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Managing Organizational Change

Strategic change

Prof.S.Rajagopalan
rajas42@gmail.com

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Quick recap on strategy…..
 firm’s strategy involves a multitude of choices

 basic advantage the firm pursues

 scope of the market over which it seeks that advantage

 activities throughout the value chain that it undertakes to


deliver the desired advantage over the target scope.

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Strategic change
 Typically involves adjustment along many
dimensions.

 Changing a single part of a firm in isolation rarely


constitutes a genuine change in strategy.

 Strategic change falls on change efforts that span


a firm’s many functions or products

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Talking about change…..
 Is there any one in this room who welcomes
change ?

 If yes, why ?

 If no why you resist change.

 In harsh reality, nobody wants change


except ……
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“No one welcomes change except for
wet babies who wail for change of
diapers.”

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Talking about change I am reminded about
a fisherman’s story in Africa….

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We need to implement these strategies..

 Need to close down a factory and offer


voluntary retirement scheme to all
employees.
 Need to introduce ERP systems in the
organization despite resistance from
employees.
 Change the work culture of a newly acquired
company.
 Change the incentive systems of distributors

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Myths about change

 Impossible to understand why people


accept or reject change
 Bureaucracies cannot be really
changed.
 Change will always be mismanaged.
 Decrease of organisational efficiency
and effectiveness when changes are
attempted.
 People who help to implement changes
are Heroes and who resist are Villains
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Three questions before implementing
Organizational change

 Will people choose to go along with it ?


 If not, should you force a change,
regardless the level of resistance ?
 If you do force change and change is
completed will people value its benefits ?

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Prerequisites for change
 Early and continuous top management
understanding, commitment, approval and
involvement.
 High degree of trust between levels of
organization that facilitates change process.
 Patience in terms of time frames for change

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Lily - Pad Riddle

On day one , a lake contains only a single


small lily pad .Each day no of lily pads
doubles , until on the 30 th day the lake is
choked with vegetation. On what day was
the lake Half Full ?

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Organisational Shelf life problem
 Not only are changes multiplying
exponentially like lily pads in a pond , but
solutions to them have a shorter shelf life
than before.
 The programs, procedures, and strategies
that we develop to take advantage of new
opportunities or solve new problems are
becoming obsolete faster than before.

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What If You Don’t Change?

North Sea Oil Platform story

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In several companies , organisational
burning platform exists…..

 when maintaining status quo becomes


prohibitively expensive

 change is always costly but when present


course of action is even more expensive
what is the alternative ?

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Major change is the loss of control
 How people perceive & react to change
 Change is considered major when it is
perceived to be so by those affected
 change as a result of significant disruption in
established expectations .
 Loss of control over some important aspect
of their lives or environment

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THE STRUCTURE OF CHANGE

Synergy Nature

Culture Process

Resilience

Commitment Roles

Resistance
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Nature of change

 Realise the importance of the role of


loss of control
 Exercise some degree of direct or
indirect control over what happens
during implementation
 Assimilate change at a speed
commensurate with a pace of events
taking place around you

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Process of change

 Approach change as an unfolding process


rather than a binary event.
 Accept change is expensive and you will
have to pay.
 Believe status quo is more expensive
than cost of transition
 Accept the discomfort of ambiguity as a
natural reaction of transition
 Attracted to remedies you see as
accessible 18
Change is a Process

Transition Desired
Present state state state

Pain Remedy

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Prerequisites for major organisational change

 Pain : a critical mass of information that


justifies breaking from the status quo

 Remedy : desirable , accessible actions that


would solve the problem or take advantage
of the opportunity afforded by the current
situation

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THE
THE PRICE
PRICE FOR
FOR FAILING
FAILING TO
TO
SOLVE
SOLVE AA PROBLEM
PROBLEM
High
Price Recovery will be impossible
10 Business
Imperative
We will lose most of what we 9
consider important
8

LEVEL OF RESOLVE
We will have to shift our entire way 7
of operating
6

The price will be terribly expensive 5

4
The price will be difficult to pay
3
The price will be more than we 2
want to pay
1 Good
Idea
Low Price The price will be mild irritation 21
THE
THE PRICE
PRICE FOR
FOR FAILING
FAILING TO
TO
TAKE
TAKE OF
OF AN
AN OPPORTUNITY
OPPORTUNITY

