MGMT4010 CLO2-CLO3 PDF

Opportunities, Trends & Challenges CLO2 Objectives Understand change-related opportunities, challenges and trends Understand successful strategies in response to these Opportunities in Organizational Change Enhanced Adaptability: Organizations can better respond to market shifts, customer demands, a...

Opportunities, Trends & Challenges CLO2 Objectives Understand change-related opportunities, challenges and trends Understand successful strategies in response to these Opportunities in Organizational Change Enhanced Adaptability: Organizations can better respond to market shifts, customer demands, and competitive pressures, ensuring relevance and sustainability. Improved Efficiency: Streamlining processes and adopting new technologies can lead to significant improvements in productivity and cost savings. Opportunities in Organizational Change Innovation and Creativity: Encourages a culture where new ideas are valued and implemented, leading to growth and differentiation. Alignment with Market Needs: Ensures offerings remain desirable by staying closely aligned with customer expectations and industry trends. Challenges of Organizational Change Resistance to Change: Employees and management often resist due to fear of the unknown, loss of control, or comfort with current processes. Communication Barriers: Lack of clear communication can lead to confusion and hinder the change process. Challenges of Organizational Change Resource Allocation: Requires significant investment in time, money, and resources, which can be challenging to manage effectively. Operational Continuity: Maintaining smooth operations while implementing changes is crucial but often leads to short-term disruptions. Trends in Organizational Change Digital Transformation: Leveraging technology to improve operations, customer experiences, and decision-making processes. Cultural Shifts: Growing emphasis on creating cultures that embrace change, with a focus on agility, flexibility, and employee engagement. Trends in Organizational Change Agile Change Management: Adopting more flexible and iterative approaches to change, allowing for quicker responses and adaptations. Data-Driven Decisions: Increasing use of AI, machine learning, and analytics to inform and guide change initiatives. Strategies for Successful Change Clear Communication: Keeping all stakeholders informed and involved is key to overcoming resistance and ensuring a shared vision. Planning and Resource Management: Detailed planning and careful allocation of resources ensure that changes are feasible and well-supported. Strategies for Successful Change Monitoring and Feedback: Continuously tracking progress and gathering feedback allows for adjustments and improvements. Support and Training: Providing adequate training and support helps employees adapt to new systems and processes, ensuring a smoother transition. Conclusion Organizational change is a complex but essential aspect of modern business strategy. By recognizing the opportunities and challenges, staying abreast of trends, and adopting effective strategies, organizations can navigate the intricacies of change successfully and emerge stronger and more adaptable. Recognizing a Need or Opportunity for Change CLO2 Objectives Sources (Triggers) of Change 3 Sources of change © John Hayes (2018) ©www.imagesource.com Many of the opportunities and threats that trigger change can be found in an organization’s external environment, but some can originate from within the system itself. Triggers (Causes) of Change Internal Factors External Factors Change initiated by the business Change from outside the business Restructuring Mergers and acquisitions New Board of Directors Changes in organizational vision Employee dissatisfaction Organizational growth Business unit / department mergers Performance failures Social trends / attitudes Economic conditions Laws / regulations Technological advances New competition Industry changes Cost pressures Vendor / supplier changes 5 Internal sources of change Greiner asserts that, for many organizations, the most pressing problems are rooted in the organization’s past decisions. Organizations evolve through five predictable stages of development and each stage brings with it a set of alignment-related issues that have to be managed if the organization is to be effective. Growth through CREATIVITY Growth through DIRECTION Crisis of leadership leads to a Crisis of autonomy leads to a Growth through DELEGATION leads to a Crisis of control Growth through COORDINATION leads to a Crisis of red tape Growth through COLLABORATION leads to And so on... © John Hayes (2018) Internal and External Sources of Change External Sources of Change: PEST Analysis PEST is an analytical tool that focuses attention on external factors that can trigger organizational change Political Economic Sociocultural Technological © John Hayes (2018) ©www.imagesource.com Political Factors Definition: Political factors refer to the extent to which government policy and actions intervene in the economy or a specific industry. This includes tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Example: A new government policy increases tariffs on imported goods to protect domestic industries. This change can significantly impact international trade and may benefit local producers while increasing costs for importers. Economic Factors Definition: Economic factors involve economic conditions and trends that can affect an organization's operation and profitability. This includes economic growth, interest rates, exchange rates, inflation, and economic cycles. Example: A recession leads to higher unemployment, reduced consumer spending, and tighter credit conditions. Businesses may see a decline in sales and may need to adjust their strategies to cope with the economic downturn. Social Factors Definition: Social factors analyze the demographic and cultural aspects that affect a company's market. This includes population growth rate, age distribution, career attitudes, health consciousness, and lifestyle changes. Example: An aging population increases the demand for healthcare services and products. Companies in the healthcare industry might see growth opportunities, while those in youth-focused markets might need to reevaluate their strategies. Technological Factors Definition: Technological factors consider the rate of technological innovation and development that could affect a market or industry. This includes R&D activity, automation, technology incentives, and the rate of technological change. Example: The rapid advancement of artificial intelligence technology leads to