INTERNATIONAL SCHOOL OF MANAGEMENT

MBA PROGRAM

FINAL PAPER – CHANGE MANAGEMENT

COMPARISON OF THE COOPERATIVE CONTEXTUAL CHANGE MODEL

(3MC)
WITH SELECTED ARTICLES

PRESENTED TO: PROF. ALESSANDRO BISCACCIANTI

PRESENTED BY: DIEGO PARDO

PARIS – JUNE 2010

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 TABLE OF CONTENTS

1. EXECUTIVE SUMMARY

2. COMPARISON OF M3C WITH ARTICLES

3. THE HARD SIDE OF CHANGE MANAGEMENT

4. ALL I EVER NEEDED TO KNOW ABOUT CHANGE MANAGEMENT I

LEARNED AT ENGINEERING SCHOOL

5. CRACKING THE CODE OF CHANGE

6. LEAD CHANGE: WHY TRANSFORMATION EFFORTS FAIL

7. THE PASSIVE AGRRESIVE ORGANIZATION

8. REFERENCES

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1. EXECUTIVE SUMMARY

The Model of Cooperative Contextual Change (M3C) has a very effective and

complete context of what is needed before, during and after the process of change

management to maintain stability, reduce stress and achieve the different stakes of

the organization. Seeing it on contrast with other theories and models of other

authors in the mentioned article below, we can see that they have much similarities

and the same north direction, but the model goes deeper into the relationship and

reliability of the individuals. It embraces the whole process – of awareness,

stability, performance, and competitiveness - and doesn´t leave any loose parts. Its

steps or elements to stability are well defined and embrace in a whole the theory of

other authors (where each of them only refers to certain elements of stability).

The articles analyzed in this paper are The Hard Side of Management by Sirkin,

Keenan & Jackson (2005), All I Ever Needed to know about Management I Learned

it at Engineering School by Dickhout (1997), Cracking the Code of Change by Beer

and Nohria (2000), Lead Change: why Transformation Efforts Fail by Kotter

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 (2207), and The Passive Aggressive Organization by Neilson, Pasternack & Van

Nuys (2000).

This paper will take you through the four elements of M3C and make a contrast

with these five selected articles that have made change management essential for

today´s and future organizations. As you will see many elements of this articles are

very interesting and can aggregate value to the process, but they all lack of the

completeness of the Cooperative Contextual Change Model.

2. COMPARISON OF M3C WITH ARTICLES

As we saw in the seminar energy transforms and changes. Everything is energy!

When there is change stress is created and triggers all kind of fears. This stress

becomes a resistance to change and for this, the action is to trigger stability. By

creating change through stability we are creating conditions for learning.

There are four elements of stability to implement the Model of Cooperative

Contextual Change (M3C) seen during the three days of the seminar. These four

elements of stability (taught by Professor Alessandro Biscaccianti Ph.D.) are the

following: explicit stake (awareness), co-built & co-opted ground rules (stability),

systematic interfaces to initiate and regulate actions (performance), and solution-

oriented mindset (competitiveness).

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I am going to explain each one of these four elements of the model and then relate,

compare and contrast them with the five articles chosen below. Not all the articles

have common factors or relations with the M3C. I think that the M3C is so complete

and well structured that in all the articles selected, and Kotter by my opinion is the

one that approaches most to the structure (then the DICE system). The others have

parts that can be related to some element of stability or simply talk about other

alternatives for solutions but not going into the root of the problems without

disaccrediting their valuable input on how to asses changing systems (some don´t

start with reducing stress levels from the beginning but induce theories of how to

manage change aversion with Laws – for example the article written by Dickhout

(2007)).

 The 1st element of stability is to provide persistent direction and to make what is

at stake for everybody. During time there are going to be crisis (changes) and to

get to the stake and perform positively, the stability is crucial in this process

(stress levels have to be reduced). There has to be some cleaning done with the

conflicts in the system. The sponsor has to be the driver for change and he has to

be committed, convinced and aware of the stake (which is checking the

applicability of the model). The purpose of this element is to bring awareness of

the need for change. Individuals have to exchange and share information

between each other to see the big picture and have the entire context of the

situation.

