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Organizational Change

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Organizational Change

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What doesn't kill you makes you stronger. In the past decades, hundreds of organizations, including government sectors, small companies, and large MNCs, have attempted to make change to themselves. Some succeeded, but many failed. In this presentation we discuss the nature and process of organizational change. We use text book models and explain them with real cases. The presentation end with the case that Starbucks return to its root, adapted from Robbins' "Organizational Behavior 15ed."

What doesn't kill you makes you stronger. In the past decades, hundreds of organizations, including government sectors, small companies, and large MNCs, have attempted to make change to themselves. Some succeeded, but many failed. In this presentation we discuss the nature and process of organizational change. We use text book models and explain them with real cases. The presentation end with the case that Starbucks return to its root, adapted from Robbins' "Organizational Behavior 15ed."

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Organizational Change

  1. 1. Organizational  Change Waseda  Business  School  Global  MBA  2015   Organizational  Behavior  Seminar   Instructor:  Prof.  Norihiko  Takeuchi   Facilitator:  William  (  LIU,  Shih-­‐Wei  )  
  2. 2. The  Adaptation  in  Nature Source:  Taiwan  Mountain   Magazine,  issue  90  
  3. 3. How  Many  Moths  Are  in  the  Picture? Source:  Taiwan  Mountain   Magazine,  issue  90  
  4. 4. “It  is  not  the  strongest  of  the  species   that  survives,  nor  the  most  intelligent,   but  the  one  most  responsive  to  change.  “   —Charles  Darwin,  The  Origin  of  Species,  1859    
  5. 5. The  Nature  of  Change Source:  CartoonStock
  6. 6. The  DeXinition  of  Organizational  Change •  Any  alterations  in  the  people,  structure,  or  technology  of   an  organization   –  Ex:  Total  Quality  Management,  Reengineering,     Rightsizing,  Culture  Change,  Turnaround   •  Any  change  in  an  organization  may  have  effects  extending   beyond  the  actual  area  where  the  change  takes  place.   –  Ex:  When  Northrop  Grumman  installed  a  new   automated  production  system,  employees’  training,   compensation  system,  and  recruitment  criteria  are   also  changed Stephan  Robbins,  Mary  Coulter,  Management  9th  ed.   Ricky  GrifXin,  Fundamentals  of  management  5th  ed.
  7. 7. Source:  Northrop  Grumman  webpage   <www.northropgrumman.com> Automa'c   Produc'on Employee   training Compensa'on   system Recrui'ng   criteria   Quality   control
  8. 8. Forces  For  Change Nature  of  the   Workforce •  More  cultural  diversity   •  Increased  immigration  and  outsourcing Ex:  Expatriate   management Technology •  Mobile  computers  and  handheld  devices   •  Emergence  and  growth  of  social  networking   sites Ex:  E-­‐commerce Economic   Shocks •  Financial  crisis   •  Global  recession Ex:  Bankruptcy  of  GM Competition •  Global  competitors   •  Mergers  and  consolidations   Ex:  Merger  of  Daimler   and  Chrysler     Social  Trends   •  Increased  environmental  awareness   •  Liberalization  of  attitudes  toward  GLBT Ex:  Rise  of  the  same-­‐ sex  marriage World  Politics •  Rising  health  care  costs   •  Opening  of  markets  in  China Ex:  NIKE  outsource   production  to  China Stephan  Robbins,  Mary  Coulter,  Organizational  Behavior  15th    ed.  
  9. 9. Planned  Change  or  Reactive  Change •  Things  just  happen   •  Planned  Change   –  Activities  that  are  intentional   and  goal  oriented   •  Goals  of  Planned  Change   –  Improving  the  ability  of  the   organization   –  Changing  the  behavior  of   groups   Jeff  Bezos,  CEO  of  Amazon   Source:  Newscom.
