MGT599 Strayer Change Management MGT599 – 5. Read the article titled “10 Principles of Change Management” at http://www.strategy-business.com/media/file/r

MGT599 Strayer Change Management MGT599 –

5. Read the article titled “10 Principles of Change Management” at http://www.strategy-business.com/media/file/resilience-04-15-04-rebrand.pdf (SEE ATTACHED AS WELL). In the article, the authors advocated for diagnosing an organization’s culture (i.e., 8. Address culture explicitly), often considered the most difficult aspect to evaluate when diagnosing organizations. Speculate on at least two (2) challenges that business leaders might face when diagnosing organizational culture during substantial business transition within a company. Propose key strategies to mitigate the challenges in question and support your response.

6. From the article, select one (1) principle that you mostly agree with and examine its fundamental strengths and weaknesses. Include one (1) example or scenario in which you could apply the chosen principle to support your response.

7. Technology is a key driver of change and an important source of competitive advantage in business environments. Examine the overall manner in which an enterprise could exploit the opportunities that technology offers in order to establish or sustain a competitive advantage. Include a real-world example to support your response.

8. Use the Internet or Strayer Library to research two to three (2-3) articles on soda wars among American soft drink manufacturers, primarily between Coca-Cola and Pepsi. Next, propose a strategy that one (1) of the soft drink manufacturers could use to increase its competitive advantage. Provide a rationale for your response. strategy+business
RESILIENCE REPORT APRIL 2004
10 Principles of Change
Management
FOR MORE INFORMATION:
DEANNE AGUIRRE, SAN FRANCISCO, deanne.aguirre@strategyand.us.pwc.com
This article was originally published by Booz & Company.
RESILIENCEreport
1
10 Principles of Change Management
Tools and techniques to help companies transform quickly.
by John Jones, DeAnne Aguirre, and Matthew Calderone
W
ay back when (pick your
date), senior executives in
large companies had a
simple goal for themselves and their
organizations: stability. Shareholders
wanted little more than predictable
earnings growth. Because so many
markets were either closed or undeveloped, leaders could deliver on
those expectations through annual
exercises that offered only modest
modifications to the strategic plan.
Prices stayed in check; people stayed
in their jobs; life was good.
Market transparency, labor
mobility, global capital flows, and
instantaneous communications have
blown that comfortable scenario to
smithereens. In most industries —
and in almost all companies, from
giants on down — heightened global competition has concentrated
management’s collective mind on
something that, in the past, it happily avoided: change. Successful companies, as Harvard Business School
professor Rosabeth Moss Kanter
told s+b in 1999, develop “a culture
that just keeps moving all the time.”
This presents most senior executives with an unfamiliar challenge. In
major transformations of large enterprises, they and their advisors conventionally focus their attention on
devising the best strategic and tactical plans. But to succeed, they also
must have an intimate understand-
ing of the human side of change
management — the alignment of the
company’s culture, values, people,
and behaviors — to encourage the
desired results. Plans themselves do
not capture value; value is realized
only through the sustained, collective actions of the thousands — perhaps the tens of thousands — of
employees who are responsible for
designing, executing, and living with
the changed environment.
Long-term structural transformation has four characteristics: scale
(the change affects all or most of the
organization), magnitude (it involves
significant alterations of the status
quo), duration (it lasts for months, if
not years), and strategic importance.
Yet companies will reap the rewards
only when change occurs at the level
of the individual employee.
Many senior executives know
this and worry about it. When
asked what keeps them up at night,
CEOs involved in transformation
often say they are concerned about
how the work force will react, how
they can get their team to work
together, and how they will be able
to lead their people. They also worry
about retaining their company’s
unique values and sense of identity
and about creating a culture of commitment
and
performance.
Leadership teams that fail to plan
for the human side of change often
find themselves wondering why
their best-laid plans have gone awry.
No single methodology fits
every company, but there is a set of
practices, tools, and techniques that
can be adapted to a variety of situations. What follows is a “Top 10” list
of guiding principles for change
management. Using these as a systematic, comprehensive framework,
executives can understand what to
expect, how to manage their own
personal change, and how to engage
the entire organization in the process.
1. Address the “human side”
systematically. Any significant
transformation creates “people
issues.” New leaders will be asked to
step up, jobs will be changed, new
skills and capabilities must be developed, and employees will be uncertain and resistant. Dealing with
these issues on a reactive, case-bycase basis puts speed, morale, and
results at risk. A formal approach for
managing change — beginning
with the leadership team and then
engaging key stakeholders and leaders — should be developed early,
and adapted often as change moves
through the organization. This
demands as much data collection
and analysis, planning, and implementation discipline as does a
redesign of strategy, systems, or
processes. The change-management
2. Start at the top. Because change
is inherently unsettling for people at
all levels of an organization, when it
is on the horizon, all eyes will turn
to the CEO and the leadership team
for strength, support, and direction.
The leaders themselves must
embrace the new approaches first,
both to challenge and to motivate
the rest of the institution. They
must speak with one voice and
model the desired behaviors. The
executive team also needs to understand that, although its public face
may be one of unity, it, too, is composed of individuals who are going
