Developing Capabilities for Lean
Enterprise Change
George Roth
April 24, 2008
Enterprise Change Challenge
• Adapting to ever-changing external environments
• Managing increasing technological complexity
• Coordinating across multiple stakeholders and interfaces
• Working through collaborative networked enterprises
MOVING FROM THE PAST
(vertically integrated) organizations
TOWARDS THE FUTURE
(networked) enterprises
2
Good Leadership Practices
Survey: Which of the following good leadership
practices do you find in your company?
1.
2.
3.
4.
5.
6.
7.
8.
9.
becoming an outspoken and charismatic company and industry leader
paying-for-performance to ensure results
emphasizing good strategy and well articulated long-term plans
creating a relentless focus on “what to do” (core competence)
using technology to drive change
letting your mergers and acquisitions ignite change
focusing your mgmt team on managing change, motivating people, and creating
alignment
using convincing names, tag lines, and launch events for change programs
positioning yourself in promising, high-growth industries
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
What is your organization’s
score?
_____
Nine “good” management
practices not
found
in great companies
(from Collins 2001: 10-11)
3
Collins’ findings
11 out of 1435 public companies (Abbott, Circuit
City, Fannie Mae, Gillette, Kimberly-Clark,
Kroger, Nucor, Philip Morris, Pitney Bowes,
Walgreens, and Wells Fargo) changed into
companies that produced sustained
great results:
–
–
–
–
–
–
Level 5 Leadership
First Who... Then What
Confront the Brutal Facts
The Hedgehog Concept
A Culture of Discipline
Technology Accelerators
4
Limitations of Planned
Organizational Change
Multi-organization
Focus
is onform:
single
enterprise
• organizations:
New organizational
•forms
Our correlate
opportunities
with are
CEO
Executive
Board
3
3
7
3
broad
and can not be
high
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addressed by single
organizations
•
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5
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7
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63 3
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7
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2
6
5
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1
Single organizations
are:
Enterprises
are:
Hierarchical
• •Poly-centric
Highlyrelationships
organized
• •Multiple
Tightlycoupled
coupled
• •Loosely
51
5
2
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7
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6
1
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37
73
33
3
Product
4
Development
3
7
3
Teams
3
3
7
6
6
1
3
33
7
1
5
5
2
3
37
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1
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2
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42
24 2
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Sales Engineering
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Product
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PTM
5
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7
PTM6
2
4
1
Vice President
Finance
2
5
2
Vice President
Materials
Management
1
2
6
5
5
2
2
4
3
7
3
1
1
2
6
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2
Vice President
Manufacturing
Sales and
Marketing
6
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2Vice President
Vice President
Research
and 3
7
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5
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http://lean.mit.edu
3
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Purchasing Research and
Development
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 5
Challenges of Enterprise
Change
CEO
Executive Board
3
7
3
6
CEO
3
3
7
Functions
3
5
3
7
6
6
Vice President
Sales and
Marketing
Vice President
Research
and 3
7
3
Development
5
Vice President
Manufacturing
Vice President
Materials
Management
Vice President
Finance
5
4
2
6
3
2
4
2
2
Product
4
Development
3
7
3
Teams
2
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3
7
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2
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1
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Division
3
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Division
3
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Manufacturing
Purchasing Research and
Development
1
Sales Engineering
1
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6
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• • Different
assumptions
about organizational
• Enterprisescontext
are:
Organizations
are:
•
• Hierarchical
Should
assume
• Highlynot
organized
• Tightly coupled
that we can
• Poly-centric
bootstrap
knowledge
• Multiple past
relationships
• Loosely coupled
• Need a theory of change built upon premises of working
both within and across organizational boundaries
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 6
Understanding
Lean+Enterprise+Change
What can we draw upon?
Research on
Research on
Lean
Enterprise
Research on
Change
•
Books/documented studies
• Toyota and “lean” – i.e. The Machine that Changed the World,
•
•
•
•
The Toyota Way, Remade in America, Collaborative Advantage
Management/leadership – i.e. Built to Last, Good to Great,
Execution, The Leadership Engine
Corporate/leadership – i.e. Jack, Who Says Elephants Can't
Dance?
Strategy/Change – i.e. The Innovating Organization, Leading
Change, Breaking the Code of Change, The Dance of Change
New case studies that develop and test
concepts – successful “lean” change
http://lean.mit.edu
lean+change
change+enterprise
lean+
enterprise+change
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 7
Successful
Enterprise Change
So, what does it take?
