Beyond Change Management: From Traditional Phase Models … · Beyond Change Management: From...

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]


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Also of interest:

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• April 5-7, 2011 (Los Angeles)


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


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


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


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


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


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


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


‐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


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


Beyond Linear Views of ChangeBeyond Linear Views of Change

Sue MohrmanSenior Research Scientist


The Elements of Change Model

Prepare Direct Execute Assess Reinforce


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


Valuing


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


How we’ll describe it (and how it “should” go)…

CR

Strategy


Implementation&

Assessment

IT E R I

Designing

Valuing

I A

AcquiringKnowledge

Diagnosing


How we’ll describe it (and how it “should” go)…

CR

Strategy


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


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


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


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:


•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


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


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


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


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


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


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


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


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…..


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


.

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)


Identification of local goals ( )

SM94T

Health Care is a Complex Adaptive System


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


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


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.


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


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.


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


• ENABLE LEARNING

More On This Topic

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,


g pand Joe Mello (COO Emeritus, DaVita)

Register at http://ceo.usc.edu

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