increased automation in manufacturing. Companies that adopt these technologies may improve efficiency and reduce costs, while those that don't may fall behind. Strebel’s model for managers to anticipate technological and economic changes Strebel's model is designed to help managers anticipate and respond to technological and economic changes. It emphasizes the importance of continuous scanning of the environment, understanding the forces of change, and adapting strategies accordingly. Strebel: Scanning the Environment Identifying Signals: Managers must actively identify early signals of change in technology and the economy, which may include emerging trends, innovations, or shifts in consumer behavior. Broad Perspective: Encourages looking beyond the immediate industry to understand broader global and technological trends. Strebel: Understanding Forces of Change Analyzing Impact: Once potential changes are identified, managers need to analyze their potential impact on the organization and industry. Drivers of Change: Understanding the drivers behind these changes, such as technological advancements, regulatory shifts, or economic factors. Scenario Planning: Engaging in scenario planning to envision possible futures and how these changes might play out. Strebel: Adapting Strategies Flexibility and Agility: Emphasizing the need for strategies that are flexible and can quickly adapt to new information and conditions. Innovation and Experimentation: Encouraging a culture of innovation and experimentation to take advantage of new opportunities and technologies. Continuous Learning: Committing to ongoing learning and development to stay ahead of changes. Strebel’s Model summary (NEW) Strebel’s (1996) model can be used by leadership to anticipate technological and economic changes in the environment and initiate planned organizational changes that will enable an organization to be ahead of competition. The model suggests indicators can be used to identify breakpoints when organizations must change their strategies in response to changes in the competitor’s behavior. Recognizing the need for change: developing a culture of vigilance ©Getty A failure to recognize external or internal threats or opportunities can lead to internal or external misalignments that undermine organizational effectiveness. © John Hayes (2018) Recognizing the need for change: developing a culture of vigilance ©Getty However, vigilance can be spoiled by a number of factors such as: o Cognitive biases retrospective rationality and the need to justify past decisions short time perspectives that encourage managers to stick with a winning formula for too long (the trap of success) © John Hayes (2018) Sensing the need for change and formulating a change agenda It begins when individuals notice and respond to what they perceive to be significant internal and external events. ©Getty But the top team’s ability to recognize the need for change may be hampered by: lack of diversity in functional background and experience of members of top team their commitment to a strong ideology (mental model) that marginalises (downgrades) dissenting views. © John Hayes (2018) Sensing the need for change and formulating a change agenda ©Getty How to correct this? Actively seeking out and debating alternative perspectives and interpretations can help ensure that the possibility of new threats or opportunities are properly considered. © John Hayes (2018) promotes a reactive approach to change limits the possibilities for planning and involving others in the change process © John Hayes (2018) ©Digital Vision/Getty Images Failure to recognise the need for change in good time © GETTY Using performance indicators to recognize the need for change Discrepancies between actual and desired performance can signal a need for change But problems can arise when discrepancies are not recognized because managers restrict their attention to a narrow range of indicators Some of the factors that managers need to consider include: © John Hayes (2018) Use of profit as one of the main indicators of effectiveness But this indicator might not apply to all organizations While financial viability may be necessary for the survival of organizations such as religious orders, universities, hospitals or charities, profit might not be viewed as a critical indicator of effectiveness Indicators of effectiveness need to be related to the purpose of the unit or the organization © John Hayes (2018) © GETTY 1. Purpose © GETTY 2. Stakeholder perspective Different stakeholders (e.g., senior managers, other workers, customers, suppliers, shareholders, regulatory bodies) may use different indicators to assess the effectiveness of an organization. © John Hayes (2018) Different criteria may be used to assess effectiveness at different levels (e.g., individual, work group, department, strategic business unit, total organization). The criteria used to assess effectiveness at individual or department level need to be aligned with those used to assess overall organizational performance. © John Hayes (2018) © GETTY 3. Level of assessment 4. Alignment across the organization Criteria of effectiveness for each function Purchasing Production Distribution MINIMISE COST OF OBTAINING & HOLDING REQUIRED LEVEL & QUALITY OF INPUTS MINIMISE COST OF PRODUCING REQUIRED OUTPUT ON TIME TO SPECIFIED QUALITY MINIMISE COST OF DELIVERING OUTPUT TO REQUIRED LOCATIONS AT REQUIRED TIMES Marketing & Sales MAXIMISE REVENUES FROM SALES In order to perform effectively, each function might pursue the following objectives: Low procurement Costs Long production runs Few suppliers Low variety Low inventories High capacity utilisation No overtime working © John Hayes (2018) Low inventories High product availability & fast response Flexible internal supply Stable demand Flexible product specification to meet customer requirements An organization that is not very profitable today may be incurring higher costs because it is investing in new plant, product development and training to guarantee greater profits over the long term. © John Hayes (2018) © GETTY 5. Time perspective © GETTY 6. External benchmark Performance in one unit may need to be benchmarked against performance elsewhere to assess how effective it is. © John Hayes (2018) For example, a budget airline’s decision to open a route to one location rather than another might have a positive effect on the performance of the local unit of a car rental firm. But this higher performance may have little to do with factors internal to that unit. This needs to be taken into account when assessing the effectiveness of that unit relative to other units. © John