…beyond basics: consistency, people, training & metrics
• Rethinking organizational boundaries
• View own organization with suppliers and customers as a contiguous value stream
• extend the domain to include organization’s environment
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 8
An ‘enterprise’ is a set of connected organizations
Small, local
businesses
Centralized
hierarchical
organizations
o
o
o
o
o
1900
o
o
o
o
o
o
o
Complex networked
enterprises
o
o
x
o
o
o
o
o
o
o
o
o
o
1950
Source: Thomas W. Malone, 2001 “Inventing the Organizations of the New Economy”
2000
Enterprise Value Stream
•
A portrayal of the
relationships of the
organization in its external
environment
Value
Value
Value
and the general ordering
of high-level processes
across that organizational
environment
Value
Value
Value
Value
Enterprise Value Stream
Enterprise Leadership &
Governance Processes
Enabling
Infrastructure
Processes
Enterprise Leadership &
Governance Processes
Enabling
Infrastructure
Processes
Life Cycle
Processes
Life Cycle
Processes
Enterprise thinking
What is outside my organizational (or functional)
boundaries is not beyond my influence… or
improvement ability!
Product
Product
Markets
Markets
Customer
Markets
Capital
Capital
Capital
Markets
Markets
Markets
… rethinking organizational
boundaries
Integral
Modular
Modular
(Lean)
(Mass
(Mass))
Enterprise
Enterprise
Enterprise
Supplier
Markets
Supplier
Supplier
Markets
Markets
Labor
Labor
Labor
Markets
Markets
Markets
Enterprise thinking…
… evolving from lean improvement
efforts
Raytheon
Warner Robins ALC
Rockwell Collins
Ariens
Searching under the light
Successful
Enterprise Change
So, what does it take?
…beyond basics: consistency, people, training & metrics
• Installing sets of organizational innovations
• Complementarities of practices
• extend the scope to include sets of changes as coherent programs
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 15
“Lean” as a system that extends
beyond organizational boundaries
MacDuffie (1995):
•
Combination of HR practices (bundles) and flexible production
system technology (organizational logic) that explains
economic performance
• Bundles: elements in an internally consistent HR system
• Organizational logic: combination of use of buffers and work
systems for mass, transition, or flexible production systems
MacDuffie & Helper (1998):
•
Honda’s supplier support system (“BP”) at Capitol,
Progressive, Tower, Donnelly, SEWS & GTI:
•
•
•
•
•
•
•
Developing lean suppliers to support their lean production system
Consistent with internal practices and philosophy
Encourage fresh thoughts and engagement
Gather data and keep records of production system changes
Root cause (5 why’s) method
Develop contextual knowledge (“go see”)
Smooth flow and eliminate waste
New organizational forms
• The ‘N’ Form or Network Form
• The Horizontal Corporation
• The Boundaryless Organization
• The Cellular Form
The Innovating Organization
• The Federal Form
• The Virtual Organization
(Eds) Andrew Pettigrew and Evelyn Fenton
London, Sage, 2000
• The Learning Organization
• The Web
Innovative Forms of Organizing:
An International Perspective
(Eds) Andrew Pettigrew et al.
London, Sage, 2003
* Based on work by Andrew Pettigrew, University of Bath
European, Japanese and US
Comparisons 1992-1997
• Overwhelming Finding (1,500 companies)
– Common direction of change, but from different starting point
and some variation in pace across the 3 regions.
• Evidence of parallel organizational change, but little
evidence to support the thesis that firms are converging
towards:
• A Single Type, or
• A Set of Organizational Practices
• Across the 3 regions is greater evidence of boundary and
process changes than structure changes in the period 19921997.
18
* Based on work by Andrew Pettigrew, University of Bath
Systemic change:
Europe, Japan and US, 1992-1997
Europe
Japan
US
Structure (S)
30.3%
6.2%
16.5%
Processes (P)
74.9%
53.7%
82.3%
Boundaries (B)
44.9%
30.7%
57.0%
System 1 (S+P+B)
13.0%
1.2%
8.9%
System 2 (S+P)
25.1%
4.7%
12.7%
System 3 (P+B)
34.2%
18.7%
46.8%
System 4 (S+B)
16.4%
1.6%
11.4%
The 3 Dimensions
The 4 Systems
Very few companies adopting whole system of change
19
* Based on work by Andrew Pettigrew, University of Bath
Systemic change and performance*:
Summary of regression results
The 4 Systems
System 1 (S+P+B)
System 2 (S+P)
System 3 (P+B)
System 4 (S+B)
Pooled Sample of
Western Firms
UK
US
++
-
+
--
+
--
-
One symbol, + or -, indicates weak positive or negative significance; two symbols, ++ or --,
indicate strong positive or negative significance.