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 Sirkin, Keenan & Jackson (2005) state en their article that the hard elements of

an organization have to be addressed before focusing on the soft ones

(leadership, corporate culture, employee motivation). These hard elements are

defined as DICE (duration, integrity, commitment and effort) an especially

integrity and commitment have to do with this first element of the M3C due to

the cleaning of conflicts. If you don´t have everybody under the same umbrella,

stake or objective you will encounter too much resistance during the process.

The need for change and DICE are totally converged with sharing the perception

to be developed.

In the article of Kotter (2007) he completely aligns this element of stability with

his first and third stage. The first stage talks about establishing a sense of

urgency. Drive individuals out of their comfort zone (very complicated) and

create a sense of urgency to change. This drive has to be made by the sponsor of

the M3C and totally reflects the third stage of Kotter by creating a vision. It’s

the need to clarify the direction which everyone must be on. It has to be direct in

the changing effort and there have to be strategies made to eventually deliver

that vision on the long run. This is making the context´s assessment and see if

everyone is on the same page and know why the change is needed and where are

we going.

 The second element of stability is to encourage and promote the co-construction

and co-operation of the ground rules necessary to handle the interfaces between

the parts of the system and consequently enforcing those ground rules

permanently. The stake is setting the correct team and making people part of

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something (remember that people support what they help to create!); make them

feel members to enhance the team´s stability. In this element the ground rules

are crucial for decision making (and it will reduce the friction of future problem

solving). There has to be communication, negotiation, decision making and

action to define the stake by strong consensus (making the rules). Very

important the relationship they are very different) between hierarchy and

leadership because the latter is available for everyone at every level while the

first one is used for stability.

Sirkin, Keenan & Jackson (2005) state en their DICE, specially the “I” of

integrity that is about picking the right team for the job. We know that there is

no perfect person or team but there has to be an effort of picking the right

quality team for to lead the process. Each team member has to have roles,

commitments, responsibility and accountability. Creating membership to

enhance the team´s stability is about integrity (they are well directed and

correlated with some of the elements of stability).

Dickhout (1997) states in his law of leadership that leaders are the trigger for

change. Sometimes it is hard to find (a true leader) but the acts and thoughts of

the leader will have big consequences on the change development. It is totally in

symphony with the second element of stability that also focuses on building a

team with strong consensus for creating the rules. This team as Dickhout says

has to share a vision and have aligned coalitions. His law of leverage also

applies here because it focuses on the things that will have the greatest impact

and addressing those changes. Finding the right levers and knowing how to use

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 them can multiply the effect by a thousand. It’s very similar to establish the

ground rules to play and know where the levers are going to be created (under

these rules).

Kotter (2007) says in his second stage that forming a powerful guiding coalition

is crucial. A minimum mass is created so that there is enough power for

coalition. Not only is the top level of management needed, but various levels

downstream of managers to generate momentum. These leader teams have to

include cross functional department heads. Encourage them to work as a team

outside the boundaries of the normal hierarchy. This is setting the team and

creating membership! (and as I said before Kotter goes similarly with the M3C

in many stages and related structure of steps).

 The third element of stability is to adopt the systematic relationship methods’ to

initiate and regulate actions. Its purpose is to ensure individuals in the

organization gain power to enhance the team´s performance. The contextual

driveship is being able to give employees the necessary tools to have leadership

even if they are not on top of the hierarchy. There are two key concepts in the

model that are reliability and autonomy. Reliability is defined by the function of

commitment and competences (and the model has a reliability matrix to see

where it is located – stable, unstable, negative, positive). And autonomy, is

defined as the function of reliability and the inverse of the stake (autonomy also

has a matrix with the level of the stake and reliability). The autonomy curve

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defines in which part of the curve a company is (between optimizing and

structuring) with respect to its level of autonomy (low – teaching; limited –

training; sufficient – delegating; and high – empowering).

Beer and Nohria (2000) state in their article that by the integration of the two

theories (theory E and O), we can create surplus value and great payoffs to the

corporation in the constant dynamic world of the present. Both of them will

create economic value for the shareholders and develop the structures of the

organization. But all of this with leadership and setting the direction from the

top and engage the people below. This converges with third element of ensuring

individuals power to enhance the team´s performance (initiating and regulating

actions). A reward system to use incentives to reinforce change but not to drive

it is propped by these authors. All of these factors try to make contextual

driveship.