Hayes (2018) © GETTY 7. Constraints and enabling factors Let’s consider the difference between a proactive and reactive approach to change Proactive and reactive responses to change Firms cannot ignore changes in their external environment forever. Eventually they have to adapt if they are to survive. But some firms are slower than others to recognise the need for change and/or slower than others to take action. Their response is Reactive, rather than proactive. Organizations can break out of the pattern of punctuated equilibrium and avoid the need for urgent transformational change... By being Proactive and anticipating change and adopting practices that promote continuous adaptation. Two Common Approaches for Adapting to Change Punctuated Equilibrium © John Hayes (2018) Continuous Incremental Adaptation Strategic drift occurs when the strategy pursued by a business no longer fits with the environment around it. What may have been appropriate at one point is no longer suitable as conditions have changed. Adapting to change: Punctuated Equilibrium Many organizations are slow to adapt to change - It is easier to maintain the status quo The result is a gap (strategic drift) between what the organization is doing and what is happening in the environment. Eventually the gap gets large enough to force the organization to make a radical transformational change. Punctuated Equilibrium Apple product development through Punctuated Equilibrium. Organizations change through alternating of periods of equilibrium, and periods of revolution. © John Hayes (2018) Continuous Incremental Adaptation iPhone product development through Continuous Incremental Adaptation (almost annual improvements). Continuous incremental change – the constant updating of work processes and social practices. o helps to maintain alignment with the environment oaccumulates incremental changes to transform the organization over time Reactive and proactive Approaches: Hotel Example Proactive Approach: Ali, a hotel executive, has learned the number of people who want to travel with their pets is increasing. Ali develops a plan to create petfriendly rooms in each of his hotel locations. He also advertises this new feature, even before travelers begin asking it. Reactive approach: Only after many pet-owning guests were turned away, the hotel executive considers implementing pet-friendly rooms. https://www.referenceforbusiness.com/management/Pr-Sa/Reactivevs-Proactive-Change.html#ixzz76wVJJLoz Consequences of Not Anticipating Change Less time for planning. More difficult to involve people in the process.. Less time to experiment and search for creative solutions. Lack of opportunity to influence markets and technology © John Hayes (2018) Four Change Management Mistakes to Avoid Having the wrong people on the Journey Not listening to team members’ concerns Failing to recognize that original plans may need to also Change Being unwilling to consider risks Four Change Management Mistakes to Avoid Patrick Johnson is the Global CEO and Chairman of Hybrid Theory. According to him, when it comes to change management four common mistakes people seem to be repeating: Four Change Management Mistakes to Avoid Having the wrong people on the journey. ▫ This isn't about only using positive people. ▫ He is talking about the negative disruptors who derive the majority of their self-worth by being the contrarian in the room. Four Change Management Mistakes to Avoid Not listening to team members' concerns. ▫ You cannot successfully change external factors such as structure, reputation and value proposition without acknowledging and addressing personal concerns. ▫ That means every single person. ▫ Listening is job one. Four Change Management Mistakes to Avoid Failing to recognise that plans often change. ▫ "This is my plan, and I'm sticking to it," said no successful change manager ever. ▫ The best change management plans are amenable to change but don't kid yourself into thinking that the need for alteration will always be prompted by something pleasant. Four Change Management Mistakes to Avoid Being unwilling to embrace calculated risks. ▫ Slow and steady does indeed win many races, but you never hear about the corporate races lost by reticence and too much reverence for the competition. Transition is the new normal, and leaders need to be sharing stories of what works now and what has stopped working. Every mistake is an opportunity to learn and adapt to a more beneficial outcome. Summary External sources for change The PEST acronym and Strebel’s cycle of competitive behaviour were introduced as tools that can help managers identify external sources of change. Internal sources Sensing a need for change and formulating a change agenda This begins when individuals notice and respond to what they perceive to be significant external or organizational events. Discrepancies between actual and desired levels of performance signal a need for change but problems can arise when discrepancies are not recognized because attention is restricted to a narrow range of indicators. Proactive and reactive approaches to change. Punctuated equilibrium Continuous incremental adaptation © John Hayes (2018) MGMT 4010 Leadership and Change Management CLO 3 Change Management Theories/Models Learning Objectives Forces that regulate organizational behavior Change theories and models Grundy’s three varieties of change Apply change models for diagnosis Diagnostic, leverage and change management phases Two common approaches for adapting change Punctuated equilibrium and continuous incremental adaptation Diagnostic models Change agents – who initiates change Forces that Regulate Organizational Behavior Forces: Formal rules Powerful forces regulate behavior in organizations. Formal rules, procedures, and rewards and punishment systems promote and discourage behaviour. Social forces as well. This Photo by Unknown Author is licensed under CC BY-SA-NC We are social animals and we are guided by social forces. ▫ Mass psychology, herding behavior, social influence ▫ Biases, decision making shortcuts, heuristics etc. Organizations also develop their own cultures to regulate behavior. ▫ Social roles, identity, social norms (standards of behavior), conformity, attachment, social acceptance, belonging, attention, shame, ridicule, feelings, values, attitudes, beliefs. Power structures Recognize that organizations have: Formal power structures based on the organizational chart Informal power structure based on social processes Both serve to maintain the status quo. Change Leaders need to recognize and work to align both. Recognize that forces like conformity stifle