• The adoption of a full set of changes (System 1) increases the
probability of improving corporate performance
• The adoption of partial systems (System 2 and System 3) is likely
to reduce performance
20
* ‘High’ performance companies are in upper quartile of sector adjusted Return on Capital Employed
Strategic complementarities
“Doing more of one thing increases the returns
of doing more of another”
Milgrom and Roberts, 1995
• Investing in one practice makes more
profitable investing in another, setting off a
potential virtual circle of high performance
The Positive Proposition:
• Changing only a few of the system elements at a time may
not come close at all to achieving all the benefits that are
available through a fully co-ordinated move
The Negative Proposition:
• Partial moves may drive down performance
Competitive Advantage Grows Out of a System of Activities as a Whole
21
* Based on work by Andrew Pettigrew, University of Bath
Two big issues for leadership
in complementary change
Complementarities Traps
•
incremental change might lead to sub-optimal performance
•
some performance improvement could result in being trapped in
a sub-optimal success recipe
•
changing external and internal contexts of firm requires keeping
the “virtuous circle of change turning”
J – curve: things may get worse before they get better…
•
BP: Walters Æ Horton Æ Simon Æ Browne
•
Need for strong leaders to endure transition
22
* Based on work by Andrew Pettigrew, University of Bath
Rockwell
Collins:
complementary and
cumulative sets of
changes
web.mit.edu/lean
© 2005 Massachusetts Institute of Technology George Roth/032205 - 23
Change in global enterprises
We need a system that
• extends beyond our own organization (i.e.
suppliers, partners, and customers) and
• manages improvement and change as a set
across our structure, processes, and
boundaries
So… how do companies manage change, and
what is unique in an enterprise context?
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 24
Approaches to organizational change
Lewin’s Change Model
Unfreezing
Positive Model
Initiate the Inquiry
General Change
Model
Entering and
Contracting
Action Research
Model
Problem Identification
Consultation with a
behavioral scientist
Inquire into Best
Practices
Diagnosing
Movement
Discover Themes
Envision a Preferred
Future
Data gathering &
preliminary diagnosis
Feedback to Client
Planning and
Implementing
Change
Joint diagnosis
Joint action planning
Action
Refreezing
web.mit.edu/lean
Design and Deliver
Ways to Create the
Future
Evaluating and
Institutionalizing
Change
Data gathering after
action
© 2005 Massachusetts Institute of Technology George Roth/032205 - 25
John Kotter
Leading Change: Why Transformation Efforts Fail
(1996)
Effective Change involves eight sequential steps
1. Establishing a Sense of Urgency
2. Creating a Guiding Coalition
3. Developing a Vision & Strategy
4. Communicating the Change Vision
5. Empowering Broad-based Action
6. Generating Short-term Wins
7. Consolidating Gains & Producing More Change
8. Anchoring New Approaches in Culture
Successful
Enterprise Change
So, what does it take?
…beyond basics: consistency, people, training & metrics
• Pushing and pulling change
• Set in place the structure and process that enables virtuous learning and change
• extend the tools to integrate the divergent change approaches
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 27
What kind of change process?
Breaking the Code of Change Michael Beer, et al.
HBS Research Grant: conference in summer of 1998:
50 academics and 25 consultants and 6 CEOs,
debating the different perspectives on change.
comparative cases: Scott Paper, Champion Paper, Asda, GE
Two dramatically different assumptions
about the purpose for, and means of,
organizational change emerged:
• Theory E – based on Economic Value
• Theory O – based on Organizational
Capability
web.mit.edu/lean
Dimensions
of Change
Theory E
Theory O
Goals
Maximize value
Develop capabilities
Leadership
Top down
Bottom up
Focus
Structure and
systems
Corporate culture
Process
Programmatic
Emergent
Reward
system
Financial incentives
lead
Commitment leads
and incentives lag
Use of
consultants
Expert consultants
analyze problems
and shape
solutions
Consultants support
process to shape own
solutions
© 2005 Massachusetts Institute of Technology George Roth/032205 - 28
What kind of change process?