Sirkin, Keenan & Jackson (2005) in their DICE talk about Commitment and

Effort and these correlate with the functions of autonomy and reliability (and

reflected in the matrixes) of the M3C. There has to be commitment and effort

from all levels. If employees from the bottom of t he pyramid don´t see these

qualities in the ones of the top, the change will not succeed (and always all of

them under the same stake).

Kotter (2207) states in his stage #5 that empowering others to act on the vision

is essential. If some system or structure is undermining the vision, it must be

removed or changed. Thinking out of the box, taking risks and non conventional

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 form of thinking and doing thinks must be encouraged. There can be problems

with employees that resist to change but they must be removed (or adapt to the

change process). And stage #6 says that planning and creating short-term wins

to define performance improvements and making a reward scheme to

compensate individuals who achieve them is crucial. This short term wins add

value and bring hopes high to the change process. These stages embrace the

third element of stability which purpose is to enhance performance. They are

initiating and regulating actions - there is commitment, interdependence and

reliability involved.

 The fourth element of stability is to have a solution-oriented mindset with

cooperative innovation. The stake is producing meaningful solutions to

stimulate creativity to multiply the team´s competitiveness. There has to a

balance between the knowhow (experience), the behaviors, and the knowledge.

Individuals are asked to give solutions (that are simple and effective) better than

problems.

Kotter 2007 in his last two stages embraces this last element of stimulating

creativity to enhance competitiveness. By consolidating improvements and

producing more change. Promoting and empowering individuals that implement

the vision is recommended. The change process can be refueled by new projects

and change agents. And by institutionalizing new approaches they consolidate

unions between the new behaviors and corporate success. Show employees how

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 the new approaches and attitude have helped improve the performance of the

organization. Create new norms and values that are shared with the new

changes.

Dickhout (2007) says in his Law of Feedback and Adjustment that it is

important during the process there are constant adjustments to the program (it

impulses the competitiveness and empowers people to be solution oriented with

cooperative innovation – the forth element of stability). Even the same change

can create opportunities. It is important to have structures, objectives and targets

to provide contingencies on how to adjust on unexpected results. By analyzing

constantly and supervising the changes there will be a better response from the

organization. To respond in a dynamic form will create a time advantage.

3. THE HARD SIDE OF CHANGE MANAGEMENT

This article by Sirkin, Keenan & Jackson (2005) states that two out of every there

transformation programs do not succeed. There are two kinds of elements in a

company: the hard and the soft. The soft elements are leadership style, corporate

culture, and employee motivation among others. These types of elements are

overemphasized in the change management process and the hard elements are not

addressed first and properly. These essential hard elements are known by the

authors as DICE: duration, integrity, commitment and effort.

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When any change management process is started, there is almost no agreement on

what points are the ones that trigger the change initiatives. Each top executive can

have different priorities on how to prioritize the key factors to success (in

transformation) because each one has his point of view and own experience. They

usually focus on the soft elements mentioned before. They are important, but there

are some elements that have to be addressed before those to manage a successful

change: the hard ones (DICE). These factors have three characteristics: first, they

can be measured in some kind of way; second, they can be communicated outside

and inside the company; and third, the company can influence them rapidly.

The four hard elements DICE are the following:

• Duration: time is of an essence in change management projects. Companies

think that if a project is too long then it will have less probabilities of

succeeding. But the authors have seen that if there is a long project but it is

reviewed frequently, it has more chance of success than a short time project that

is not reviewed frequently. Corporations should review their transformations

projects at least each two months (and if it is a very complicated project it can

be narrowed to two week revisions). The time between each review is more

important than the life span of the change process (reviewing is the key).

Milestones should be made and observing their impact are the best strategy to

asses this hard element.

• Integrity: this element is about picking the right team for the job. We know that

there is no perfect person or team but there has to be an effort of picking the

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 right quality team for to lead the process. But this team also has its day to day

work, so they have really to be compromised to go the extra mile to lead the

change management and also do their daily work. Each team member has to

have roles, commitments, responsibility, accountability and work together

(integrity). Sponsors have to measure the integrity and firmness of the team by

making private surveys to have feedback from the members. These teams have

to be problem solving oriented, organized and accountable for the decisions

made.

