CH-18 Creating and Leading Change – Management: Leading and Collaborating in a Competitive World : Chapter Notes

Chapter 18 Creating and Leading Change LEARNING OBJECTIVES 1 Discuss what it takes to be world class. 2 Describe how to manage and lead change effectively. 3 Describe strategies for creating a successful future. CHAPTER OUTLINE Becoming World Class Sustainable, Great Futures The Tyranny of the Or The Genius of the And Achieving Sustained Greatness Organization Development Managing Change Motivating People to Change A General Model for Managing Resistance Enlisting Cooperation Harmonizing Multiple Changes Leading Change Shaping the Future Thinking about the Future Creating the Future Shaping Your Own Future Learning and Leading A Collaborative, Sustainable Future? CHAPTER RESOURCES Experiential Exercises 1. Overcoming Resistance to Change 2. Networking Scenarios Cases EatWell Technologies Supporting Case Technology Helps Dollar General Remain Competitive Case Incidents Robot Repercussion Implementing Strategic Change Social Enterprise Using Co‐creation to Build a Better Future Lecturettes 1. Using Organization Development 2: The Issue of Stress KEY STUDENT QUESTIONS There is one question that students can be relied on to ask whenever the topic of change comes up. It is: 1. “Is change always good?” The answer, of course, (and students are just waiting to hear you say this) is “No.” Coca-Cola wishes that they had never heard of “The New Coke” and Time Warner wishes they had never heard of AOL. But the change that is anticipated and planned is often better than change that catches people off guard. As the text points out, there are advantages and disadvantages to being an innovator at the cutting edge. The trick is to be thoughtful about where and when the change should occur and to know enough about the environment so that change doesn’t catch you by surprise. Teaching Tip This is the point in class where students start to look back and say to themselves, “What have I gotten from all this?” A “summing up” at the end of class helps students to put the whole class in perspective. There are several ways to summarize the class, including: Putting key lessons into two or three PowerPoint slides. Every professor will have different things that he or she emphasizes during the term, but below are some suggested points to cover: Management theories build on each other as they evolve Environmental changes demand organizational changes To get somewhere, you have to have a goal. SWOT Rational decisions rarely are Before making decisions that affect people in your organization, consider both strategic and practical implications Humans are not resources! Listen first, then talk. Money isn’t the only motivator, and everyone is motivated by different things Leadership positions are less important than letting people contribute to achieving a vision Conflict resolution requires creativity and trust. Post the class expectations that you collected on the first day of class, and ask students how well they have been met. Ask students to tell you what they will DO differently tomorrow as a result of taking the class. Stressing behaviors, not theories or thoughts, helps them to see how concepts can be applied. CLASS ROADMAP POWERPOINTS Slide 1 Creating and Leading Change Slide 2 Chapter Introduction Quotes Slide 3 Learning Objectives MANAGEMENT IN ACTION Shell Oil’s Managers Face Off with Investors Over Climate Change At Shell’s recent annual general meeting, nearly 99 percent of Shell investors voted to support a motion for it to report on whether its activities were consistent with worldwide governments’ goals to limit climate change. They angrily questioned executives about the sustainability of its business strategy and commitment to the environment. Why are investors frustrated with Shell’s top management? Part of it has to do with the company’s unwillingness to deviate from its tried and true business strategy. In response to these and other concerns about its future and its impact on the environment, Shell created a New Energies Division. This group is charged with investing in renewable and sustainable power sources, like wind, that rely less heavily on carbon. New Energies has a budget of $1.7 billion which is less than 1% of the amount the company invests in oil and gas production. I. BECOMING WORLD CLASS LO 1: Discuss what it takes to be world class. Sustainable, Great Futures. Core ideologies in Built-to-Last companies (Exhibit18.1) The Tyranny of the “Or” – this refers to the belief that things must be either A or B and cannot be both. The Genius of the “And” (organizational ambidexterity) – is the ability to pursue multiple goals at once. Example 18.1 – Being world class: One of the signs of a great company is that it can transmit its values to all employees. Alex Frankel, a journalist, spent two years “undercover” in frontline retail jobs to see if anyone company was better than the rest in this regard. His findings were reported in a book “Punching In: The Unauthorized Adventures of a Front Line Employee.” According to Frankel, Apple Inc. stands out. As he says “Apple stores, with