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Change Model Assignment – DUE IN 16 HOURS

Change Model Assignment

Consider a real business or non-profit organization that has responded to external change well during the past five years or less.

The organization and change that you consider in this assignment must be small enough that you can do an adequate job on the assignment. Do not attempt to describe an organization that is so large that it is international in scope. Research how and why the change was made (include at least four sources, one of which must be the course text, one of which may be the organization’s website, two of which must be research-oriented).

In your paper,

Contextualize the organizational change you have selected within one of the change models described in the course text. This means consider the time and place of the organization, as well as economic, technological, geopolitical, sociocultural, environmental and other macro forces influencing the change.
Explain the rationale for choosing the model you have selected over the other models in Chapters 1 and 3 or other parts of the course text (one or two sentences per model only), and
Delineate the process you are defending in your argument.
Make sure you consider the effects of the change on the company’s shareholders, employees, and customers, as well as on society and the environment. Remember, do not choose an organization or company that is too large for you to examine critically in this short assignment.

The Change Model Assignment paper,

Must be four to five double-spaced pages in length (not including title and references pages) and formatted according to APA Style as outlined in the Ashford Writing Center’s APA Style (Links to an external site.) resource.
Must include a separate title page with the following:
Title of paper
Student’s name
Course name and number
Instructor’s name
Date submitted
For further assistance with the formatting and the title page, refer to APA Formatting for Word 2013 (Links to an external site.).
Must include an introduction and conclusion paragraph. Your introduction paragraph needs to end with a clear thesis statement that indicates the purpose of your paper.
For assistance on writing Introductions & Conclusions (Links to an external site.) as well as Writing a Thesis Statement (Links to an external site.), refer to the Ashford Writing Center resources.
Must use scholarly sources in addition to the course text.
The Scholarly, Peer-Reviewed, and Other Credible Sources (Links to an external site.) table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for this assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a particular assignment.
Must document any information used from sources in APA Style as outlined in the Ashford Writing Center’s APA: Citing Within Your Paper (Links to an external site.) guide.
Must include a separate references page that is formatted according to APA Style as outlined in the Ashford Writing Center. See the APA: Formatting Your References List (Links to an external site.) resource in the Ashford Writing Center for specifications.

Required Resources

Text

Weiss, J. W. (2016).

Organizational change (2nd ed.)

. Retrieved from https://content.ashford.edu/

Chapter 3: Implementing Change

Articles

Jones, C. (2015, November 22).

Six reasons Tim Cook is doing a great job as Apple’s CEO (Links to an external site.)

.Retrieved from https://www.forbes.com/sites/chuckjones/2015/11/22/six-reasons-tim-cook-is-doing-a-great-job-as-apples-ceo/#112a3f5242fd

This article will assist you in your Changes at the Top discussion forum this week.
Accessibility Statement does not exist.
Privacy Policy

(Links to an external site.)

Somaney, J. (2015, November 15).

All excuses aside, Apple’s major problem Is Tim Cook (Links to an external site.)

. Retrieved from https://www.forbes.com/sites/jaysomaney/2015/11/15/all-excuses-aside-apples-major-problem-is-tim-cook/#1499d2f1af68

