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Change management
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AGENDA
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Definition
Types of Change Who should Participate? Why we need Change Management ? Change management process Methodology selection criteria Key elements of successful organizational change What did Jack Welsh do?
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Definition Change Management: activities involved in (1) defining and instilling new values, attitudes, norms, and behaviors within an organization that support new ways of doing work and overcome resistance to change; (2) building consensus among customers and stakeholders on specific changes designed to better meet their needs; and (3) planning, testing, and implementing all aspects of the transition from one organizational structure or business process to another.
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While change happens one person at a time, there are processes and tools that can be used to facilitate this change. Tools like communication and training are often the only activities when no structured approach is applied. When there is an organizational change management perspective, a process emerges for how to scale change management activities and how to use the complete set of tools available for project leaders and business managers.
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When the rate of change outside exceeds the rate of changing inside, the end is insight
Jack Welch Chairman & CEO General Electric CO.
Employees who go through a change are: More aware of what's changing and the all-important why of the change. More interested in participating in the change in order to achieve the objectives of the change. More knowledgeable about the change. More skilled in the new ways of doing business that the change is bringing. More comfortable with the change because they have the support of supervisors who provide positive feedback throughout the change.
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Change management process The change management process is the sequence of steps or activities that a change management team or project leader would follow to apply change management to a project or change. the most effective and commonly applied change, most change management processes contain the following three phases:
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Phase 3 - Reinforcing change (Data gathering, corrective action and recognition) These phases result in the following approach as shown
MANAGEMENT Phase 1 - Preparing for change The first phase in methodology is aimed at getting ready. It answers the question: how much change management is needed for this specific project? The first phase provides the situational awareness that is critical for effective change management.
Outputs of Phase 1: Change characteristics profile Organizational attributes profile Change management strategy Change management team structure Sponsor assessment, structure and roles
MANAGEMENT Phase 2 - Managing change The second phase of process is focused on creating the plans that are integrated into the project activities - what people typically think of when they talk about change management. Based on the process , there are five plans that should be created to help individuals move through the ADKAR Model.
Outputs of Phase 2: Communication plan Sponsor roadmap Training plan Coaching plan Resistance management plan
MANAGEMENT Phase 3 - Reinforcing change Equally critical but most often overlooked, the third phase of The process helps project teams create specific action plans for ensuring that the change is sustained. In this phase, project teams develop measures and mechanisms to see if the change has taken hold, to the see if employees are actually doing their jobs the new way and to celebrate success.
Outputs of Phase 3: Reinforcement mechanisms Compliance audit reports Corrective action plans Individual and group recognition approaches Success celebrations After action review
MANAGEMENT Methodology selection criteria for ease of use: Easy to implement Easy to understand Easy to communicate to others Simple Practical Structured and systematic Logical Comprehensive and holistic
Key elements of successful organizational change 1. 2. 3. 4. 5. Committed and active participation of leadership Culture change Energetic involvement of an empowered and educated work force Effective communication and measurement Aligning human resources systems with the goals and objectives of change
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MANAGEMENT 115 Year History (1892) - only remaining company from original Stock Market Market Capitalization - 560 Billion Dollars Most Admired Company for third straight year in Fortune Worlds Most Respected Company for two years straight in Financial Times
Facts
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Organization
Power Systems
GE
Consumer Electronics
Medical NBC Appliances View from the CEO: If youre not #1 or #2 in your industry youre not long for GE
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It Wont Last
The web/eBusiness:
DISBELIEF - Why jump into this business when nobody makes money? Jurgen Hubbert, Daimler Chrysler Board member.
DENIAL - The money will be made in the software on the client - Microsoft
FEAR - I was afraid of it because I couldnt type - Jack Welch
Reaction
# of Nodes on Internet
100000000 10000000 1000000 100000 10000 1000 100 10 1
D-69 D-70 D-71 D-72 D-73 D-74 D-75 D-76 D-77 D-78 D-79 D-80 D-81 D-82 D-83 D-84 D-85 D-86 D-87 D-88 D-89 D-90 D-91 D-92 D-93 D-94 D-95 D-96 D-97 D-98 D-99
Date
Heres Why!