their aura of cool, were, in fact, living up to their mission to “reinvent retail” and setting a high bar for other companies to follow.” Achieving Sustained Greatness (Exhibit 18.2) Strategy focused on customers and fine-tuning that is clearly communicated to employees Execution – good people with decision-making authority on the front lines doing quality work and cutting costs Culture that is motivating and empowering with appropriate rewards Structure characterized by cooperation and exchange of information E. Organization Development (OD) — a system-wide application of behavioral science knowledge to develop, improve, and reinforce the strategies, structures, and processes that lead to organizational effectiveness. Aims to: increase organizational effectiveness supports human potential, development, and participation in addition to performance and competitive advantage OD techniques strategic interventions techno-structural interventions human resources management interventions human process interventions II. MANAGING CHANGE POWERPOINTS Slide 4 Becoming World Class Slide 5 Core Ideologies in Built-to-Last Companies Slide 6 The Tyranny of the Or Slide 7 The Genius of the And Slide 8 Achieving Sustained Greatness Slide 9 Organization Development (OD) Slide 10 Types and Goals of OD Interventions Slide 11 Managing Change Slide 12 Reasons for Resistance to Change Slide 13 A General Model for Managing Resistance Slide 14 Methods for Managing Resistance to Change Slide 15 Harmonizing Multiple Changes Slide 16 Leading Change Slide 17 Sources of Complacency LO 2: Describe how to manage change effectively. Shared leadership — encourages people to not only support change but to implement it. Change Agents – People who create change. C. Motivating People to Change – reasons for resistance relate to the specific nature of a particular change General reasons for resistance (Exhibit 18.3) Inertia Timing Surprise Peer pressure Change-specific reasons for resistance Self-interest Misunderstanding Different assessments Management tactics Example 18.2 – Managing Change: Even business schools go through the change process on a regular basis. Yale has recently completely retooled its business program. Now, instead of taking courses in marketing, finance, accounting, and human resources, students are sent through multidisciplinary courses that are structured around the organizational roles of the manager. These roles are either internal to the organization (the innovator, the operations engine, the employee, and sourcing and managing funds (or CFO) or external to the organization (the customer, the investor, the competitor, and state and society). These changes stemmed directly from concerns that business schools were somehow encouraging their students to be unethical in the wake of corporate scandals at companies like Enron and WorldCom. Multiple Generations at Work Are You Ready for the Future of Work? A recent study about the changing nature of work stated: “Disruptive innovations are creating new industries and business models, and destroying old ones. New technologies, data analytics and social networks are having a huge impact on how people communicate, collaborate and work.” Employees from every generation would be well advised to remain flexible with regard to job opportunities and to try to work for organizations that fit with your personal values. D. A General Model for Managing Resistance (Exhibit 18.4) Unfreezing – realizing that current practices are inappropriate and that new behavior is necessary. Performance gap – the difference between actual performance and the desired performance. Moving – to institute the change and begins with establishing a vision of where the company is heading. Force-field analysis — Involves identifying the specific forces that prevent people from changing and those that will drive people toward change. Refreezing – strengthening the new behaviors that support the change. E. Enlisting Cooperation Several effective approaches to managing resistance and enlisting cooperation are available: (Exhibit 18.5) Education and communication Participation and involvement Facilitation and support Negotiation and rewards Manipulation and cooptation Coercion Management in Action – Progress Report Shell Believes Demand for Fossil Fuels Will Remain Strong Even as Shell Oil Company pivots to address investors’ concerns about climate change, and to protect its profits from the worldwide decline in supply and demand for oil, it has not abandoned its fossil-fuel business. Shell’s managers believe oil and natural gas markets will peak as soon as 10 to 15 years from now but then remain strong for several more decades. The company also says it takes seriously its role in combating climate change, and it is making changes. In a reversal of its earlier skepticism about governments’ ability to slow climate change, Shell supports the ground-breaking 2016 United Nations Paris Agreement, which seeks to commit nations to keep warming below 2 degrees Celsius by reducing the emissions that contribute to climate change. Shell’s recently announced New Energies Division will explore investments in