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Managing Change

By Anthony Coppel

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What will be covered?• Definition of Change Management:

What it is and what it is not (slides 3-5)

• Thinking Exercise (slide 6)

• The Basic Elements of Change Management (slides 7-11)

• The Phases in Change Management (slides 12-19)

• A real-world Example (slides 20-26)

• Practice (slide 27)

• Summary (slide 28)

• Readings (slide 29)

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Look at the whole puzzle:

What is Change Management?

• Process, tools and techniques to– manage people-side of change processes– achieve the required outcomes– realize the change effectively within

• the individual change agent

• the inner team

• the wider system

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Major Barriers to Effective Organizational Change

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7 Myths that Undermine Effective Change

• Myth 1: It’s really not that big of a change.• Myth 2: This isn’t personal.• Myth 3: We don’t have to involve them.• Myth 4: We have smart people, they can figure that out.• Myth 5: We will figure it out as we go.• Myth 6: They are employees, they should just get on board.• Myth 7: My boss understands why I am doing this.

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Thinking Exercise

• Think of the most difficult change you’ve recently gone through in your work life.

• Briefly describe your first reaction and subsequent reactions (evolution) to this change. Was it positive? If not, why?

• Identify at least one thing that you wish you’d done differently while going through this change.

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3 Fundamental Pieces of the Puzzle

• The environment scanning• Five basic elements• Three roles of the leader

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Piece n°1: the environment

ENVIRONMENTAL SCANNING

Internal focus - Competitive priorities - Corporate culture - Reward systems - Relationships and networks - Type of machines - Etc.

External focus

Five Forces Model - Competitive rivalry - Power of suppliers - Power of customers - Threat of new entrants - Threat of substitutes

Others factors - legal - political - cultural - economical - societal - technological

Analysis Analysis

Strengths Weaknesses Threats Opportu-nities

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Piece n°2: 5 basic elements

• Strategy

• Culture

• Structure

• Technology

• Employees

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Piece n°3: Role of the leader

CharismaticCharismatic

InstrumentalInstrumentalMissionaryMissionary

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The environment

5 basic elements

3 pieces or one piece?

leader

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Getting the puzzle together

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• Phase n°1: Map the Influence Landscape

• Phase n°2: Identify the Type of Resistance

• Phase n°3: Leverage Negotiation

• Phase n°4: Overcome Resistance

• Phase n°5: Assemble the Puzzle

Getting the puzzle together (cont.)

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• Identify the key players

• Draw an influence map

• Identify supporters, opponents, and convincibles

Phase n°1

Map the Influence Landscape

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Sources ofResistance to Change

Level OneLevel One Level TwoLevel Two

HonestHonestDisagreementDisagreement

Lack ofLack ofInformationInformation

EmotionalEmotionalIssuesIssues

PersonalPersonalReasonsReasons

Phase n°2

Identify Type of Resistance

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• Open both eyes

• Open your mind

• Put yourself in your opponent’s shoes

• Think outside the box

• Be creative

Phase n°3

Leverage Negotiation

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Phase n°4Overcome Resistance: 1 method & 5 tools

Education

Facilitation Cooptation

Participation

Coercion

Negotiation

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Phase n°5

Assemble the Puzzle: Actions1. Establish a sense of urgency

2. Create a guiding coalition

3. Develop a vision and strategy

4. Communicate the change vision

5. Empower broad-based action

6. Generate short-term wins

7. Consolidate gains and produce more change

8. Anchor new approaches in the culture

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• Each of those steps will help create a new behavior toward change.

• Step 1: People start telling each other, “let’s go, we need to change things!”.

• Step 2: A group powerful enough to guide a big change is formed and they start to work together well.

• Step 3: The guiding team develops the right vision and strategy for the change effort.

• Step 4: People begin to buy into the change and this shows in their behavior.

• Step 5: More people feel able to act, and do act, on the vision.

• Step 6: Momentum builds, as more and more people try to fulfill the vision, while fewer and fewer resist change.

• Step 7: People make wave after wave of changes until the vision is fulfilled.

• Step 8: People keep behaving in new ways despite the pull of tradition, turnover of change leaders, etc.

Phase n°5 (cont.)