Theories E and O approach the problem of organizational
change from two different, but equally legitimate
perspectives....
neither achieves all the objectives of management in
most cases!
Dimensions of
Change
Theory OE
Goals
Embrace paradox between value and organizational capability
Leadership
Set direction from top and engage people from below
Focus
Focus simultaneously on hard and soft
Process
Plan for spontaneity
Reward system
Incentives reinforce but do not drive change
Use of consultants
Consultants are expert resources who empower employees
We need to be both “pushing” (E) and “pulling” (O) change!
web.mit.edu/lean
© 2005 Massachusetts Institute of Technology George Roth/032205 - 29
Frameworks for Lean Transformation: TTL
Strategic/Episodic Learning & Change
Long Term Cycle
Entry/Re-entry
Cycle
Focus on the
Value Stream
Adopt Lean
Paradigm
Initial
Lean
Vision
Decision to
Pursue
Enterprise
Transformation
Enterprise
Strategic
Planning
Challenge of
understanding, enabling &
managing
flow-down and feed-back
web.mit.edu/lean
Environmental
Corrective
Action Indicators
Focus on
Continuous
Improvement
Outcomes on
Enterprise
Metrics
Develop Lean Structure
& Behavior
Detailed
Lean
Vision
+
Short Term Cycle
Detailed
Corrective
Action
Indicators
Create & Refine
Transformation Plan
+
Implement Lean
Initiatives
Continuous/Process
© 2005 Massachusetts Institute of Technology
Learning
& Change
Lean
Transformation
Framework
Enterprise
Level
Transformation
Plan
George Roth/032205 - 30
Balancing Push & Pull Change:
Using Force Field Analysis
Social systems exist in a state of homeostasis
- the ability or tendency
of plans
an organism to maintain equilibrium and
I have
Lean my
Tools
& Principles:
hold to the status
quo
and
priorities
- We
are all part of the same value
canasI
stream and each onlyHow
as good
maximize my
our customers & suppliers
profit?
=
Change in the system comes from
• Increasing enabling forces
• Relaxing inhibiting forces
web.mit.edu/lean
© 2005 Massachusetts Institute of Technology George Roth/032205 - 31
Successful
Enterprise Change
So, what does it take?
…beyond basics: consistency, people, training & metrics
• Seeking growth opportunities
• Project positive vision for continual renewal
• extend the strategy to build in growth and development
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 32
Growth orientation
We repeatedly find that:
• Team and organizational development will get people
•
•
engaged and committed to improvement efforts
People committed to improvements efforts can produce
dramatic results
Resources and opportunities to are needed to continue
to vitalize development (feed growth)
Strategic/Episodic Learning & Change
Enterprise
Strategic
Planning
Decision to
Pursue
Enterprise
Transformation
Long Term Cycle
Entry/Re-entry
Cycle
Focus on the
Value Stream
Adopt Lean
Paradigm
Initial
Lean
Vision
+
Environmental
Corrective
Action Indicators
Focus on
Continuous
Improvement
Outcomes on
Enterprise
Metrics
Develop Lean Structure
& Behavior
Detailed
Lean
Vision
Short Term Cycle
Detailed
Corrective
Action
Indicators
+
Implement Lean
Initiatives
Lean
Transformation
Framework
Create & Refine
Transformation Plan
Enterprise
Level
Transformation
Plan
Continuous/Process
Learning & Change
web.mit.edu/lean
© 2005 Massachusetts Institute of Technology George Roth/032205 - 33
Growth orientation
How do you balance pull change (continuous
improvement, organizational capabilities, or theory
O) and push change (strategic direction,
economic value, or theory E)?