  10. 10. Resistance  to  Change   •  The  force  resists  the  change  and  maintains  the  status  quo.   •  Resistance  to  change  can  be  positive  if  it  leads  to  open   discussion  and  debate.   “You've  written  a  bold  and   innovative  proposal.   Unfortunately,  it  challenges   the  status  quo  and  that  can   jeopardize  my  job.” Source:  CartoonStock
  11. 11. SHRM  Aging  Workforce  Survey 36%   20%   19%   13%   6%   5%   2%   Beginning  to  examine  internal  policies  and  management  prac'ces  to   address  this  change   Have  examined  our  workforce  and  determined  that  no  changes  in   our  policies  and  prac'ces  are  necessary   Just  becoming  aware  of  this  poten'al  change   Not  aware  of  this  poten'al  change   Have  implemented  specific  policies  and  management  prac'ces   Have  proposed  specific  policy  and  management  prac'ce  changes   Have  agreed  on  a  plan  to  change  policies  and  management  prac'ces   Source:  SHRM  Aging  Workforce  Survey:  State  of  Older  Workers  in  U.S.  Organizations      
  12. 12. Types  of  Resistance Explicit Implicit Voicing  complaints,  engaging  in  job   actions   Loss  of  employee  loyalty  and   motivation,  increased  errors  or   mistakes,  increased  absenteeism   “The  Xirst  order  of  business  is   the  problem  of  absenteeism.” “We  like  status  quo.” Source:  CartoonStock
  13. 13. Source  of  Resistance  to  Change •  Uncertainty   –  Employees  worry  about  their  ability  to  meet  new  job   demand,  think  job  is  insecure,  and  dislike  ambiguity.   •  Threatened  Self-­‐Interests   –  A  change  might  diminish  some  managers’  power.   •  Different  Perceptions   –  Employee  resist  because  they  do  not  agree  with  top   managers’  perception  of  the  situation
  14. 14. Kraft’s  Takeover  of  Cadbury Cadbury Kraft Entrepreneurial  company  with  great   autonomy  given  to  managers. Did  not  keep  the  promise  of  keeping   plants  opened.   A  formal  and  hierarchical    food  Giant. Source:  Daily  Mail,  UK
  15. 15. Overcome  the  Resistance Education  and   Communication   Show  those  effected  the  logic   behind  the  change   Ex:  Caterpillar  educates  the   change  very  often Participation Participation  in  the  decision   process  lessens  resistance   Ex:  3M  encourages  employees   to  participate  change  events Building  Support   and  Commitment Counseling,  therapy,  or  new-­‐skills   training   Ex:  GM  provides  relocation  and   retraining  during  plant  closing Develop  Positive   Relationships People  are  more  willing  to  change   if  they  trust  the  managers Ex:  Frequent  visiting  the   subordinate   Implementing   Change  Fairly   Be  consistent  and  procedurally   fair   Ex:  Meet  the  promises Manipulation  and   Cooptation “Spinning”  the  message  to  gain   cooperation Ex:  GM  convinces  Union  by   promising  employee  beneXits   Selecting  people  who   accept  change Hire  people  who  enjoy  change  in   the  Xirst  place Ex:  GE  replaced  12  out  of  14   top  managers  during   restructuring Coercion Direct  threats  and  force Ex:  Power  of  persuasion  
  16. 16. The  Process  of  Change Source:  ServiceMaster,  Newscom.
  17. 17. Lewin’s  Three-­‐Step  Model •  Unfreezing  the  status  quo   •  Changing  to  a  new  state   •  Refreezing  to  make  the  change  permanent   Stephan  Robbins,  Mary  Coulter,   Organizational  Behavior  15th    ed.   Stephan  Robbins,  Mary  Coulter,  Management  9th  ed.  