Assemble the Puzzle: Behaviors

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A real-world example: ROLEX

Rivalry Intense

Presence of French, Swiss and Italian groups. 2 groups: traditional independent watch producers and multinational luxury groups. 3 main segments: - haut de gamme: price between $300 Š 2,000 - luxury: $2,000 Š 6,000 - prestige: more than $6,000 Patents: heavily used

Threats of substitutes LOW Other technology: cell phones, pocket PC, but donÕt fulfill the same needs. Possibility of other luxury items (like jewellery, bags, etc.) to fulfill the function of social membership?

Threats of potential new entrants

LOW LVMH Watches and Jewellery division: not yet profitable; dissuasion for potential entrants? Potential threats of Chinese and Indian firms: from disruptive to main competitors?

Power of suppliers HIGH Manpower: not enough qualified watchmakers. Suppliers: play a vital role in providing vital parts of the watch. Limited number of suppliers worldwide (essentially in Switzerland) Swatch: stop supplying to other watchmakers with key components of watchÕs movement. Swiss made label: only for watches whose movements are made in Switzerland.

Power of buyers MEDIUM

Customers: usually approved retailers, in some cases mix with wholly owned boutiques. Approved retailers: increasing negotiation power depending on proposed types of watches, intensity of concurrence. Reasons to buy: Very diverse, but technicality, materials, design, brand image play a big role. Low sensitivity to price. Different trends of consumption between man and woman. Growing interest and buying power of the younger generations.

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A real-world example: ROLEX (cont.)

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Six major trends

• 1) context of mergers and acquisition

• 2) emergence of new markets and new competitors;

• 3) growing importance of product innovation and development

• 4) disproportion of competitors’ size & structure

• 5) vertical integration

• 6) culture of secrecy

A real-world example: ROLEX (cont.)

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• Most pressing challenge for ROLEX: internal.• Externally: no leverage on economic conditions

and raw material’s price • Internally: need to create a culture

– more customer-– more innovation- – more-delivery oriented.

The lack of financial pressure (private company) causes that particular culture. Managers’ role to create the impulse for change in order to be able to overcome the weaknesses (major Supply Chain initiative on the way).

A real-world example: ROLEX (cont.)

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• Result: Supply Chain ROLEX Project– Ambitious goals of reduction of inventory, of costs, of

time between order and delivery, etc.– Implication of all departments of the firm

• Sense of Urgency: established by the CEO with a strict deadline.

• Guiding Coalition: newly hired employee – with extensive background in building world-class

supply chains– did homework by identifying key players and influence

maps; – sustained by a Supervisory Committee.

A real-world example: ROLEX (cont.)

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• New vision and strategy: developed internally with consultants’ help.

• Communication: top-down approach with incremental steps.

• Broader action: identification of priorities and definition of an extensive test on a limited area of the production; to be extended to all areas.

• Short-term wins: concentration on MRP updates and adjustments

A real-world example: ROLEX (cont.)

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• Consolidation: through implication of more departments, better communication; through going deeper into the organization.

• Anchoring: new metrics defined for the compensation system.RESULT: ROLEX enters the industrial era, with a thorough knowledge of its costs, its production processes and reliable metrics.

A real-world example: ROLEX (cont.)

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Practice• Refer back to our initial exercise…(link)• Revisit the most difficult change scenarios you

identified earlier• Identify one key thing you’ve learned today which

would have helped you handle the change better• What will you start doing differently—as early as

today—the next time you are confronted with significant change?

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Summary

• Change Management is a difficult science (because not exact) that succeeds best when ingrained in the culture.

• The role of the change agent (leader) is crucial. • He/she should master the tools that will help plan

the change. It is about observing and analyzing.• Then comes the implementation of the 8-step

method where the negotiation skills are critical.

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Readings• Leading Change : Overcoming the Ideology of Comfort and the Tyranny of

Custom, by James O'Toole, 302pp., Jossey-Bass, April 1995

• Leading Change: Why Transformation Efforts Fail, by John P. Kotter, 187pp., Harvard Business School Press, September 1996

• The Heart of Change: Real-Life Stories of How People Change Their Organizations, by John P. Kotter and Dan S. Cohen, 208pp., Harvard Business School Press, August 2002

• The First 90 Days: Critical Success Strategies for New Leaders at All Levels, by Michael Watkins, Harvard Business School Press, 2003

• Good to Great: Why Some Companies Make the Leap, and Others Don't, By Jim Collins, 320pp., Harper Collins Publishers, Incorporated, October 2002

• Useful website with free tools: www.change-management-toolbook.com - sign up for its free monthly newsletter!