renewable and sustainable power sources. The company is also trying to reduce emissions from its fossil-fuel business by working on ways to capture and store carbon so it will not be released into the atmosphere. Shell Technology Ventures, the company’s venture capital division, supports new solar and wind businesses. If you were the CEO of Shell, how would you respond to pressures from shareholders to a become more environmentally friendly company? What changes, if any, would you pursue short-term? Long-term? Answers will vary, but the CEO will have to be responsive to shareholders demands, as they elect the board of directors who appoints the chief executive. Short-term changes can be technical changes in drilling and other procedures that will be environmentally friendly. Long-term changes would include investment in sustainable practices and renewable energy. Do you agree with Shell’s CEO that fossil fuels will be needed to meet energy demand for several more decades? Answers will vary, but with the rapid changes worldwide, this assessment may be a bit too enthusiastic. The global demand for oil and natural gas is dropping, and there are permanent practices being put in place to sustain this reduction. F. Harmonizing Multiple Changes Total organization change involves introducing and sustaining multiple policies, practices, and procedures across multiple units and levels. G. Leading Change (Exhibit 18.6) Establishing a sense of urgency means getting people to understand why change has to happen now. To create a guiding coalition means putting together a group with enough power to lead the change. Developing a vision and strategy will direct the change effort. Communicating the change vision requires using every possible channel and opportunity to talk up and reinforce the vision and required new behaviors. Empowering broad-based action means getting rid of obstacles to success, including systems and structures that constrain rather than facilitate. Generate short-term wins. Consolidate gains and produce more change. Anchor new approaches in the culture. H. Sources of Complacency (Exhibit 18.7) CONNECT Video Case: Louisville Slugger: Hillerich and Bradsby SUMMARY Total organization change involves introducing and sustaining multiple policies, practices, and procedures across multiple units and levels. Such change affects the thinking and behavior of everyone in the organization, can enhance the organization's culture and success, and can be sustained over time. In this activity, students see how the company that makes Louisville Slugger baseball bats instituted and dealt with this type of change initiative. ACTIVITY After a brief introduction, students watch a 13-minute video. The exercise concludes with a series of multiple-choice questions. CLASS DISCUSSION IDEAS The instructor may wish to explore how the culture of the firm has influenced its success. To tie this exercise into the previous activity, the instructor may wish to revisit Exhibit 18.8 in the text and ask students to place current and potential Hillerich and Bradsby products in the quadrants. CONNECT Click and Drag: Leading the Charge for Change (Keyboard navigable alternate version available.) SUMMARY Change is unpredictable and because companies introduce new changes constantly, getting employees to commit to changes can be challenging but is necessary for successful change. Management must question and carefully select those changes worth undertaking. Additionally, in order to minimize employees’ resistance to change, management must outline how the change will benefit the company and its employees and then clearly communicate the benefits thoroughly, honestly, and frequently. ACTIVITY In this activity, students place the activities involved in leading change in the correct sequence. CLASS DISCUSSION IDEAS Spur a discussion by asking which of the steps do students feel is the most important or which of them can be skipped. Should they all be followed, even in a crisis? Students could also be asked to reflect on Lewin’s comprehensive change model and relate the activities to that model. CONNECT Manager’s Hot Seat: Change: More Pain than Gain? SUMMARY A national media communications company acquires a regional communications company. As a result of the merger, the regional marketing department is reorganized, combining the staff of the two organizations. The manager is overseeing the restructuring process and is having a lot of difficulty with people shifting roles, sharing assignments, and adapting to new hierarchies. In the 13-minute video, the manager meets with two department members who are very displeased with the new changes. The employees eventually ask the manager to leave the company and head a start-up. ACTIVITY Students watch the 13-minute video and answer three multiple-choice questions. CLASS DISCUSSION IDEAS The exercise can be debriefed by asking students what steps may have been steps in implementing the acquisition that led to the conflict depicted in the video. If the issues in the video are caused by a clash of cultures, what can be done to address that issue? III. SHAPING THE FUTURE POWERPOINTS