amplifierproduce major directed change—by creating an amplifier effect
Operating on these high leverage points uses change resources (time, energy, capital, knowledge) efficiently because one intervention can lead to many changebecause one intervention can lead to many change impacts
D i i i hi h iDuring transition, concentrate on high impact interventions.
© 2011 University of Southern California
High Leverage Interventions in Complex Systems Include Those that:Systems Include Those that:
• Change the behavior of key agents (those who control interactions ofChange the behavior of key agents (those who control interactions of others and/or who are likely to be imitated)
• Intentionally build and or encourage new interaction patterns‐‐when t i t t i it l d t l i i ti dagents interact in new ways it leads to learning, innovation, and an
increase in self‐regulatory capacity
• Change the success criteria of agents‐‐what is reinforced or rewardedg g
• Create a new shared understanding to govern interactions and stimulate self‐regulation (mission, values, principles of operation, governance processes)governance processes)
• Create a line of sight to/focus on system level outcomes
• ENABLE LEARNING
© 2011 University of Southern California
• ENABLE LEARNING
Accelerating Transformations and Building Agile OrganizationsOrganizations
Beyond change management...
Corporate executives know that their company's competitive leadership and s stainable effecti eness depend on acceleratedleadership and sustainable effectiveness depend on accelerated change implementation and agility.
Traditional linear change models no longer work in an era of relentless change. Accelerated change implementation must become a core organizational capability. It must be enabledchange implementation must become a core organizational capability. It must be enabled by the way we organize and the way we lead.
This seminar provides new frameworks and approaches to:l t i ti t iti• accelerate organization transitions
• deal with the demands for ongoing transformation• implement agile organizations• build robust change capabilities
April 5‐7, 2011, Los AngelesWith Chris Worley,
Sue Mohrman,
© 2011 University of Southern California
g pand Joe Mello (COO Emeritus, DaVita)
Register at http://ceo.usc.edu