4 pages16 hours

3
Implementing Change
Construction workers on scaffolding.
hxdbzxy/iStock/Thinkstock
Learning Objectives
After reading this chapter, you should be able to do the following:
Summarize the nine steps in Ackerman and Anderson’s road map for change.
Analyze Cummings and Worley’s five dimensions of leading and managing change.
Describe how to align an organization with its new vision and future state.
Explain how roles/relationships and interventions are used to implement change.
Examine ways to interact with and influence stakeholders.
Change is the law of life and those who look only to the past or present are certain to miss the future.
—John F. Kennedy
Alan Mulally was selected to lead Ford in 2006 after he was bypassed as CEO at Boeing, where he had worked and was expected to become CEO. Insiders and top-level managers at Ford, some of whom had expected to become CEO, were initially suspicious and then outraged when Mulally was hired. They questioned what someone from the airplane industry would know about the car business (Kiley, 2009).
Chair William (Bill) Clay Ford, Jr.—who selected Mulally as CEO—told Ford’s officers that the company needed a fresh perspective and a shake-up, especially since it had lost $14.8 billion in 2008—the most in its 105-year history—and had burned through $21.2 billion, or 61%, of its cash (Kiley, 2009). Because Ford knew that the company’s upper echelon culture was closed, bureaucratic, and rejected outsiders and new ways of thinking, he was not surprised by his officers’ reactions. However, Ford’s managers had no idea that the company was fighting for its life. To succeed, Mulally would need Chair Ford’s full endorsement and support, and he got it.
The company’s biggest cultural challenge was to break down the silos that various executives had built. As we will discuss more in Chapter 4, silos are specific processes or departments in an organization that work independently of each other without strong communication between or among them. A lack of communication can often stifle productivity and innovation, and this was exactly what was happening at Ford.
Mulally devised a turnaround strategy and developed it into the Way Forward Plan. The plan centralized and modernized plants to handle several models at once, to be sold in several markets. The plan was designed to break up the fiefdoms of isolated cultures, in which leaders independently developed and decided where to sell cars. Mulally’s plan also kept managers in positions for longer periods of time to deepen their expertise and improve consistency of operations. The manager who ran the Mazda Motor affiliate commented, “I’m going into my fourth year in the same job. I’ve never had such consistency of purpose before” (as cited in Kiley, 2009, “Meetings About Meetings,” para. 2).
Mulally’s leadership style involved evaluating and analyzing a situation using data and facts and then earning individuals’ support with his determination (Taylor, 2009). Mulally put a stop to managers’ meetings in which maneuvering for power occurred more than performance-based decision making. He led by his mantra, “One Team, One Plan, One Goal.” The era of politicking and power plays among officers was over. Mulally’s style and method was also effective with the unions; negotiations were tough but realistic.
Mulally also created a constant stream of data where all managers saw weekly reports of Ford’s global operations that compared executives’ performance against profit targets. Located in the Taurus and Continental rooms near Mulally’s office, the walls showed color-coded bar charts, graphs, and tables that reflected information on Ford’s businesses in South America, Russia, China, and other parts of the world. Red indicated divisions that weren’t hitting profit projections; green indicated those that were on target; and yellow indicated that performance could go up or down. Updated numbers were validated by pre-earning quarterly audits. These openly visible charts and graphs created a culture of transparency where no executive could avoid the truth. Mulally said numbers helped executives anticipate issues and adjust strategy (Kiley, 2009).
Alan Mulally, CEO of Ford, stands next to the Ford logo with his fists raised in triumph.
AP Photo/Roberto Pfeil/dapd
Alan Mulally’s leadership was integral to enacting positive change at Ford.
From the start of his tenure at Ford, Mulally declared, “I am here to save an American and global icon” (as cited in Taylor, 2009, “A New Corporate Culture,” para. 6). He was performance-driven, just as he was at Boeing. He once stated, “I live for Thursday morning at 8 a.m.” (Synder, 2010, para. 3), which was when he met with direct reports and led by using his Business Plan Review. Ford’s four profit centers—the Americas, Europe, Asia–Pacific, and Ford Credit—reported out first, followed by 12 functional areas, including product development, manufacturing, human resources, and government relations.
These meetings did not include premeetings or briefing books (Taylor, 2009), and Mulally stated that the difficult questions he asked were never intended to embarrass anyone. He wanted people to share information that could produce results in the marketplace. Neither BlackBerrys nor distracting side conversations were allowed at these meetings. Mutual respect was demanded. Mulally removed vice presidents from the meetings when they wouldn’t stop talking (Taylor, 2009).
Joe Hinrichs, a manufacturing supervisor, said, “Alan brings infectious energy. This is a person people want to follow” (as cited in Taylor, 2009, “A New Corporate Culture,” para. 3). Mulally’s practice and insistence on transparency through open and continuous communication with and among all professionals at Ford was based on his assertion that “everyone has to know the plan, its status, and areas that need special attention” (as cited in Taylor, 2009, “A New Corporate Culture,” para. 2). For example, Mulally was resolute that Ford reduce its dependence on light trucks, since gas is costly. Mulally’s openness gained him support across the company, even with his candor and straightforwardness.
“Team Mulally,” as the CEO and his followers have been called, has succeeded in turning around “a very sick company” (Kiley, 2009). The firm never accepted a government bailout like the other U.S. auto companies. Ford generated $144 billion in revenue in 2014, down from $147 billion in 2013. The company sold 2.842 million vehicles in 2014 (Statista, n.d.).
The company positioned Mark Fields as the new CEO in 2014 following Mulally’s 8-year, highly successful run. Although Ford’s competitive position is reportedly stronger than it has been since the late Taurus/Explorer years of the 1990s (Taylor, 2014), there are still concerns ahead for the company. First, Fields is not Mulally, who stands as one of the most popular CEOs the company has known (Taylor, 2014). Despite this and the fact that Fields may be more direct and not as charismatic as Mulally, he knows the company and industry well.
Whether Fields can meet the vehicle-related challenges of the digital and globalization age while keeping the company from sliding back into a politically charged environment remains to be seen. Fields has said that he faces the challenge of transitioning Ford’s vehicles from the “ultimate industrial product” into the “ultimate technology product” (as cited in Nusca, 2015, para. 3). Mulally’s “One Team, One Plan, One Goal” helped unify the company’s international operations, but Ford’s sales show that it still is a “North American–centric automaker” (Ford Online, 2008) whose profits stem mainly from the truck business (it earned $8.781 billion in 2013 pretax profit on North American auto operations and lost $1.228 billion in the rest of the world [Taylor, 2014]).
The company must also be vigilant with regard to its corporate social responsibilities and legal advertising. It was twice found guilty of falsely increasing the window-sticker fuel economy ratings by 7 miles per gallon on several of its models (Taylor, 2014.). Fields must also ensure that the company’s strategies, culture, and mind-set stay competitive and do not revert to pre-Mulally practices. Fields has stated, “We want people to challenge custom and question tradition. We want them to not take anything for granted” (as cited in Nusca, 2015, para. 6).
Critical-Thinking Questions
What went wrong at Ford that led to the competitive and organizational problems that existed before Mulally came aboard?
What specific change (leadership) practices did Mulally employ to help turn Ford around?
From your own reading, experience, and online research, what do you think Mulally’s successor should do to make Ford vehicles more competitive?
Introduction: Getting From Here to There
Implementing major organizational changes is neither automatic nor mechanical. Transitioning to a new vision and future state is a process, not an event. During any change phase, organizational leaders and change teams guide and shape people’s mind-sets and behaviors to adopt new ways of thinking, apply different strategies, reinvigorate the culture, and align internal systems. Leadership skills, intelligence, courage, and a high capacity for collaboration are required. The bottom line is that the success of any organizational change depends in large degree on implementation.
Assessment allows change leaders to better assess the reality of the situation and a possible future, whereas action planning allows changes to have a higher rate of success (Warrick, 2011). Although both factors are important in the change process, many OD practitioners consider implementation to be most important. Without successful implementation, the change process doesn’t matter.
The implementation process begins once the urgency for change is communicated, the organization is assessed for the type of change needed, and a plan is communicated throughout the organization. In the following section, we present a road map that highlights the implementation phases of large-scale changes.
3.1 Road Map for Change
Corporations and organizations that embark on large complicated changes, as Ford did and continues to do, depend on a road map from which other plans are generated. Chapters 1 and 2 discussed two such road maps: Kotter’s eight-step method and Cooperrider’s four dimensions in appreciative inquiry. Here we discuss Ackerman and Anderson’s (2010) road map, which overlaps with the other two. Figure 3.1 shows distinct implementation phases that combine learning from all the steps to help leaders move to their desired destinations.
The change process model offers a road map without dictating the roads to take (Ackerman & Anderson, 2010). It is up to leaders to decide the paths they will take based on their individual circumstances. In this regard, the road map can be used as a “thinking discipline” rather than a prescribed way of forcing an organization’s behavior into a plan and timeline. Used this way, leaders can have flexibility as they navigate the organizational, technical, human, and cultural dimensions of their end-to-end change process.
Even with this process model, transformational changes tend to have a life of their own (Ackerman & Anderson, 2010). Since both the change process and outcome emerge and evolve—that is, both process and outcome evolve unexpectedly and sometimes become a new or even better development than predicted (Ackerman & Anderson, 2010)—leaders generally launch a planned change without knowing exactly where they are going, even though they have described a clear end or future state. This is the case because markets, the economy, people, and many other factors are constantly changing. Still, leaders of transformational changes use road maps and plans to guide their implementation.
Leaders must let go of old ways in order to move forward. Any implementation plan is only as sound as the change strategy, and if all other plan variables are consciously and conscientiously enacted. Enhanced commitment and excitement, combined with the collective intelligence of key decision makers, are essential requirements for a transformational change’s success (Ackerman & Anderson, 2009).
Figure 3.1: Road map for change
The change process shown in this model is continuous and can allow leaders to implement change and organizational reach goals
A continuous flowchart for change. It starts with “Hear the wake-up call,” and then leads in to 1. Prepare to lead the change. 2. Create organizational vision, commitment, and capability. 3. Assess the situation to determine design requirements. 4. Design the desired state. 5. Analyze the impact. 6. Plan and organize for implementation. 7. Implement the change. 8. Celebrate and integrate the new state. 9. Learn and course correct. It then goes back to step one again, if needed.
Source: Ackerman, L. A., & Anderson, D. (2001). Awake at the wheel: Moving beyond change management to conscious change leadership. OD Practitioner, 33(3), 46. Copyright© BeingFirst, Inc. Reprinted with permission from the authors.
Mulally’s example as a change leader reflects many of the stages presented in Figure 3.1. While stages 1 through 4 were discussed in Chapters 1 and 2, it is helpful to briefly summarize some of them, paying particular attention to the implementation process. It is also important to note that all stages in any change road map are in some way related to, and in preparation for, the change’s implementation. In fact, the implementation’s success depends on how effectively the previous stages were developed and carried out.
Planning and implementing a large organizational change is, in practice, not a linear or mechanical process. As we said at the start: Change is not an event but a process. Some stages loop back to previous ones as surprises and emergent changes occur.
Preparing to Lead the Change
Leaders generally embark on a change effort because of a wake-up call (Ackerman & Anderson, 2010). In the case of Ford’s turnaround, it was Bill Ford who watched the company’s stock, cash, and competitiveness tumble. He called Mulally to lead the charge to change because the officers in the company were not moved to take urgent action.
Mulally’s mission, then, was to turn Ford around. To prepare to lead the change, he learned the reality of the situation by studying the facts, numbers, and details. He next began to create a case for the change while identifying the desired outcomes. During this time he was also building his capability to lead the change, ensuring that he had the relevant skill sets, expertise, and experience (Ackerman & Anderson, 2010). Because he had learned how to deal with enterprise-wide change at Boeing, Mulally seemed ready for the task. He also was charged with clarifying an overall change strategy and creating an infrastructure that had the conditions to support the change effort. In this regard, he devised a turnaround strategy—the Way Forward Plan—that centralized and modernized plants to handle several models at once and that sold vehicles in several markets.
Creating Vision, Commitment, and Capability
Mulally’s overall vision was to return Ford to its preeminent status in the global auto industry. His commitment and persistence were evident in his statement that he “expects the very best of himself and others, [and] seeks to understand rather than to be understood” (as cited in Taylor, 2009, “A New Corporate Culture,” para. 3). As Bill Ford once said about him, “Alan is not a very complicated person. He is very driven” (as cited in Taylor, 2009, “A New Corporate Culture,” para. 3).
Mulally built the necessary capability by reorienting the top-level global officers and 12 functional area managers to the company’s long-term goals and short-term operating objectives. He ensured this alignment by regularly communicating to all managers via weekly operational reports that compared executives’ performance against profit targets.
Assessing the Situation
Mulally never stopped assessing Ford’s situation—its financial position, sales, marketing status, and capabilities in relation to global competitors and in regard to his vision to get Ford back to the top of the industry. In the turnaround described in the opening scenarios, Mulally’s “One Team, One Plan, One Goal” was the road toward his desired state of seeing Ford as the top global competitor in as many vehicle classes as possible. Although he depended on his managers’ input to help determine vehicles’ design requirements based on customer demand, as leader he ensured that the company’s culture did not return to the splintered state of bickering and isolated control based on different officers’ preferences.
In turnarounds like Ford’s, Mulally’s method reflected a continuous examination of the ongoing impact of his changes. His use of continually changing data, information, and analysis, interpreted at the Thursday morning meetings, was the basis for analyzing his vision’s impact, the company’s goal, and its global operational systems.
Plan, Organize, and Implement the Change
Mulally’s plan centered on the implementation of his “One Team, One Plan, One Goal” mantra. Put simply, that plan was:
Focus on the Ford brand (“nobody buys a house of brands”); compete in every market segment with carefully defined products (small, medium, and large; cars, utilities, and trucks); market fewer nameplates (40 worldwide by 2013, down from 97 worldwide in 2006); and become best in class in quality, fuel efficiency, safety, and value. (as cited in Taylor, 2009, “A New Corporate Culture,” para. 4)
This plan was easier to outline than achieve. When Mulally first arrived at Ford, he said it was the toughest environment he had seen, but he believed that the company would succeed if it adhered to its plan (Taylor, 2009).
Implementing the plan required preparing for all the stages discussed previously. In the road map shown in Figure 3.1, implementation occurred after the preparation stages were completed, based on the development of the master implementation plan (Taylor, 2009). Because Mulally had Chair Ford’s and the board of directors’ support, and because he painstakingly prepared himself with the financial, organizational, cultural, and operational detail, he knew he was ready to implement.
It is very important to state that Mulally met with and debriefed the officers, managers, and many employees at Ford before and while planning the change. Mulally had also met with Chair Ford several times and discussed the company’s situation before accepting the job. It all seemed to pay off. Mulally’s insistence on transparency through open communication with and among all professionals at Ford ensured that everyone knew the plan and where the company was in the process. So, although the change was not easy, neither was it impossible or unrealistic. Mulally had used a road map and a plan, as well as his intuition, discipline, and confidence.
The change has proved successful to date, as shown in Ford’s financials and Mulally’s 2011 stock bonus. Mulally and Ford have “Celebrated and Integrated the New Change,” as stage 8 in Figure 3.1 shows. At his retirement in 2014, Mulally received almost $300 million with stock shares and options. While at Ford, he received a total base salary of $13.5 million with cash bonuses of $30.8 million. He took in a total of $44.2 million in cash by the end of 2014 (Isidore, 2014). The road ahead has already proved challenging for Mulally’s successor Fields, as noted earlier, as Ford continues the journey through stage 9, learn and course correct. The remainder of this chapter discusses how other planned changes are implemented.
Managing Change
Mapping the Road for Change
Suppose you are a member of the C-suite (that is, the top-level officers of a company, including the chief executive officer, chief financial officer, and others) at a multinational corporation. After a period of stable, albeit slow, growth, you begin to notice changes in output. The 40-year reputation of the company is at stake, as are the jobs of your employees. In order to prevent a downward spiral that will result in layoffs and possibly plant closings, a change must be made.
Developments of concern include customer complaints, faulty supplies that prompted a recall, and plummeting revenue. In the interim, a short-term survival plan is in place to sustain the company until the problems are reversed, but you and other members of the C-suite are meeting to discuss an overall change in the way you do business. It is crucial to evolve with the markets and be attuned to changes in the business environment, but this change requires more than that. When warning signals like these are received, it is necessary to steer the company in the right direction to avoid costly pitfalls that may threaten its long-term prosperity.
The change process model in Figure 3.1 is called on to formulate the plan. The input of C-suite members and unit managers is an integral part of the initial planning. Leadership recognizes that careful mapping must be completed for the change to take hold and truly transform the company.
Discussion Questions
When embarking on transformational change, what considerations do you need to keep in mind as a leader to move the company to the desired state?
What is the impetus for change, and what tools are necessary to move forward?
What are the principles of implementing a change?
How important are the members of your workforce in a change implementation, and how do you utilize their efforts?
(See the end of the chapter for possible answers.)
Check Your Understanding
Explain how Mulally’s change program at Ford exemplifies and differs from the stages in Figure 3.1.
What are some important differences between change assessment and implementation? Which of these two processes would you feel more interested and confident using to define, lead, and manage change in an organization? Explain your reasoning.
3.2 Implementing Change Through Leading and Mobilizing