Slide 18 Shaping the Future Slide 19 Creating the Future Slide 20 Social Enterprise Slide 21 Social Enterprise Questions Slide 22 Exhibit 18.8 Vast Opportunity Slide 23 Which Should You and Your Firm Do? Slide 24 Learning Cycle: Explore, Discover, Act Slide 25 Level 5 Hierarchy Slide 26 A Collaborative, Sustainable Future? Slide 27 Management in Action Slide 28 In Review LO 3: List tactics for creating a successful future. A. Reactive change is a change effort that occurs under pressure; problem-driven change. Proactive change is a change effort that is initiated before a performance gap has occurred. Exercising foresight Learning continuously A clear, strategic goal to learn new capabilities A commitment to constant experimentation Thinking about the Future Creating the Future (Exhibit 18.8) Adapters take the current industry structure and its future evolution as givens. Shapers try to change the structure of their industries, creating a future competitive landscape of their own design. Shaping Your Own Future Look for positions that stretch you and for bosses who develop their protégés F. Learning and Leading Continuous learning (Exhibit 18.9): Constantly explore, discover, and take action in order to learn, grow on a personal level, and to help your organization be more effective. Example 18.3 – Continuous learning: Jim Bolt of Fast Company identifies three “best practices” in executive education. He says that continuous learning can’t be something that’s preached — if it is to work, the CEO and his or her executive team have to be the first people in any new training program. In addition, he says that you can’t go through a single executive education program and expect to get real learning. Instead, there need to be shorter and more frequent learning experiences, and those experiences need to be action oriented, not just theoretical. In other words, continuous learning doesn’t take place when you listen to a lecture on strategic planning — it takes place when you actually do planning for your organization. But companies need to be sure that people who are engaged in action learning don’t get so focused on the action that they lose sight of the learning objectives. A good facilitator is vital, as is a program that helps people take learning and apply them back on the job. Commit to lifelong learning. 4. Hierarchy of career stages (Exhibit 18.10): At different stages of your career, you will learn different things at each stage. Level 1 — Highly Capable Individual Level 2 — Contributing Team Member Level 3 — Competent Manager Level 4 — Effective Leader Level 5 – Executive A Collaborative, Sustainable Future? Bear in mind the long run in addition to immediate demands Consider collaboration as a key to sustained success CONNECT Click and Drag: Which Products Create New Markets? (Keyboard navigable alternate version available.) SUMMARY Exhibit 18.8 in the text illustrates the opportunity to create new markets. Articulated needs are those that customers acknowledge and try to satisfy. Unarticulated needs are those that customers have not yet experienced. Served customers are those to whom your company is now selling, and unserved customers are untapped markets. Business-as-usual concentrates on the lower-left quadrant. The leaders who recreate the game are constantly trying to create new opportunities in the other three quadrants. In this activity, students have the opportunity to better understand these four quadrants by considering them through the eye of patent buying and launching decisions at Procter & Gamble. ACTIVITY In this activity, students place each of seven products in one of the four quadrants. CLASS DISCUSSION IDEAS Ask students to place other well-known products into the quadrants. Management in Action – Onward Will Shell Develop Environmentally Friendly Policies and Achieve Economic Growth? Since its founding in 1907, Shell has adapted successfully to a myriad of external pressures. Today’s challenges may be different. Many believe that current social, environmental, and political forces are combining in a way that will force disruptive change within Shell and the rest of the energy industry. Jeremy Leggett of the Carbon Tracker Initiative, a group that advises energy company investors, argues that “environmentally friendly policies and economic growth are not mutually exclusive.” Time will tell if Shell’s approach of delaying its shift toward greener energy was the correct one for investors and other stakeholders around the globe. How much influence do external stakeholders like the ones mentioned above exert on Shell’s top management? The stakeholders mentioned in the example have tremendous influence over public opinion, which in turn has sway with Shell’s top management. It is not about what one particular person thinks and the power he/she has over Shell, but about a changing culture surrounding the industry, and how long it will take for this to influence Shell’s top management. Do you think Shell should maintain its current pace of change or move faster toward greener energy technologies? Elaborate. Answers will vary. The example seems to point toward the direction