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7HR006 Leading

Transformation and Change

Day 2
To discuss transformational change
To discuss the nature of change
To share views on why change transformations fail
To look at strategic analysis tools
To discuss how they apply to your organisational
case study, that you may use for your assessment?
Considering the leap from
continuous organisational
change to transformational
change
From planned to
continuous change
(Lewin's 3 stage model) This quaintly linear
and static conception the organization as an
ice cube is so wildly inappropriate that it is
difficult to see why it has not only survived but
prospered. Suffice it to say here, first, that
organizations are never frozen, much less
refrozen, but are fluid entities with many
personalities. Second, to the extent that there
are stages, they overlap and interpenetrate one
another in important ways.
(Kanter et al, 1992, p. 10)
Continuous change

Emergent change consists of


ongoing accommodations,
adaptations and alternations..(it)
occurs when people reaccomplish
routines and when they deal with
contingencies, breakdowns and
opportunities in everyday work.

(Weick, 2000, p. 237)


Features of emergent change
No neat start and finish point which can be planned & managed
continuous, open-ended & unpredictable process of aligning &
realigning organisations to the external environment
Concerned with understanding of the Substance of change, the
Context (environment) & the Process
Recognises processes & politics of change
Focuses on the interrelatedness of individuals, groups &
organisations, (Burnes, 2004, p.292)
Emphasis is placed on the contingent nature of organisational
change
Managing Emergent
Change
Need to manage change through the
effective leadership of groups and teams
not dictat
Role & success of the manager depends
upon possession and effective deployment
of a range of relevant competencies, not
hierarchical legitimacy or expert power
So what does
transformational change
mean?
What is your definition?
Can you give an example in
your own organisation?
Transformational change
(see Senior p.49 on)
A shift in the business culture of an organization resulting from a change in the
underlying strategy and processes that the organization has used in the past.
A transformational change is designed to be organization-wide and is enacted
over a period of time. Read more: http://www.businessdictionary.com/definition/transformational-change.html#ixzz1sDILXUn9

Jack Welchs turnaround of General Electric often quoted as an early example


(e.g. Carnall 2007, Tichy & Sherman 1995)
.(the organisation) ought to stretch itself, ought to reach to the point
where it almost becomes unglued

Four Rs of transformation (Gouillart & Kelly Transforming the Organisation


1995)
Renew, reframe, revitalise & restructure

Link to creative destruction/ frame breaking change/quantum leaps and


transformational leadership?
Transformation is:
Based on definition provided by Johnson, Scholes & Whittington (2011)

Radical
Deliberate
Organisation-wide
deep & pervasive
Leads to actions outside the organisations existing
paradigm
Reengineers culture (beliefs and values) by changing
underlying assumptions & behaviours
http://www.guardian.co.uk/sustainable-
business/blog/transformational-change-firms-
future-ecosystems-communities - funny picture!!
The scale of change
(Dunphy& Stace, 1993; Tushman, Newman &
Romanelli,1988)

Fine-tuning:
improving what is already done
Incremental adaptations:
small changes in response to minor shifts in
the environment (10% Change)
Transformation (frame-breaking change):
major strategic, structural, process,
technological change; revolutionary,
reshapes entire organisation
Frame-breaking change
Tushman, Newman and Romanelli (1988)

Most organisations will experience periods


of fine-tuning &incremental adaptations,
punctuated by frame-breaking change
Modular transformation

major realignment & radical change for one+


departments/divisions
Corporate transformation:

organisation-wide revolutionary change


radical shifts in business strategy
Levering Transformation
K. Harigopal (2006)
3S (strategy, structure, system)
3P (purpose, process, people)
Realising organisational vision

What other theories does this


remind you of?
McKinsey & Co. 7-S
Framework
Source: R. Waterman, T. Peters, J. Phillips, 'Structure is not organization',
Business Horizons, June (1980), pp. 14-26 (p. 18)
Strategy

Structure Systems

Shared
Values

Skills
Style

Staff
http://www.mindtools.com/pages/ar
ticle/newSTR_91.htm
Jack F Welch. CEO General Electric
(and often quoted as a leader of
organisational turnaround)

I am convinced that if the rate of


change inside the institution
(organisation) is less than the rate
of change outside, the end is in
sight.

The only question is the timing of


the end.
Transform only if you have
to?
The most effective firms take advantage
of relatively long convergent periods of
incremental change...frame-breaking
change is quite dysfunctional if the
organization is successful and the
environment is stable.

Tushman et al, (1988)


Nature of change: Issues
Who determines whether change is incremental or
transformational?
The need for change may not always be agreed
universally:
perceptions of what is inappropriate may not be shared
Political agendas may be utilised to justify potential
changes
e.g. Manipulating/ withholding information
desire to eliminate the old regime when a new exec. is
appointed etc.
Evolution and revolution in
organisations (Larry E
Greiner)
Determinants: age & size of organisation
Other Parameters:
Industrial growth rate
Stage of evolution
Stage of revolution
Implications:
Change unavoidable & predictable
Solutions become problems in next phase
The Age of Unreason ?
Ages of reason:
17th. century: scientific revolution
18th. century: enlightenment
Now: Age of unreason:
post modernism
we should expect organisational revolution
(Greiner)
very nature of change is changing, therefore
difficult to plan or respond
the turbulent environment
Why transformation efforts fail

Kotter (1995)

1. Not establishing a great enough sense of urgency


2. Not creating a powerful enough coalition
3. Lacking a vision
4. Undercommunicating by a factor of ten
5. Not removing obstacles to the new vision
6. Not systematically planning for and creating short term
wins
7. Declaring victory too soon
8. Not anchoring changes in the corporations culture
6 steps to effective

change (Beer et al 1990)


Mobilize commitment to change through joint diagnosis of
business problems
Develop a shared vision of how to organise and manage for
competitiveness
Foster consensus for the new vision, competence to enact it
and cohesion to move it along
Spread revitalization to all departments without pushing it from
the top
Initialise revitalization through formal policies, systems and
structures
Monitor and adjust strategies in response to problems in the
revitalisation process
8 step strategy for change
management (Kotter 1990/1996)

Establish a sense of urgency.