•
It is easier to align economic value creation and
organizational capability development when there are
growth opportunities
Growth orientation
web.mit.edu/lean
© 2005 Massachusetts Institute of Technology George Roth/032205 - 35
Growth orientation
•
Warner Robins ALC
Suppliers
Suppliers
OEM
Employees
Share- Employees
holders // Unions
Unions
Zero Sum Game
(Competition-based focus on splitting the pie)
web.mit.edu/lean
© 2005 Massachusetts Institute of Technology George Roth/032205 - 36
Growth orientation
web.mit.edu/lean
© 2005 Massachusetts Institute of Technology George Roth/032205 - 37
Lean Timeline
at LEAD
18 July 2002
October 2002
Feb-Oct 2003
September 2003
February 2004
August 2004
March 2005
May 2005
30 August
2005
http://lean.mit.edu
Col. Guinn joins as Commander LEAD
Lean launched at LEAD on Patriot RECAP program*
Lean launched on 3 other Patriot programs
$1.3 million refunds to Patriot RECAP program
$0.99 million refund check on SOCOM GMVs
$2.5 million total in refunds to Patriot & Avenger Reset programs
Lean launched on HMMMV RECAP program
HMMMV flow line operational
Col. Guinn succeeded by Col.
Swenson
© 2008
Massachusetts Institute of Technology
George Roth 01/23/08 - 38
Lean Savings = “Refunds”
to Customers
•
•
•
Lean reduces Utilized Labor expenses below their
fixed-price allocations.
Depot offers through MIPR* to perform Additional
Work during current FY, at no added cost to Customer,
which endorses and hands back its “refund check”.
Additional work adds current FY labor demand and
reduces its excess NOR.
Lean
Savings Returned
to Customers
* Military
Interdepartmental
Purchase Request,
DD448
= $5.8M
http://lean.mit.edu
LEAD has changed the business by giving money back!
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 39
Successful
Enterprise Change
So, what does it take?
…beyond basics: consistency, people, training & metrics
• Distributing leadership practices
• Recognizing interdependent roles in a system of leadership
• extend the leadership to all levels of the enterprise
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 40
Leadership Begins at Home
“Leadership is about capturing the imagination and
enthusiasm of your people and turning that energy
into action.”
“Make that action impress and astound
your customers.”
Daniel Ariens
What
did it
result
in?
Leadership Must Motivate Change
Is This Enough Motivation?
China - $19.30 + Freight
USA - $31.47/Internal
APS/Lean - $15.72
One Piece Flow Cell
Leadership for Learning & Change
Applying learning disciplines…
…is leadership in learning organizations
different from the leadership needed in
organizations with other goals?
Building an Ecology of Leadership
What do we mean by leadership?
CEO who drives change
vs.
Human community capable of shaping its future
(The Dance of Change, 1999)
Fundamental Issues
… paradox of the system…
activities…are rigidly scripted, yet
at the same time operations are
enormously flexible and adaptive.
… activities and processes are
constantly being challenged and
pushed to a higher level of
performance, enabling the company
to continually innovate and improve.
… observers confuse the tools
and practices … with the system
itself.
“Lean” cultural assumptions:
4 Rules at Toyota
Rule 1: All work shall be highly specified as to
content, sequence, timing and outcome
Rule 2: Every customer-supplier connection must
be direct, and there must be an unambiguous
yes-or-no way to send requests and receive
responses.
Rule 3: The pathway for every product and service
must be simple and direct
Rule 4: Any improvement must be made in
accordance with the scientific method, under the
guidance of a teacher, at the lowest possible level
in the organization
Source: “Decoding the DNA of the Toyota Production System” Spear & Bowen, HBR 99
What is the “lean”
culture?
A culture is a set of basic tacit assumptions about how the
world is and ought to be that
is shared by a set of people and
Artifacts
storiesthoughts,
people tell,
determines their perceptions,
feelings and behavior.