• Commitment: There are two groups of people that are key factors to have

committed in order to launch and have success the change project. The first are

the most influential executives in the company and the second are the employees

that are going to be affected directly by this change of processes, systems and

structures. If individuals form the lower side of the organization don´t see that

their leaders are committed to the project then everything will fall like a stack of

cards. Top executives have to communicate the need for change from the

beginning and not at the middle of the program. One on one conversations are

very good feedback. Believe in the company´s employees and that they can also

bring new fresh ideas that can lead to success (don´t underestimate them).

• Effort: generally before starting a change project employees already have a big

load of work and their schedules are pretty tight. The company has to be very

careful to the additional workload that this transformation project is going to add

to the members of the process. It is recommended that if their workload

increases for more than 10% is better to reduce their tasks in their daily

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 activities or get help from outsiders. If there are too stressed out with too much

work, they won´t be able to do either of the tasks effectively. This hard element

has to be thought before so that the change efforts are not frustrated later

because of excess demands.

By assessing these four hard elements before going into the soft elements we can

create a framework that can help the executive team evaluate the change pillars and

where are the success key factors of the project. These types of assessments are

subjective but they give an objective framework to make the right decisions on the

future process.

4. ALL I EVER NEEDED TO KNOW ABOUT CHANGE MANAGEMENT I

LEARNED AT ENGINEERING SCHOOL

This article written by Dickhout (1997) from McKinsey and Company of the

Toronto´s office, is about he had from his younger years the curiosity of how would

things worked. He followed his father´s footsteps by studying mechanical

engineering (and he says that they specialize in how make things go round and

round – in other words “making change”) and was overwhelmed by the forces of

nature and how this science could help him understand the power and trivialities in

life. Then many years later he saw himself working for McKinsey (consulting

worldwide company) and helping his clients to design change programs and make

them work by effective execution.

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Dickhout states that many literature and books of management are sometimes useful

they lack of dynamic and change characteristics. They seem still and static. The

systems are not frozen, they are in constant change and they need to be assessed in

that manner. There are five basic premises he thinks that are the best changing

programs for organizational change and these are:

• The Law of Constituent Balance: the company´s constituent stakeholders are

often on imbalance which is the reason and need for change. They compare it

with the balance and imbalance of an ecosystem. When the ecosystem is

knocked out of its balance, there are changes and redistribution of resources

until the balance is gained again. The same happens with a company. The

imbalance of the corporation should be used to create the conditions for change.

Management is key for these changes to be made.

• The Law of Leverage: this law talks about focusing the change on the things that

will have the greatest impact and addressing those changes. Finding the right

levers and knowing how to use them can multiply the effect by a thousand

(simple levering mechanics). So it is very important to identity the real changes

to be made (and not do changes on everything), and when identified they have

to be treated with tenacity (more than normal or average). It is also important to

see the company in a number of layers (or dimensions) and see the entire

picture. Focusing on economic (costs and revenues) levers, then on

organizational (structures and processes) and finally on performance (mission,

vision and values).

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 • The Law of Momentum: Energy has to be liberated to make the change work.

This energy can come from the inside (management) or the outside

(shareholders or consultants) of the system. All major change will need other set

of behaviors and these have to be well exploited by the leader change manager.

Consistency is crucial to go from a low to high performance accomplishment

because it is not automatic (it takes time). So, momentum has to be created

between these steps so that leadership, shared vision and capabilities are

endorsed. Achieving results and building more energy for the next step is the

answer.

• The Law of Feedback and Adjustment: it is important that during the process

there are constant adjustments to the program. Even the same change can create

opportunities. It is important to have structures, objectives and targets to provide

contingencies on how to adjust on unexpected results. By analyzing constantly

and supervising the changes there will be a better response from the

organization. To respond in a dynamic form will create a time advantage.

• The Law of Leadership: and at last, leadership is the trigger for change.

Sometimes it is hard to find (a true leader) but the acts and thoughts of the

leader will have big consequences on the change development. The leadership

team should not be big (two to three) and they should be role models. Have a

shared vision and align coalitions.