innovation and change. Mass or Herding Behaviour Sometimes organizational culture embeds (sets in) values regarding lessons learned from realities that have long since https://www.youtube.com/watch?v=y-PvBo75PDo changed. Invisible Social Forces Shape Behaviour https://www.youtube.com/watch?v=XxfcaY86jpw Change Theories and Models 10 Two Main Change Management Models Prosci Lewin’s Destabilize the balance between driving forces and restraining forces. These forces tend to manifest as behaviours. Create a vision of a desired state. Communicate the vision Create a sense of urgency, a compelling message of why the status quo can’t continue. Disconfirm people’s assessment of the benefit of the status quo. Build a change team of motivated people. Practical steps to take to unfreeze (to melt the ice) Determine what needs to change by surveying your team or organization to understand the current state. Understand why change has to take place. Use Stakeholder Analysis and Stakeholder Management to identify and win the support of key people within the organization. Frame the issue as one of organization-wide importance. Practical ways to unfreeze Create a compelling message about why change has to occur. Use your vision and strategy as supporting evidence. Communicate the vision in terms of the change required. Emphasize the "why." Remain open to employee concerns and address them in terms of the need to change. Move to a new level Adjust attitudes and beliefs, dispel rumours. Achieve short-term wins. Modify the processes, systems, and structures that shape behaviours. Time & Communication are key. After the uncertainty created in the unfreeze stage, the change stage is where people begin to resolve their uncertainty and look for new ways to do things. People start to believe and act in ways that support the new direction. The transition from unfreeze to change does not happen overnight: people take time to embrace the new direction and participate proactively in the change. Practical steps to take to ease the change stage Practical ways to ease the change In order to accept the change and contribute to making it successful, people need to understand how it will benefit them. Not everyone will fall in line just because the change is necessary and will benefit the company. This is a common assumption and a pitfall that should be avoided. A related change model, the Change Curve, focuses on the specific issue of personal transitions in a changing environment and is useful for understanding this aspect in more detail. Practical ways to ease the change For a start, it's important that you communicate clearly and often and throughout the planning and implementation of the changes. Remember to describe the benefits, explain exactly how the changes will affect everyone, and prepare everyone for what is coming. Also, make sure that you stay ahead of and dispel any rumors. That means answering questions openly and honestly, dealing with problems immediately, and relating the need for change back to operational necessities. Practical ways to ease the change You can also empower your people by involving them in the process, where appropriate. Also, have line managers provide day-to-day direction. Where possible, generate short-term wins to reinforce the change. When the changes are taking shape and people have embraced the new ways of working, the organization is ready to refreeze. The outward signs of the refreeze are a stable organization chart, consistent job descriptions, and so on. Reinforce behaviours that propel new levels of performance. Feedback signals that reinforce behaviours. Maintain new incentive systems. Create a new sense of stability. Celebrate success. Refreeze 01 02 03 04 Recognize employees contributions. Reinforce new norms, values, behaviours, Integrate change into culture, policies, procedures. Update employee handbooks, onboarding processes, training materials to reflect the new structure and expectations Refreeze The refreeze stage also needs to help people and the organization to internalize or institutionalize the changes. This means making sure that the changes are used all the time, and that they are incorporated into everyday business. With a new sense of stability, employees feel confident and comfortable with the new ways of working. Steps to anchor the changes into org’s culture Identity what supports the change. Identify barriers to sustaining change. Ensure leadership support. Create a reward system. Steps to anchor the changes into org’s culture 1 Establish feedback systems. 2 3 4 Adapt the organizational structure as necessary. Keep everyone informed and supported. Celebrate your success! Prosci’s Change Management Model “What does Prosci stand for?” The name is a combination of the first three letters in words “professional” and “science.” The Prosci organizational change management model is based on scientific principals and research applied in professional settings. Prosci’s Change Management Model Founded in 1994, Prosci claims to be the “World’s Most Widely Adopted Individual Change Management Framework.” 29 What is Change Management (Prosci) Video link: https://www.youtube.com/watch?v=nDxA7s0jU5o&t=11s 30 Prosci’s Five Tenets of Change Management We change for a reason Why are we changing? Organizational change requires individual change Who has to do their job differently (and how)? Organizational outcomes are the collective result of individual change How much of our outcomes depend on adoption and usage? Change management is an enabling framework for managing the people side of change We apply change management to realize the benefits and desired outcomes of change What will we do to support adoption and usage? How will driving adoption and usage improve results? 31 Organizational Change can Impact Employees 32 Prosci’s Process of Managing Change Phase 1: Preparing for Change Phase 2: Managing Change Phase 3: Reinforcing Change 33 Phase 1: Preparing for Change Focus on where the organization and its employees are BEFORE change begins. 1. Define the change management strategy 2. Prepare the change management team 3. Develop a sponsorship model Phase 2: Managing Change ADKAR Model comes into play: 35 Phase 2: Managing Change 36 Phase 2: Managing Change Communications Planning Sponsorship Roadmap Created Coaching Training Management and “Change Agents” Managing Resistance 37 Phase 3: Reinforcing Change Continue to improve Consider rewards & recognition, measuring changes in employee behaviour, and after-action review. Collect & analyze feedback Diagnose gaps & manage resistance to change Implement corrective fixes and celebrate success Apply Change Models for Diagnosis How to Drive a Successful Change Management Project 1. Diagnostic Phase 2. Leverage Phase 3. Change Management Phase 1. Diagnostic Phase i. Identify dysfunction within tools, processes, and teams (and impact on the org) Did your teams find it difficult to familiarize themselves with new business processes implemented within your department? Are salespeople not using all the features of your CRM when with prospects? Do employees find it difficult to use new features of the corporate intranet and often request support? 