that Shell is not moving fast enough toward greener energy technologies. BOTTOM LINE What does it mean to be "world class" at a goal such as quality or sustainability? Being world class requires applying the best knowledge and ideas and being able to meet the highest standards. Thus, an organization with world-class quality delivers the best possible products and services, and an organization with world-class sustainability applies the latest thinking in sustainability to meet the highest standards for that goal. What showed Jerry Rhoads of Fox Valley Nursing Center the difference between what is and what could be? This question applies the principles to the Change Agent story on this page. A severe snowstorm closed area roads so that the staff already at the Fox Valley Nursing Center had to figure out how to work on their own for 72 hours. The staff members scheduled themselves to work in rotating teams, and their performance was so good that Rhoads saw self-managed teams as the way the facility could normally be run. What made Rhoads a change agent is that he saw the teamwork not merely as an exceptional event but as an idea for the future. What are the three phases in the process of continuous learning? The three phases are exploring current reality, discovering issues and choices, and acting (testing solutions, implementing plans, evaluating results, recognizing problems, and celebrating successes). SOCIAL ENTERPRISES Using Co‐creation to Build a Better Future Co-creation is when diverse stakeholders come together to develop new practices. Stephanie Schmidt, Managing Director of Ashoka Europe, believes the social sector can learn from what companies do well: “It is scale, but also efficiency in terms of operations, product development, distribution, as well as innovation.” Can you think of additional examples in which diverse organizations have joined forces to address social or environmental problems? Answers will vary. There are times when food manufacturers team up with drug manufacturers to fight diseases around the world, or when sports teams work with charities to address social problems. Do you believe this co-creation movement is sustainable or a passing fad? Explain. The co-creation movement is advantageous for the organizations participating in it. It allows organizations to leverage their strengths for social causes, and this, in turn, brings about financial benefits, such as great public relations. These types of movements are not new, so calling it a passing fad may not be very historically accurate. LECTURETTES LECTURETTE 18.1: Using Organization Development ORGANIZATION DEVELOPMENT In general terms, organization development (OD) is a major long-range program of planned change. OD is an effort to make major long-term improvement in an organization's efficiency and/or effectiveness. OD is a coordinated program of behavioral approaches aimed at improving an organization. THE PROCESS OF ORGANIZATION DEVELOPMENT OD may be viewed as a managed (planned, coordinated, systematic) process (methodology, system, strategy, tactic) of behavioral science to improve (optimize, create a competitive advantage) organizational effectiveness (solve problems, reach objectives, raise productivity, improve quality, increase profitability). OBJECTIVES OF ORGANIZATION DEVELOPMENT OD is often customized to meet the unique needs of complex organizations, but OD programs usually count the following among their objectives: Each OD intervention program should attempt to increase the level of trust and support among, individuals and groups throughout the organization. OD programs should result in more open communications. OD efforts should try to create openness toward problem-solving by confronting organizational problems. OD interventions should move the responsibilities for decision-making as close to the action as possible. OD techniques should increase the employees' sense of ownership of organizational goals. OD activities should increase the collaboration between and among organizational elements. OD interventions should help individuals increase their awareness of group processes and their impact on them. A MODEL OF ORGANIZATION DEVELOPMENT The overall OD intervention program may be viewed as a five-step procedure: STEP 1 Organizational audit. STEP 2 Identification of potential interventions. STEP 3 Development of the overall implementation program. STEP 4 Implementation of the OD strategy. STEP 5 Evaluation and feedback. ORGANIZATION DEVELOPMENT INTERVENTION TECNIQUES Planned meetings — used for such conventional purposes as the collection and dissemination of information. Brainstorming — an unstructured interactive group process for generating ideas and promoting problem-solving. The Gordon Technique — similar to brainstorming except the group is not aware of the real problem under study. Nominal Grouping — a structured group process for generating ideas and promoting problem—solving. The Delphi Technique — a group process for groups that cannot meet in face-to-face situations. Management by Objectives — an integrative technique for establishing goals, planning, and controlling. Team