Implementing change is an art and a science. Not all leaders and CEOs succeed the way Mulally did. In fact, there is a mixed track record when CEOs leave one industry to change a company in another. As discussed in Chapter 2, John Sculley from PepsiCo, who was chosen by Apple’s board of directors to take over as CEO from Steve Jobs, failed in that capacity, as did his two successors. Robert Nardelli, a vice president at GE, became CEO of Home Depot and was eventually pushed out by the board because his directive approach brought about mixed results. CEO William Perez, formerly of SC Johnson (which makes household brands such as Glade, Pledge, Windex, and so on) became CEO of Nike but resigned after 13 months due to disagreements with Nike founder Philip Knight and the fact that he was running an unfamiliar business. However, there are some success stories, such as that of Eric Schmidt, who was CEO of Novell and became CEO of Google from 2001 to 2011 (Kiley, 2009). We begin this section with the example of a change master, ex-CEO Larry Bossidy, who came from GE to successfully turn around AlliedSignal, which later became Honeywell.
Larry Bossidy of AlliedSignal shakes hands with Michael R. Bonsignore of Honeywell.
AP Photo/Marty Lederhandler
Larry Bossidy (right) shakes hands with Michael R. Bonsignore, chair and CEO of Honeywell, after the 1999 merger between the two companies. Bossidy would become known for his ability to affect rapid, if ruthless, change.
AlliedSignal/Honeywell and Larry Bossidy
Bossidy became the chair and CEO of AlliedSignal, Inc., in 1991. The so-called Bossidy era spanned from 1992 to the early 2000s. The company began as Allied Chemical & Dye Corporation in 1920 before becoming AlliedSignal, Inc., following the acquisition of Signal Companies, Inc., in 1985 (International Directory of Company Histories, 1998). As a large industrial corporation, it was a player in many industries, including aerospace, chemicals, fibers, automotive parts, plastics, and other advanced materials (International Directory of Company Histories, 1998). In 1999 a merger caused AlliedSignal, Inc., to become Honeywell International, Inc. It ranked number 74 on the Fortune 500 listing in 2015, with revenues of more than $40 billion (Fortune, 2015b). Looking back, the vision of AlliedSignal, Inc., was to “be one of the world’s premier companies, distinctive and successful in everything we do” (International Directory of Company Histories, 1998, para. 1). Its success in achieving this was largely due to Bossidy’s strategy and vision.
The Bossidy era was distinctive for its quick and ruthless but effective change (International Directory of Company Histories, 1998). Bossidy came from the electronics and electrical equipment industry, spending the majority of his 34 distinguished years at GE. His leadership positions included chief operating officer (COO) of the GE Capital Corporation (also known as GE Capital), executive vice president and president of the company’s Services and Materials Sector, and vice chair and executive officer of GE. After entering a new industry and successfully mobilizing change, he is credited with transforming AlliedSignal, Inc., into one of the world’s most admired companies. He achieved earnings per share growth of 13% or more for 31 consecutive quarters and an eightfold increase in the company’s share price (LeighBureau, n.d.).
Despite his tough methods and company drive, Bossidy was well respected. He was named CEO of the Year by Financial World magazine in 1994 and Chief Executive of the Year by CEO Magazine in 1998 (LeighBureau, n.d.). He knew where he wanted AlliedSignal to go and how he wanted to get there. He knew that significant changes were necessary and wasn’t afraid to make them.
Housecleaning
Bossidy’s first move at AlliedSignal was to “clean house,” which he did by reducing the number of employees from 98,300 in 1991 to 76,700 by 1996 (International Directory of Company Histories, 1998). He saw that the company was internally focused and too crippled by ineffective organization—they had “centralized all the paper and decentralized all the people” (Tichy & Charan, 1995, para. 29). Bossidy set out to fix this.
News headlines about this time announced, “Larry Bossidy won’t stop pushing,” and articles described him as a “tough guy” (Lobel, 2000, p. 1). Bossidy was known for valuing hard work and rewarding those who demonstrated it. He reportedly said that he expected involvement, ideas, collaboration, leadership, development, drive, anticipation, growth, and adaptability from every one of his direct reports (Bossidy, 2007). He used these expectations as guidelines when implementing change. He didn’t stop after he reduced the labor force. He cleaned up unprofitable operations, sold off many small and some significant business units, and cut capital spending. Corporate culture was the hardest to change, but Bossidy’s approach created a team-oriented, less bureaucratic culture that was heavily focused on performance (Lobel, 2000).
A “Churn and Burn” Culture
Bossidy had high expectations, and he demanded from employees what he demanded of himself: results-oriented high yields, quality, and no-nonsense execution. This message was clearly communicated and incorporated into the company culture. Bossidy’s strategic goals for 1999 were growth, employee development/learning, and quality improvement using Six Sigma—“a management philosophy developed by Motorola that emphasizes setting extremely high objectives, collecting data, and analyzing results to a fine degree as a way to reduce defects in products and services” (SearchCIO, n.d.). He worked toward these goals by stretching each employee to his or her potential, which often translated into long days and stressing demands (Lobel, 2000).
Bossidy was once quoted as saying, “Meetings start at 7AM and run until 6PM. It’s hard to get stuff done around other times. After weeks of meetings, you have a pile of stuff on your desk and people think you’ve been on vacation” (as cited in Lobel, 2000, p. 4). The culture was challenging but attracted employees who thrived in that type of performance-driven environment. As Sandra Beach Lin, then vice president and general manager of the Specialty Wax and Additive group, noted, employees knew that they would be in trouble if the company did not make its numbers, and therefore did not need to be pushed by management. Instead, they pushed themselves (Lobel, 2000).
A Dramatic New Structure
Bossidy’s new vision required a dramatic new structure, and he was willing to make bold moves on the battlefield (Tichy & Charan, 1995). As he put it, “I don’t want to have to come back a year from now and restructure all over again. If we’re going to take a charge, I want to take a big one” (as cited in Tichy & Charan, 1995, para. 53).
In October 1997 AlliedSignal announced that it was restructuring from three sectors to 11 business units (International Directory of Company Histories, 1998). The Aerospace sector became Turbocharging Systems, Engines, Aerospace Equipment Systems, Electronics and Avionics Systems, Aerospace Marketing Sales & Service, and Federal Manufacturing & Technologies. The Automotive sector became Automotive Products Group and Truck Brake Systems. Finally, the Engineered Materials sector became Specialty Chemicals, Polymers, and Electronic Materials.
This was no small change. It eliminated an entire layer of management. Bossidy issued a press release saying that each new unit
is a significant factor in its market and has global reach, world-class talent, and the critical mass to operate autonomously. Removing the sector layer will enable these businesses to make faster decisions and serve customers with greater speed, flexibility, and cost effectiveness. (Reference for Business, 2015, “Bossidy Era,” para. 4)
The Key: Goal Deployment
As CEO, Bossidy began each year by rolling out strategic goals that became the foundation for the goal deployment process (Lobel, 2001). All employee goals were linked to those of the enterprise. Before Bossidy could implement any of these transformations, the company had to be united in vision and values. He started at the top with an off-site meeting for the top 12 company managers. They agreed on seven values: customers, integrity, people, teamwork, speed, innovation, and performance (Tichy & Charan, 1995).
Employees at all levels then set goals with these seven values guiding their planning. The goals were deployed through what was referred to as Total Quality (TQ). AlliedSignal fully committed to use TQ as the driver for change; if anyone did not believe in this initiative, they were asked to change or leave the company. Some employees changed, while others left (Tichy & Charan, 1995).
Coach Bossidy
Bossidy’s results-driven culture was also people-oriented. As he said, “I think you don’t change a culture. I think you coach people to win” (Tichy & Charan, 1995, para. 22). Bossidy’s coaching allowed employees at all levels to set goals and understand they would be stretched to achieve maximum performance. This culture was a significant success factor in implementing the dramatic changes made during the Bossidy era.
Bossidy talked to employees and practiced what management writer Tom Peters called MBWA, management by walking around. Coaches are not very effective without good two-way communication, so in his first 2 months as CEO, Bossidy talked to about 5,000 employees at all levels across the country. Talking to people was Bossidy’s main form of coaching. He coached them at what is known as skip-level, informal lunches of about 20 employees (Tichy & Charan, 1995). He was intentional about creating interactive settings and using surveys. Getting employees on board was key: Obtaining support from lower level employees can be powerful and convinces middle management to support the change as well (Tichy & Charan, 1995).
Communication is not the end-all, be-all to coaching people to win. Successful change leaders like Bossidy also provide support. As Bossidy astutely recognizes, leaders cannot get their employees to perform well by yelling at them and abusing them. Instead, they must show employees the big picture and demonstrate how change will benefit the company. They do this by establishing credibility and giving employees incentives and help. With this support, employees can and will do anything (Tichy & Charan, 1995).
By coaching his employees to win, Bossidy’s increased influence bolstered his authority in both strategy and operations. Tichy and Charan (1995) posit that “managers add value by brokering with people, not by presiding over empires” (para. 77). That is what Bossidy did at AlliedSignal, Inc.—he brokered with those still at the company to transform it.
There are many factors necessary for effectively leading and managing large organizational changes; having a plan and a model are certainly two. The following are other factors advocated by experts and studies in the field and illustrated by Bossidy at AlliedSignal.
Five Dimensions of Leading and Managing Change
Bossidy embodied elements of many implementation models of organizational change, including Cummings and Worley’s (2001) five dimensions of leading and managing change depicted in Figure 3.2. Those dimensions include motivating change, creating a vision, developing political support, managing the transition, and sustaining momentum. Because we discuss the dimensions of developing political support in Section 3.5 of this chapter and present strategies for sustaining change in Chapter 5, we will focus here on motivating change, creating a vision, and managing the transition.
Warrick’s (2010) six-step change implementation process will also be discussed within the context of Cummings and Worley’s model. Warrick’s steps include the following:
Keep the big picture in mind.
Choose the right interventions.
Use a sound change model to plan and manage the change process.
Keep people engaged and make the incentive for change greater than the incentive to stay the same.
Identify and manage resistance to change.
Follow through and learn from the process. (Warrick, 2011, pp. 259–260)
Figure 3.2: Five dimensions of change leadership and management
Navigating the five dimensions of change includes motivating change and sustaining a change, and several steps in between.
A chart that shows five phases that lead to effective change management. The “motivating change” phase is about creating readiness for change and overcoming resistance to change. The “creating a vision” phase is about mission, valued outcomes, valued conditions, and midpoint goals. The “developing political support” phase is about assessing change agent power, identifying key stakeholders, and influencing stakeholders. The “managing the transition” phase is about activity planning, commitment planning, and management structures. The “sustaining momentum” phase is about providing resources for change, building a support system for change agents, developing new competencies and skills, and reinforcing new behaviors. All of these things lead to effective change management.
Source: Adapted from Thomas G. Cummings and Christopher G. Worley. Organization development & change. Fig. 7.1, p. 109. Copyright © 2001 by South-Western College Publishing, a division of Thomson Learning.
Planned organizational change does not happen by accident. Although not all events in a change can be controlled, there are logics to leading and managing change initiatives in organizations. The following five dimensions illustrate practical steps for leading such planned changes.
Motivating Change
Bossidy was a master at motivating change. He created readiness and overcame resistance. Most resistance occurs because people know and/or believe that many planned changes do not succeed; the reasons for change are not clear; or the organization’s leaders are not fully invested in making sure the change is successful (Warrick, 2011). Leaders need to identify the specific reasons why change is resisted and respond accordingly. Bossidy’s approach to motivating change involved intense and widespread communication with all employees to avoid as much resistance as possible. He succeeded in preventing some resistance by keeping the big picture and his vision in mind while dealing with the reality of the situation.
Two-way actions and communications must also take place to set an organizational tone regarding change and must be continually updated as progress is made. Stakeholders need to know what the change is, why it is happening, what has been accomplished so far, how their efforts contribute, and when the change will be completed. For example, Bossidy spoke with 5,000 leaders before implementing the change and then hosted small lunches with employees to evaluate the change process as it was taking place. He gained employees’ respect through good communication. Leaders must gain the respect of the organization when leading change, and when resistance is persistent and/or unwarranted, they must take corrective action before change efforts are negatively affected (Warrick, 2011).
Creating a Vision
As we saw with Mulally at Ford, leading change also requires vision—a big-picture view framed by the organization’s goals and an assessment of past, current, and future conditions. The change process is dynamic and must be informed by the organization’s larger vision and values.
Bossidy’s vision was to make AlliedSignal a distinctive, successful, premier global company. This vision informed every decision and communication he made. He saw where AlliedSignal could go and took the time to understand how it would get there. He had not only a big-picture view, but a systems-level understanding. The organization as a whole is a system comprising many parts that interact with one another. Effective change leaders must understand that changing one part of an organization can also affect the other parts, and that a structural change may alter the organization’s culture (Warrick, 2011).
Developing Political Support
Although we discuss the importance of developing political support in Section 3.5, we note here that Bossidy took into account his company’s political environment in relation to change and responded accordingly. He understood the importance of internal politics in implementing change. To Bossidy, AlliedSignal executives were important stakeholders, and he took action to influence them through goals and performance measures.
For example, when two marketing and sales executives could not get along and were not acting in alignment with the vision, Bossidy fired both of them and had a guard escort them out. He recognized that negative political dynamics were hindering change and company performance. The two were hired back at 3:00 p.m., after convincing Bossidy that they would be able to work well together despite their differences. Bossidy gave them a second chance, and the lesson was learned (Bossidy, 2007).
Managing the Transition
Interventions must be designed and implemented to motivate and manage the transition. Bossidy began his change process at AlliedSignal with several big bang interventions. He laid off 21,600 employees, sold off business units, reduced capital spending, and did major restructuring. He was not afraid of large-scale change and knew it was needed to move AlliedSignal toward the vision. These interventions were not implemented prematurely or without adequate planning. Planning is a key responsibility of leaders when motivating change and managing the transition. In some instances activities can be combined with planning, and leaders must be careful to avoid misdirected or unnecessary efforts at any level.
Additionally, using a sound model to plan and manage the change process increases the effectiveness of implementation. Whether Bossidy explicitly followed Warrick’s proposed steps or not, it is clear that he employed all of them while leading change at AlliedSignal/Honeywell. Bossidy believed in relying heavily on a practical road map that identifies possible obstacles to overcome (Bossidy & Charan, 2002).
Bossidy also employed elements from the change road maps presented earlier in this text. For example, he created a sense of urgency for change (NHS North West, 1996) through his decisiveness and timeliness, stating that people should expect him to make well thought-out, quick decisions once he obtained the information that he needed (Bossidy, 2007). The moment he took over AlliedSignal in 1991, he did just that. Bossidy gathered all the information he needed and made quick decisions to eliminate jobs and restructure from three sectors to 11 units. Urgency was created as employees experienced swift action and follow-through.
Bossidy was decisive; there was no honeymoon period while the company considered change. As soon as he had the plan and information to support it, change began to occur. He used a guiding dominant coalition to implement his change strategy (NHS North West, 1996). Bossidy knew he needed a strong management team to implement the change he wanted. In his first 2 years, 30% to 40% of his day was spent hiring and developing leaders (Bossidy, 2001). In engaging in hands-on hiring, Bossidy was handpicking a coalition to share his vision and help him implement change.
Bossidy generated short-term wins (NHS North West, 1996) to bolster support for the implementation process by focusing only on what needed to be changed and leaving the rest of the company alone (Bossidy & Charan, 2002). In just 5 years, Bossidy’s changes increased the company’s return on sales to 7.3% and reduced long-term debt to only 22% of total capital (International Directory of Company Histories, 1998). Communication and strongly enforced goals allowed the AlliedSignal team to work quickly to implement change.
Two men sit across from each other at a desk. One is speaking and gesturing with his hands.
BananaStock/Thinkstock
Interviews are one way to gather continuous feedback from both employees and management, something that is crucial to smoothly managing change.
Feedback was another critical success factor in leading and managing the transition at AlliedSignal. Some organizations may neglect to collect feedback, putting change initiators at risk of not knowing when their changes are not working as planned (International Directory of Company Histories, 1998). Change is handled best by organizations that are oriented toward learning, and feedback is the most direct and continuous way to learn about change within the organization. Feedback on the change process provides leaders with useful information about what is and isn’t working and ideas for improvements or efficiencies.
Feedback can be gathered using many unique methods. These include surveys, interviews, observation by employees responsible solely for monitoring change, and using teams. Bossidy used his continuous communication process not only to gather new information and obtain a sense of how the change affected people, but also to give positive and negative feedback to his team and employees, both about the change and their performance. Feedback ensures that mobilization is a dynamic, living process and, when done well, orients the organization toward learning.
Sustaining Momentum
While managing and mobilizing change, employees must also be engaged and involved, especially those who lack access to higher level leaders and managers. This is because leadership may become engaged in other tasks, key players may be unable to fulfill all their responsibilities, and leadership changes may jeopardize the organizational changes (Warrick, 2010). It takes a concerted effort to provide the resources necessary to sustain change and reinforce new behaviors.
Communication is an important tool when building support systems and providing a unified and complete understanding of the vision. Bossidy created a demanding environment, but he also provided many outlets for communication and feedback (in terms of concerns, ideas, plans, goals, and performance). His expectations with regard to employee performance and responsibilities were made very clear. Bossidy later became known in management literature as a leader who excelled at execution, which involved engaging and involving employees (Bossidy & Charan, 2002).
However, with regard to creating incentives for change, it is also important to note that these changes typically only benefit the organization and signify more work and little benefit for those employees who are actually implementing the change. To this point, Bossidy was not proficient at providing incentives for change as much as he emphasized the achievement of goals. His “incentive” was that employees would likely be fired if they didn’t meet the performance goal. This type of culture worked at AlliedSignal because employees attracted to the company were those who were looking for this type of environment; however, this performance-driven method does not often result in the best change. It also requires more oversight and time when creating goals (Holstein, 2002).