1. Diagnostic Phase ii. Create a quick mapping of stakeholders and classify these actors according to their level of involvement in the project. Decision makers make the decision to change and initiate it (Top Management); Project leaders are responsible for its success and contribute directly or indirectly (project team, business experts, operational managers, training managers, human resources, IT department); Users and beneficiaries of the project are the main actors of change (business teams affected by the change, all employees) 1. Diagnostic Phase iii. Identify the risks of change both for managers and for operational teams and employees These risks can be linked to fear of the unknown, fear of not being consulted or involved in the change, no perceived added value either on an individual or group scale, a lack of skills, bad timing or a possible redefinition of the scope of the position and therefore a loss of power. 1. Diagnostic Phase iv. Identify the expected results and gains. Perceived benefits can vary from one actor to another. When implementing new software for example, where the Top Management sees an opportunity to invest in new management tools, to digitize processes or even to improve efficiency and productivity of employees, operational teams might see it as a way to achieve their objectives and to gain time and efficiency. 2. Leverage Phase (training & support) i. Identify employee needs and implement customized support Skills, process, roles, KPIs, Tools, Culture, Behaviour & Power 2. Leverage Phase (training & support) ii. Anticipate objections and prepare communication plan To launch the project, create a communication kit that explains the benefits of the change, each stakeholder’s role in the project, and an outline of key dates Organize focus group workshops leading up to the project launch made up of a representative group of employees to get a feel for the environment and to test multiple options before deploying at scale. 2. Leverage Phase (training & support) iii. Prepare for implementation and create training plans Theoretical Knowledge: What do employees need to know about culture or context to effectively adopt the change? Practical Skills: What operational expertise and skills are needed? Behavior & Process: What processes, habits, or ways of thinking must be adopted for sustainable change? 3. Change Management Phase i. Follow-up of action plans (KPIs) Timing (ex: were deadlines met for tool installation so the project could be launched on time?) Budget (ex: Was the training budget respected?) Quality (ex: Is the project’s progress satisfactory, or showing positive outcomes?) Efficiency (ex: Were time, budget, and other resources used wisely?) 3. Change Management Phase ii. Measure Engagement It is important to measure the commitment and the involvement of your employees regarding the current change, whether through regular feedback (forms, surveys, etc.), during dedicated workshops, or by observing adoption and use rates of a new tool. Diagnostic Change Models Diagnostic Change Models Diagnostic: Determining WHAT needs to change 1. Nadler and Tushman’s Congruence Model 2. McKinsey 7S 3. Kotter’s 8 4. Cynefin (kun-ev’in) Nadler and Tushman’s Congruence Model Introduction The Nadler-Tushman Congruence Model is a diagnostic tool for understanding organizational performance. It emphasizes the need for alignment or "congruence" between key components: work, people, structure, and culture. The model suggests that higher performance is achieved when these elements effectively align with each other and the organization's strategy. It is used to identify areas of misalignment or "incongruence" to target improvements and enhance overall organizational effectiveness. 1. Nadler and Tushman’s Congruence Model Nadler & Tushman, American organizational theorists, proposed a system model that suggests that any change within an organization has a ripple effect on all the other areas of the organization. An example, a company may put out a new travel and entertainment policy. That policy, a formal organizational element, has an impact on information organizational elements, individuals and tasks. Nadler: Step 1 Analyze each element Work People Organizational structure Culture Nadler: Step 1 Analyze Each Element - Work People Critical tasks What work is done? How is it done? Skills and knowledge required Flow of work Challenges, stresses, and rewards of the work Projects Job roles - Who interacts to get the tasks done? - Bosses, peers, stakeholders. - Education, experience, skills, knowledge - Engagement, motivation - Level of compensation, rewards, recognition - Career alignment, preferences, attitude Organizational structure - - Hierarchy structures Systems, processes Physical layout Rules, policies, procedures Business units or divisions How decisions are made How information flows How people relate to each other Culture - Leadership style - Organizational attitudes, beliefs, values, and behavior. - Unwritten rules - Norms - Political networks - Political situation Nadler: Step 2 Analyze the relationships between the elements Work and People Is the work being done by the most able and skilled people? Does the work meet individuals' needs? Work and Structure Is work done in a well-coordinated manner, given the organizational structure in place? Is that structure sufficient to meet the demands of the work being done? Structure and People Does the organizational structure allow people to work together effectively? Does it meet people's needs? Are people's perceptions of the formal structure clear or distorted? People and Culture Are people happy with the culture or is there conflict? Does the culture align to people's values, in general? Culture and Work Does the culture help or hinder work performance? Structure and Culture Do the culture and the organizational structure complement one another, or do they compete? Nadler: Step 2 Analyze the relationships between the elements Work and People Is the work being done by the most able and skilled people? Does the work meet individuals' needs? Nadler: