‘If you want something new, you have to stop doing something old’ ~ Peter Drucker

 

Course Curator: Dr. G. Danford (London Business School MBA, Helsinki School of Economics PhD)

Eight MBA-level sessions covering: Models of change, structural barriers, cultural challenges, and the implementation of change. Speakers include: business school professors (Harvard, Stanford…), corporations (McKinsey, Bain & Co…) and more.

 

Time Required: 60 min. 


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BEFORE YOU BEGIN: We recommend that you test your understanding of this sessions content.

WHY? Because the MOST VALID method for measuring learning is to compare results from a pre/post test of content.

 

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Please make a note of your score for comparison purposes, at the end of this session.


1.0 Course Introduction

  • What is organizational change all about?
  • Why all organizations need to change in order to survive?
  • Why organizational change can be difficult?
  • ‘The Change Promoter Score’ A NEW CHANGE MANAGEMENT TOOL.

 

LEARNING MOMENTS from this session:

Organizational Change Management (OCM) considers the full organization and what needs to change. The Change Management (CM) principles and practices covered in this course concentrate primarily on CM as a tool for the people-side of change. Therefore, the focus is on how people and teams are affected by organizational transition. CM is influenced by many different disciplines, from behavioral and social sciences to information technology and business solutions. Within a project management context, CM may refer to the change control process wherein changes to the scope of a project are formally introduced and approved. In this session the key takeaways are:

  • 75% of all change programs fail to realize the desired goals.
  • If people can’t see the need for change, they don’t want it, won’t stand for it, and will avoid… if not sabotage it.
  • Forming a strategic vision for change should NOT BE the first planning step.
  • Engaging employees in the change process is the ‘other half of the equation’, and often forgotten.
  • The PRESS change model helps to address that ‘other half of the equation’.
  • Industry transformation (environmental turbulence), is often a primary driver of change.
  • Change is a given (not an option), and a ‘people plan’ is the best defense.
  • The Change Promoter Score is a tool for monitoring employee sentiment during change.
  • Changing the narrative is often more effective than change management.

 

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1.1 Strategy First

Prof. J. Kotter (Harvard Business School) has devised an eight step process for leading change. Despite the common wisdom (strategy first), forming a strategic vision for change is the third step in that process. Therefore, before forming a strategic vision for change, it is essential to:

  • Create a Sense of Urgency by crafting and using a significant opportunity as a means for exciting people to sign up to change their organization.
  • Building a Guiding Coalition by assembling a group with the power and energy to lead and support a collaborative change effort.
  • Only Then: Form a Strategic Vision and shape the vision to help steer the change effort and develop strategic initiatives to help achieve that vision.

 

STRATEGY COMES FIRST? (2:00)
John Kotter (Harvard Business School)
NOTE: this video will start and stop at the pre-assigned times 0:02-1:51


 

1.2 Employee Engagement

Marshall Goldsmith has proposed a radical new approach to employee engagement. According to Marshall,  this new approach is the “other half of the equation”, the missing piece, the thing that management has been overlooking that could change the business landscape for good!

The key variable in employee engagement is the individual, the employee, not the program!

Although this might sound obvious, this idea is not often taught or acted on. Companies spend billions of dollars every year trying to get employees and leaders to believe that the solution to employee engagement problems is “out there” not “in us”. Historically, almost all of the evaluations on employee engagement programs have focused on the company/organization. Marshall poses the questions: who is learning to take responsibility? Who is being trained? In the end, the employees may or may not take responsibility for engaging themselves. Many take no responsibility for engaging themselves at all (Marshall Goldsmith).

Being engaged, being happy, finding meaning, and leading people largely comes from inside, not from some teacher, coach, or program. It is not just what people learn, but how they (you and I) use that learning, that make the difference.

 

EMPLOYEE ENGAGEMENT (4:15)
Marshall Goldsmith
NOTE: this video will start and stop at the pre-assigned times 0:32-5:15

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1.3 Change is Hard!

Successful change is more likely to occur if the following activities are included:

  • Defined and measurable stakeholder aims and a business case for their achievement (which should be continuously updated).
  • Monitoring assumptions, risks, dependencies, costs, return on investment, dis-benefits and cultural issues.
  • Effective communication that informs various stakeholders of the reasons for the change (why?), the benefits of successful implementation (what is in it for us, and you), as well as the details of the change (when? where? who is involved? how much will it cost?).
  • Devise an effective education, training and/or skills upgrading scheme for the organization.
  • Counter resistance from the employees of company and align them to the overall strategic direction of the organization.
  • Provide personal counseling (if required) to alleviate any change-related fears.
  • Monitoring the implementation and fine-tuning as required.