Despite the harsh performance-driven culture, Bossidy succeeded in following through on the process of the change initiative. He sustained momentum through the change, which is not easy. It takes a great deal of discipline and determination to provide successful, lasting changes and to convince leadership to continue with the process until all goals are achieved. However, successful implementation is worth the hard work—it accomplishes necessary changes, increases confidence in the change process, and empowers and excites employees at all levels.
Check Your Understanding
If you were instructed to help a team plan a large change for an organization that recently hired you, outline some steps you would take to share at your first meeting.
What are some concepts and actions that Bossidy used in the change effort at AlliedSignal? How successful was he in his efforts?
3.3 Strengthening Alignment With the New Vision and Future State
Organizational change expert Daryl Conner (2006) stated in his book Managing at the Speed of Change that once effective change leaders determine what must be done, achieving these goals involves three components of organizational change: intent, people, and delivery.
Intent involves creating and sharing the vision for the end result of the change and protecting its integrity as the company moves through the change process. This step is especially important at the beginning of a change effort, since it helps garner commitment and motivation.
People refers to the human aspects of change. It involves developing employees’ commitment to the change, reducing resistance, aligning the change with the company culture, and creating synergy. Delivery includes setting up governance, overseeing interdependencies, providing progress reports, and prioritizing and assigning resources. When all three components are combined, there is a higher probability of adding full value to the process and its outcomes.
The issue in integrating these three components in organizational change is that each one deals with a specialized area (Conner, 2006). Therefore, when a pressing project or goal is being pursued, rarely are the three areas dealt with simultaneously. From this reasoning, Conner (2006) discovered the importance of strategy execution—that is, combining the components of intent, people, and delivery to increase the probability of the change initiative’s success.
Another way to view how planned organizational change combines intent, people, and delivery—including implementation—is through the need to align the major dimensions of vision, strategy, culture/people, and processes that were discussed in Chapters 1 and 2. At the implementation stage of organizational change, aligning these dimensions involves redirecting the activities of leaders, managers, and professionals to the new vision and future state of a transformational change.
A man in a suit draws the solution to a maze.
GuidoVrola/iStock/Thinkstock
A leader must be able to guide a company toward a new vision while keeping the people and the organizational culture in alignment with core values.
Leadership: Aligning People and Culture to the New Vision and Strategy
Aligning the organization to a new vision and strategy begins at the leadership level. Leaders like Bossidy of AlliedSignal and Mulally of Ford transformed their companies through dramatic vision and cultural alignment to it. Collins (2000) noted the distinction among values, vision, and operations: Core values are timeless and should not be changed, but the operating practices and culture of an organization should never stop changing.
Before a leader can align the people and culture with the vision, she or he must distinguish what should change and what should not. An organization’s vision is comprised of three elements: (a) its mission or purpose—the reason why it exists; (b) its enduring core values; and (c) its ambitious, achievable goals for the future. The most important of these elements is the company’s core values (Collins, 2000). Strong core values give leaders the platform for vision and change.
Strategy, Culture, and Processes
An essential part of effective change is selecting leaders who can align the right vision and strategy to an organization’s industry environment, and then ensure that the culture and other organizational dimensions are working together toward common goals. Because CEOs and leaders are chosen to identify a new vision and select an effective strategy for a failing or faltering organization, the stakes are high for the leader. This is especially important when implementing a sizable change because alignment helps to uphold the organization’s core values, reinforce its purpose, and move it toward its goals. When a company’s alignment is strong, anyone can walk in and know what its vision is without explicitly being told (Collins, 2000).
While we have discussed leaders’ strategies, styles, and methods of organizational change, as well as the effects of change on employees and teams, it is also important to raise awareness of the importance of organizations’ and companies’ boards of directors. These are the bodies whom leaders generally report to and must gain approval for their strategies and actions. It is the role of boards of directors to keep the organization, and the leader, on course of the purpose and mission of the enterprise. A case of a leader whose strategies were not accepted by the board of directors is Hewlett-Packard’s former CEO Leo Apotheker. In August 2011 Apotheker announced to the tech world that HP was spinning off its personal computer (PC) division and business—in which HP is one of the world’s leading manufacturers (Taylor, 2011). Debate in the industry and at HP ensued. Meg Whitman, former CEO of eBay, was hired to replace Apotheker and his strategy. Shortly after she came aboard, Whitman announced that the PC division is still right for the company and for its customers, partners, shareholders, and employees (Couts, 2011). An excerpt from HP’s formal statement on the strategy change stated:
The strategic review involved subject matter experts from across the businesses and functions. The data-driven evaluation revealed the depth of the integration that has occurred across key operations such as supply chain, IT and procurement.… Finally, it also showed that the cost to recreate these in a standalone company outweighed any benefits of separation. (Couts, 2011, para. 8)
Aligning to Strategy
After the CEO or leader and top-level executives select a new strategy, implementing a transformational strategy generally requires a shift in the organization’s culture, values, structure, roles, skills, and processes. In the HP example, it appeared that the proposed strategy change would not add to the company’s competitiveness and would be detrimental to HP’s culture and stakeholders.
Note that Mulally at Ford achieved alignment through his “One Team, One Plan, One Goal” mantra, which was embodied in the strategy of the Way Forward Plan. He insisted on transparency and communication, so that the vision was clear and supported by the entire organization.
A similar example comes from the 3M Company. Leaders at 3M were also able to create alignment because of clear and enduring core values, a strong vision, and the fact that they created opportunities to execute these (Collins, 2000). 3M’s corporate values state that the company will:
act with uncompromising honesty and integrity in everything we do; satisfy our customers with innovative technology and superior quality, value and service; provide our investors an attractive return through sustainable, global growth; respect our social and physical environment around the world; value and develop our employees’ diverse talents, initiative and leadership; and earn the admiration of all those associated with 3M worldwide. (3M, 2015, “Our Values,” paras. 1–6)
All aspects of the company and its operations align with these values. It has worked hard to create a culture based on excellence and innovation that is firmly aligned with its core values.
At 3M, scientists have been permitted to spend 15% of their time on projects of personal interest (a similar practice exists at Google). As 3M leaders see it, creativity allows for innovation and progress and is an important way to align employees and their efforts to the vision. 3M also requires that 30% of division revenue come from new products. The company supports new ideas (through an internal venture capital fund), provides a dual career track, and gives entrepreneurial and innovation awards (Collins, 2000). Through its actions, 3M leaders make the company’s vision and strategies clear. Action is the primary means of alignment.
When aligning employees with the vision, leaders should consider nonfinancial incentives in addition to financial ones. Nonfinancial incentives can sometimes be as or more effective than monetary rewards in developing long-term employee engagement (Dewhurst, Guthridge, & Mohr, 2009). Part of aligning people to the vision is motivating and keeping them engaged. Employee morale can be improved with accolades from managers and one-on-one attention from leaders, as well as the opportunity to participate in task forces or lead projects (Dewhurst et al., 2009).
Businesses are in need of leaders and employees who are involved and eager to exceed expectations, particularly in an environment of continuous change (Dewhurst et al., 2009). Engagement and alignment stem from good communication and motivation. In the case of Ford, Mulally had a well-communicated plan that he consistently followed. This created a sense of stability, making the change seem more manageable.
Transitioning Cultures
A challenge pertaining to alignment arises when achieving the new vision requires a fundamental shift in culture. Employee distraction and demoralization can impede cultural changes and result in negative, counterproductive energy within an organization (Ghislanzoni, Heidari-Robinson, & Jermiin, 2010). Canada’s Bombardier faced such a cultural transition in the early 2000s. Pierre Beaudoin, CEO and president since 2008, had a formidable task. To change the culture, Beaudoin had to shift the company from hard goals to soft goals and find a way to champion change. Once driven solely by its manufacturing and engineering goals, Bombardier was on its way to becoming a company dedicated to its customers, its workforce, and continuous improvement (Simpson, 2011).
Bombardier was affected by the aviation and aerospace industry recession that followed the September 11, 2001, terrorist attacks, but the company also acquired the railway transportation company Adtranz from DaimlerChrysler in the same year. The company’s function-based structure had allowed it to make such acquisitions and grow. This growth was positive but kept the focus away from the customer. The Bombardier culture was in silos (per function) and needed to be integrated and aligned toward a new, customer-focused vision. Employees didn’t understand the company’s vision or values, making it nearly impossible for them to support it. The culture was one in which value was placed on any individual who was able to get the job done in a crisis but with very little focus on teamwork (Simpson, 2011).
Advanced Micro Devices and Culture
Fred Allen from Forbes interviews Colette Laforce, CMO of Advanced Micro Devices (AMD), about the cultural shift she has been implementing. Why does Laforce believe that a fundamental culture shift is necessary? Looking at the example of Bombardier in your text, what are some methods Laforce could use to create a more purpose-driven culture?
The company then made a shift from hard to soft goals. Hard goals, or goals that have clear, quantifiable criteria like performance figures, are often easier to measure. They are necessary but cannot be the main focus if a cultural transition is to take place. Instead, soft goals, or goals without clear, measureable criteria—such as employee initiative and communication—had to be the focus. Bombardier leaders translated soft goals into hard measurements wherever possible to help the company evaluate progress. The goal was to encourage frontline employees to become more proactive and take initiative. This process took time, as culture cannot be changed quickly (Simpson, 2011). The leaders at Bombardier understood a critical success factor in alignment—goals must be connected to the daily work of each employee. If employees cannot see or understand the alignment, it will not be sustainable.
Effective alignment is achieved when there are champions of change. Champions are visible, daily examples of alignment. As Bombardier recognized, it is critical to have employees who will reach out to others and spread new ideas throughout the company (Simpson, 2011). By engaging employees across all levels to become champions of change, the vision and strategy spread more quickly, consistently, and thoroughly throughout the organization.
Changing Systems and Processes
Aligning culture to new strategies lays the groundwork to successfully implement new systems and processes. Looking back at stage 6 in Figure 3.1, planning and organizing must occur before the change can be successfully implemented.
A process is a series of actions or steps designed to achieve a particular goal, objective, or milestone. The strategy dictates the necessary processes. The leader must evaluate whether those processes exist yet in the organization and, if so, whether (and how) they are contributing to implementation. Many companies must move from a narrow, project-based perspective to a broad, program-based, end-to-end perspective (Browning, 1993). This can happen on either a micro or macro level; but either way, changing systems and processes requires a big-picture view. The leader must see and understand how all the pieces should and do work together to accomplish the strategy.
Accountability is important when working with new or improved systems and processes. With this in mind, Browning (1993) suggests that the organization create the role of process owner. The process owner is the employee who is given both responsibility and accountability regarding how the new or improved process functions (Browning, 1993). This relates back to alignment; for new systems and processes to work, there must be spaces for them, created when the organization was aligned to the new vision. Changes in processes and systems must be made carefully and correctly to prevent employee and cultural morale from dropping (Ghislanzoni et al., 2010).
Ghislanzoni and colleagues (2010) note the top five strategies used by successful organizations when changing their systems and processes. The first is that successful organizations use reorganization to change employees’ mind-sets and behaviors. Processes and systems are often completely integrated, meaning that employees at all levels of the organization are involved. If done well, a change in processes and systems can help align the culture to the new vision, and reinforce that alignment.
The second strategy focuses on what the new organizational model is and how it would work within the company (Ghislanzoni et al., 2010). Leaders must look at both the conceptual and the reality when implementing change—one without the other is incomplete and ineffective. The third strategy involves implementing the model quickly to begin immediately providing value. Implementation often happens more slowly than leaders would like, but changes that have been competently and thoroughly planned and organized are more likely to be less wasteful and more successful.
The fourth strategy is to attend to any risks or roadblocks as early as possible in the process, which enforces the need for the leader to monitor the process and plan before it is implemented. Finally, successful companies launch new business initiatives just prior to or at the same time implementation is completed (Ghislanzoni et al., 2010). Small and early victories are key, and sustaining the momentum is important for implementing change. This is also true at the system and process level.
Fine, Hansen, and Roggenhofer (2008) note six habits lean leaders—that is, leaders who streamline and bring effective practices—adopt when changing systems and processes:
A focus on operating processes
Root-cause problem solving
Clear performance expectations
Aligned leadership
A sense of purpose
Support for people
Processes should be a focus, and successful leaders must ensure that processes are standardized (Fine et al., 2008). The goal is to solve the root problem, rather than generate temporary solutions to surface problems. This involves providing learning opportunities as processes and systems are changed. With change comes the need for performance measurements that must be communicated and evaluated at all levels. Functional boundaries shouldn’t stop changes in process. Looking at the big picture often requires that processes change across silos or departments, which requires that leadership in all functions be aligned with the vision.
Finally, changes must be related to employees’ day-to-day work. Leaders must show others how all the pieces fit together and set both short- and long-term goals. Companies should change with purpose and support. Mulally, for example, provided purpose and support through good communication. He first aligned himself to the vision and then led by example. Processes and systems were changed—not arbitrarily, but strategically—and the change process was approached as a learning process.
These six habits encompass the importance of aligning culture and people to the vision both before and during the implementation of new processes and systems. Leaders must see the real problems and develop a well-communicated and well-followed plan that adhere to the vision, and set clear expectations at all levels.
Managing Change
The Specifics of Alignment
Suppose you are implementing change at a major pharmaceutical company. You want to veer the company away from having the stereotypical reputation of a medicine factory concerned mainly with profit margins and cost-cutting measures. Instead, you want to steer the corporation onto a path that concentrates on the customers. Your vision: improving customers’ health is paramount—set out to do good for society and make it good business.
Getting leadership on board is one of the first steps. You set out to integrate the three main components of proposed change: intent, people, and delivery. You recruit leadership by communicating a clear vision and announcing your commitment to protecting the organization’s integrity and in an effort to foster buy-in from managers and employees, thereby aligning the culture to your vision. You work on redesigning the infrastructure to manage delivery, including resource allocation, governance revisions, and metrics. Along with your team, you begin to refocus activities of unit managers to support the new vision.
It is important to integrate the three main components of the proposed change (intent, people, and delivery). However, as they are different dimensions of organizational change, you must try to spin several plates at once and keep your attention focused on all corners of the organization. You are determined to lead by example. You see how the pieces of your organization fit together to achieve your vision, you have a big-picture view that you are communicating to others, and you are approaching this change as a learning process.
Discussion Questions
What role do values play and how do they affect the vision and culture in a transformational change?
What are the stages, in order, to take as you implement change?
What are some specific ways to align the culture of the organization with the change initiative?
What are some of the pitfalls to be avoided?
(See the end of the chapter for possible answers.)
Check Your Understanding
What techniques did Bossidy use at AlliedSignal to align the new vision, strategy, culture/people, and processes? Explain.
If a manager asked you for tips on how to implement an organizational change, what lessons and knowledge from this section would you share?
3.4 Plan-to-Action: Roles, Relationships, and Interventions
Whereas Mulally, Bossidy, and other top-level leaders generally serve as the champions of change in their organizations, assigned managers and teams work with consultants to drive the daily planning and implementation processes. Although there is no one best way to organize change, most models refer to some form of top-down structure to launch the process, which cascades across all other organizational units. This section discusses how the roles, relationships, and planned activities are designed and implemented.
Assigned Roles and Relationships
Having a comprehensive change road map and plan in hand—like the one discussed in the first section of this chapter—enables the CEO or top leader to proceed with the help of human resources professionals to recruit and assign others to transition the organization. The following framework represents different roles and responsibilities of different change leaders and professionals in an organization described in Table 3.1.
Leading and managing the change transformation involves the normal operating business side of an organization to coordinate with the planned change side. Human resources professionals are involved throughout the change process. Depending on the size of the organization and the scale of the change, assigned roles and relationships can involve a number of people and teams, as Table 3.1 shows.
Some of the roles in Table 3.1 involve integrating individuals’ and teams’ responsibilities into the organization’s daily business functions and specific change activities. For example, the sponsor (who works for the organization) must interact with representatives from all the groups. Similarly, the change consultant and his or her team (who are dedicated to the change program and do not work as part of the business functions) must interact with the leadership change team and the executive team (members from teams who do work for the organization).
Power, Authority, and Responsibilities of Change Leaders and Teams
Notice in Table 3.1 that power and authority are based on a number of sources, including position, technical expertise and knowledge, strategic and operational experience and know-how, ability to motivate and serve as a positive role model, interpersonal and organizational communication skills, and the capability to execute the change requirements.
Table 3.1: Assigned leadership roles and relationships
Roles