5. CRACKING THE CODE OF CHANGE

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This article of Beer and Nohria (2000), talks about combining the quick creation of

economic value for shareholders and patiently develop a trusting corporate culture

in the long term to transform the way business change. Companies have realized

that either they change or they die. Even the dot-com´s know that they have to

manage change effectively with the exponential entrepreneurial growth. There are

two theories of change: theory E is change based on economic value and theory O is

based on organizational capability.

Going deep into each theory (through six dimensions of change: goals, leadership,

focus, process, reward system and use of consultants) we have that theory E

manages the change from the top level downstream, it focuses on structures and

systems, its process is by planning programs, and the reward system is based solely

on financial motivators. The theory O as we said earlier has as an objective develop

organizational capabilities, its leaders empower the lower levels and upstream (the

contrary of theory E), it focuses on creating corporate culture, and its reward system

is motivated with commitment.

But the real thing us that many companies use both theories. They try to apply both

of them but are not able to break the frictions between the two. The right path is two

combine the two but it is not easy because they go on opposite ways. But here is a

way to reduce the frictions between these two and create shareholder value and

stronger institutions. Companies that achieve these goals will gain profitability and

productivity as a synergy.

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If combined the theories E and O we have the following (Beer and Nohria, 2000):

• Goals: explicitly embrace the paradox between economic value and

organizational capability.

• Leadership: set the direction from the top and engage the people below.

• Focus: focus simultaneously on the hard (structures and systems) and the

soft (corporate culture).

• Process: plan for spontaneity.

• Reward system: use incentives to reinforce change but not to drive it.

• Use of Consultants: are experts’ resources that empower employees.

The best way to combine these two theirs is two sequence them. The tension

between E and O goals has to be worked and confronted. On the other side you have

to setup the vision from the top of the organization and have commitment and

engage from the lowest part. The use of consultants can create very important value

through specialized knowledge and tactical competences that nobody has in the

inner side of the organization.

The integration of the two theories can create surplus value and great payoffs to the

corporation in the constant dynamic world of the present. Both of them will create

economic value for the shareholders and develop the structures of the organization.

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 “To thrive and adapt in the new economy, companies must simultaneously build up

their corporate cultures and enhance shareholder value; the O and E theories of

business change must be in perfect step” (Beer and Nohria, 2000).

6. LEAD CHANGE: WHY TRANSFORMATION EFFORTS FAIL

“Guiding change may be the ultimate test of a leader –no business survives over the

long term if it can´t reinvent itself. But human nature being what it is, fundamental

change is often resisted mightily by the people it most affects: those in the trenches

of the business. Thus, leading change is both absolutely essential and incredibly

difficult” (Kotter, 2007).

In this excellent article by John Kotter he basically states that change is not an event

but a process (and a long one). Managers have to understand that during this process

there are several stages that have to be followed in a certain order without taking

shortcuts. He presents these eight stages and the actions needed in each one:

I. Establish a sense of urgency: drive individuals out of their comfort zone

(very complicated) and create a sense of urgency to change. Convince at

least 75% of the managers that a change is needed. Looking at the market

and competitive factors for potential crises and opportunities not seen yet.

Do not paralyze for the overcoming risks.

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 II. Form a powerful guiding coalition: it is very important that a minimum mass

is created so that there is enough power for coalition. Not only is the top

level of management needed, but various levels downstream of managers to

generate momentum. These leader teams have to include cross functional

department heads. Encourage them to work as a team outside the boundaries

of the normal hierarchy. Commitment is key and has to be shared throughout

the group to lead the change effort.

III. Create a vision: the need to clarify the direction which everyone must be on.

It has to be direct in the changing effort and there have to be strategies made

to eventually deliver that vision on the long run. It can’t be vague or too

complicated (five minute rule).

IV. Communicate the vision: the vision has to be communicated through every

mean and media possible (along with the strategies to achieve it). Teaching

new pattern and behaviors with leading coalition. It is very important that

the communication is clear and direct (everyone understands). This point

can be very difficult is for example there are downsizings to be made. But

there has always got to be the ethical standards that embrace the vision.

V. Empower others to act on the vision: if some system or structure is

undermining the vision, it must be removed or changed. Thinking out of the

box, taking risks and non conventional form of thinking and doing thinks

must be encouraged. There can be problems with employees that resist to

change but they must be removed (or adapt to the change process).

