304 Organizational Change

8 Global Megatrends

- Increased Productivity (less people necessary) - Businesses more powerful than governments - Internet (Global Mind and Market) - Emerging Demographic shifts (Developed aging, developing youthful) - Credit System and New currency - Natural Resource depletion - Damaging effects of global warming - Biotechnology (useful for aging, wealthy populations)

Leading Change

1) Establish a sense of urgency 2) Form a powerful coalition 3)Create a vision 4)Communicate the vision 5) Empower others to act on the vision 6) Plan for and create short-term wins 7) Consolidate improvements and create more change. 8) Institutionalize new approaches

Dimensions of Organizational Change

1) How radical or different from status quo is the change: Incremental or Revolutionary. - Determined by how far organization is from goal or ideal state. 2) How constant or incessant is the change: Discrete or continuous. - Determined by how quickly the organization's environment is changing.

Self-Design Organization Steps

1) Laying a Foundation - Acquiring Knowledge - Diagnosing - Valuing 2) Designing 3) Action Learning Cycle Everyone in organization is involved and practicing in all parts.

Unfreezing Steady State

1) Understand the current steady state - Force Field Analysis: Map the change situation to identify existing driving and restraining forces and analyze the strength and balance of the opposing forces. 2) Unfreeze steady state by weakening restraining forces, creating an imbalance towards driving forces to change.

Lewin 3 Stage Process

1) Unfreeze the Steady State 2) Transition to New Steady State 3) Re-Freeze the New Steady State

Action Learning Cycle

1)Taking action to change and Improve organization 2) Collecting Pertinent Information - "How are we doing in regard to our values and goals after change?" 3)Diagnose Progress 4)Planning to Modify and Adjust actions 5)Go back to step 1 Action Learning Cycle repeats again and again thru time, each iteration makes the firm better.

Types of Organizational Change

Adaptation: Discrete and Incremental Re-creation: Discrete and Revolutionary Fine-Tuning: Continuous and Incremental Transformative: Continuous and Revolutionary

Transition to New Steady State

Compelling Story and Clear change vision - "What do we look like ideally?" Powerful Coalition of stakeholders on board - employees, managers, key customer groups, key board members, key government groups Strong leadership and role modeling of change Implementation plan with objectives, roles, and responsibilities Mechanisms to communicate the change and gain wide commitment Building capability to perform new behaviors. Facilitation and Support.

Forces driving Organizational Change

Competitive Environment - Globalization - Aggressive Newcomers - Consolidation into bigger competitors - Deregulation Internal Pressures - Eroding margins - Pressures to grow - Shareholder pressure/demands for accountability Proliferating and rapidly changing technologies Changing workforce demographics Political and Economic Changes

Laying the Foundation - Acquiring Knowledge

Conceptual Learning - Broad organizational topics (304) - Specific knowledge of design elements (structure, information and control systems, work design, human resource systems) - Gives the ability for all employees to self-design strategies Practical Learning - Visits to companies with self-design (visualize results) - Cases and articles (practice and learn processes) - Speakers and conferences (continuously build knowledge)

Problems with Traditional Change Method

Conflict between experts and doers - not cooperative, so all issues with the change program result in finger pointing between the two. Lack of employee buy-in. Too rigid, not adaptive to local conditions - packaged change program can't be effective everywhere. Limited implementation due to above factors. Cynicism about change self-perpetuates.

Institutionalize new approaches

Do - Articulate connections between new behaviors and corporate success. - Create leadership development and leadership succession plans consistent with the new approach. Don't - Not create new social norms and shared values (culture) consistent with changes. - Promote people into leadership positions who don't personify the new approach.

Form a Powerful guiding coalition

Do - Assemble a group with shared commitment and enough power to lead the change effort. - Encourage them to work as a team outside of the normal hierarchy. Don't - Have no prior experience in teamwork at the top. - Relegate team leadership to an HR, quality, or strategic planning executing rather than senior line managers.

Create a Vision

Do - Create a vision to direct the change effort. - Develop strategies for realizing that vision. Don't - Present a vision that's too complicated or vague to be communicated in five minutes.

Plan for and create short-term wins

Do - Define and engineer visible performance improvements. - Recognize and reward employees contributing to those improvements. Don't - Leave short-term successes up to chance. - Fail to score successes early enough (12-24 months into change effort).