TOYOTA
visible organizational behavior, processes and structure
(hard to decipher)
Values
strategies, goals, philosophies
(espoused beliefs and justifications)
Basic Assumptions (mental models)
unconscious beliefs, habits, perceptions, thoughts, and feelings
(ultimate source of values and actions)
Culture manifests itself at three levels
the level of the deep tacit assumptions that are the essence of the culture,
the level of espoused values which often reflect what a group wishes to be
ideally and
the way it wants to present itself publicly, and the day to day behavior
Organizational Culture Model
"occupational communities" generate cultures that cut across organizations
Artifacts
Operator sub-culture
Values
Executive sub-culture
Engineering sub-culture
stories people tell,
visible organizational behavior, processes and structure
(hard to decipher)
strategies, goals, philosophies
(espoused beliefs and justifications)
Basic Assumptions (mental models)
unconscious beliefs, habits, perceptions, thoughts, and feelings
(ultimate source of values and actions)
Approaches to Managing Organizational Effectiveness
Approach
Goals to Set to
Measure Effectiveness
Description
External resource
approach
[Executive culture]
Evaluates the
organization’s ability to
Strategy,
Analysis
secure,
manage, and
control scarce and valued
skills and resources
Internal systems
approach
[Operator culture]
Evaluates the
organization’s ability to be
innovative
and function
Innovation,
learning
quickly and responsively
Technical approach
[Engineering culture]
&
• Lower costs of inputs
• Obtain high-quality inputs of raw
Planning
materials and employees
• Increase market share
• Increase stock price
• Gain support of stakeholders such as
government or environmentalists
• Cut decision-making time
• Increase rate of product innovation
and
OD coordination and motivation of
• Increase
employees
• Reduce conflict
• Reduce time to market
Evaluates the
• Increase product quality
organization’s
ability
to
• Reduce
number of defects
Lean, 6σ, TOC, re-engineering
& CPI
convert skills and
• Reduce production costs
resources into goods and
• Improve customer service
services efficiently
• Reduce delivery time to customer
from Organizational Theory by Gareth Jones, 1997
Leadership for learning
“Where are we going?
from
e
g
n
a
h
c
ul
f
s
f
s
o
e
c
s
c
m
u
r
S
o
f
:
4
ree
h
t
t
s
a
Premise
e
l
t
sa
e
r
i
u
q
e
r
learning
p.
i
h
s
r
e
d
a
e
l
What are we here for?”
Not
Enough
Time
Strategy
and Purpose
“We keep
reinventing
the wheel!”
Chapter 12
“We don’t
have time
for this stuff!”
Chapter 3
Diffusion
No Help
(Coaching
and Support)
Chapter 11
“Who’s in
charge of this
Business
Results
Governance
Chapter 10
“We have
no help!”
Chapter 4
Credibility
“We don’t know
what we’re
Personal
Results
tional
a
z
i
n
a
g
r
g the o
n
i
n
i
f
e
tion,
d
c
e
t
s
r
o
r
e
p
d
,
a
n
issio
tive le
• Execu ent, offering perm
that
.
t
s
x
y
environm
e
a
t
n
w
o
n
c
i
n, and
anges
o
h
i
t
c
a
g
u
l
n
i
a
roject,
p
v
p
o
e
l
a
e
v
d
e
n
d
u
o
aders
vity ar True
i
e
t
l
c
e
a
n
i
g
l
n
l
i
a
z
i
• Loc
Believers
galvan
,
s
t
l
u
s
e
and Nonr
.
y
e
t
i
c
l
i
b
fusing
a
f
i
t
d
n
produ
Believers
u
d
o
n
c
a
c
a
y
munit
aging
m
o
c
g
n
i
do not
d
and man
l
i
s
r
u
e
b
d
a
s
e
r
l
he line
etworke
t
n
t
l
a
a
h
t
n
r
e
e
r
t
• In
ing su
k
a
m
,
e
c
experien
.
Assessment and Measurement
act alone
“They won’t
give up the
R3
New Business
Practices
R1
“This stuff
isn’t
Networking
and Diffusion
Enthusiasm &
Willingness to
Commit
People
Involved
Not Relevant
Chapter 5
R2
Walking
the Talk
Learning
Capabilities
“I have no
idea what
these
people
are
“They don’t
understand us!”
“We
have the
right
Investment in
Change
Initiatives
Chapter 6
“They’re not
walking the
talk!”
(Am I safe? Am I
adequate? Can I
trust others? Can
I trust myself?)
Chapter 9
“They’re
acting
like
a cult!”
“This stuff
is______
“This stuff
isn’t working!”