Building — a process that helps groups develop a team approach. Conflict Resolution — processes that help resolve conflicts. Force Field Analysis — the study of change situations, examining forces for and against change. Feedback – interpersonal communication designed to help people become more aware of their feelings The Organization Mirror — uses feedback from customers, clients, etc. to better understand the corporate image. Future Shock Absorbing — helps people deal with major change. Management Development — designed to train and develop managerial personnel. Life Career Planning – help individuals develop life and career plans. Training — help employees acquire new knowledge, skills, and attitudes. Third Party Facilitation — uses a skilled third person to resolve problems. Program Evaluation and Review Technique (PERT) — a tool for planning, scheduling, and controlling complex projects. Matrix Structures — working groups that cut horizontally and diagonally across the organizational hierarchy. LECTURETTE 18.2: The Issue of Stress STRESS DEFINED Stress may be defined as an individual's adaptive response to a stimulus that brings excessive physical or psychological pressure on her or him. Hans Seyle, known as the father of stress research, suggests that people are born with a certain limited amount of adaptive energy with which to cope with environmental pressures over a lifetime. When an individual is exposed to a number of critical life changes, traumatic events, and illness, the body is kept virtually in a constant state of arousal from both real and imagined threats. Under this type of pressure, the body simply runs out of adaptive energy and just wears out. TYPES OF STRESS Seyle further theorized that there were two kinds of stress: (1) eustress and (2) distress. Eustress — positive stress resulting from a positive, even exhilarating experience, such as marriage, promotion, graduation, and so on. Distress — negative stress resulting from negative experiences such as being fired, a death in the family, serious illness, and so on. Therefore, stress is not necessarily bad. Eustress can be used as a positive motivator of performance, but eustress is not good for an individual or a workgroup. LEVELS OF STRESS Too little stress — when a person is not sufficiently motivated and becomes bored and apathetic on the job, that person might suffer from too little stress on the job. Too much stress — when a person perceives too much stress, it may lead to dysfunctional behaviors and attitudes. Moderate level of stress — a moderate stress level is one that stimulates work behavior without incurring undue stress. This is the ideal level of stress for the working environment. STRESSORS 1. A stressor is any condition or change in the work environment that is perceived as potentially challenging or threatening. Work stressors may be better understood if grouped into three interrelated categories: (I) job factors; (2) career factors; and (3) extra-organizational factors. Job Factors — those stressors over which the employer has the most control, as follows: Organizational policies — employee rights, affirmative action, promotions, transfers, etc. Organizational structure — degree of centralization, employee participation, normalization, etc. Organizational climate — supportive relations, trust, friendliness, concern for employee welfare, etc. Organizational Processes — training programs, delegation, controls, performance feedback, etc. Working Conditions — overcrowding, privacy, spatial arrangements, noise, heat, cold, etc. Interpersonal Relations — trust, conflict, competition, recognition, etc. Job Demands — monotony, routine, repetition, time pressures, social interactions, etc. Role Characteristics — types of roles, role clarity, role ambiguity, role conflict. Career Factors — those stressors dealing with the worker's career development, career cycle, and career path. Under-promotion — being in a job below one's perceived ability, preparation, and expectations. Over-promotion — being in a job above one's perceived ability, preparation, and expectations. Mid-Career Crises — a sudden awareness of aging or a new awareness of one's limited situation. Middle Management — the development of that "caught-in-the-middle feeling." Obsolescence — real or perceived obsolescence, too old to learn new techniques, etc. Thwarted Ambitions — the frustrating perception that one's ambitions will never be realized. Job insecurity — fear of lay-off, downgrade, transfer, or other factor dealing with job security. Extra-Organizational Factors — those stressors from outside the organization. Societal Change — the disorientation and isolation caused by too much change in one's socio-cultural environment. Family Problems — dual careers, separation, divorce, etc. Financial Problems — debt or the inability to provide for current or future needs. Family conflicts — between work and family demands. Belief conflicts — between personal beliefs and company policies. Instructor Manual for Management: Leading and Collaborating in a Competitive World Thomas S. Bateman, Scott A. Snell, Robert Konopaske 9781259927645, 9781259546945