MANAGING ORGANIZATIONAL

CHANGEWhy do most organizational change attempts fail and what can managers

do about it?

Session I: Organizational Change – Concepts and Problems

What is organizational change?Why do managers fail in organizational change?

Session II: Executing Organizational Change

What are the critical elements of executing change?What are some of the practical aspects of implementing

change?

Program Structure

What is Organizational Change?

ERP and IT Changes Visioning Strategic Plans Portfolio Consolidation/Diversification New Business Models M&As / Alliances Restructuring High Performance Work Systems

Incremental

Large-Scale

Scale of Organizational Change

(Greenwood & Hinings, 1996)

Organizations generally underestimate the scale of change.

Pace of Organizational Change

Gradual Rapid

Organizations generally overestimate how quickly they can make change happen.

Types of Change

Transformational

Revolutionary

Continuous Improvement

Small & Quick

Gradual RapidPace

Scale

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Academic-Oriented Literature on Organizational Change

• Rational Adaptation Models in the 1970sOrganizations respond (change) readily to contingencies

• Limits to Organizational Change in the 1980s– Isomorphism – Change largely limited to conforming to what other

organizations do – Strong inertial tendencies of organizations

“The probability that organizations will be able to succeed at core change is very low.”

• TODAY: Focus on understanding limits and how to counter them

Common Organizational Change Failures

• Innovative HRM programs are not fully adopted and implemented

• ERP and IT initiatives regress backwards• Visions don’t stick• Strategic plans remain as plans • Restructuring leads to restructuring….• Change programs don’t generate benefits• M&As don’t add value for acquiring firms

Organizational ChangeFailure Rates

• Between 60-90% organizational change plans don’t succeed– “In a recent Bain survey, 70% of the companies said their

change management initiatives did not deliver the expected results.” (www.bain.com; Dec. 2010)

Academic Research: Understanding Limits to Change

• Large, longitudinal analyses of innovation and change across organizations

• Case studies and process tracing looking at internal dynamics of change in organizations

Making Change Happen: A Leadership View

John Kotter (1996) – Leading Change–Process View • Trace missteps leaders make

–Prescriptive• Emphasize key steps leaders need to make

change happen

Missteps Error 1: Leaders don’t sufficiently address complacency [to get urgency]– Assume people are on board– Believe facts are enough– Rely on anxiety and fear – Don’t appeal to heart - “See-Feel-Change”

Error 2: Leaders fail to get key influencers on board– Diversity matters: People with title, opinion

leaders, needed expertise, etc.

Error 3: Leaders underestimate the power of Vision– Simple– Sensible– Provides imagery– See benefits– Passes the test of Elevator Ride

Error 4: Leaders under-communicate the vision – GEs Jack Welch: “Real communication takes

countless hours of eyeball to eyeball, back and forth….And, it must be absolutely relentless.”*

*Tichy, N. & R. Charan. 1989. “Speed, simplicity, self-confidence: An interview with Jack Welch, Harvard Business Review, Sept-Oct: pp. 113.

Error 5: Allowing obstacles to block the new vision– Identifying, isolating, and silencing resistors– Removing or modifying organizational practices

that act as barriers

Error 6: Failing to build in short-term wins– Not just hoping, actually building in wins

Error 7: Failing to institutionalize organizational change– Making the meaning and value of change part of

fabric of organizationError 8: Declaring victory too soon

Basic Hurdles to overcome

Resource HurdleFocusing on the hot spots and bargain with other critical parties

Cognitive HurdlePutting managers face-to-face with problems and customers; Finding new ways to communicate

Motivational HurdlePutting the stage lights on and frame the challenges to get engagement

Political HurdleIdentifying and silencing internal opponents; isolating external ones

Contrasting Assumptions About Change

Programmatic Change Environmental Change

Problems in behavior are a function of individual knowledge, attitudes, and beliefs.

Individual knowledge, attitudes, and beliefs are shaped by recurring patterns of behavioral interactions.

The primary target of renewal should be the content of attitudes and ideas; actual behavior should be secondary.

The primary target of renewal should be behavior; attitudes and ideas should be secondary.

Behavior can be isolated and changed individually.

Problems in behavior come from a circular pattern, but the effects of the organizational system on the individual are greater than those of the individual on the system.

The target for renewal should be at the individual level.

The target for renewal should be at the level of roles, responsibilities, and relationships.

How do we accomplish change?

The sequencing of the change process

Unfreeze Status Quo

Establish and reinforce the change

BUT HOW DO WE DO THE CHANGE?ARE THERE ANY PRACTICAL STRATEGIES?