 

MOST CHANGE EFFORTS FAIL (7:00)
Mary Meaney, Director, McKinsey

NOTE: this video will start and stop at the pre-assigned times 00:02-7:12


 

pomodoro2

Take A Pomodoro Break Now (5 min. to relax & reflect)

Learning always benefits from short breaks. 

Video: Pomodoro Time Management Technique


 

1.4 What is Change Management?

Organizational change means permanently altering patterns of organizational behavior. Organizational change is not about personal change, or creating new organizations. Therefore, organizational change is focused on what is happening inside existing organizations, and within their environments. Despite the fact that change management has been in existence for over half a century, one of the major challenges remains to be the capacity of managers to implement change. Therefore this course should help in better understanding both the challenges encountered in change management, and the key issues surrounding the implementation of organizational change.

 

WHAT CHANGE MANAGEMENT IS NOT (6:00)
NOTE: this video will start and stop at the pre-assigned times 0:24-6:26


 

1.5 Followers Need Leaders

‘In today’s complex business environment, change is always present. Competitive pressures, industry shifts, and technology disruptions are only a few of the elements conspiring toward change. The uncertainty of reorganizations and restructuring can hurt employee morale and productivity, especially when reorganizations and restructurings are needed’. Be prepared by:

  • Investing in your best people and leaders.
  • Developing communications, leadership, and executive presence skills throughout your organization.
  • Supporting your key initiatives with a ‘people plan’ that helps employees feel valued.

 

LEADING CHANGE (3:00)
Ken Blanchard (animation) keynote at the Drucker Centennial

NOTE: this video will start and stop at the pre-assigned times 9:37-13:45

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1.6 Case: Industry Transformation

Industry transformation is often a driver for change. One industry which is not immediately associated with transformational change is the automotive sector. In 2015, Tim Cook (CEO Apple) was quoted as saying that, ‘the automotive industry is at the precipice of massive change’. Cook said that the growing importance of software in cars, autonomous vehicles, electrification of power systems, and other drivers are shaking up the business. Apple are even planning to launch an electric vehicle (by 2019). Cook feels that ‘the industry is at an inflection point for massive change’. Other observers have also commented on the transformations occurring/or about to occur in that sector. A major question then for companies in the automotive sector is: how will the industry transformation impact their business and what actions are required to address those changes?

Four Scenarios for the automobile industry (Deloitte):

  • Scenario 1: Incremental Change… Private ownership remains the norm, with consumers opting for the particular forms of privacy, flexibility, security, and convenience that come with owning vehicles. Autonomous drive won’t become widely available anytime soon.
  • Scenario 2: Carsharing… Continued growth of shared access to vehicles. Multi-vehicle households can begin reducing the number of cars they own while others may abandon ownership altogether, reducing future demand.
  • Scenario 3: Driverless Vehicle… Autonomous-drive technology proves to be viable, safe, convenient, and economical, yet private ownership continues to prevail.
  • Scenario 4: Accessible Autonomy… Convergence of both the autonomous and vehicle-sharing trends.

Four Challenges facing the automotive industry (McKinsey):

  • Challenge 1: Complexity and cost pressure (platform and modular systems).
  • Challenge 2: Diverging markets (changing regional and segment patterns…and China).
  • Challenge 3: Digital demands (connectivity of vehicles).
  • Challenge 4: Shifting industry landscape (power systems, infotainment, and competition from China).

 

TURBULENT ENVIRONMENTS (3:00)
NOTE: this video will start and stop at the pre-assigned times 6:26-9:22


 

1.7 The PRESS Change Process

PRESS is an acronym for five sub-process which support the implementation of change (Prof. H. Rao, Stanford Graduate School of Business). One must consider these five sub-process in tandem (they are not stages)

  • P = Persuading
  • R = Recruiting Support & Overcoming Resistance
  • E = Energizing Behavior
  • S = Staffing
  • S = Sequencing

PRESS CHANGE PROCESS (4:00)
Professor Huggy Rao (Stanford)
NOTE: this video will start and stop at the pre-assigned times 0:05-4:14


 

pomodoro2

Take A Pomodoro Break Now!

Just 5 min. to relax & reflect.
Video: Pomodoro Time Management Technique


 

1.8 Why Bother?

‘Why bother trying to change? Wouldn’t it be better to stick with the status quo? After all, if the current situation isn’t working, a disruptive, unpredictable and stressful change effort that ultimately falls flat on its face is only going to make things much worse’.