Fear and
Anxiety
Chapter 7
Chapter 8
…all are needed in order to initiate and sustain deep change
Approaches to Managing Organizational Effectiveness
Approach
External resource
approach
[Executive culture]
Internal systems
approach
[Operator culture]
Technical approach
[Engineering culture]
Goals to Set to
Measure Effectiveness
Description
Evaluates the
organization’s ability to
Strategy,
Analysis
secure,
manage, and
control scarce and valued
N
skills anderesources
&
• Lower costs of inputs
• Obtain high-quality inputs of raw
Planning
materials and employees
• Increase market share
• Increase stock price
• Gain support of stakeholders such as
government or environmentalists
tw
o o
de ccu rk le
ve pa ad
lop tio e
Evaluates
• Cut decision-making time
hie thein na rsh
g
organization’s
ability
to
be
• Increase rate of product innovation
l c ip
ra
alilearning
innovative
and
rc function
o
Innovation,
and
OD coordination and motivation of
–
• Increase
g
m
h
c
n
quickly and responsively
ica m m ro employees
l a en uni •ssReduce
ing conflict
ut t w tie • Reduce
time to market
ho i t s
h
rit o
ut
y
Evaluates the
•
organization’s
ability
to
Lean, 6σ, re-engineering•
convert skills and
•
resources into goods and
•
services efficiently
•
Increase product quality
&Reduce
CPI number of defects
Reduce production costs
Improve customer service
Reduce delivery time to customer
from Organizational Theory by Gareth Jones, 1997
Distributed Leadership:
Countervailing directions for leaders implies a
system of leadership with distinct roles
Executive leadership to design and
implement complementary sets of
innovations
• Top-down, planned change (Theory E)
Local leadership empowered to
continuous improvements
• Bottom-up change and development of
CEO
3
Functions
3
7
3
capabilities (Theory 0)
Create culture of learning and
commitment to continual improvement
Evolve efforts based on past success
and insight into new opportunities
7
•
to drive economic value
• Set market strategy and financial
•
targets
• Arrange position within value stream
• Make needed systems and structural
changes
Middle
leadership to implement changes and
6
V ice President
Research
and
3
7
3
V ice President
V ice President
V ice President
Sales and
Manufacturing
Materials
Marketing
Development
5
V ice President
Finance
Management
5
4
2
Product
2
3
3
7
2
3
3
Teams
3
7
3
6
6
5
2
5
1
4
4
6
PTM
5
1
1
4
2
1
3
3
1
3
7
7
2
4
2
Product
1
Division
3
3
3
Product
Division
37
73
6
6
3
3
7
3
1
1
3
7
•
•
•
5
3
3
6
7
7
3
3
3
7
3
6
6
3 7
3
6
2
5
1
4
2
1
6
6
3
6
5
1
1
1
3
3
7
2
6
2
1
1
3
6
Product
Division
2
2
1
1
2
3
3
2
2
1
3
7
2
PTM
PTM 6
2
2
1
3
7
5
2
1
3
2
3
4
Development
3
5
4
2
6
2
3
6
1
2
encourage innovation
4
2
4
2
2
3
3
3
5
2
Follow direction from top and engage people from below (Theory OE)
Mentoring and coaching local leaders with directions from executive leaders
Prophesize future opportunities and provide feedback on current realities
5
5
4
4
5
5
5
5
4
2
2
2
2
2
2
42
24 2
24
2 2
5
2
3
3
3
3
3
2
2
2
2
2
1
1
2
2
2
4
4
3
3
2
2
1
1
2
2
1
3
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1 1
1
1
1
1
1
1
1
1
1
1
1
Network leadership to connect resources with opportunities
• Working across executive, local and middle leadership levels, creating communities
• Developing, testing and refining shared vision and alignment of efforts
• Finding needed resources inside and outside of organization
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 52
Distributing Leadership
Who are your leaders?
• What tools and methods do they use?
• How are they empowered?
• How do they facilitate learning and change?
Middle
Management
Executive Leaders
Line Leaders
Network Leaders
How are leaders aligned and their efforts integrated?
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 53
Successful
Enterprise Change
Rethinking
boundaries
Distributing
leadership
The system of change
~ leads to a ~
Installing
innovation sets
lean enterprise system
Seeking
growth
http://lean.mit.edu
Pulling &
pushing change
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 54
Implications for Executive Leadership:
Architecting an enterprise through a change system
• Strong, competent, and enduring leadership at all levels
• Bridging occupational communities to foster learning
• Managing the contention in roles of executive, local,
middle and network leaders
Improving, learning and changing their organization
and enterprise through these five capabilities:
• Enterprise thinking
• Complementary approaches
• Pulling of change
• Growth orientation
• Distributed leadership
Sharing authority by establishing principles and modeling
practices that executives adhere to and expect from
all other leaders
Questions?
Discussion
http://lean.mit.edu
© 2008 Massachusetts Institute of Technology George Roth 01/23/08 - 56