‘In fact, people themselves are responsible for making the status quo so resistant to change. We are trapped by our own behavior. ~ Warren Bennis
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.
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.
Please make a note of your score for comparison purposes at the end of this session.
Time Required: 35 min.
3.0 Models of Change
- What drives change in organizations?
- The difference between external and internal congruence?
- Structural, political and cultural change perspectives?
- ‘Designing Change’ A NEW CHANGE MANAGEMENT TOOL
LEARNING MOMENTS from this session
Although external changes can pose a threat to an organizations strategy, often a greater threat can come from within the organization. The Nadler and Tushman ‘Congruence Model of Change’ reveals the degree to which three key components are congruent with one another (organizational fit with tasks, individual skills, and task requirements). The model allows leadership to determine:
- The level of organizational performance?
- The changed required to improve performance (and why)?
- The root drivers of performance improvements (work processes or people)?
- The need for organizational re-structuring?
- The need for organization culture change?
- The reason why one organization thrives within a corporate structure, and another struggles within the same structure?
- Operational effectiveness, although necessary to superior performance, is not sufficient to achieve sustainable advantage.
- Internal congruence involves multiple aspects: structure, politics and meaning.
- The ‘Three Action Frames’ for diagnosing change: structure, politics, and meanings.
- The Fogg Behavioral Model (B = MAT).
- Designing change with ‘Design Thinking’.
3.1 Congruence Model
According to the Nadler and Tushman congruence model, four inputs which have a significant influence on the pace of change:
- Environment: Factors outside the organization that have a potential impact on the organization.
- Resources: Various assets to which the organization has access, including human resources, capital, information, as well as less tangible resources.
- History: Organizational history and the history of patterns of employee behavior, policy, the types of people the organization.
- Strategy: The process of determining how the organization’s resources are best used within the environment, and within the historical context, in order to attain the desired goals.
Internal Congruence (3:00)
NOTE: this video will start and stop at the pre-assigned times 0:24-3:34
3.2 What is Strategy?
Professor Michael Porter (Harvard) says that, today’s dynamic markets and technologies have called into question the sustainability of competitive advantage. Under pressure to improve productivity, quality, and speed, managers have embraced tools such as TQM, bench-marking, and re-engineering. Dramatic operational improvements have resulted, but rarely have these gains translated into sustainable profitability. Furthermore, gradually, these tools have taken the place of strategy. Porter argues that operational effectiveness, although necessary to superior performance, is not sufficient, because its techniques are easy to imitate. Strategy, according to Porter, is when a company can outperform rivals (deliver greater value), through differences it can preserve.
‘ A sound strategy is commonly undermined by a misguided view of competition, organizational failures, and the desire to always grow. Companies may have to change their strategic position due to a major structural change in their industry. In those cases, the company should choose their new position based upon: the ability to leverage a new system of complementary activities into a sustainable advantage (based upon trade-offs).
Relationship Between Strategy and Change? (4:00)
Prof. Michael Porter, Harvard Business School
NOTE: this video will start and stop at the pre-assigned times 42:23-46:16
3.3 Case: Congruence in Music Industry
The music industry has faced 40 years of disruptive technological change. The core elements of music production and distribution have been digitized, lowering barriers to entry and transforming value creation and value capture for all participants—record companies, artists, and music distributors. The first wave of digital technologies moved the music industry from analog vinyl records and magnetic cassette tapes to plastic compact discs. The latest wave in the digitization of music distribution has commoditized convenience, and shifted the power to Spotify, Pandora, and Rdio that have replaced digital downloads with direct digital streaming. Artists and record companies only get paid for the music that consumers listen to’. (K. Lakhani and M. Iansti), Harvard Business Review 2014).
This shift to digital distribution and production has created a dilemma for record companies (the trade-off between value creation and value capture), and for artists.
Case: Music Industry (5:00)
NOTE: this video will start and stop at the pre-assigned times 3:24-8:18
3.4 Three Action Frames
Internal congruence is a complex issues and involves multiple aspects (Three Action Frames): structure, politics and meaning. Therefore, effective change management should address all of these aspects. However, as Nadler and Tushman recognized: congruence is a double-edged sword, ‘while our model implies that congruence of organizational components is a desirable state, it is, in fact, a double-edged sword. In the short term, congruence seems to be related to effectiveness and performance. A system with high congruence, can be resistant to change, develop ways of insulating itself from outside influences, and may be unable to respond to new situations.’ The Three Action Frames, allows management to deal with this challenge.