It takes a whole team of people to create a great company but just one lousy leader to take the whole business down the pan. Too many leaders’ egos are far too big; they want to make their mark by making changes, maybe change is desperately needed but, because they try to force results, the only outcomes are lower productivity, time and money wasted, and higher employee turnover. If people can’t see the need for change, they don’t want it, won’t stand for it and will go out of their way to avoid, if not sabotage, it. ~ Ken Blanchard

 

CHANGING IS HARD (4:00)
NOTE: this video will start and stop at the pre-assigned times 9:37-13:45


 

1.9 Leading Change

Long-termism can be an excuse for failing to grasp the nettle. (Schumpeter, The Economist 2014).

Nokia, left a floundering boss, Olli-Pekka Kallasvuo, in place for four years despite growing protests from investors. By the time it got around to replacing him in 2010 the company was damaged almost beyond repair.

Short-term demands, such as quarterly reporting schedules etc., can force problems out in the open, and get them fixed quicker. More important, short-termism can allow “creative destruction” to work its magic. However, this is not to say that everyone should start chanting: “Short-term good, long-term bad”. Rather, there is an argument for nuance. Long-termism and short-termism both have their virtues and vices—and these depend on context.’ Therefore, the time-frame for change must be well understood by all.

John Kotter (Harvard Business School) in 1996 wrote his now famous change management book ‘Leading Change’. Kotter created the 8 Step Change Model to help managers deal with transformational change. In 2002 Kotter (together with Dan Cohen) investigated the core problem people face when leading change. The central issue identified in that research was that: Changing The Behavior of People. Kotter emphasizes that successful change can only occur. when we speak to people’s feelings.

 

The 8 Step Change Model:

  • Create a Sense of Urgency (management must craft a significant opportunity).
  • Build a Guiding Coalition (management must form a team who have power and energy).
  • Form a Strategic Vision and Initiatives (management must actively steer the change effort).
  • Enlist a Volunteer Army (enlistees must be ready, willing and able).
  • Enable Action By Removing Barriers (management must remove all obstacles to change).
  • Generate Short-term Wins (the team must produce small accomplishments).
  • Sustain Acceleration (management must reinforce change structures and policies).
  • Institute Change (management must explicitly connect new behavior to success).

 

IMPLEMENTING CHANGE (3:30)
NOTE: this video will start and stop at the pre-assigned times 13:46-17:18

 

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1.10 Change Promoter Score (CPS)

Organizations can employ a radically simple way to gauge employee sentiment toward the proposed change efforts. When an organization views their employees as ‘internal-customers’, an effective way of measuring change program sentiment is to employ the Net Promoter Score system. For the purposes of change management, this system could be referred to as the ‘Change Promoter Score’. By monitoring the Change Promoter Score (CPS) system, organizations can then act on the feedback they collect before/during/after after any change effort.

Asking the ultimate question allows organizations to track promoters and detractors of change efforts, and in doing so produce a clear measure of an organization’s performance through its employees (internal-customer) eyes. The Ultimate Question is:

 

HOW likely is it that you (employee or internal customer) would recommend the change initiative to another colleague? and WHY?

We must always follow up with the open-ended question…WHY?

Based on the CPS, employee (internal-customers) sentiment can be monitored throughout the change program and categorized by:

  • PROMOTERS: Loyal enthusiasts who keep supporting the organizations change efforts, and urge their colleagues to do the same.
  • PASSIVES: Satisfied but unenthusiastic employees (internal customers) who can be easily wooed by not changing or accepting other modes of change.
  • DETRACTORS: Unhappy employees (internal customers trapped in a bad organizational relationship.

 

While easy to grasp, the CPS (‘Change Promoter Score’) metric represents a radical change in the way organizations can monitor employee (‘internal-customer) relationships during change, and organize for the successful implementation of change. Rather than relying on notoriously ineffective employee satisfaction surveys, organization can now use CPS (‘Change Promoter Score’) to measure employee (internal-customer) relationships as rigorously as they now measure other performance metrics. What’s more, CPS (‘Change Promoter Score’) enables top management to hold everyone accountable for taking into account employees (internal-customers) during the change process. The CPS (‘Change Promoter Score’) clarifies the link between the quality of an organizations employee (internal-customer) relationships during change, and allows management to gauge better what is working and what is not. Based on this vital feedback, top management can then decide what actions to take, if any. Note: more details on the CPS at the bottom of this page.