Step 2 Analyze the relationships between the elements Work and Structure Is work done in a well-coordinated manner, given the organizational structure in place? Is that structure sufficient to meet the demands of the work being done? Nadler: Step 2 Analyze the relationships between the elements Structure and People Does the organizational structure allow people to work together effectively? Does it meet people's needs? Are people's perceptions of the formal structure clear or distorted? Nadler: Step 2 Analyze the relationships between the elements People and Culture Are people happy with the culture or is there conflict? Does the culture align to people's values, in general? Nadler: Step 2 Analyze the relationships between the elements Culture and Work Does the culture help or hinder work performance? Nadler: Step 2 Analyze the relationships between the elements Structure and Culture Do the culture and the organizational structure complement one another, or do they compete? Nadler: Step 3 Build and Sustain Congruence (agreement or harmony or compatibility) 1.Plan steps to adjust and align each element, addressing any identified mismatches. 2.While implementing solutions, also strengthen areas that are already in harmony. 3.Choose strategies that suit your team or organization's unique nature and operating environment, recognizing that what works for one may not work for another. McKinsey 7Ss Diagnostic Model 2. McKinsey 7S 1. Strategy – a thoroughly considered formal business plan that produces competitive advantage in alignment with company mission and values 2. Structure – how the company is organized, decision-making responsibility, and accountability, all at least partially depicted in the org chart 3. Systems – business and technical infrastructure that supports the processes, decisions, and activities that get the work of the organization done 4. Style – way of working that establishes a code of conduct, common way of communicating, and consistent way of doing business from top to bottom of the organization 5. Staff – all human resources activities, including recruiting, hiring, initiating, training, supporting, and rewarding employees 6. Skills – the core capabilities and competencies that enable employees to execute on plans and achieve objectives 7. Shared Values – the foundational mission and values that underlie and align the other 6 elements of the 7S model to maintain a cohesive and effective organization Introduction The McKinsey 7S Framework is a well-known model for checking if an organization is prepared to meet its goals. Even a good strategy might fail if the organization's parts aren't working together well. This model, used for over 30 years, emphasizes coordination rather than strict structure and is useful for both large and small organizations. 2. McKinsey 7S 1. Strategy – a thoroughly considered formal business plan that produces competitive advantage in alignment with company mission and values 2. Structure – how the company is organized, decision-making responsibility, and accountability, all at least partially depicted in the org chart 2. McKinsey 7S 3. Systems – business and technical infrastructure that supports the processes, decisions, and activities that get the work of the organization done 4. Style – way of working that establishes a code of conduct, common way of communicating, and consistent way of doing business from top to bottom of the organization 2. McKinsey 7S 5. Staff – all human resources activities, including recruiting, hiring, initiating, training, supporting, and rewarding employees 6. Skills – the core capabilities and competencies that enable employees to execute on plans and achieve objectives 2. McKinsey 7S 7. Shared Values – the foundational mission and values that underlie and align the other 6 elements of the 7S model to maintain a cohesive and effective organization 2. McKinsey 7S Implementing the McKinsey’s 7S Model The model is implemented in a Five Step Process – a process which is pretty simple to lay out, but more challenging to implement. 1.Understand current situation – Are the elements of the 7S model aligned? Identify inconsistencies or gaps. What might need to change? This needs to involve all relevant internal stakeholder groups. 2.Determine desired situation – Develop an organizational design that fills the gaps and fixes the inconsistencies identified in the first step. The proposed design needs to support achievement of strategic objectives. Implementing the McKinsey’s 7S Model 3. Determine action plan to reach desired situation – Devise a plan for implementing each facet of the changes between the current and desired state. The plan may include changes to the strategy, the hierarchical structure, the systems and flow of information, capabilities of personnel, and ways of working. 4.Execute action plan – Put together a series of projects with clear lines of responsibility and empowerment to implement the changes. While support of stakeholders, especially executive sponsors, is critical, it is also critical to deploy the right resources, separate from operational resources, to implement changes as required. Implementing the McKinsey’s 7S Model 5. Perform periodic review of situation – The action plan needs to include a timeline with expectations over time. Periodic review includes progress toward optimization of the organization over time and needs to be agile with the ability to make adjustments as required. Further information about the model Implementing the 5-step process is part of an ongoing program – and not a project. It does not have a well-defined end point. It has an indefinite time frame, and thus does not meet the definition for a project. Further information about the model The process is iterative, and not serial. It does not simply proceed from step 1 through to step 5. In reality, as depicted by the various backward turning arrows in the diagram, progress can mean returning to any prior step at any time. For example, new information may become available that alters the understanding of the current situation. Similar learning along the journey can necessitate a return to any of the steps. Kotter’s Model Introduction Kotter's Eight-Step Model is a framework for leading organizational change, developed by Harvard Business School professor John P. Kotter. It outlines a step-by-step approach to implementing successful change: Identifying and highlighting the potential threats and the repercussions which might crop up in the future. Examining the opportunities which can be tapped through effective interventions. Initiate honest dialogues and discussions to make people think over