GE "Gets It"
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Schwab Results:
More Reality
In June 1998, Schwab's Web site handled about 600,000 secure transactions a day. In November 1999, less than a year and a half later:
The site handled well over 7 million secure transactions a day Two-thirds of their trades were conducted over the Web Schwab managed 263 billion dollars in online assets versus 28 billion dollars for e*Trade The company took in 4.7 million dollars a day in revenue versus Amazon's 3.8 million dollars a day
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The Realization: VISIONARY - The Network IS the computer - SUN DREAD We are late to the game and are behind Microsoft - December 7, 1995 UNEASY - If we dont embrace it and make it as engrained as breathing - we may be taking our last breath - Jack Welch - January 1999
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GE gets religion
Conclusion of Jack Welchs Annual Address to shareholders April 26, 2000 So ... to conclude ... Id like to remind you once more that there is very little ... if anything ... new in management today ... and that this "new economy" and "old economy" which we hear about incessantly are just labels invented by pundits.
There is however . . . something new and something very real ... that is changing the pace and scope of business as it has never been changed before. Any
company ... old or new ... that does not see this technology [eCommerce] as literally as important as breathing ... could be on its last breath.
But for those of us ... including GE ... who are capturing it ... are energized by it ... and see it as the greatest opportunity in our history ... the excitement is like nothing weve ever experienced ... and the rewards [of eCommerce] promise to
GE Gets Religion
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Initiatives
Workout
Globalization - 1985
20% Revenues from abroad when initiated 41% Revenues from abroad now
Quality - Six Sigma - 1996 eBusiness - January 1999 And this is a Big One!
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Approach
There is enough room for multiple companies to prosper to some extent GE has typically been a Fast Follower In this case GE was slow to recognize it, but is moving fast now. GE had to quickly muster support in order to get the momentum of this dinosaur to turn on a dime How did they do it?
Strategy
execute quickly (eTime) - help keep the startups at bay provide better service reduce cost = increase margin eBusiness (the web) provides an opportunity to seemingly integrate the diverse businesses of GE What a large company lacks in agility it can make up with capital.
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Paradigm Shift
Lockheed Aircraft
Maytag Washers Sony Televisions BASF Plastics
"There's no such thing as an 'old economy' and a 'new economy.' Commerce is the same as it was 500 years ago. People sell and people buy--whether it's from a wagon or the Internet." - Jack Welch
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Mission
Get everyone on same page (fast) Understand the value and the risk in eBusiness Eliminate Paper
CTQs
Quick to Market Reliable Profitable
Identify the processes that need change Dont simply webify - destroy your existing process and rebuild with new vision
eBusiness Strategy
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Focus on key emergent technologies Like Java, J2EE and XML standards as they solidify/integrate Directory service and Content management tools (database) b2b connectivity tools and broadband! Implementation Corporate wide eBusiness Training - provide Internet Mentors to business leaders DestroyYourBusiness.com Attract and retain the best staff - think outside the box Instill Fear - do it or die ... Educate the consumer Leverage the GE Brand Strategic Alliances (TradeOut.com)
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Implementation
eBusiness has outgrown the label initiative at GE Changing the company to the core eBusiness has changed the DNA of GE forever by energizing and revitalizing every corner of the company eBusiness is not rocket science - it is simply the application of fairly elementary technology - initially this was not understood and this is why the dot.com companies led the charge instead of the highly resourced companies like GE. GE can leverage their 100+ year brand which is widely recognized (and must be protected) eBusiness is the final nail in the coffin of bureaucracy which is not tolerated in the GE culture
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Implementation
Security
Common Architecture
Customer Centric
risk ROI
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Performance
How
Customer Service Typical cost to service a phone interaction with the client $5.00
will reach $5 billion this year. Last year transactions cost GE $50 apiece;
online the cost is $5 Market Share GE Power Systems capturing 20% more market share (70% total) partly due to web-based integrated turbine performance monitoring
Pretty Well!
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Vote
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Summary
Can GE succeed in eBusiness? Jack is a change implementer If anyone can change a corporate culture, its Jack Bureaucracy of larger companies tends to slow change, but Jack addresses this in his plan The change is being driven for the right reasons Cost, Quality, Speed not just because its a wave
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Failures
Most Critical Failure of Changes
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1.
Consider different people Work with values and beliefs Understand and relate to needs and problems Tailor your message to your audience
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3.
Unrealistic expectations Believing dictating an executive vision translate into the new state!!! Change complexity Inadequate execution/project management skills Declaring victory too soon
4. 5. 6.
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Conclusion
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Conclusion
During his 20 years of leadership at General Electric GM. Welch increased the value of the company from $13 billion to several hundred billion.