Organizational Change
Often viewed as the best part of
the job by managers. Making the
organization better. Putting a
person stamp someplace. Having
an impact.
Managers careers often based on
making positive changes.
Examples of change topics
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Financial—Lots of companies and
overstating profits.
Strategic--changing strategic goals
(turnaround). Address IBM and EK
Organizational (higher levels)
Developing policies and procedures
New product development
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Implementing a new customer service
program such as phone courtesy
Technology development
ISO certification
Adopting a common MIS platform
across departments
Two cases
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Success--IBM
Limited Success--Eastman Kodak
Once upon a time…..
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Watson and IBM. Bigger is better.
Then the shining star loses its luster.
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Dark days and nights. Bankruptcy?
Video.
What did Gerstner do?
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Retrenchment
Reanalyzed the market. Main Frame to
PCs. Strength was service--consulting.
This has been major growth area for
IBM.
Money put into R and D. IBM leader in
Patents.
We will continue to improve the execution
of our strategies to produce marketplace
wins, chiefly by strengthening and
leveraging IBM's unique breadth of people,
skills and technology — assets many of our
competitors are trying furiously to replicate.
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Reorganized--Example with PC division.
Cost cutting to be competitive with Dell.
Outsourcing production. Reduce parts
and models, just in time delivery.
Increasing inventory turns.
Created Single world wide sales
division. (Functional overlay).
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New hires Gerstner. Hired Dell’s
procurement manger.
Change culture from Academy to
baseball team. Slow process. Top
down, turnover, new hires.
Today--IBM rebound. Dominant player
in PC market challenging Compaq.
Loss of $7/share in 1993 to Gain of
$6/share 1997. Major consultant #2.
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IBM has had its Ups and downs.
Overall, much healthier bottom line.
Once upon a time famous inventor
develops the Camera. New fields
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Dominated by Eastman-kodak.
Peace and happiness throughout the
kingdom until
One day the dreaded Japanese
dragon came to ravage the kingdom
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Strong kingdom and
not overwhelmed,
but continual
damage was
threatening.
Call went forth for a new Prince
Eastman Kodak
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Hired Fisher as CEO.
Slow to retrench--gentle touch and
gradual.
Change culture and promote risk taking.
Strategy New products--Digital
camera’s not player in the market.
Royal Gold film.
Build a world-class, results-oriented culture . . . by
providing customers and consumers with solutions to
capture, store, process, output and communicate
images to people and machines anywhere, anytime . .
. bringing differentiated, cost-effective solutions . . .
to the marketplace quickly and with flawless quality
through a diverse team of energetic employees with
the world-class talent and skills necessary to sustain
Kodak as the World Leader in Imaging. In this way,
we will achieve our fundamental objective of Total
Customer Satisfaction, and our consequent goals of
Increased Global Market Share and Superior
Financial Performance."
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Change the culture--top down to teams.
Slow to change.
Not the classic turnaround. Flat to
declining sales.
Latest with EK
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New CEO Internal promotion.
Still price war and flat to declining
revenues
New Mission
We plan to grow more rapidly than our competitors by
providing customers with the solutions they need to capture,
store, process, output and communicate images—anywhere,
anytime. We will derive our competitive advantage by
delivering differentiated, cost-effective solutions—including
consumables, hardware, software, systems and services—
quickly and with flawless quality. All this is thanks to our
diverse team of energetic, results-oriented employees with the
world-class talent and skills necessary to sustain Kodak as the
world leader in imaging.
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Another corporate restructuring of the
film division.
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Profits simply based on reduced
operating costs.
Stock has never done well in the past 5
years. Even during the stock boom.
In teams
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What are common elements
What are differences
Creating changes as a process.
Most important advice about
creating change.
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Its often political.
Within a department it may be less
political. Example, reorganize jobs.
Between departments it highly political.
Culture wars.
Two aspects of Politics
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Power (all people involved with change
have some power)
Self-interest (all people involved with
change have some self-interest) Some
cases differentiation and sub goals.
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To create change you need to manage
power issues and self-interest issues.
Important to not only gain acceptance
but gain commitment to the change.
Following Waremart through
Change
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Growth No Frills grocery store.
Low prices, low costs, high volume.
Decentralized Decision Making.
Gunslinging culture.
Grew to need warehouse.
Minutely planned and tight control.
Conflict
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Differentiation--different goals and
different cultures between retail and
distribution.
Vendors would play them against each
other.
Ideally gain commitment through
changing perceptions.
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Usually identifying a gap and preparing
for a change. Motivational. We have a
problem and change is required.
Bad news is good news for change.
Opportunity seeking--changes in
strategic orientation.
Pitfalls
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Hard to give up mental maps/game
plans
Simplistic views of the past future
Wanting to maintain equalibrium/habit
Waremart
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Consultants
Both sides new there was a problem but
blamed others.
Examined communication patterns. No
compromise in building new distribution
center. All alternatives got shot down.
Gridlock. Everyone new unacceptable
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Forcing in conflict resolution was the
dominant mode. Compromise was not
showing on the “radar”.
Confrontation
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The system is broken
Use images not facts.
Repeat the message
Create confrontations or point out
problems.
(marketing)
Barrier
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Uncertainty of the change. I have an idea but
critics wonder if it works.
George Bush and Social Security. Bold
initiative—but will it work.
Need to alleviate uncertainties.
Make it clear what is expected
Make the benefits clear.
Make sure resource available to support
change.
Waremart
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Focus on disaffected managers and
gaining their support rather than the
dominant in fighters. As change
occurred these people supported
needed changes.
Education on building of culture.
Actually use of it in discussion.
This is the execution.
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Controlling issue. Monitor progress.
Early identification of problems.
Helps to share successes
Barriers
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Failure to finish.
Execution of a game plan. Start with
small wins.
waremart
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Differences in cultures. But work to
bridge the differences. Cultural training.
Some old guard supervisors who could
not adjust were let go.
Issues of Power
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Power of resistors to change
Power of those with competing agendas
Power of those with compatible
agendas.
IBM
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Emphasized force coercion.
(downsizing and dictate). Did use some
others as well
EK used
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Rational persuasion as first choice but
used others too later (such as
downsizing and restructuring).
Also tried shared power through teams
and mixed success. Best example was
Royal gold.
Tradeoffs between speed and
acceptance
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Downsizing which would probably be
best.
Policies and procedures governing
family leave which would be best.
Example
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Sexual Harassment Policy
Different ways to do it.
How do you manage change.
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What would you do?
Sources of resistance?
How would you overcome those
sources.
Summary
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Managing change most demanding and
challenging (in positive sense) part of
the job. If you like this, excellent
chance you will be a successful
manager.
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Political--error assume boss orders it
and it will occur.
Different ways to achieve results.
Tradeoffs.
Resistance to change is critical aspect
to manage and manage early in the
process.