Establish a sense of urgency

Do - Examine market and competition for potential crises or new opportunities. - Convince 75% of managers that status quo is more dangerous than change to something new. Don't - Underestimate the difficulty of driving people from their comfort zones. - Become paralyzed by risk.

Empower others to act on the vision

Do - Remove or alter structures undermining the vision. - Encourage risk taking and non-traditional ideas, activities, and actions. Don't - Fail to remove powerful individuals who resist the change effort.

Communicate the vision

Do - Use every vehicle possible to communicate the new vision and the strategies for achieving it. - Teach new behaviors by the example of the guiding coalition. Don't - Undercommunicate the vision. - Behave in ways antithetical to the vision.

Consolidate improvements and produce more change

Do - Use increased credibility from early wins to change systems, structures, and policies undermining the vision. - Hire, develop, and promote employees who can implement the vision. - Reinvigorate the change process with new projects and change agents. Don't - Declare victory too soon - like with the first performance improvement. - Allow resistors to convince "troops" that the war has been won.

Kurt Lew's Organizational Change Model Definitions (Driving, Restraining, Steady State)

Driving Forces - Encourage change, push people in organization in new direction. Restraining Forces - Resist change, push people in organization not to change. (listed above) Steady State - Driving forces=restraining forces, creates equilibrium of no change.

How to change Steady State

Increase driving forces or decrease restraining forces - Best strategy is to decrease restraining forces as it reduces anxiety and conflict throughout the process.

Laying the Foundation - Diagnosing

Inputs - Competitive Environment - Business Strategy Design Elements - task or human oriented; formal and informal design (structure and culture) Outputs - Performance outcomes - Human outcomes

ReFreezing New Steady State

Integrate changes into Organization Culture (norms and values) Reinforcing mechanisms - systems, processes, and incentives in line with the new behavior Monitor the changes and make necessary adjustments

Self-Design Organization Change Model (Build change mentality and capability into everyday operations of all employees)

Involves multiple stakeholders - anyone with a powerful interest should have a say (employees, managers, key customer groups, key board members, key government groups). Innovation on site - Learn to analyze and design change IN the situation. Learning by doing - Practice the designed solution in the situation where it originated. Continuous change, improvement and learning - process of practice and refinement. Part of normal operations

Approaches to Designing

Limited Change (Incremental): Fine-Tune current design. Medium amount of change: Imitate others Extensive Change (Revolutionary): Zero Based Designing - Designing from scratch.

Designing High-Involvement Organizations

Made up of units or work teams - Carry out whole work process delivering value to customer. - Members have the skills and knowledge to work without daily control. - Clear responsibility and decision making authority - Measured and held accountable for results All organization elements are designed to promote and reinforce EMPLOYEE INVOLVEMENT Designed around whole parts of self-completing units In dynamic environments, employees can collaborate and create change quickly and productively.

Traditional Change Methods - Exclusively expert driven problem solving

Management initiated and controlled Problem focused. Experts (acctns, finance) analyze issues and design solutions. Doers (line managers) implement solutions but haven't been included in design process. Solution rolled out as packaged change program with rigid steps. Employees treated as main source of resistance towards change, sets up employee vs. management conflict.

Forces Driving Organizations to Resist Change

People Resistances - Ingrained habits (liability of success) - Difficult to learn new behaviors - Security/economic factors (changes threaten expertise and status) - Fear of unknown Organization Resistances - Strong organizational structure - Structural inertia: structure of reward and information systems - Threats to expertise, power relationships, and resource allocations - Little slack or funding (less money or resources to experiment with due to eroding margins) - Poor leadership: not oriented towards leading change, only managing status quo.

Features of High Involvement Organizations

Structure: Flat and Lean Work Design: Self-managed teams Information systems: open and distributed, always up to date for employees to use in decision making. Leadership: visionary, change-oriented Decision-making: employees empowered to make decisions quickly and close to the problem. Training and Development: continuous, equipping employees to create beneficial change. Selection process: culture driven, to strengthen propagation of core values and norms of employee-driven change. Rewards: Performance and skill based. Culture: Strong and egalitarian Work-force accommodations: plentiful, creates good quality of life for employees.

Laying the Foundation - Valuing

Values must be decided on and committed to UNIVERSALLY Valued Performance Outcomes - Quality, quantity, time.. - Innovation, efficiency Valued Human Outcomes - Quality of work life - Employee security Valued Organizational Conditions - Empowerment (as opposed to politicking) - Teamwork