Three Action Frames (6:30)
NOTE: this video will start and stop at the pre-assigned times 8:18-14:58
Take A Pomodoro Break Now (5 min. to relax & reflect)
Learning always benefits from short breaks.
3.5 Case: Honeymoon at Yahoo
Willingness to change is a strength, even if it means plunging part of the company into total confusion for a while. ~ Jack Welch
Flexible working options are the norm in tech companies (WFH – Work From Home). Marissa Meyer (CEO Yahoo), pulled that policy from Yahoo staff in 2013. Mayer has made resetting the Yahoo culture a top priority. ‘Being a Yahoo isn’t just about your day-to-day job, it is about the interactions and experiences that are only possible in our offices.’ Many critics called the new Yahoo policy a step backward for workplace flexibility. Some commentaries said, ‘It wasn’t the policy itself, but how it was unveiled.
“At Yahoo’s headquarters in Sunnyvale, California, just off US 101 in the heart of Silicon Valley, almost two thousand employees sat in a huge cafeteria. On that November 2013 day, the many Yahoos who had admired all of Marissa Mayer’s progress wondered: Why was Mayer throwing away all the goodwill she had earned with a series of policies that were, at best, poorly rolled out and badly explained to employees or, at worst, plain mistakes. They wondered, more seriously than at any time since she joined, if Mayer was actually up for the job of saving Yahoo. Some were angry because, to them, it seemed like Marissa Mayer had said one thing and done another.” (Business Insider. 2.1.2015)
Yahoo: All Hands on Deck (3:00)
Ellen Galinsky, President, Families and Work Institute
NOTE: this video will start and stop at the pre-assigned times 0:55-4:05
3.6 Design Thinking
The Miracle of Tiny Habits ‘plant a tiny habit in the right spot, and it will grow without coaxing’ ~ B.J. Fogg (Stanford University)
B = MAT
According to BJ Fogg (Stanford University), there are three elements that must occur at the same time for behavior change to occur (Fogg’s Behavioral Model). The three elements are:
- Motivation (sensation, anticipation, social cohesion).
- Ability (training or modify tasks-simplicity).
- Trigger (spark, signal, facilitator).
For behavior to occur those three must occur simultaneously. There is however a critical threshold called the ‘activation trigger’. If a person is above that threshold (high motivation/high ease-of-doing), the desired behavior will occur. If one is below that threshold (low motivation/hard-to-do), the desired behavior will not occur. The secret is to put ‘Hot Triggers’ in the path of motivated people (you can do this now!). Hot Triggers are everywhere and one should notice (recognize) them and how they work. Therefore, Hot Triggers can be used to create habits. It is important to remember that , the triggers need to be in the path of motivated people, and coupled with behavior people are already practicing. Identifying, and employing ‘Hot Triggers’ is an important part of Designing for Behavioral Change.
- Cue Habits: when the trigger is initiated, a person responds.
- Cycle Habits (occur on a cycle): when an action is taken after another action (before I brush my teeth I floss).
Daily Cycle Habits can be very effective in supporting a desired change because, Cycle Habits can more easily become very common occurrences.
Behavior Change (3:00)
NOTE: this video will start and stop at the pre-assigned times 6:34-10:45
3.7 Designing Change
According to Prof. BJ Frogg (Stanford University), there are two ways to create lasting change (incremental Small Changes or by changing the Environment). The mistake many organizations make is to design for ‘epiphany (revelation, inspiration). Frogg feels that ‘magic is not necessary for change to occur’, one just needs to do what works (incremental steps, change in the environment, or both). Frequently the signals that organizations are designing for ‘epiphany’ include; showing, educating, and assessing employees.
Small Changes are designed to be easy to achieve, not time consuming, and requiring little effort. The benefits of small changes is that people can easily see the progress made, and that progress is not perceived as threatening. Fogg distinguishes between two different forms of small steps (tiny and starter). Tiny steps are scaled-down versions of the desired behavior (make this small change). Starter steps are the first steps in a sequence of behaviors (watch a video about the benefits of….). Starter steps can lead to bigger behavior changes.
The choice of ‘tiny’ vs. ‘starter’ steps will depend on the context and the desired behavioral change. Some behaviors are more easily simplified through tiny versions and others through starter steps. In some cases, both approaches can be employed. Fogg believes that incremental steps, when attempting to change peoples behavior, are the most effective.