through stressful times and need to
be supported.
Executive teams that work well
together are best positioned for success. They are aligned and committed to the direction of change,
understand the culture and behaviors the changes intend to introduce, and can model those changes
themselves. At one large transportation company, the senior team
rolled out an initiative to improve
the efficiency and performance of its
corporate and field staff before
addressing change issues at the officer level. The initiative realized initial cost savings but stalled as
employees began to question the
leadership team’s vision and commitment. Only after the leadership
team went through the process of
aligning and committing to the
change initiative was the work force
able to deliver downstream results.
3. Involve every layer. As transfor-
mation programs progress from
defining strategy and setting targets
to design and implementation, they
affect different levels of the organization. Change efforts must include
plans for identifying leaders throughout the company and pushing
responsibility for design and implementation down, so that change “cascades” through the organization. At
each layer of the organization, the
leaders who are identified and trained
must be aligned to the company’s
vision, equipped to execute their specific mission, and motivated to make
change happen.
A major multiline insurer with
consistently flat earnings decided to
change performance and behavior
in preparation for going public. The
company followed this “cascading
leadership” methodology, training
and supporting teams at each stage.
First, 10 officers set the strategy,
vision, and targets. Next, more than
60 senior executives and managers
designed the core of the change initiative. Then 500 leaders from the
field drove implementation. The
structure remained in place
throughout the change program,
which doubled the company’s earnings far ahead of schedule. This
approach is also a superb way for a
company to identify its next generation of leadership.
4.
Make
the
formal
case.
Individuals are inherently rational
and will question to what extent
change is needed, whether the company is headed in the right direction, and whether they want to
commit personally to making
change happen. They will look to
the leadership for answers. The
articulation of a formal case for
John Jones
is a vice president with Booz Allen
Hamilton in New York. Mr. Jones is a
specialist in organization design, process
reengineering, and change management.
DeAnne Aguirre
(deanne.aguirre@strategyand.us.pwc.com)
is an advisor to executives on
organizational topics for Strategy&, PwC’s
strategy consulting business, and a
principal with PwC US. Based in San
Francisco, she specializes in culture,
leadership, talent effectiveness, and
organizational change management.
Matthew Calderone
is a senior associate with Booz
Allen Hamilton in the New York
Office. He specializes in
organization transformation,
people issues, and change
management.
RESILIENCEreport
approach should be fully integrated
into program design and decision
making, both informing and
enabling strategic direction. It
should be based on a realistic assessment of the organization’s history,
readiness, and capacity to change.
2
RESILIENCEreport
3
change and the creation of a written
vision statement are invaluable
opportunities to create or compel
leadership-team alignment.
Three steps should be followed
in developing the case: First, confront reality and articulate a convincing need for change. Second,
demonstrate faith that the company
has a viable future and the leadership to get there. Finally, provide a
road map to guide behavior and
decision making. Leaders must then
customize this message for various
internal audiences, describing the
pending change in terms that matter to the individuals.
A consumer packaged-goods
company experiencing years of
steadily declining earnings determined that it needed to significantly restructure its operations —
instituting, among other things, a
30 percent work force reduction —
to remain competitive. In a series of
offsite meetings, the executive team
built a brutally honest business case
that downsizing was the only way to
keep the business viable, and drew
on the company’s proud heritage to
craft a compelling vision to lead the
company forward. By confronting
reality and helping employees
understand the necessity for change,
leaders were able to motivate the
organization to follow the new
direction in the midst of the largest
downsizing in the company’s history. Instead of being shell-shocked
and demoralized, those who stayed
felt a renewed resolve to help the
enterprise advance.
5. Create ownership. Leaders of
large change programs must overperform during the transformation and
be the zealots who create a critical
mass among the work force in favor
of change. This requires more than
mere buy-in or passive agreement
that the direction of change is
acceptable. It demands ownership by
leaders willing to accept responsibility for making change happen in all
of the areas they influence or control.
Ownership is often best created by
involving people in identifying problems and crafting solutions. It is reinforced by incentives and rewards.
These can be tangible (for example,
financial compensation) or psychological (for example, camaraderie
and a sense of shared destiny).
At a large health-care organization that was moving to a sharedservices model for administrative
support, the first department to create detailed designs for the new
organization was human resources.
Its personnel worked with advisors
in cross-functional teams for more
than six months. But as the designs
were being finalized, top departmental executives began to resist the
move to implementation. While
agreeing that the work was topnotch, the executives realized they
hadn’t invested enough individual
time in the design process to feel the
ownership required to begin implementation. On the basis of their
feedback, the process was modified
to include a “deep dive.” The departmental executives worked with the
design teams to learn more, and get
further exposure to changes that
would occur. This was the turning
point; the transition then happened
quickly. It also created a forum for
top executives to work as a team, creating a sense of alignment and unity
that the group hadn’t felt before.