  18. 18. John  P.  Kotter:  Why  Transformation  Efforts  Fail? Not  establishing  a  great  enough   sense  of  urgency Too  many  managers  but  no  leaders   Needs  75%  of  the  managers  be  convinced Not  creating  a  powerful  enough   guideline  coalition Underestimate  the  difXiculties   Oppositions  can  gather  and  stop  the  change Lacking  a  vision Without  a  vision,  a  transformation  effort  can   dissolved  into  confusion  and  misdirection Under  communicating  the  vision The  change  startle  if  no  people  understand Not  removing  obstacles  to  the  new   vision Organizational  structure:  Narrowed  job  design   Individual  interest:  Compensation  or  appraisal Not  systematically  planning  for  of   creating  short-­‐term  wins Time  make  people  loss  momentum  to  change     Shorten  wins:  12-­‐24  months Declaring  victory  too  soon Declare  the  war  won  too  early  is  catastrophic Not  anchoring  changes  into  culture Unless  rooted,  changes  are  easily  degradable John  P.  Kotter,  Harvard  Business  Review,  Jan.  2007  
  19. 19. Declaring  Victory  Too  Soon Source:  Troy  (Movie),  International  Movie  Database
  20. 20. Jim  Kilts  Made  Change  to  Gillette   Revise  the  appraisal  system Setup  appraisal  system  according  to  job  description.   The  evaluation  should  be  run  quarterly  or  annually. Flatten  the  organizational   structure Remove  hierarchy  to  facilitate  communication. Communication Chairman’s  page  and  video  presentation  distributed  to   all  employees. Participative  management Weekly  staff  meetings  and  overseas  visiting. Refer  to  “Gillette  Company  (B):  Leadership  for  Change”   Jim  Kilts,  Former  CEO  of  Gillette
  21. 21. •  First  day:   –  Operating  committee  staff  meeting   –  Communicate  his  style,  philosophy,  expectations,  and  management  process   –  Promising  no  lay-­‐off  but  emphasize  performance   •  First  week:   –  Communicate  the  Circle  of  Doom  to  rise  the  sense  of  urgency   –  Start  one-­‐on-­‐one  meeting  with  managers   •  First  Month:   –  Deliver  video  presentation  and  chairman's  page   –  Setup  short-­‐term  agenda  and  quarterly  priorities   –  Change  the  organizational  structure     Refer  to  “Gillette  Company  (B):   Leadership  for  Change”  
  22. 22. Kotter’s  Eight-­‐Step  Plan Establish  a  sense  of  urgency Identify  crisis,  potential  crisis,   or  major  opportunities Ex:  Jim  Kilts’  “Circle  of   Doom” Form  a  powerful  coalition Assemble  a  team  with  enough   power  to  lead  the  change Ex:  Set  “international   operating  ofXice” Create  a  new  vision Create  a  vision  and  set   strategies  for  the  vision Ex:  Jim  Kilts’  “My  Vision  and   My  style” Communicate  the  vision Using  very  vehicle  possible Ex:  Speech,  meeting,  video,   and  webpages Empower  others  to  act  on  the   vision  by  removing  obstacles Remove  barriers  undermine  the   changing  efforts Ex:  Removing  layers  and   hierarchies   Plan  for,  create,  and  reward   short-­‐term  “wins” Visible  performance   improvements  and  reward  it Ex:  Month-­‐>Quarter   -­‐>Annual  goal Consolidate  improvements  and   make  adjustments Reinvigorating  the  process  with  new  goal Reinforce  the  change Articulate  the  connection  between  new  ways  and  success John  P.  Kotter,  Harvard  Business  Review,  Jan.  2007;  Gillette  Compnay  (B),  Harvard  Business  School  Case  
  23. 23. Action  Research •  A  change  process   •  Based  on  the  systematic  collection  of  data   •  Selection  of  a  change  action  based  analysis Diagnosis Change  agent  collect  information,  concerns,  and   needed  changes  from  members   Analysis Make  information  into  primary  concerns,  problems,   and  possible  actions Feedback Share  with  employees  what  has  been  found.  Facility   employees  to    develop  action  plans Action Employees  and  change  agents  carry  out  actions   Evaluation Evaluate  the  effectiveness  referring  to  the  initial  data   Stephan  Robbins,  Mary  Coulter,  Organizational  Behavior  15th    ed.  
  24. 24. Organizational  Development •  Techniques  and  programs  to  change  interpersonal  work   relationships   •  A  planned  to  increase  organization’s  effectiveness  and  health OD  Concerns  Values Respect  for  people Individuals  are  respected  and  treat  with  dignity Trust  and  support Need  a  trusting,  authentic,  open,  and  supportive   climate Power   equalization Eliminate  hierarchies  and  control Confrontation Problems  should  be  openly  confronted Participation To  make  people  commit  to  change Stephan  Robbins,  Mary  Coulter,  Organizational  Behavior  15th    ed.  