the prevalent issues and give convincing reasons to them. Request the involvement and support of the industry people, key stakeholders and customers on the issue of change. Kotter’s 8 Steps to Lead Change Create a sense of urgency A volunteer army needs a coalition of effective people – born of its own ranks – to guide it, coordinate it, and communicate its activities. Identifying the effective change leaders in your organizations and also the key stakeholders, requesting their involvement and commitment towards the entire process. Kotter’s 8 Steps to Lead Change Build a guiding coalition Kotter’s 8 Steps to Lead Change Form a powerful change coalition who would be working as a team. Identify the weak areas in the coalition teams and ensure that the team involves many influential people from various cross functional departments and working in different levels in the company. Build a guiding coalition Clarify how the future will be different from the past and how you can make that future a reality through initiatives linked directly to the vision. Determining the core values, defining the ultimate vision and the strategies for realizing a change in an organization. Ensure that the change leaders can describe the vision effectively and in a manner that people can easily understand and follow. Kotter’s 8 Steps to Lead Change Form a strategic vision and initiatives Large-scale change can only occur when massive numbers of people rally around a common opportunity. They must be bought-in and urgent to drive change – moving in the same direction. Communicate the change in the vision very often powerfully and convincingly. Connect the vision with all the crucial aspects like performance reviews, training, etc. Handle the concerns and issues of people honestly and with involvement. Kotter’s 8 Steps to Lead Change Enlist a volunteer army Removing barriers such as inefficient processes and hierarchies provides the freedom necessary to work across silos and generate real impact. Kotter’s 8 Steps to Lead Change Ensure that the organizational processes and structure are in place and aligned with the overall organizational vision. Enable action by removing barriers Continuously check for barriers or people who are resisting change. Implement proactive actions to remove the obstacles involved in the process of change. Reward people for endorsing change and supporting in the process. Wins are the molecules of results. They must be recognized, collected and communicated – early and often – to track progress and energize volunteers to persist. By creating short term wins early in the change process, you can give a feel of victory in the early stages of change. Create many short term targets instead of one long-term goal, which are achievable and less expensive and have lesser possibilities of failure. Reward the contributions of people who are involved in meeting the targets. Kotter’s 8 Steps to Lead Change Generate short-term wins Press harder after the first successes. Your increasing credibility can improve systems, structures and policies. Be relentless with initiating change after change until the vision is a reality. Achieve continuous improvement by analysing the success stories individually and improving from those individual experiences. Kotter’s 8 Steps to Lead Change Sustain acceleration Articulate the connections between the new behaviors and organizational success, making sure they continue until they become strong enough to replace old habits. Discuss the successful stories related to change initiatives on every given opportunity. Ensure that the change becomes an integral part in your organizational culture and is visible in every organizational aspect. Ensure that the support of the existing company leaders as well as the new leaders continue to extend their support towards the change Kotter’s 8 Steps to Lead Change Institute change Advantages and Disadvantages to Kotter’s Model Advantages Disadvantages It is an easy step by step model which provides a clear description and guidance on the entire process of change and is relatively easy for being implemented. Since it is a step by step model, skipping even a single step might result in serious problems. Emphasis is on the involvement and acceptability of the employees for the success in the overall process. Major emphasis is on preparing and building acceptability for change instead of the actual change process. The process is quite time consuming (Rose 2002). The model is essentially top-down and discourages any scope for participation or cocreation. Can build frustration and dissatisfaction among the employees if the individual requirements are given due attention Cynefin Introduction The Cynefin model is a framework for decision-making and problem-solving that helps leaders understand the complexity of their environment and choose appropriate actions. The Cynefin model helps leaders recognize the context they're in and respond with strategies that fit the complexity of their situation. Introduction It categorizes issues into four domains: Simple (Obvious): Problems are clear and solutions are well-known. Leaders can apply best practices. Complicated: Problems require analysis and expertise, but solutions are discoverable. Leaders rely on expert advice. Introduction Chaotic: There's high urgency and no clear Complex: Problems have cause-and-effect. many interconnected parts and unpredictable outcomes. Leaders must act immediately to Leaders need to probe, establish order. sense, and respond. 4. Cynefin (kun-ev’in) Meaning: place or habitat that we understand because we were born to it and live it ▫ Considers how we look at organizations – helps to find out what the problem is Simple: We tend to think in the “simple” box where we can see what is happening, can categorize it, and then respond to the problem – it is known. Complicated: In reality, we spend most of our time in the complicated category where we may not know the problem, but we know it is there, and it can be learned – it is “knowable.” 