Responsibilities

Deliverables
Sponsor (highest line authority)

“I give the ‘go-ahead’ to implement, provide resources, clarify outcomes, make course corrections, and sponsor the change.”

“I set the direction and expectations, coordinate communication, sign off on major decisions, inspire confidence, and resolve significant disputes.”
Executive team (organizational senior managers)

“We manage the outcomes and results, coordinate the business with the change strategy and outcomes, and balance priorities between the change activities and organizational business with middle managers and frontline supervisors.”

“We authorize and fund the change requirements. We manage expectations, maintain operations, model new behaviors and attitudes of the change and new culture, and sign off on daily decisions from the change team.”
Leadership change team

“We are cross-functional, representing the entire organization; we have been delegated the authority to help create and implement the change strategy with the executive team. We create conditions to realize breakthrough outcomes. We own the change methodology and support its implementation in the organization.”

“We develop the change strategy and supporting process plan producing results. We oversee the realignment and resources of the change strategy to ensure effective integration of all change objectives. We also model behavior and roles required to implement quality results.”
Change consultant and project team

“We lead and manage both the process and technical sides of the change. We coordinate with the Leadership Change Team to integrate the design and implementation of project change activities throughout the organization.”

“We ensure the process and completion of all the major stages/phases of the change for each goal. We strategize, problem solve, and coach the business side on all steps and issues of change initiatives from plan to implementation. We also model change behaviors and mind-sets required for success of the change.”
Source: Adapted from Ackerman, L. A., & Anderson, D. (2010). The change leader’s roadmap. San Francisco: Pfeifer, an Imprint of Wiley, Chapter 1; and The Adkar model of change. Loveland, CO: Prosci. Retrieved from http://www.change-management.com /tutorial-job-roles-mod2.htm
The sponsor is an executive from the organization’s line operation. This executive has position authority and power in the chain of command to direct employees to perform tasks related to their positions and to the organization’s goals. At the same time, the sponsor must be able to oversee the entire change process while inspiring others to succeed.
The organization’s executive team members must be able to balance priorities, workloads, and the expectations of middle managers and frontline supervisors who are meeting the needs of the daily operations of the organization while implementing new requirements of the change. They must ensure that the change effort’s strategic goals and objectives are being implemented, and also model the behaviors and mind-set of the new organizational state that is still in transition.
The leadership change team consists of members from different functional areas (for example, marketing, finance, production, and research and development) who must lead the change strategy’s implementation. They create the conditions and own the change methodology to realize breakthrough outcomes. They are content experts in their areas of specialization who are charged with ensuring that the details of the plan are integrated “on the ground.” Like the other members responsible for the change, they too must be the change that they are effecting.
The change consultant and project team lead and manage the technical sides of the change. The change consultant coordinates with the leadership change team to integrate the design and implementation of specific change activities throughout the organization. The power and authority of change consultants and their team—all of whom are usually hired externally—is based on their knowledge and expertise, not on their organizational status. Therefore, they need the leaders and members who are organizational hires to cooperate by performing their work. As OD specialists, part of their expertise resides in their human relations, communication, and execution skills.
Criteria of Change Leaders and Teams
Organizational members should be selected to help plan and implement the change according to certain criteria. These include being (a) highly competent in the organization and (b) best positioned to effectively lead the effort (Ackerman & Anderson, 2010). In addition, we would add the following criteria: (c) being well-respected and well-liked by professionals in the organization, (d) being trusted by others in positions of authority and responsibility, and (e) having a track record of accomplishments that are central to the organization’s mission.
These are also characteristics, competencies, and experience that CEOs like Mulally brought to Ford and Bossidy to AlliedSignal/Honeywell. Although they were not always liked by everyone, they earned respect based on their competence, their knowledge and experience, and their ability to demonstrate productive results. This is important for promoting collaboration, which is a cornerstone of effectively implementing change initiatives.
Implementing Interventions
A major task of change leaders and teams is to design and implement change interventions. With regard to organizational change, interventions are specific planned activities and events aimed at helping an organization increase its effectiveness (Cummings & Worley, 2009). Based on diagnoses of problems organizations face and/or opportunities that can be taken advantage of, OD interventions are designed to put an organization or one of its units into a more effective state. From this perspective, an intervention is effective if it meets three criteria: (a) it fits the organization’s needs, (b) it has been thoroughly examined and will produce the intended outcomes, and (c) it transfers management competence to the organization’s members (Cummings & Worley, 2009).
The type of intervention used depends on the type of organizational change needed (transformational, transitional, or developmental), as shown in Figure 2.4. The type of planned intervention also depends on what particular dimension of the organization (for example, leadership, strategy, culture, structure, processes) is targeted to change. Because we are primarily discussing transformational or large-scale change, the types of interventions required affect all of the major organizational dimensions in some way. Some changes within a particular dimension may affect the other dimensions. For example, a newly selected CEO has ripple effects that extend to everyone. A major employee evaluation system can affect different employees across an organization, whereas an IT reporting and control system that most employees must use will affect different divisions, departments, and units.
Before elaborating on the different types of change interventions shown in Figure 2.4, we summarize one of the most important transformational changes experienced by the Avon Products company. Examples from Avon’s story will demonstrate the nature and types of interventions that organizations use.
Avon and CEO Andrea Jung
Avon is one of the world’s leading direct sellers of beauty products, including skin care, makeup, and fragrances, as well as jewelry, lingerie, and fashion accessories. The company sells to customers in 145 countries (Cohen & Roussel, 2004). Avon’s 2015 annual ranking as a Fortune 500 firm was 322, with $8.85 billion in revenues (Fortune, 2015a).
During the 1980s Avon Europe had branches in just six countries, and each country had an independently operated factory and warehouse with separate information and distribution systems that handled the local market. During the 1990s Avon’s robust growth nearly overwhelmed its supply chain organization (Cohen & Roussel, 2004). The firm had focused almost exclusively on marketing and sales to the exclusion of its supply chain and operational logistics. When the company planned on doubling sales revenue in Europe from $500 million in 1996 to $1 billion in 2001, executives realized that it would not work to replicate its country-based supply chain model in new and different markets. A decentralized supply chain across international geographies and cultures would be cost prohibitive (Cohen & Roussel, 2004). Something had to change.
Andrea Jung had been CEO of Avon for 11 years when this change loomed on the horizon. She recalls how it felt to be faced with this situation:
As I was deciding back in 2005 to undertake the boldest-ever restructuring of the company, I had a frank conversation with a friend to whom I turn for advice from time to time. He reminded me that most people who successfully orchestrate significant corporate turnarounds come from outside, because they have no vested interest in the company or its people. It was 8 P.M. on a Friday night, and he challenged me. Could I, he asked, go home over the weekend and fire myself as the CEO who had presided over five years of explosive growth, and then rehire myself Monday morning as the turnaround specialist who would lead the company into the next era? It meant totally reinventing myself from the leader I had been to an entirely new type of leader who would be right for the next chapter in the company’s history. It was a very humbling experience, but ultimately very liberating. (as cited in Business Today, 2011, p. 34)
In 2005 Avon’s stock price—which increased more than 181% during Jung’s first 5½ years as CEO—dropped 45% between April and October (Kowitt, 2012). That same year marked the abrupt end of 6 consecutive years of more than 10% growth, with earnings having tripled under Jung’s leadership. In Avon’s European markets, a new sales campaign began every 3 weeks, but it took 12 weeks, on average, to cycle a product through the supply chain. Manufacturing was dependent entirely on forecasts, but about 50% of products resulted in rush orders because the company sold more than forecasted. Manufacturing incurred large changeover costs to stop production and meet rush orders. Preprinted containers were ordered in the language of respective country markets before sales were known. The company had slow-selling inventory accumulating and significant, unpredictable costs dependent on sales (Cohen & Roussel, 2004).
Significant resources were needed to transform the supply chain. Avon moved 45 of its best employees from Europe to work on the transformation full time for 18 months. The company was challenged to create a centralized planning function to handle reactions to demand and inventory levels (Cohen & Roussel, 2004).
Accumulating Information and Creating Systems
Andrea Jung, CEO of Avon, speaking from a podium.
AP Photo/Stephen Chernin
One of the first steps Andrea Jung took toward doubling Avon’s sales revenue in Europe was to compose a solid team and transform the supply chain.
Avon’s first step was to create a common database for the organization to record information about inventory, manufacturing, and sales. Things like product codes and descriptions were developed for global visibility and analysis. Management around the world had to evaluate sales and inventory trends—both supply and demand. Without accompanying systems, the information in the database could not be used effectively, so Avon also created a supply chain and scheduling system. A regional planning group was put in place to evaluate the entire supply chain and make decisions using this information (Cohen & Roussel, 2004).
The Redesign
When Jung and her senior team stepped back and reviewed their supply chain as an end-to-end process, rather than as isolated local systems, the real value and benefit of this transformation became evident. If the supply chain was transformed, the company could replace five or six language-specific bottles for shampoo or lotion with one plain bottle. This way, production could run continuously without having to switch the bottle stock, and customer service could respond more quickly to changes in demand. Therefore, when inventory was exhausted in any market, the warehouse moved into action by labeling products in the relevant language and shipping them out on trucks. The savings and economic gain was significant.
Avon embarked on the redesign of its physical supply chain. Manufacturing operations were consolidated around the company’s emerging market, allowing for time and labor cost efficiencies. A centralized inventory hub was created near two manufacturing plants in Poland, allowing products to be directed as demand was determined. Containers were standardized to reduce changeover costs. By purchasing inputs like containers from suppliers close to the manufacturing plants, transportation time and cost were reduced. There were also fewer suppliers that were more flexible and responsive.
The redesign was possible because Avon widened its view of the company’s overall operations. The decentralized model—in which each country operated independently—kept Avon from working as a single, streamlined operation. By looking at the supply chain as an end-to-end process, Avon could make better strategic choices and adapt to changing market demands more quickly (Cohen & Roussel, 2004).
Communication and Realignment
Avon next changed its structure to match the redesign of its supply chain processes. “Plan, source, make, and deliver” became the new key process (Cohen & Roussel, 2004, p. 3). The simpler, centralized model was easier to manage. It also changed the roles and responsibilities of many employees. For example, general managers became responsible primarily for sales, rather than for inventory.
Jung made facts rather than intuition the main driver behind managers’ decisions. This shift removed much of the autonomy of country managers but enabled them to perform their work with more precision, increasing each operation’s overall performance. These changes were reflected in new performance metrics—a data-centric approach (Bloomberg Businessweek, 2008). The company also infused collaboration in its changes. A collaborative design workshop was held that involved suppliers, a design firm, and Avon marketing and supply chain personnel. Collaborating on ideas yielded designs that reduced costs and improved efficiency.
The new processes and structure were communicated through training; this helped upgrade employee skills. Avon partnered with Cranfield University, a supply chain business school in Britain, to develop a new training program in both full and accelerated durations (full for supply chain associates and accelerated for senior executives) (Cohen & Roussel, 2004).
Avon successfully implemented a new and vastly more efficient supply chain to respond to its rapid growth of two or three new markets per year. This change allowed the company to increase efficiency, reduce costs, and save about $50 million per year (Cohen & Roussel, 2004). The company went on to create a fully integrated IT system to incorporate the changes and track the new information collected (Cohen & Roussel, 2004).
The Transformation of Jung and Avon
Jung’s expertise and experience were grounded in building brands, not in turning around global logistics supply chains, structures, and systems. During the company’s steep decline in the early 2000s, she said, “My first reaction was: ‘I get it. I see the numbers, but I just don’t know if I, or we, have the stomach for it’” (as cited in Byrnes, 2007, “Painful Cuts,” para. 1). She had to shift both her thinking and the thinking of her managers regarding problem solving from intuition to a data-driven approach. She also had to take much of the autonomy from country managers, who were used to running plants their way. They had to create a way to install and mobilize a globalized manufacturing and marketing system.
Jung also had to champion downsizing—a most painful task. Seven layers of management were let go, from 15 down to 8 management levels. During the restructuring, she flew from country to country talking with her top 1,000 global managers. Her basic message was that a quarter of them would be let go by the end of the year. This was a difficult time for Jung, as she had hired many of them (Bloomberg Businessweek, 2008).
She also led the charge on launching the numbers-heavy, return-on-investment analysis that most of the larger, successful consumer products companies—Gillette, Procter & Gamble, PepsiCo, and Kraft—had been using for many years. The analysis was run by an executive team, most of whom were recruited from outside the company and were centralized from the New York headquarters.
At the end of her tenure as CEO, Jung had more pressures with which to contend (Lublin & Karp, 2011). In 2011 the U.S. Securities and Exchange Commission (SEC) inquiries and an SEC subpoena investigated whether Avon was involved in bribes to Chinese government officials and improperly disclosed market-sensitive information to financial analysts over the previous 2 years. In December 2014 Avon agreed to pay $135 million to settle the SEC charges (Wohl, 2011). As CEO of Avon, Jung made some bad decisions. In April 2012 Avon replaced Jung as CEO with Johnson & Johnson vice chair Sherilyn McCoy.
Types of Interventions
We usually do not read about or see how the different implementation roles explained earlier in this section are carried out in notable organizational transformations. What we do read about is how visible CEOs and leaders either master or fail at organizational changes. Mulally at Ford and Bossidy of AlliedSignal, for example, succeeded in their efforts. Jung succeeded but struggled in her attempt to learn and adopt the necessary implementation roles and expertise needed to turn Avon around.
Reinventing the Leader as Change Champion
Jung led the restructuring and centralization of Avon’s supply chain, which required transforming new logistics systems and business processes that, in turn, changed employee roles and the manufacturing and marketing processes. She succeeded at leading these strategies and systems (shown in Figure 2.4) by reinventing her role as an implementation leader who had to make and enact the tough decisions. This reorientation was not easy and did not happen right away. Avon experienced a 45% stock price drop and the cessation of earnings growth in 2005 before any changes were made. It was challenging for Jung to stomach these downturns when the company had been doing so well under her former leadership style.
Jung had to change not only her leadership, but also the organization’s culture, people, strategy, structure, and systems. The team she put together developed the strategy at corporate and functional levels. Jung started by looking at the big-picture problems to determine the big-picture solutions, and then brought people together to work out the details.
Reinventing a Supply Chain and Culture