Create the guiding coalition.
Develop a vision and strategy.
Communicate the change vision.
Empower employees for broad-based action.
Generate short-term wins.
Consolidate gains and produce more change.
Anchor new approaches in the culture
Framework Addict!
http://frameworkaddict.wordpress.com/2012/05/10/framework-18-kotters-8-step-change-model/
Successful Implementation
Alexander (1985)

Communicating decisions to all


employees allowing questions and
concerns to be raised
Starting with a good ideanothing
can rescue a fundamentally poor
decision.
Gaining employees commitment and
involvement.
Provision of sufficient resources
Development of an Implementation
plan identifying likely problems.
Organisations in the next
few years?
The last 2 years has seen a double dip
recession. http://www.youtube.com/watch?v=Ai52FoySceY
What do you think will happen to

organisations in the next 18 months?


How will they survive?

What about your own organisation?

Discuss in small groups and feed back to


the wider group.
http://youtu.be/_TcZrTsRddc
Tools for strategic analysis
Strategic decisions are

likely to
be complex in nature
be made in situations of uncertainty
affect operational decisions
require an integrated approach (both inside
and outside the organisation)
involve considerable change

Effective strategies are both deliberate and


emergent. (Mintzberg 1991)
THE STRATEGIC PROCESS

1 2
Strategic Analysis Strategic Goal Setting
SWOT Growth
Core Competencies Customer satisfaction
Environmental studies Profitability
Market projections Market Share

4 3
Implementation Chosen Routes to goals
Leveraging resources Resources
Progress measurement Systems and processes
Conflict resolution Capability
Change Management Partnership
Boston Consulting Group (1970s)

GROWTH/SHARE MATRIX

divest

prioritise

invest

kill
BCG Analysis
Stars Strong Market share in high growth
industry, the best profit and growth opportunity.
Cash cowHigh market share in low growth
industry, a cash generator.
DogsLow share in low growth industry, not
usually profitable.
Q mark(Problem Child)Low share in high
growth market, an attractive potential but not a
current cash generator.
How might these categories relate to
products in Goodyear Dunlop?
PORTERS FIVE FORCES (1980)
Force Field analysis
ASPECTS OF STRATEGIC ANALYSIS

Strategic
The Environment
Capability
Strategic Analysis

Organisational Stakeholder
Culture Expectations
4 response options to decline;
generating, reacting, defending,
preventing (Whetten 1980)
Organisational Lifecycle

Set-up GrowthMaturityDecline
Business Life Cycle
Start-up - flexibility
Growth systems, procedures
Maturity taking stock, changing
priorities
Decline rationalisation, redundancy
ANALYSING THE ENVIRONMENT; PESTEL, now STEEPLE!!
SWOT MATRIX

Helpful Unhelpful

I
n
t
e
r
n
al

E
xt
e
r
n
al
STAKEHOLDER MAPPING

Level
Low
of Interest
High

Low Minimal Keep


Power
Effort Informed

Keep Key
High Satisfied Players

Mendelow A (91)
Exercise
Using the PESTEL/STEEPLE model plus
one other model discussed, make
notes in relation to your organisation
What can you put in each category?
What examples can you give to
support the categories?
Be prepared to share this with others
Organisational strategy in
practice

Some case studies


http://www.wychavon.gov.uk/cms/council,-elections,-meetings/council-departments/about-us/our-
strategy.aspx - a Councils one page strategy/one page set of values

http://features.thesundaytimes.co.uk/public/best100companies/live/template - Times Top 100

http://www.tradereform.org/2012/07/not-made-in-america-top-10-ways-walmart-destroys-us-
manufacturing-jobs/ - 10 ways Walmart destroys the US

http://hbr.org/2012/04/retail-doesnt-cross-borders-heres-why-and-what-to-do-about-it/ar/1 -
Harvard Business Review (April 2012)
Before our next session

Read the article called Why do change efforts


fail under suggested reading folder, title:
75% fail
Write some brief notes on a significant
organisational change that you have first
hand knowledge ofbring this to share
Read the assessment brief and be ready to
come along to class with your questions
Bring a copy of your organisational chart
Suggested reading
Beer M. & Nohria, N (eds). (2000) Cracking the code of change
Boston: Harvard Business School Press.
Buchanan D. & Badham, R. (1999) Power, Politics and
Organizational Change, London: Sage
Handy, C. (1999) Inside organizations : 21 ideas for managers.
Harmondsworth : Penguin
Kanter, R.M. (1996) The change masters : corporate entrepreneurs
at work. London: International Thomson Business Press Pascale, R.
(1991) Managing on the edge : how successful companies use
conflict to stay ahead London: Penguin Books
Weick, K (2000) Emergent change as a universal in organizations,
in Beer and Nohria (eds.) Breaking the Code of Change, Boston,
MA: Harvard press