4. Cynefin (kun-ev’in) Meaning: place or habitat that we understand because we were born to it and live it ▫ Considers how we look at organizations – helps to find out what the problem is Complex: Becoming more common in today’s world where we have linkages ex. A -> B -> C situation, but C is also connected to A. It becomes a “pattern.” Need to discover what works – have to test & probe. Chaos: “turbulent”, not able to see patterns, or may have hidden patterns – just try something and act and see what happens. Hope for some control. Change isn’t easy. Cynefin (kun-ev’in) https://www.youtube.com/watch?v=1Wvo7rdCAYQ Grundy’s Three Varieties of Change Introduction Grundy's three varieties of change are a way to categorize the different types of change that organizations might undergo: Smooth Incremental Change Bumpy Incremental Change Discontinuous Change Grundy’s (1993) Three Varieties of Change Smooth Incremental: Slow evolving, systematic, predictable. Nearly obsolete. Bumpy Incremental: Relative tranquility disrupted by periods of acceleration. Discontinuous Change: Rapid shifts in strategy, structure, and culture or all three. Rate of chang e Smooth incremental Smooth incremental change can be summarized as, change which evolves slowly in a systematic and predictable way. It is important to note that, in correlated form the vertical (x) axis must represent rate of change, not amount of change, smooth incremental change happens at a constant rate. While the horizontal axis (y) signifies the constant; time. Grundy’s (1993) Three Varieties of Change Bumpy incremental Bumpy incremental change is characterized by periods of relative tranquility punctuated by acceleration in the pace of change. This type of change could be caused by the periodic reorganizations that public sector organizations go through, especially on change of government. Grundy’s (1993) Three Varieties of Change Discontinuous The third variety of change is what Gundy refers to as discontinuous change. This can be caused by rapid shifts in strategy, structure or culture, or in all three. In the public sector, privatization would be a likely cause of this change, whereas in the private sector, the opportunities offered by the development of the internet are most likely to cause discontinuous change. It is the smooth incremental type of change that the public sector organization strives to achieve. Grundy’s (1993) Three Varieties of Change Two Common Approaches for Adapting to Change Two Common Approaches for Adapting to Change Punctuated Equilibrium © John Hayes (2018) Continuous Incremental Adaptation Punctuated Equilibrium Concept: This approach is based on the idea that organizations go through long periods of stability (equilibrium) punctuated by short, radical shifts in strategy or structure (revolutionary periods). The change is significant and transformative, altering the fundamental nature of the organization. When it happens: These changes often occur in response to a dramatic shift in the environment, such as new technology, market disruption, or a change in leadership. Characteristics: The period of change is relatively short compared to the long stable periods, but the impact is profound and often requires a complete overhaul of processes, strategies, and sometimes even the organization's mission. Adapting to change: Punctuated Equilibrium Many organizations are slow to adapt to change - It is easier to maintain the status quo. The result is a gap (strategic drift) between what the organization is doing and what is happening in the environment. Eventually the gap gets large enough to force the organization to make a radical transformational change. Punctuated Equilibrium Apple product development through Punctuated Equilibrium. Organizations change through alternating of periods of equilibrium, and periods of revolution. © John Hayes (2018) Forces of Inertia Maintain Equilibrium Cognitive biases - restrict thinking ‘within the current Organizational frame’. Motivational barriers - more acceptable to do more of the same, and there is a fear of loss from the unknown Forces.of inertia make it difficult for people to do things differently or do different things. This slows change Inertia: a tendency to do nothing or to remain unchanged. Continuous Incremental Adaptation Concept: This approach suggests that organizations should constantly evolve and adapt in small steps. Change is ongoing and gradual, focusing on continuous improvement and adaptation to the environment. When it happens: Instead of waiting for a crisis or a significant shift, organizations continually assess the landscape and make small adjustments regularly. This can include adopting new technologies, tweaking strategies, or making minor structural changes. Characteristics: The changes are smaller and less disruptive than in punctuated equilibrium, but over time they can significantly transform the organization. This approach is often seen in highly competitive industries where staying ahead requires constant innovation and agility. Continuous Incremental Adaptation iPhone product development through Continuous Incremental Adaptation (almost annual improvements). Continuous incremental change – the constant updating of work processes and social practices. helps to maintain alignment with the environment accumulates incremental changes to transform the organization over time Summary Both approaches have their merits and can be effective depending on the organization's context, the nature of the industry, and the specific challenges faced. Some organizations might even find that a combination of the two approaches works best for them. Revolutionary periods Periods of revolutionary change realign the organization with the external environment (a crisis) or based on a leadership change. However, forces of inertia cause the alignment to be short lived. Each revolutionary episode is followed by a period of relative stability that triggers another episode of revolutionary change, and the process continues to unfold as a process of punctuated equilibrium. Example: A new Dean comes into the Business College and re-organizes the department, OR the IT department fails a governmental audit Inertia: a tendency to do nothing or to remain unchanged. Change Agents Who Initiates Organizational Change?: The Catalyst Organizational changes need a catalyst. People who act as catalysts and assume the responsibility for managing the change process are called change agents. Any manager can be a change agent. When we talk about organizational change, we assume that it’s initiated and carried out by a manager within the organization. However, the change agent could be a nonmanager—for example, an internal staff specialist or an outside consultant whose expertise is in change implementation. Who Initiates Organizational Change? Senior management Middle management Employees Who Initiates Organizational Change? Senior leaders may be better able to execute change, because they have more power and better access to resources. Middle managers may be better able to initiate change, because they have a better understanding of front line operations. Employees may initiate change either by proposing it to an upper-management who listen or by forcing it. (strike!) Thank you!