6. Communicate the message.
Too often, change leaders make the
mistake of believing that others
understand the issues, feel the need
to change, and see the new direction
as clearly as they do. The best change
programs reinforce core messages
through regular, timely advice that is
both inspirational and practicable.
Communications flow in from the
bottom and out from the top, and
are targeted to provide employees
the right information at the right
time and to solicit their input and
feedback. Often this will require
overcommunication through multiple, redundant channels.
In the late 1990s, the commissioner of the Internal Revenue
Service, Charles O. Rossotti, had a
vision: The IRS could treat taxpayers
as customers and turn a feared
bureaucracy into a world-class service organization. Getting more than
100,000 employees to think and act
differently required more than just
systems redesign and process
change. IRS leadership designed and
executed an ambitious communications program including daily voice
mails from the commissioner and
his top staff, training sessions, videotapes, newsletters, and town hall
meetings that continued through
the transformation. Timely, constant, practical communication was
at the heart of the program, which
brought the IRS’s customer ratings
from the lowest in various surveys to
its current ranking above the likes of
McDonald’s and most airlines.
7. Assess the cultural landscape.
Successful change programs pick up
speed and intensity as they cascade
down, making it critically important
that leaders understand and account
for culture and behaviors at each level
of the organization. Companies often
make the mistake of assessing culture
either too late or not at all. Thorough
8. Address culture explicitly.
Once the culture is understood, it
should be addressed as thoroughly as
any other area in a change program.
Leaders should be explicit about the
culture and underlying behaviors
that will best support the new way of
doing business, and find opportunities to model and reward those
behaviors. This requires developing a
baseline, defining an explicit endstate or desired culture, and devising
detailed plans to make the transition.
Company culture is an amalgam
of shared history, explicit values and
beliefs, and common attitudes and
behaviors. Change programs can
involve creating a culture (in new
companies or those built through
multiple acquisitions), combining
cultures (in mergers or acquisitions
of large companies), or reinforcing
cultures (in, say, long-established
consumer goods or manufacturing
companies). Understanding that all
companies have a cultural center —
the locus of thought, activity, influence, or personal identification — is
often an effective way to jump-start
culture change.
A consumer goods company
with a suite of premium brands
determined that business realities
demanded a greater focus on profitability and bottom-line accountability. In addition to redesigning
metrics and incentives, it developed
a plan to systematically change the
company’s culture, beginning with
marketing, the company’s historical
center. It brought the marketing
staff into the process early to create
enthusiasts for the new philosophy
who adapted marketing campaigns,
spending plans, and incentive programs to be more accountable.
Seeing these culture leaders grab
onto the new program, the rest of
the company quickly fell in line.
9. Prepare for the unexpected.
No change program goes completely according to plan. People react in
unexpected ways; areas of anticipated resistance fall away; and the
external
environment
shifts.
Effectively managing change
requires continual reassessment of
its impact and the organization’s
willingness and ability to adopt the
next wave of transformation. Fed by
real data from the field and supported by information and solid decision-making processes, change
leaders can then make the adjustments necessary to maintain
momentum and drive results.
A leading U.S. health-care
company was facing competitive
and financial pressures from its
inability to react to changes in the
marketplace. A diagnosis revealed
shortcomings in its organizational
structure and governance, and the
company decided to implement a
new operating model. In the midst
of detailed design, a new CEO and
leadership team took over. The new
team was initially skeptical, but was
ultimately convinced that a solid
case for change, grounded in facts
and supported by the organization
at large, existed. Some adjustments
were made to the speed and
sequence of implementation, but
the fundamentals of the new operating model remained unchanged.
RESILIENCEreport
cultural diagnostics can assess organizational readiness to change, bring
major problems to the surface, identify conflicts, and define factors that
can recognize and influence sources
of leadership and resistance. These
diagnostics identify the core values,
beliefs, behaviors, and perceptions
that must be taken into account for
successful change to occur. They
serve as the common baseline for
designing essential change elements,
such as the new corporate vision, and
building the infrastructure and programs needed to drive change.
10. Speak to the individual.
Change is both an institutional journey and a very personal one. People
spend many hours each week at
work; many think of their colleagues
as a second family. Individuals (or
teams of individuals) need to know
how their work will change, what is
expected of them during and after
the change program, how they will
be measured, and what success or
failure will mean for them and those
around them. Team leaders should
be as honest and explicit as possible.
People will react to what they see and
hear around them, and need to be
involved in the change process.
Highly visible rewards, such as promotion, recognition, and bonuses,
should be provided as dramatic reinforcement for embracing change.
Sanction or removal of people standing in the way of change will reinforce the institution’s commitment.
Most leaders contemplating
change know that people matter. It
is all too tempting, however, to dwell
on the plans and processes, which
don’t talk back and don’t respond
emotionally, rather than face up to
the more difficult and more critical
human issues. But mastering the
“soft” side of change management
needn’t be a mystery. +
4
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