High We will miss a key element in


Price moving from “first class” to 10 Business
Imperative
“leader” 9
We will miss a powerful paradigm 8

LEVEL OF RESOLVE
shift in the way we operate
7
We will miss a cornerstone to the
6
overal business strategy
5
We will miss a major competitive
distinction 4

3
We will miss a powerful tactical
advantage 2
Good
We will miss something interesting 1 Idea
Low Price and enjoyable 22
THE HUMAN REACTION TO CHANGE

When
perceived
reality matches
expectations, a
sense of
control is
achived and a
This need Specific form of
can be met expectations equilibrium is
People by dictating are
have a or at least established
generated
strong need anticipating based on
for control their future what can be
dictated or
anticipated When perceived
reality does not
match
expectations,
the feeling of
control is lost
and people must
adjust to the
changes they
were unprepared
to face
Roles of change
 Sponsors : Individuals or Groups who
has the power to sanction or legitimize
changes
 Agents : Individuals or Groups
responsible for actually making change
 Targets: Individuals or Groups who have
to change
 Advocates: Individual or Groups who
want to achieve a change but lack the
power to sanction it 24
Resistance to change

 Understand the basic mechanism of


human resistance
 View resistance as a natural reaction to
disruption of expectations
 Interpret resistance as a deficiency of
either ability or willingness
 Encourage and participate in overt
expressions of resistance
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NEGATIVE RESPONSE TO CHANGE

Anger Acceptan
Active

ce

Bargainin
g
RESPONSE
EMOTIONAL

Testing
Denial

Immobilizati
Passive

on Depression
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TIME
Commitment to change

 People respond to change at different intellectual


and emotional rates.
 Commitment is expensive . Don’t order if you
can’t pay for it.
 Commitment cannot be generated without a plan
of action
 Building commitment is a developmental process.
 Either build commitment or prepare for
consequences
 Increase the speed
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Culture and change

 Understand the effect of culture on


outcome of change effort
 Major organisational changes must be
supported by organisational culture
 Recognise when counter cultural
changes are introduced, alter existing
culture to support new initiative

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HOW CULTURE IMPACTS CHANGE
Attempts to introduce
changes that are
radically different than
the existing culture
usually are not
successful

Beliefs Behaviors Assumption


s
Attempts to introduce
changes that are generally
consistent with the current
culture usually are
Synergy and change

An organisation’s speed of change depends


largely on how effectively and efficiently it
advances through four stages of synergy :
Interacting , Appreciative understanding ,
Integrating , and Implementing

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Synergy and change

 Recognition on importance of synergy


 Willingness and ability to join others in
efforts to produce a 1+1>3 equation
 Listening , valuing, integrating and
applying perspectives different from
your own

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Resilience - Key attributes

 Positive : views life as challenging but


opportunity filled
 Focussed : clear vision of what is to be
achieved
 Flexible : Pliable when responding to
uncertainty
 Organised : applies structures to help manage
ambiguity
 Proactive : engages change instead of evading
it
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Handling change cycle

1. choosing the Target


2. Setting goals
3. Initiating action
4. Making connections
5. Rebalancing to accommodate change
6. Consolidating the learning
7. Moving the next cycle

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Change Process

Leadership issues

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Leading the change
 Effectively target the change
 Plan a path to accomplish the change
 Create a conducive climate for change
 Avoid problems or if encountered solve
along the way
 Realise all benefits of completed change

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Managing change - Leadership

 Desired roles
 Visionary catalyst sustaining force
 Creativity and Intuition
 driving force for change

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Managing change - Leadership

 Actions
 Commitment to change - personal and
organisational
 continuous communication
 No surprises
 Quick action to remedy problems
 Allowing appropriate time for change

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Managing change - Leadership

 Leadership- roles
 Gauging needed effort - don’t
underestimate the time and effort needed
for change
 Motivation and capability
 Flexibility - be prepared to change course
if needed
 Managing shifts in ownership
 Straightening the pathway to change
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Managing Change – causes to watch for
 Sponsor can leave
 Programme may have to be scaled down due
finance, over-run
 Loss of key personnel
 Loss of unique skills & resources
 Changed circumstances make original design less
effective
 Change leaders may lose heart & drive
 Poor management of programme and projects

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