With the plan ready to be put into action, Jung used her role as integrator to attack the system and structural issues. She started with a new common database system for recording inventory, manufacturing, and sales data, as well as a new supply chain and scheduling system. Both systems integrated information and facilitated decision making. Jung had to use relationships with employees, vendors, and customers to successfully implement the new system and sought constructive feedback throughout the process. This major change at Avon was a collaboration of efforts and insights. Jung relied on this collaboration, which was a balancing act for all parties.
Structural Interventions
With the new system in place and functioning, Jung turned to its structure. She looked at the supply chain from all levels—enterprise, functional, business process, and global. Avon consolidated its facilities and created a centralized inventory hub.
Major physical changes like this require significant amounts of resources (particularly financial), making it critical that the leader maintain good relationships with employees, vendors, and customers. Relationships allow for the beneficial exchange of information and feedback, and they often contribute to a more efficient, accurate, and mutually beneficial change process. The leader must make sure all stakeholders see the value in the change and understand their unique contributions to it. Jung topped off the structural changes by standardizing containers and localizing suppliers. These procedural and structural changes made Avon’s supply chain (and its people) more agile.
Roles, Relationships, and People Interventions
The roles and relationships required dramatic changes for many managers, not only for Jung. A simpler, centralized model was easier to manage and resulted in a shift in responsibility, from inventory to sales. It freed managers to evaluate larger issues, rather than micromanaging and responding to inventory concerns. By understanding their roles and relationships, the managers were free to develop more of their skills and talents.
These changes affected Avon’s culture and its people. The culture became more centralized as communication was integrated and supply chain problems no longer caused tension. Employees changed as their roles were relocated, more local suppliers were used, and outside specialists were brought in to train employees and evaluate the supply chain.
During the implementation process, Jung succeeded at learning new leadership roles and navigating new relationships. She learned to be an integrator, a liaison, and a cheerleader throughout the process—not with creative marketing and merchandising employees, but with first-line managers and supply chain systems professionals. The implementation succeeded because she assumed roles that involved the nuts and bolts operational systems and strategy, which were an integral part of the company’s culture, people, structure, systems, and enterprise strategy. These changes were not instantaneous. It took years of strain on the supply chain, declining performance, and the advice of a good friend to direct Avon and Jung toward change. In the end, changes were the result of careful observation, feedback, and collaboration.
Implementing New Strategies and Structures
Champions of change in any organization must ask, “What structure is best for the company?” From a contingency management theory perspective, the answer is, “It depends.” It depends on the strategy, the changing marketplace, the competition, and the evolving needs and requirements of products and services. Generally, as Figure 3.3 illustrates, organizational structures have evolved from functional, vertical hierarchies to matrix and product-structural arrangements to organic (flexible and decentralized) networks, outsourced alliances, and teams (virtual and land-based).
Some degree of centralization and control are required to standardize products and/or services and to save and share costs, ensure quality and evenness, maintain control over errors, and increase profit margin—as was the case at Avon. Still, flexibility, integration, speed, and operational connectivity output are also required to streamline structures and meet changing customer demand. For these reasons, many firms that wish to establish accountability with flexibility move certain operations into strategic business units. These arrangements give units control over their own profits and losses, while coordinating strategy, revenue, and profit targets with the parent company.
Figure 3.3: Organizational structures
The evolution of changing organizational structures generally moves from simple to complex, stable to turbulent, and mechanistic to organic. There is no single organizational structure that is always right; the “fit” between an organizational structure and its environment depends on many factors, including the demands of the environment and an organization’s leadership, strategy, resources, and culture.
A chart that shows different organizational structures in history. The structure of the industrial era, 1890s–1950s, was a functional hierarchy, with the CEO at the top, and three VPs beneath him or her, and then several boxes beneath them. The technological era, 1960s–1980s, used a matrix structure, which also has the CEO on top and the three VPs beneath him or her, but then two teams (A and B) beneath them. More recently, organizations have used the networks and teams approach, where team A and B are both connected to the CEO, who is connected to design team A, which are both connected to the sales team and the manufacturing team. The figure also shows the continuum of organizational structure, going from mechanistic to organic. As organizations go from mechanistic to organic, the environment goes from stable and simple to turbulent and complex. The goals shift from efficiency and precision to innovation and change. Accountability goes from hierarchical control to economic performance. Motivation goes from security and equity to challenge and reward. Culture goes from orderly working relations to entrepreneurial freedom. The main problem changes from bureaucracy to disorder and risk.
Source: Based on Halal, W. (1994). From hierarchy to enterprise: Interval markets are the new foundation of management. Academy of Management Executive, 8(4), 70.
In Jung’s situation, the company had become too localized in its decision making and operations. The supply chain had splintered, and costs were spiraling out of control. Her task was to centralize the logistics while empowering managers to follow the new strategy based on cost savings, and to accommodate marketing to local country contexts.
In practice, larger multinational and global firms use a combination of structures—functional, product, divisional, matrix, and team—to take advantage of national and multidomestic competitive market and operations conditions. For example, large international firms like Coca-Cola and Procter & Gamble have used global matrix structures that standardize certain products across countries (a global matrix) but adapt some products for local country customer preferences (a global geographic structure). Strategies must meet environmental and customer demands while fitting with the organizational structures, cultures, and people internally to achieve required performance and remain competitive.
Whatever organizational structure is selected and aligned to the strategy, increasing use of information technologies is serving as the most rapid and relied on means of decision making. Bill Gates’s (1999) concept of the organization as a digital nervous system is still relevant to the ongoing integration of information technologies that link and transform companies’ strategic thinking and their customer interactions, basic operations, and business reflexes.
The Cisco sign outside of the company’s headquarters in California.
AP Photo/Kristoffer Tripplaar/Sipa USA
Cisco is an example of a company that practices what it develops, markets, and sells—interconnectedness.
Cisco Systems, a technology company that designs and sells networking and systems communications products and services, provides an excellent example of Gates’s concept. The company originally specialized in the enterprise (business) market but has since incorporated the home networking market. It practices what it develops, markets, and sells—interconnectedness. Cisco promotes innovation by combining and integrating knowledge workers with the company’s core competency—the technology and people it develops and acquires (Kochan, 1999).
It is important to remember that structure follows strategy. In the case of Avon, the strategy was to centralize the product manufacturing logistics, based on state-of-the-art IT and business process management leadership. Other situations may call for different strategies (for example, decentralizing authority and decision making) and structures. One can determine whether a new strategy is aligned with other organizational dimensions by asking people throughout the organization the following questions:
Can you state the organization’s overall guiding strategy?
Is the organization’s dominant strategy clearly communicated to you?
Does the organization’s strategy guide any of your work processes and results?
Are your skills related to the organization’s strategy?
Has your work, knowledge, or output changed as a result of the organization’s strategy?
Is there a consensus within the organization on the organization’s strategy?
Group and Individual Interventions
It is not easy to change behavior, attitudes, and mind-sets, as we saw when discussing resistance to change in Chapters 1 and 2. With regard to organizational change programs, Ford, Ford, and D’Amelio (2008) propose a different way to understand and deal with resistance. Rather than approaching change as irrational or as a dysfunctional reaction with the need to overcome resistance to it, these authors propose that change agents use resistance as a resource for change.
In this regard, the change agent’s job should involve taking responsibility for managing relationships with those who resist, and for the tactics of the change implementation. He or she should speak with resistors to understand why they are opposed to the change. This creates dialogue between the parties and can improve the agent–client relationship (Ford et al., 2008). Overcoming resistance, from this view, is not the aim; rather, it is important to engage the resister’s action, the change agent’s interpretations of the situation, and the organizational background—including the relationship between the resister and change agent. This dialogue seeks to get to the heart of what the resistance is about from all points of view.
Not all professionals will or should accept planned changes. Some individuals may find that the requirements and costs exceed their ability, willingness, and desire to change. However, organizations are often legally and ethically obligated to offer leaders, managers, and employees opportunities to learn, develop, and adapt to planned changes.
Interventions aimed at developing, retraining, and orienting individuals and groups to future organizational states include coaching and programs related to education, training, team building, communication skills, leadership and management, career development, problem solving, IT skills, and mentoring. Many change management skills and strategies are found in this text. Chapters 4 and 5 address the skills and mind-sets needed in agile and learning organizations.
Managing Change
Interventions That Change Business Processes
Suppose you are a leader at a consumer products company. The company survived the financial crisis but is struggling to maintain growth in the sluggish recovery. Customers are seeking improvements in service delivery, which will require more financial resources, but superior customer service is an integral part of the company’s vision.
The company facilitates online orders and ships from a centralized hub to destinations nationwide. Packing and shipping is a large part of the customers’ cost—sometimes rivaling the cost of the product itself. Change is needed to maintain the vision and answer customer demand. Leadership agrees that layoffs should be avoided as a means to boost financials; doing so can also protect employee morale.
After a gap analysis is performed, it is determined that improvements can be made in speed-to-market. Fellow leadership is on board, but you know that you must embody the change and continually seek their feedback and collective input to strengthen any change implementation.
Discussion Questions
What type of intervention would you perform in this scenario?
How would you creatively execute this type of intervention?
Aside from the main task at hand, what kinds of considerations should you keep in mind?
How will you manage resistance?
(See the end of the chapter for possible answers.)
Check Your Understanding
Consider a leader, manager, or CEO that you have worked with or have read about (not in this text) who helped implement an organizational change. What qualities did he or she possess? How did these qualities help or hinder his or her ability to promote change?
Explain each type of intervention that must be implemented with regard to an organization-wide change.
3.5 Managing Stakeholders: Politics, Power, and Collaboration
Transformational change inevitably involves competition and changes in the power balance between executives, groups, and employees. Change initiators and agents must have sufficient power to plan, implement, and sustain the organizational change. CEOs generally direct the transformation with the help of their core leadership team, as was discussed in Section 3.4. However, in larger organizations, as the change implementation plan cascades down and across the organization, different level managers and teams take charge and need different sources of power to be effective.
Developing Political Support and Using Power in Organizational Change
Greiner and Schein (1988) identified three major sources of personal power in organizations that are relevant to change agents: knowledge, personality, and the support of others. Besides having position power (power invested in the change agent’s place in the hierarchy—job title, status), those directing the change should also have knowledge, experience, and expertise in dealing with organizational change. Change agents use their expertise and knowledge to gather and analyze diagnostic data and information, write reports, and conduct formal and informal interviews and surveys. These are all legitimate methods in a “playing-it-straight” strategy for preparing and implementing change.
Two businessmen shake hands while their colleagues applaud.
Fuse/Thinkstock
Personality is a source of power. Charisma, reputation, and credibility can assist a change agent’s personal power in managing the political nature of change.
Enlisting the support of others in the organization is a second source of power for change agents. This power source involves individuals, groups, and other influential people. It also involves using social networks and coalitions to leverage change and resources for their own competitive advantage and to remove obstacles that prevent goal achievement (Greiner & Schein, 1988). It is critical to gain access to those who can help promote change.
Personality is a third source of power. Charisma, reputation, and credibility can help a change agent manage the political nature of change. A major strategy that can be used involves going around the formal system. Managers and employees who are liked have informal influence; those with good reputations can enact changes by using their personal legitimacy to circumvent bureaucracy, rules, and red tape. While this is an easy method, it may have negative and ethical consequences. Caution should be taken when using personal power to avoid the formal system.
Identifying and Influencing Major Stakeholders
Another step in preparing to manage the political dimension of change is to have the guiding planning coalition identify and then influence the change’s key stakeholders. Stakeholder analysis is one tool for this process (Freeman, 1984). This type of analysis does not involve creating an “us against them” stance; rather, it is a way to identify the key stakeholders in order to understand the issues related to the change that affect different individuals, groups, and work units. Involving different individuals across the organization in this process can keep it more objective. The following questions should be asked:
Who are the stakeholders (that is, people who have an interest) in supporting or resisting the change?
What are their stakes in either supporting or resisting the change?
What do the supporters stand to gain and lose from the change?
What do the resisters stand to gain and lose from the change?
What type(s) of power do the supporters have with regard to the change?
What type(s) of power do the resisters have with regard to the change?
What strategies can we use to keep the support of the supporters?
What strategies can we use to neutralize or win over the resisters?
Once the key stakeholders are identified, they can be mapped into supportive, nonsupportive, mixed-blessing, and marginal positions with regard to the planned change. Using the strategies of Savage, Nix, Whitehead, and Blair (1991) to assess and manage stakeholders (see Figure 3.4), a change agent and core team can gather information to inform influence strategies.
Figure 3.4: Stakeholder matrix
Each quadrant represents a stakeholder response to real and perceived threats and opportunities.
A four-quadrant graph charts the potential for stakeholders as a threat to change and the potential for stakeholder cooperation with change. There are four types of responses. Type one is the supportive response, which has a low level of threat to change and a high level of cooperation with change. The strategy here is to involve. Type two is the marginal approach, which has low levels of cooperation with and threat to change. The strategy here is to monitor. Type three is the non-supportive approach, which has a high level of threat to change and a low level of cooperation with change. The strategy here is to defend. Type four is the mixed blessing approach, with high levels of threat to change and cooperation with change. The strategy here is to defend.
Source: Savage, G., Nix, T., Whitehead, C., & Blair, J. (1991). Strategies for assessing and managing stakeholders. Academy of Management Executive, 5(2), 61–65.
For example, stakeholders who are supportive (type 1 in Figure 3.4) need to be involved so as to maintain and leverage their support when preparing for and implementing the change. Nonsupportive stakeholders require strategies from the change agents that defend the change. However, because the goal is to move as many stakeholders as possible into a supportive stance, it is feasible to use other strategies with nonsupportive people.
For those stakeholders who are marginal (type 2, those who show a low potential for cooperating with the change and are seen as a threat to it), a monitor strategy is suggested. Other strategies can also be considered to transform these fence sitters into supporters. Because mixed-blessing stakeholders (type 4) have a high potential of threat to the change and also a high potential for cooperation, a collaborative strategy could be used to move them to a supportive stance. When developing influence strategies with stakeholders, it is important to stress the new change’s vision, mission, and values. It is always important to keep a strategy’s ethical means and ends in mind. When managing the politics and power of any change process, the goal is to not hurt anyone and to respect everyone.