  25. 25. Organizational  Development  Techniques Sensitivity   Training Members  discuss  themselves  and  their   interactive  processes  in  a  free  and  open   environment,  facilitated  by  a  behavioral   scientist. Ex:  Benedictine  University’s   OD  team  help  Abbott  realign   culture  with  mission  and   value   Survey  Feedback Identifying  discrepancies  among  member   perceptions  via  surveys Ex:  KJ  Associate  help  a  school   identify  issues  in  education Process   Consultation  (PC) Process  consultants  observe  group   member's  interaction  and  provide   suggestions Ex:  Avid  Work  help  client   accelerate  product   development  cycle Team  Building Using  high-­‐interaction  group  activities  to   increase  trust  and  openness  among   members Ex:  Partnering  Resources   help  to  facilitate  executive   team  develop  new   approaches Intergroup   Development Increase  cross-­‐function  or  cross-­‐group   interaction  and  understanding Ex:  Communication  between   IT  and  other  departments Appreciative   Inquiry  (AI) Emphasis  group’s  success,  via  discovery,   dreaming,  design,  and  destiny Ex:  WorldsView  used  AI  to   create  shared  value Organization  Development  Network  <http://www.odnetwork.org>  
  26. 26. Change  and  Innovation Source:  Evan  Williams  (leO),  founder  of  TwiSer,   New  York  Time.
  27. 27. DeXinition  of  Innovation •  A  new  idea  applied  to  initiating  or  improving  a  product,   process,  or  service   Invention Innovation The  introduction  of  new  product,   process,  or  service   Improves  or  makes  a  signiXicant   contribution  to  an  existing  product,   process  or  service Ex:  Introduction  of  electrostatic  cloth Ex:  P&G  used  electrostatic  cloth  to  make   Swiffer  mop Source:  P&G
  28. 28. Stimulate  Innovation •  Structural  variables   –  Organic  structures   –  Long-­‐tenured  management   –  Slack  resources   –  Internal  communication   •  Experimental  Culture   •  Training  and  Development   Idea  Champions   Individuals  who  take  an   innovation  and  actively   promote  the  idea  
  29. 29. Jack  Welch  Made  GE  a  Learning  Organization Bureaucracy  and   Centralized     Self-­‐learning  and   Innovative   Leadership   Strong  commitment  and   team-­‐leading  capability   Followership   Achievement  driven   and  Agree  to  the   standards     Human  Resource  Systems   Strong  recruitments,  supportive   training  sessions,  effective   appraisal  system   Source:  GE:  Two  Decades  Transformation,  Harvard  Business  School  Case Jack  Welch,  Former  CEO  of  GE
  30. 30. To  Build  a  Learning  Organization Establish  a   Strategy   Make  explicit  its   commitment  to  change   Ex:  Hands-­‐on  appraisals  and   continuously  releasing   initiatives   Redesign  the   Organization’s   Structure   Flatten  the  structure  and   use  cross-­‐functional   systems   Ex:  Eliminating  layers  and  use   workshop  for  cross-­‐functional   coordination   Reshape  the   Organization’s   culture   Supportive   Taking  risks  and  admitting   failure   Unlock  the  real  openness   Ex:  Training  sessions,   reemphasize  the  openness,  and   frequently  aligning  people  with   the  learning  culture   Source:  Based  on  P.  M.  Senge,  The  Fifth  Discipline  (New  York:  Doubleday,  1990).
  31. 31. Starbucks:  Return  to  Its  Roots
  32. 32. Starbucks  Facing  Fast  Extension  During  2006 •  Starbucks  went  from  just  11  stores  in  1987   to  2,600  in  the  year  2000   •  Howard  Schultz:  “An  aura.  A  spirit  was   missing.  The  stores  were  lacking  a  certain   soul.”  “Take  the  culture  back.”   •  Afterward:    Sales  declined  and  bout  100   store  openings  being  canceled  and   hundreds  more  stores  being  closed.   •  A  bold  move:  All  7,000  Starbucks  stores   were  closed  for  a  single  afternoon  as  part   of  a  training  effort  of  135,000  baristas. Howard  Schultz,  chairman  and  CEO  of   Starbucks
  33. 33. Thank  You  for  Listening!

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