Unit 9

Accelerate Kotter: Key Points

• A dual operating system is needed for companies today to maintain operations while adapting to change at a rapid rate.
• This strategy system operates concurrently with the company's daily operations.
• The strategic system operates as a network with the following principles:
  • Many change agents, not just appointed individuals
  • A "want-to" and "get-to" mindset, instead of a "have-to" mindset
  • Focus on both intellect and emotional engagement for change
  • A network requires many leaders, not just managers, and operates with different processes and language
  • Hierarchy and network should be inseparable with a constant flow of information.

Accelerators

• Eight accelerators enable the strategy network to function effectively.
• They help create a sense of urgency, build a volunteer base, communicate vision, navigate obstacles to the vision, and institutionalize change within the company culture.
  • Create a sense of urgency around a single big opportunity (central change accelerator)
  • Build and maintain a guiding coalition (GC) with volunteers from across the organization
  • Formulate a strategic vision and develop change initiatives to capitalize on the opportunity
  • Communicate the vision and the strategy to attract volunteers
  • Accelerate movement towards the vision by removing barriers
  • Celebrate visible, significant short-term wins
  • Keep learning from experience, and never let up
  • Institutionalize strategic changes in the culture

Sustainability and Change

• Stage models describe change processes as a series of phases, although the number of stages varies.
• Change is not static and the end point is not always clear.
• Sustainability-related change has several characteristics:
  • Levers are only partially controlled by a single organization, requiring collaboration with external partners
  • Motivation is partially external, often stemming from shifting social expectations
    • External pressure can be due to reputational threats or the search for new market niches
  • Continuous change is required, making it difficult to identify a clear end-point.

Creating Urgency and Vision for Sustainability Change

• Sustainability is often not a core business aspect, making it difficult to establish a sense of urgency or vision.
• Two strategies can be applied to create urgency:
  • Challenge: Highlight the threat of falling behind competitors
  • Opportunity: Identify opportunities to proactively drive regulations or gain a competitive edge
• The Red Queen Effect, where companies compete on sustainability, can be leveraged to create a sense of urgency.
• Sustainability has emotive power, making it easier to attract volunteers; millennials, in particular, often seek more meaningful work.
• Collaboration with social organizations can enhance the success of sustainable change initiatives.

Individual Readiness for Change

• D x M x P > Cost of Change: This equation is used to assess individual readiness for change. It involves the desire (D), motivation (M), and ability (P) to make change.

Kimpton Hotels: Balancing Strategy and Environmental Sustainability

• Kimpton Hotels adopted "Earthcare" initiatives with the aim of lowering their environmental impact while not impacting the customer experience.
• The company recognized the need to balance sustainability with financial constraints and the potential impact on customer experience.
• The key challenges for Kimpton included:
  • Finding sustainable alternatives that weren't significantly more expensive (e.g., organic cotton pillows)
  • Ensuring that sustainability efforts did not negatively impact public relations
  • Scaling sustainability initiatives across a decentralized chain

The Earthcare Initiative

• Investments in the Earthcare initiative were relatively high, particularly in the early stages.
• The initiative required significant patience in terms of investment and return.
• Expertise was needed in sourcing sustainable supplies and marketing the initiative effectively.
• The centralized sustainability approach was a challenge given Kimpton's decentralized organization.
• The initiative focused on operational optimization, but it didn't necessarily promote a wider shift towards sustainability in the hotel industry.

Creating Momentum for Kimpton's Change Initiative

• Proactive Change: Kimpton needed to differentiate itself from competitors who are also adopting sustainable practices.
• Vision and Mission: The focus was on operational optimization, using a "doing less harm" approach while remaining committed to the current business model.
• Building a Coalition and Volunteer Group: Kimpton's existing culture of caring provided a foundation for the Earthcare initiative.
• Barriers to Change: Resistance was anticipated primarily from the top (leadership) rather than from the bottom (employees) of the organization.