The HP example discussed in Section 3.3 illustrates how a stakeholder analysis might have prevented the controversy and confusion over whether the company should exit the PC business. Controversy was certainly swirling inside HP over whether to sell the PC business and adopt a “You bet the company” strategy on a software venture.
Leo Apotheker championed this type of strategy when he made the case for HP’s acquisition of the British software firm Autonomy for $10.3 billion. Apotheker directed HP to rely on its software business using its new consumer tablet, the TouchPad, and HP’s operating system WebOS, which was developed to compete with systems like Android (Steward, 2011). Apotheker attempted to move stakeholders to a type 1 supportive strategy. It seemed that members of HP’s board were moving between type 2 (marginal) and type 4 (mixed-blessing) positions with regard to Apotheker’s proposal.
There were also numerous stakeholders and influential observers who were firmly in the nonsupportive group. For example, when a former HP director and venture capitalist Tom Perkins heard that HP was buying the British software firm, he called it corporate suicide (Steward, 2011). A software executive reportedly said, “It was as if Alan Mulally left Boeing to join Ford as C.E.O., and announced six months later that Ford would be making airplanes” (Steward, 2011, para. 20). Other industry analysts, CEOs, and business media also weighed in heavily against Apotheker’s and HP’s strategy of moving completely out of its PC manufacturing business to a software one that would go head-to-head with Apple, Google, and other dominant players in that competitive space.
Without executing a thorough stakeholder analysis on this issue, the board—which had the most voting power—moved into the nonsupportive stakeholder position, ousted Apotheker, and brought in Meg Whitman, who kept HP manufacturing group.
Managing Conflict
Implementing change strategies involves conflict among and between people. Conflict within an organization can be productive and/or problematic. It often occurs between and among people who are competing over real or perceived resources, have differences of opinion or interpretations of facts, and/or experience relationship issues.
Conflict also refers to competition that “occurs between parties whose tasks are interdependent, who are angry with each other, who perceive the other party as being at fault, and whose actions cause a business problem” (Ohlendorf, 2001, “Understanding Conflict,” para. 1). Conflict can also be classified by its end result as either constructive or destructive and functional or dysfunctional. Constructive or functional conflict is progressive—the result is growth and change, with increased involvement and unity. Destructive or dysfunctional conflict, on the other hand, is regressive—the result is retreat and polarization, with a loss of morale unity (Ohlendorf, 2001).
A 2013 Stanford University/Miles Group study revealed that knowing how to handle conflict ranks as the most significant area of concern for CEOs (Larcker, Miles, Tayan, & Gutman, 2013). Almost 43% of CEOs surveyed gave “conflict management skills” the highest rating. CEOs are often tasked with difficult decisions that typically come with some level of conflict. Therefore, they must learn how to skillfully navigate conflicting agendas. Conflict is inevitable when managing stakeholders. Organizations must direct all parties toward constructive conflict to meet larger goals. This task requires foresight, situational analysis, and good communication.
Styles of Conflict Management
Figure 3.5: Five styles of conflict management
The five styles of conflict management are accommodating, avoiding, collaborating, competing, and compromising. Knowing one’s personal style and the styles of others increases the odds of arriving at a suitable solution.
A graph showing the conflict management style based on level of assertiveness and cooperativeness. Low assertiveness and low cooperativeness are characterized as having an avoiding conflict management style. High assertiveness and low cooperativeness constitute competing conflict management styles. A balanced level of assertiveness and cooperativeness is a comprising conflict management style. High assertiveness and high cooperativeness constitute a collaborating conflict management style. Low assertiveness and high cooperativeness constitute an accommodating conflict management style.
The accommodating style is a cooperative style of resolving conflicts in which one risks being taking advantage of or used at their own expense, since it may go against one’s goals and desired outcomes, depending on the other party’s motives and tactics. This approach works well when the other party is the expert or has a better solution. It can also be effective for maintaining future relations with the other party.
Source: Thomas, K., and R. Kilmann. (1977). Developing a forced-choice measure of conflict-handling behavior: The ‘MODE’ instrument. Educational and Psychological Measurement, 37, 309. Reprinted with permission from Sage Publications, Inc..
Thomas and Kilman’s (1977) classic five styles of managing conflict provides one of the most widely used and useful assessments for discovering organizational members’ dominant conflict management styles. Understanding your style and the style of those with whom you trying to resolve a conflict increases self-awareness and provides opportunities to explore resolution options. Read about the different styles in Figure 3.5 and then take the assessment to discover your dominant styles(s) at http://lnu.se/polopoly_fs/1.88249!thomas-kilman-conflict
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The avoiding style does not address an issue or problem. Neither party is likely to reach their goals. This style may be effective under the following conditions: (a) when an issue is trivial or when one cannot achieve her or his goals, (b) when resolving an issue is too costly, and (c) when the climate surrounding the issue is too emotionally volatile and one needs to pull back or withdraw. If an issue solves itself, a person or group may achieve their goal. However, using this strategy is not advised for the long term.
The collaboratingstyle involves cooperating with others to pursue a win–win solution. This style avoids win–lose methods and outcomes and is more effective with complex issues that may also require innovative solutions. Collaborating requires (a) high levels of trust from all parties and (b) more time and effort spent getting all parties to reach consensus. A downside is expecting too much from the process and expected outcome, while not achieving one’s desired goal. Still, this style is most recommended.
The competingstyle is a win–lose approach. It requires confronting and assertive goal achievement instead of cooperating with the other party. Winning may be at the other party’s expense. This style can be effective when (a) there is a crisis or emergency and time is a priority; (b) a quick, decisive solution is required; or (c) all parties agree that such an approach is needed.
The compromising style is a lose–lose approach in which neither party gets what they really want. Assertiveness and cooperation are required. This style may be effective when (a) a temporary outcome is needed and (b) when both parties have equally important goals. This style should be avoided as a preferred, automatic approach, and collaborating might work better to achieve goals.
Again, you have a better chance of finding a suitable solution if you are aware of your own style and the styles of those with whom you must negotiate, and if you apply the appropriate style to the situation.
The Drama Triangle
Destructive conflict is often evidenced through a “drama triangle,” as depicted in Figure 3.6. This triangle illustrates a pattern involving a “persecutor,” “victim,” and “rescuer” (Lloyd, 2001; Ohlendorf, 2001). While at first glance these three roles appear somewhat dramatic, leaders, managers, and employees can take on such attitudes and behavior patterns, particularly during stressful times.
Figure 3.6: The drama triangle
The drama triangle depicts the three roles within a conflict, and it begins with a victim or a persecutor.
A pyramid divided into four parts that show the three entities involved in an issue. At the center of the pyramid is the issue, with the three players surrounding it: the persecutor, the rescuer, and the victim. The persecutor exhibits aggressive behavior and initiates the attack. The rescuer exhibits either nonassertive or aggressive behavior and will not say “no.” The victim exhibits nonassertive behavior and encourages either rescuing or persecution.
Source: Based on Ohlendorf, A. (2001). Conflict resolution in project management. University of Missouri–St. Louis. Retrieved from http://www.umsl.edu/~sauterv/analysis/488_f01_papers/Ohlendorf.htm
A person takes on a persecutor role when they use aggressive behavior to initiate an attack against others who, in turn, can behave as victims. The victim’s nonassertive behavior encourages either persecution or rescuing. Victims are often characterized by feelings of helplessness, inadequacy, or guilt, which stem from stress or lack of confidence. These feelings occur when there is resistance or avoidance to change. Rescuers exert either aggressive or nonassertive behavior and become the rescuer because of their unwillingness to say no. This unwillingness allows them to champion the victim’s problem. Rescuers are typically compulsive and cannot resist trying to fix others’ problems, even if they are not asked to (Health Psychology Consultancy, 2012).
When managers identify these roles and understand how to manage each role player, they can resolve conflicts and even prevent conflicts from happening (Ohlendorf, 2001). When managing change in an organization, leaders should be on the lookout for already existing evidence of these roles, or who may be likely to fit into each.
Constructive Conflict
Because conflict cannot be avoided, it is important that organizations have a strategy for resolving it. Duncum (2010) suggests six steps to transform a conflict into something constructive:
Stop ignoring conflict; it won’t make it go away.
Act decisively to improve the outcome.
Make the path to resolution open and honest.
Use descriptive language rather than evaluative.
Make the process a team-building opportunity.
Keep the upside in mind. (paras. 6, 7, 9, 11, 13, 14)
Face-to-face discussion (often known as a confrontational approach to conflict resolution) is a mutually beneficial method. It is also infinitely more efficient and effective than simply ignoring a conflict. As Ohlendorf (2001) recognizes, this confrontational approach is best when parties mutually trust each other, when both need to win, when there is adequate time, and when learning is the both parties’ ultimate goal.
The second step—decisive action—helps prevent, respond to, or reconcile conflict quickly. This requires open and honest communication. All parties involved in the conflict should have input and the decision should be clearly communicated in a timely manner. Employees become eager participants in conflict management when they believe that working through conflicts can improve their productivity and advance their career (Duncum, 2010). Ohlendorf (2001) agrees, noting that all managers and leaders should pay attention to how employees perceive organizational justice so that they can promote more cooperative styles in conflict management.
Cooperative styles include confronting, compromising, and smoothing. The confrontational approach was mentioned previously—this is a win–win, face-to-face method for resolving conflict. The compromising approach involves a give-and-take negotiation in which each party must sacrifice in order to reach a mutual compromise. This approach is appropriate when time is limited and an initial agreement cannot be reached. The smoothing approach is more accommodating—areas of agreement, rather than disagreement, are the focus. While this approach is more cooperative, it does not always succeed in resolving conflict. It should be used if there is an overarching goal; if any solution will be adequate; or if the organization needs more time (Ohlendorf, 2001).
The final steps involve creating success momentum within the organization (Duncum, 2010). Success momentum is the result of effective conflict resolution, which can only be reached through positive words, good attitude, and effective team building. Descriptive, rather than accusatory, words facilitate cooperation and growth. Encouraging teamwork during conflict resolution can improve an organization’s interpersonal relationships and create a culture of resolution.
Facilitating Collaboration
Implementing a planned change involves more than leading and managing power, politics, and conflict; it also requires collaboration among individuals, groups, and external stakeholders. Collaboration is generally defined as communicating and working with others in pursuit of common goals. Leaders and managers are responsible for creating and enacting an environment, culture, and behaviors that demonstrate collaboration. Rosabeth Moss Kanter (2000) at Harvard University identified the following three intangible assets and leadership roles (concepts, competence, and connections) needed to master change:
The imagination to innovate: Effective leaders must help develop new concepts, ideas, models, and technology that distinguish organizations.
The professionalism to perform: Leaders can provide personal and organizational competence to deliver value to demanding customers while executing flawlessly with the support of the workforce.
The openness to collaborate: Leaders bring connections with partners who deepen the organization’s reach, add to its offerings, and energize its practices. (pp. 32–36)
Studies on collaboration by McKinsey & Company have suggested that accurately understanding who is actually collaborating in a company, and investigating how that interactive work is done, is the beginning of changing habits that hinder interaction and productivity (Manyika, Sprague, & Yee, 2009). Tools such as social networks, wikis, and video have helped increase companies’ interactions internally and with customers (Somaiya, 2015).
For example, Cisco Systems collaborates using different technologies to interact and improve productivity. The company mandated the use of its own video technologies and other collaboration tools to reach additional customers and business partners. The company replaced many in-person meetings with virtual interactions and embedded these practices in their policies and governance procedures. As a result, during an 18-month period, the shift in collaborative practices saved Cisco more than $100 million in travel and business expenses and decreased the company’s carbon emissions by 24 million metric tons. The company also showed that 78% of the targeted employees felt that their lifestyles improved and their productivity increased, while customer satisfaction was maintained (Manyika et al., 2009).
Mastering deep change (being first with the best service, anticipating and meeting new customer requirements, and applying new technology) requires companies to be more than mere adapters to change (Kanter, 2002). Organizations have to be quick thinking, intuitive, and innovative. To help organizations meet these challenges, leaders cannot only be monitors of their organizations; they must also monitor their external realities and environments (Kanter, 2002).
Leaders must employ the following skills to implement, sustain, and collaboratively master change for their organizations:
Tune in to their environments: create networks of listening posts—joint ventures, satellite offices, and community service.
Challenge the prevailing organizational wisdom: develop kaleidoscope thinking—i.e., question assumptions and construct patterns of how their organizations fit with the marketplace and community.
Communicate a compelling aspiration: communicate a change that has not happened and that requires more than selling the vision. Leaders must have real conviction and communicate an aspiration that they genuinely believe.
Build coalitions: involve influential people who have political clout and resources. Leaders must identify and win over key supporters, opinion shapers, value leaders, and other experts.
Transfer ownership of a working team: get a coalition in place to drive the change. Leaders must then continue to be involved to encourage, support, coach, and provide resources to the team, while allowing people to explore new possibilities that are not costly.
Learn to persevere: leaders must not stop too soon in the change transformation. To embed the change, leaders must continue to monitor the environment, check assumptions, question whether the change is the right one, and stay involved.
Make everyone a hero: recognize, reward, and celebrate progress and accomplishments. Change is ongoing. If change is effectively implemented, it can be sustained if leaders encourage and recognize the talents, skills, and energies of the people who made and continue to make the change happen. (Kanter, 2000, pp. 32–36)
In addition to creating an environment of collaboration, responsibly leading and managing stakeholders internal and external to organizations have become both a part of a competitive advantage and the right thing to do, as the following section shows.
Ken Lay, former CEO of Enron, is led away in handcuffs.
AP Photo/Michael Stravato
Former CEO of Enron Ken Lay was found guilty of committing one of the biggest financial frauds in U.S. history. He died of an apparent heart attack while awaiting sentencing.
Managing Stakeholder Responsibilities
The 2007–2009 global financial meltdown was precipitated by unregulated activities from financial institutions and individual traders. It showed that corporate change was needed not only for competitive reasons but to also curb, recuperate from, and prevent such illegal and unethical losses. Greed and power can lead to misuse and abuse of employee pensions and livelihood, investors’ trust, and the public’s confidence. The entire global economy is at stake.
Looking back to the early 2000s, the scandals of some of the most prestigious U.S. firms (such as Andersen Consulting, Tyco, WorldCom, and Enron) clearly illustrated the need not only for internal controls over financial operations and strategic direction, but also external controls from the SEC as well as other government agencies (Weiss, 2014). Turnarounds, reorganizations, and restructuring—as well as bankruptcies and prison terms of several executives—are among the types of transformational changes that have occurred in the aftermath of these scandals.