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 VI. Plan for and create short-term wins: defining performance improvements

and making a reward scheme to compensate individuals who achieve them is

crucial. This short term wins add value and bring hopes high to the change

process. Try not to leave anything to chance and take control of the

situation. Because change takes time, this wins give momentum and helps

keep the urgency level up.

VII. Consolidate improvements and produce more change: use credibility from

already accomplished goals and objectives to change systems or something

that undermines the vision. Do not declare victory to soon (that maybe in the

first results of improvement) and never lower the guard. Promoting and

empowering individuals that implement the vision is recommended. The

change process can be refueled by new projects and change agents.

VIII. Institutionalize new approaches: consolidate unions between the new

behaviors and corporate success. Show employees how the new approaches

and attitude have helped improve the performance of the organization.

Create new norms and values that are shared with the new changes.

7. THE PASSIVE AGRRESIVE ORGANIZATION

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This article written by Neilson, Pasternack & Van Nuys (2000) talks about that not

many companies have a “resilient” organization with timely information and

excellent based decisions. Instead, the vast majority have serious challenges and

unhealthy environments. These types of companies are called passive-aggressive.

Its authors state that this category is called from the organization quiet but fierce

resistance to corporate directives. Employees do not do their best and feel free to

not be effective or efficient (no accountability). They do not feel the need to learn,

share or achieve any goals. Passive-aggressive corporations can have or too much

control or have a total lack of it. The top management (people with authority) act

under the false impression that they can´t control things which actually they can,

and vice versa. So basically the lines of authority are not well defined, the merits are

not rewarded and the employees just pass their days as if nothing is happening

(there is no effort for improvement).

Besides the passive-aggressive organization there are six other types (Nielson,

2000):

• Resilient: highly adaptable to external market with coherent business strategy.

• Just in Time: inconsistently prepared for change but can face a challenge

without losing the big picture.

• Military Precision: dominated by a small senior team and executed efficiently its

operating model.

• Overmanaged: its multiple layers of management create paralysis and problems

in decision making.

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• Outgrown: too big and complex to be managed a small team but with

democratized decision making.

• Fits and Starts: have very talented and motivated people but that go in different

directions.

Companies’ don´t start with passive aggressive in them. Naturally a company is

born healthy and starts to grow and its organizational structures start to get a

complex form. Then decentralization comes because of the size and globalization

and trouble comes with resistance and failure on objectives.

In passive-aggressive organizations there are four factors that freeze initiative:

ineffective motivators (do not reward effectively their individuals for their added

value in the company); unclear decision rights (nobody knows where their rights,

responsibility and limits start or end); wrong information (people care more about

of forms inside the company that of being competitive on the long term); and

misleading structure (there are no clear measures of how to create value).

These types of organizations are very averse to change. But hey can be cured with

the following key factors:

• Bring in new people: individuals from the outside (they call new blood) can by

leaders in change management. They don´t have the inner habits, have new

relationships and interpersonal skills that are more effective (treat the company

as a business).

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• Turn every block in the company: because these types of organizations are so

misaligned, the most effective way to claim their attention is to change

everything at once so that it has a big impact and the reactions will be in the

same scale.

• Make the decisions and stick with them: clarifying who makes the decisions (the

rights) and then respect the people who make them. Individuals have to start to

be accountable between each other and regain trust.

• Share the information: the decisions have to be made with a clear priority of

what information is relevant.

• Match motivators to contribution: it is very important to correlate the motivators

of the employees to the value they add in the long term.

All of these factors are important but if the senior management is not completely

engaged, then it won´t work.

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8. REFERENCES

• Beer, M., & Nohria, N. (2000). Cracking the Code of Change. Boston: Harvard

Business Review.

• Dickhout, R. (1997). All I Ever Needed to Know About Change Management I

Learned at Engineering School. Toronto: McKinsey & Company.

• Kotter, J. P. (2007). Lead Change: Why Transformation Efforts Fail (3rd ed.).

Boston: Harvard Business Review.

• Neilson, G. L., Pasternack, B. A., & Van Nuys, K. E. (2000). The Passive-

Aggressive Organization. Boston: Harvard Business Review.

• Sirkin, H.L., Keenan, P., & Jackson, A. (2005). The Hard Side of Change

Management. Boston: Harvard Business Review.

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