Dual Operating Systems

• Companies need a second, complementary operating system for strategy to address rapid change and mounting complexity
• This system operates like a network, pulling in volunteers throughout the organization
• This system should be flexible and agile like a network
• It should complement the existing system without being overly burdensome
• It should focus on constant competitive advantage without disrupting day-to-day operations.

Five Principles of a Dual Operating System

• Many change agents: Rely on volunteers, not just appointed individuals
• Want-to and get-to mindset: Foster a positive attitude towards change
• Head and heart: Address both logical and emotional aspects of change
• More leadership: Utilize a network structure with different processes and communication styles
• Two systems, one organization: Integrate the hierarchy and the network with constant information flow.

Eight Accelerators for Strategic Change

• Create a sense of urgency: Emphasize the need for continual strategic adjustments and alignment with opportunities
• Build a guiding coalition: Form a team of volunteers from across the organization, treating each member equally
• Formulate a strategic vision: Define a clear vision and create change initiatives aligned with opportunities
• Communicate the vision: Communicate the vision effectively to create buy-in and attract volunteers
• Accelerate movement: Remove barriers and support progress towards the vision
• Celebrate wins: Acknowledge and celebrate short-term successes to build momentum
• Never let up: Continuously learn from experience and avoid prematurely declaring victory
• Institutionalize change: Integrate strategic changes into the company culture.

Stage Models of Change

• Characterize change processes as following distinct stages
• Stages may vary in different models, but usually include three main stages
• Change is dynamic, lacking a clear start and end point, and the distance to travel is unpredictable.

Sustainability-Related Change

• Requires a collaborative approach involving partners outside the organization
• Driven by both internal and external factors: shifting social expectations and external pressure (reputational threat, seeking new market niches)
• Requires continuous change, making it difficult to define an endpoint and reach a natural conclusion.

Challenges with Applying Change Models to Sustainability

• Most change models were not designed for sustainability change
• Difficulty in creating a sense of urgency, as sustainability is often not a core business priority
• Sustainability often lacks a compelling vision motivating employees.

Framing Urgency and Vision for Sustainability

• Challenge: Competitors are getting ahead, creating a need to catch up
• Opportunity: Proactively take advantage of market opportunities and drive regulations.

The Red Queen Effect

• Companies compete on sustainability, simultaneously strengthening their rivals as they react to competition
• Using a Red Queen effect framework, change agencies can create a sense of urgency by highlighting performance gaps or unexploited opportunities.

Sustainability as a Means of Market Competition

• Sustainability is increasingly becoming a key competitive differentiator
• Companies are seeking to capitalize on the emotional and ethical appeal of sustainability to attract talent and customers, particularly millennials.

Individual Readiness for Change

• Measured using the equation: D x M x P > Cost of Change
  • D: Dissatisfaction with the current situation
  • M: Vision of a better future
  • P: Practical steps to achieve the vision
• If the product of dissatisfaction, vision, and practical steps exceeds the cost of change, individuals are more likely to embrace change.

Kimpton Hotels Case Study

• An example of a company balancing strategy and environmental sustainability
• Kimpton Hotels implemented a national environmental program to reduce environmental impact
• Faced challenges, including higher costs for sustainable products, potential impact on customer experience, and the need to maintain brand promises.

Earth Care Initiative Lessons

• Investments are high, but require patient capital
• Expertise necessary in supplier sourcing, green marketing, and operational optimization
• Culture needs a centralized approach to sustainability, despite a decentralized organizational structure
• It’s essential to avoid shifting the burden of sustainability onto customers, as this can lead to rebound effects.

Creating Momentum for Sustainability Change

• Proactive Change: Companies can gain a competitive edge by emphasizing their sustainability initiatives and differentiate themselves from rivals
• Vision and Mission: Focus on operational optimization and minimizing harm while maintaining the same business model.

Barriers to Change

• Resistance could come from top leadership rather than employees
• The company's culture may be a factor in overcoming resistance.