 

MEASURING CPS (2:30)
Rob Markey, Bain and Company

NOTE: this video will start and stop at the pre-assigned times 00:14-02:41


 

1.11 Complexity is Enemy?

“Life is really simple, but we insist on making it complicated.” ~ Confucius

COMPLEXITY OR SIMPLICITY?

Simplicity, is the ability to get things done with the least amount of wasted motion, in a way that will satisfy both your customers and the people doing the work. When workers feel like there’s a direct line of sight to what they’re contributing. and to what customers are receiving, and when customers have a direct line of sight to what they’re getting, and what the value is…the necessity for change is more visible.

 

THE ENEMY IS COMPLEXITY (3:30)
Ron Ashkenas (Harvard Business Review Interview)
NOTE: this video will start and stop at the pre-assigned times 07:02-10:36


 

CHANGE WHO, OR WHAT?

The concept of a “change agent” is arrogant, says Peter Block (Designed Learning). Instead of saying “I’m here to change them,” we can say, “I’m here to change the conversation with people about their intentions.” In any conversation aimed to change the narrative, you’re doing two things: giving support to the organization and then confronting it. Peter says the support statement often is a simple acknowledgement that you hear what the other is saying; it means you have listened. The confront statement then identifies the difference between how you see a situation and how the other sees the same situation. Real change becomes possible only when we change the cultural narrative.

Challenge To Learner: What is the change narrative in your organization today? After watching the next video (Design Thinking and Change), consider how your organization might learn from the concept of ‘changing the narrative’.

 

CHANGE WHAT (2:00)
Peter Block (CEO Designing Learning)
NOTE: this video will start and stop at the pre-assigned times 0:02-1:51


1.12 Conclusion

Start your change program by ‘Creating a Sense of Urgency’ and ‘Building a Guiding Coalition’. The PRESS Model can support employee engagement during those processes. The Change Promoter Score can measure employee sentiment (and action points), before-during-after the change. Organizational complexity is often camouflaging the necessity for change. Therefore, reducing the complexity and changing the narrative, can help achieve a broader understanding of the desired changes needed in your organization.

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BEFORE PROCEEDING:

COMPLETE the Session 1/8 quiz again, and compare your results.

SHARE your thoughts & ideas with others in the comment box at bottom of page.


 

Recommended Reading: 

Changing Change Management (McKinsey) 

The Net Promoter System for Internal Customers (Bain and Company)


 

NEXT Session 2/8: MODELS OF CHANGE

CONTENT: The Change Lab, Peter Drucker on change, former CEO of Nokia describing barriers to change in Nokia, Prof. Daniel Kahneman (Nobel Laurate) on the role of decision-making during change, McKinsey observations on the influence of technology on change, and more (models of change, planned vs. improvisational change, technology disruption etc.). LINK TO 2/8 BELOW


 

RECOMMENDED VIEWING
Effective Learning With The Promoter Score (2:00)

Rob Markey (Bain and Company)
NOTE: this video will start and stop at the pre-assigned times 0:02-1:51

 

Common sense and good judgment is necessary during change:

  • Pick your spots. Not every interaction with every function merits feedback. Consider focusing on the few interactions that really matter—the episodes in which a group has a real chance to make an impact on change efforts.
  • Give it a rest. Use a process that allows you to control the number of times any individual is asked to provide feedback. You don’t want to overwhelm your employees (internal-customers) with an avalanche of requests.
  • Maintain high velocity. Provide the feedback directly and immediately to employees who need to hear it. Connecting feedback to specific events and actions allows employees to quickly identify potential changes to behavior, processes or policies.
  • Keep it real. Don’t protect your team from harsh comments. Instead, promote an environment in which even difficult feedback is treated as a welcome chance to improve.
  • Celebrate heroes. Similarly, share positive feedback quickly, regularly and with enthusiasm. Use stories of successful initiatives, collaboration and internal promoter creation to reinforce your organization’s value of change.
  • Follow up fast. Similar to external customers, internal customers need to know their feedback has been heard and taken seriously. Moreover, you can often glean rich and valuable insights from closing the loop with your internal customers.
  • Dig deep. Root-cause analysis is a critical tool for addressing the needs of internal groups, so don’t stop with analysis of comments from your feedback system. Ask the “Five Whys” (Eric Ries, Harvard) to go beyond the symptoms and figure out how to resolve the fundamental issues.

Source: Bain and Company