Behavior is hugely influenced by ones environment. Therefore, when more dramatic change is a necessity, one must consider changing the environment. However, the challenge is: how to change that environment in a realistic way? When employing design thinking, the environment can be visualized in three ways:
- Tools and Resources: By removing or adding different tools and resources, behavioral change can be altered. The secret here is to find the tools and resources which have least resistance.
- People: ‘A person can be judged by the people they associate with’ is a common phrase. Although difficult, changing behavior can be supported by surrounding people with different people. This is a challenging change, but worthy of consideration. An alternative form of change in this context is to get the people you currently associate with (work with), to change their behavior first. However, the path of least resistance to change is in ‘getting people to change in ways they want, and making that change together’.
- Awareness of Environment (perception): One doesn’t have to actually change the physical environment, but change how people perceive that environment (by employing cues or tools to support behavioral change).
Helping people take the right small steps, and changing how people perceive their environment can both be designed-in to every change program.
Design Thinking for Change (3:00)
Professor Bernard Roth, Stanford University
NOTE: this video will start and stop at the pre-assigned times 1:22-4:40
THE DESIGN THINKING PROCESS
During this Design Thinking process, the designer mindset is driven by; curiosity, mindfulness of the overall process, re-framing of ideas, radical collaboration, and a bias-towards-action. ‘Need-finding’ is also a critical part of the Design Thinking process ‘getting beyond what people say and do, to what they think and feel’. However, some needs are apparent and easy to see, but others are latent and deep (like an iceberg):
- Explicit needs (above the water line) lead to incremental improvements.
- Implicit needs come from the meaning embedded in stories.
The Design Thinking philosophy adheres to the belief that, ‘understanding implicit needs leads to unique insights and big new ideas’. This philosophy is based on the understanding that people (customers) often can’t tell you what is important, but they can signal what’s important with their behavior. Therefore, Design Thinking represents:
- A dynamic problem solving approach (ideal for poorly-bounded problems, and achieved through prototyping, iteration and rapid learning).
- A problem finding approach (involving re-framing, ethnography, and prototyping).
- A value-creation perspective (a human-centered, co-creation process focused on real end-user needs).
The Nadler and Tushman ‘Congruence Model of Change’ reveals the degree to which three key components are congruent with one another (organizational fit with tasks, individual skills, and task requirements). Four inputs can have a significant influence on the pace of change (environment, resources, organizational history and strategy). Operational effectiveness, although necessary to superior performance, is not sufficient for creating a sustainable advantage. Congruence is a double-edged sword, as a system with high congruence, can be resistant to change, develop ways of insulating itself from outside influences, and may be unable to respond to new situations.
According to the design thinking process, three elements must be present at the same time for behavior change to occur (Fogg’s Behavioral Model). Those three elements are: motivation (sensation, anticipation, social cohesion), ability (enhanced through training or modify tasks-simplicity), and a trigger (spark, signal, facilitator). When employing design thinking in the analysis of organizational change, the process should be driven by; curiosity, mindfulness of the overall process, re-framing of ideas, radical collaboration, and a bias-towards-action.
Need-finding’ is a critical part of the Design Thinking process ‘getting beyond what people say and do, to what they think and feel.
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Congruence Model Nadler Tushman (Stormbal.com)
NEXT Session 4/8: FORMAL STRUCTURES
CONTENT: The ‘North Star’ Change Model, Prof. George Richter discusses McDonaldization Theory, the Autodesk OrgOrg chart, Dr. Brian Welle (Google) on improving personal networking within Google, and more (organizational theory, organizational evolution, functional/divisional structures etc.). Formal Structure 4/8
Strategic Congruence (3:00)
Constance Dierickx, CD Consulting Group
NOTE: this video will start and stop at the pre-assigned times 0:14-3:35
Strategic congruence means that corporate, business, and functional strategies of the firm are mutually consistent, with strategy at each organizational level appropriate to the firm’s competitive arena and overall strategic aims (Hofer and Schendel, 1978). Strategic congruence can be achieved by breaking down and strategies to the business unit level, and then to the level of each function (decomposing strategy). According to normative organization theory: overall corporare goals and strategies are the starting point for all co-ordination (the first step). Creating strategic congruence however, has proven difficult (Fredrik Nilsson, and Birger Rapp).