The following questions can be used to discover the extent to which leaders and employees legally, ethically, and competitively manage their organizations and stakeholders. The criteria can also be used to review an organization’s governance procedures based on ethical and legal principles:
Do the top leaders believe that key stakeholder and stockholder relationship building is important to the company’s financial and bottom-line success?
What percentage of the CEO’s activities is spent building new and sustaining existing relationships with key stakeholders?
Can employees identify the organization’s key stakeholders?
What percentage of employee activity is spent building productive stakeholder relationships?
Do the organization’s vision, mission, and value statements identify stakeholder collaboration and service? If so, do leaders and employees talk the talk of these statements?
Does the corporate culture value and support participation and open and shared decision making and collaboration across structures and functions?
Does the corporate culture treat its employees fairly, openly, and with trust and respect? Are policies employee-friendly? Are training programs on diversity, ethics, and professional development available and used by employees?
Are there collaboration and open communication across the organization?
Are open, collaborative, and innovative ideas rewarded?
Is there a defined process for employees to report complaints and illegal or unethical company practices without risking their jobs or facing retribution?
Does the strategy of the company encourage or discourage stakeholder respect and fair treatment? Is the strategy oriented toward the long or short term?
Does the structure of the company facilitate or hinder information sharing and shared problem solving?
Are the systems (such as human resources, information, rewards, finance, and legal) aligned around a common purpose or are they separate and isolated?
Do senior managers and employees know what customers want, and does the organization meet customer needs and expectations (Weiss, 2014)?
Annual surveys of the world’s most ethical companies (Ethisphere, 2015) list more than 132 companies in over 50 industries spanning 21 countries and 5 continents. In 2015, the survey’s 9th year, 15 companies had made the list every year, and there were 11 first-time honorees (Ethisphere, 2015). Some of the most ethical companies at present include Gap; Levi Strauss; PepsiCo; L’Oréal; 3M Company; Cisco Systems; and Starbucks.
Check Your Understanding
Identify your style of conflict management. How can this knowledge help you resolve conflicts with others?
Why is collaboration important to an organization’s need and ability to successfully implement change initiatives?
Summary and Resources
Chapter Summary
Implementing planned organizational change is partly a science, partly an art. It has also become a desired skill set—and mind-set—needed by most companies, regardless of industry, size, and geographic location. Although experience is important in this endeavor, it is necessary to know and use classic and contemporary wisdom from models, road maps, and frameworks. CEOs and practicing managers hire coaches and consultants who specialize in change management to help diagnose, plan, and implement individual, group, and organizational changes. This chapter introduces the art and knowledge of implementing change.
Building on the first two chapters, we view a big-picture change road map showing how three CEOs (Mulally at Ford, Bossidy at AlliedSignal/Honeywell, and Jung at Avon) used coaches, theory, expertise, knowledge, and courage to successfully transform companies that were financially, operationally, and strategically in trouble. We show how change champions can use these same skills and capacities, which include visioning, developing a mission, articulating new values, motivating change, developing political support, mapping and managing stakeholders, and leading the actual transition.
To effectively lead and manage the implementation process, it is important to (a) keep the big picture in mind, (b) choose the right interventions, (c) use a sound change model to plan and manage the change process, (d) keep people engaged and make the incentive for change greater than the incentive to stay the same, and (e) identify and manage resistance to change. This involves understanding how to align an organization’s new vision, mission, and values to fit its strategy, culture, people, structure, and operating systems—as exemplified in the stories of Mulally, Bossidy, and Jung. These CEOs also had to change their own mind-sets—they became the change they expected of those whom they led.
The chapter also discusses what is involved in assigning individuals and structuring and teams to help drive the change. This involves selecting a sponsor from the organization who can be trusted and who is able to oversee the entire change process. Then, an executive team must be recruited to educate, communicate, motivate, and manage detail activities to realize the new vision. Finally, we discuss how to effectively lead and manage internal and external stakeholders during the implementation process. This requires recognizing and dealing with politics, power, and conflict to ensure ethical and collaborative cultures and practices in all change efforts.
Learning Objectives Recap
Upon identifying the initial need for change, the nine steps in the road map for change are as follows: (a) prepare to lead the change; (b) create organizational vision, commitment, and capability; (c) assess the situation to determine design requirements; (d) design the desired state; (e) analyze the impact; (f) plan and organize for implementation; (g) implement the change; (h) celebrate and integrate the new state; and (i) learn and course correct.
Cummings and Worley’s (2001) five dimensions of leading and managing change include motivating change, creating a vision, developing political support, managing the transition, and sustaining momentum. Motivating change involves creating readiness and overcoming resistance to change. Creating a vision incorporates mission, outcomes, conditions, and goals. Developing political support means convincing those in power to get on board with the change. Managing the transition involves activity planning, commitment planning, and management structures. Finally, sustaining momentum is about providing resources for change, building a support system for change agents, developing new competencies and skills, and reinforcing new behaviors.
Implementation is the integration of intent, people, and delivery. Intent is the defined, shared vision. People are the human resources needed for the change. Delivery involves governance, reporting, and resource allocation. The integration of these components aligns the major dimensions of the organization to the new vision. Once good leadership and vision have been established, the organization should be aligned to the change strategy. In order to achieve the new vision, a shift in organizational culture is often necessary. Finally, the organization’s systems and processes must also be aligned to the vision and strategy. These components are interrelated, and the leader must align all aspects of the organization to achieve the most effective change.
Leadership roles include sponsor, executive team, leadership change team, and change consultant and project team. The sponsor is the highest line of authority and the primary source of communication, direction, and coordination. The executive team is made up of organizational senior managers who authorize and fund the change requirements and maintain operations. The leadership change team is a cross-functional team that works with the executive team to develop the change strategy and model the roles. Finally, the change consultant and project team deals with the process and technical aspects of the change, integrating design and implementation of change activities. A successful change leader is highly competent, well positioned to lead change, well-respected and well-liked, trusted by others in the organization, and has a history of accomplishments related to the organization’s mission. The types of interventions used in change interventions include reinventing the leader as change champion; reinventing a supply chain and culture; altering the company’s structure; changing roles, relationships, and people; implementing new strategies and structures; and changing groups and individuals.
Stakeholders can often make or break a change implementation effort. Good change leaders recognize the importance of influencing stakeholders toward the change efforts. Conflict often exists through resistance to change and must be carefully and appropriately managed to unite all efforts toward the change. Collaboration is the cooperative efforts taken toward common goals. Change cannot be successfully implemented without collaboration. It is a planned effort that requires commonality and unity of purpose. Good collaboration involves tuning in to the environment, challenging the prevailing organizational wisdom, communicating a compelling aspiration, building coalitions, transferring ownership of a working team, learning to persevere, and making everyone a hero.
Discussion Questions
If you were asked to share some key points about what a team charged with implementing a transformational organizational change in a large company could expect from the implementation stage, what would you say? (Identify some key points about implementation that you would offer, based on this chapter.)
Discuss what needs to be aligned in an organization, and why, for a significant organization-wide change to successfully occur.
Describe some key roles, relationships, and responsibilities that an organization needs to assign to a significant change in order for it to be planned and implemented. If you had to assume one of those roles, which would it be and why?
What should an organization’s leader(s) know about power, conflict, and collaboration before planning and implementing a large-scale change? State what you would say to inform the leaders on this matter.
If the CEO of a small company asked you to help lay out a rough plan to implement a change, what would you suggest, based on your knowledge after reading this chapter?
A medium-sized nonprofit is highly politicized—numerous groups compete and argue among each other for resources and control. The organization’s director approaches you to help him figure out a way to plan and implement a change that could avoid much of the backstabbing and politics. What suggestions would you offer, based on what you learned from this chapter?
Discuss ways to help an organization’s change committee plan an implementation that would follow ethical and legal procedures.
Describe how your dominant conflict resolution style(s) would both enable and hinder you from effectively working on a large change management project. Then, describe how you could strengthen your capacity for conflict resolution.
Key Terms
accommodating style
A cooperative style of resolving conflicts that is effective when the other party is the expert or has a better solution. It can also be effective for preserving future relations with the other party.
avoiding style
A style of conflict resolution that does not address an issue or problem. Neither party reaches their goals. This style may be effective under these conditions when an issue is trivial or when a party cannot achieve his or her goal, when resolving an issue is too costly, and/or when the climate surrounding the issue is too emotionally volatile to get involved.
collaborating style
A conflict resolution style that requires trust and promotes a win–win approach and results. This style works with complex situations and issues that may require innovative solutions.
collaboration
The process of working with others to produce more value-added results.
competing style
A conflict resolution style that requires a win–lose approach, in which a party is constructively confronting and assertive in achieving her/his goal without the cooperation of the other party.
compromising style
A lose–lose conflict resolution approach in which no one gets what they really want. Assertiveness and cooperation are required. This style may be effective when a temporary outcome is needed and/or when both parties have equally important goals.
conflict
Competition among interdependent parties, involving anger and the perception of fault, which creates a business problem.
decisive action
The second step of conflict resolution, involving quick action taken to prevent, respond to, or reconcile conflict.
hard goals
Measurable goals, often with visible results, like performance measurements.
interventions
Specific planned activities and events that are aimed at helping an organization increase its effectiveness.
process
A set of tasks, events, and communication that organizes and combines everything necessary to deliver an important component of value.
process owner
The employee given the responsibility and accountability for performing a complete and integrated process.
soft goals
Goals like employee initiative and communication that are often difficult to measure and not highly visible or tangible.
vision
The combination of an organization’s mission or purpose, its core values, and its aspirations for the future.
Additional Resource
For more on change and Avon http://fortune.com/2012/04/11/avon-the-rise-and-fall-of-a-beauty-icon
Managing Change Sample Answers
Managing Change—Mapping the Road for Change
In recognizing that economic conditions, customers’ disposable income, and labor markets are always changing, the plan needs to be flexible so the company can keep up with customer demands. Any change strategy needs the unwavering commitment of leadership, and their persistence to push forward to get the job done. Pooling together the collective intelligence of the company’s managers and top performers will make the change effort that much stronger.
There is typically a “wake-up call” event that convinces leadership a change is in order. This event varies for each company. The first step in designing a transformational organizational change is to arm yourself with information. Consider the circumstances of the situation from all angles, and dive into the research—details, numbers, and so on—to create a business case for the change that can be reported to the board if applicable. Ensure the company has the capability to enact change and create infrastructure that supports it.
As mentioned earlier, commitment and perseverance are paramount, not only to the completion of the effort but to set the “tone at the top” for employees to emulate. This requires aligning C-suite members and managers to ensure everyone is on the same page and has the same goal for the company. Just as market conditions change, so must the change effort be an ongoing one. Remember: change is not an event, but a process. You must continue to evaluate capabilities and the status of the steps along the way—the change effort is only as good as the solid completion of the steps before it.
While employee engagement is always a concern, it is paramount when leading an organization through a transformational change. Soliciting input and feedback from managers—who in turn solicited it from their reports—adds to the information gathering process and helps illuminate the realistic conditions the company is experiencing. Debrief managers and employees along the way; involving them will make them feel a part of the change and help them recognize how their daily tasks contribute to the company’s survival. The change process will be strengthened if everyone contributes in their own way. Of course, open and transparent in communication is key.
Managing Change—The Specifics of Alignment
Stalwart values are what inform your vision. The vision is composed of three elements: mission, values, and aspirations for the business. The values should never change, but the operations and processes to achieve them should be ever changing.
Change starts with leadership. Make sure you have leaders in place that can support the change. Make the vision palpable throughout the organization—having the right leaders is an important part of doing this. Use the vision to inform the strategy, and align the culture and processes to make sure all of the organization’s components are working together to realize the vision and maintain the company’s core values. Evaluate the processes first to see how well they will work for the new vision, and improve from there.
Aligning an organization’s culture involves clarifying the way forward and creating opportunities to put the plan into action. Supporting creativity and innovation will energize employees to forge new paths and innovate new ways of doing things. Motivating employees doesn’t always have to involve money—recognizing achievements and rewarding employees with new leadership opportunities can foster engagement. Develop champions of change to engender an almost grassroots involvement in company goals and achievements. Pay careful attention to the process of changing current business practices—mismanaging the change process can reduce morale.
Never neglect good communication—keep lines open. A vague vision and a perceived reluctance on the part of leadership to communicate strategy to mobilize all employees from the top down can foster negativity and demoralization. Soft goals that are related to talent management should be kept as a part of the change process. Integrate silos to foster synergy.
Managing Change—Interventions That Change Business Processes
Speed-to-market involves structural intervention including enhancements or changes in the supply chain, inventory, and systems used to complete service requests.
Some ideas include redesigning shipping to cut down on wasted interior box space and the packing used to fill that space. That type of change might provide a cost reduction that could be passed on to consumers (in the form of reduced shipping costs). In addition, rather than shipping from one centralized location nationwide, the company could contract with third-party logistics suppliers to store inventory at secondary facilities. This might reduce shipping costs for customers and shorten the amount of time it takes for the product to leave the facility and reach its destination.
Major changes of this type can only be implemented with a healthy amount of resources, which means the leader must maintain his or her relationships with vendors, employees, the board (if applicable), and investors. Communicating the importance of the change and the benefits it will produce to all stakeholders will help facilitate the change process.
Owning the change process and any hits or misses that come with it can strengthen your credibility with detractors. Allowing for open dialogue to get to the root of the resistance is more productive than seeking to fix any smaller problems that have resulted from dissension. It makes sense to try to understand all angles of the resistance and acknowledge that it is somewhat natural; it is also wise to view resistance as an opportunity. Companies should ideally always be ready to respond to resistance and be able to aid stakeholders, employees, and managers in adapting to change.

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