Strategic Change
Drs. Suhartono MBA., MA . PhD
(cand)
Source: Shein (2011)
Process Models of Organization Change
Strategic Change:
The Paradox of Revolution and Evolution
DISCONTINUOUS CHANGE
CONTINUOUS CHANGE
Emphasis on
Revolution over evolution
Evolution over revolution
Strategic change as
Disruptive innovation/turnaround
Uninterrupted improvement
Change process
Creative destruction
Organic adaptation
Change magnitude
Radical, comprehensive, dramatic
Moderate, piecemeal, undramatic
Pace of change
Abrupt, unsteady, intermittent
Gradual, steady, constant
Change requires
Sudden break with status quo
Permanent learning and flexibility
Environmental jolts
Trigger shock therapy
Require continuous adjustment
Change pattern
Punctuated equilibrium (Equilib
Gradual development
is not the ends)
Change Management Effectiveness
Successful
Change
Post Implementation
Inkorporasi
Refreezing
Implementation
Implementasi
Moving
Concept &
Design
Inisiasi
Unfreezing
Bus Need
Awareness
Desire
Knowledge
Ability
Reinforcement
Resistance to Change
(Connor, 1995)
•
•
•
•
•
•
•
•
•
Lack of Trust: distrust of the people who propose it.
Belief that change is unnecessary: if the current way of doing things has been
successful in the past and there is no clear evidence of serious problems that
require major change.
Belief that the change is not feasible: It seems unlikely to succeed.
Economic threats; personal loss of income, benefit, or job security.
Relative high cost: cost higher than benefit.
Fear of personal failure: some expertise obsolete and new ones that may
prove too difficult to master.
Loss of status and power: shift in relative power and status of individual and
subunits.
Threat to values and ideals: inconsistent with strong values and ideals.
Resentment of interference: do not want to be controlled by others.
Reactions To Change
•
•
•
•
Denial
Confusion
Loss
Anger
“People fear the uncertainties of change. The
slightest suggestion that things won’t stay the same
can cause panic…but the real problem isn’t the
change…it’s people’s reaction to that change.”
-Dr. Alan Zimmerman
Individual Perception and Changes
(Satier Model)
Integration
DENIAL
COMMITMENT
Pemungkiran
KINERJA
Understanding
Shock
Experimentation
Frustasi
Acceptance
RESISTANCE
EXPLORATION
WAKTU
Mengenali Fase Perubahan Persepsi
• Denial
Tidak percaya
– Apatis
– Tidak peka
Ada aktivitas tapi tidak ada kelanjutan
–
–
• Resistance
Kemarahan
– Depresi
– Pembangkangan
– Menyalahkan
– Absen
–
• Exploration
–
– Berambisi
– Over preparation (banyak rencana)
– Kebingungan mengenai prioritas
Tidak terkoordinasi, bekerja sendiri-sendiri.
• Commitment
–
– Fokus pada hasil
– Paham benar mengenai langkah apa selanjutnya
– Ada kepuasan kerja
– Bersiap dengan perubahan lebih lanjut
Percaya-diri ata kemampuan beradaptasi atas perubahan.
Prinsip
• Acting better than planning (tindak lanjut lebih membuktikan
dari pada rencana). Perbaiki Kesiapan Berubah dan
Pakailah cara Komunikasi sesuai perkembangan Persepsi
Karyawan dalam setiap tahapan berubah.
• Think Big, Start Small, Act Now (Bergagasan besar, dan segera
mulai dari yang bisa dikerjakan walaupun kecil).
• Mulai dengan antusias sejak awal. Ajak staff yang antusias di
awal implementasi.
• Jangan mengharap semua langsung berubah pada saat
inisiasi.
• Berikan bantuan dan dukungan setelah inisiasi.
• Berikan penghargaan / pujian untuk setiap langkah
keberhasilan walau itu langkah yang (masih) kecil.
Komunikasi dan Perubahan
DENIAL
RESISTANCE
COMMITMENT
Tell
Ask
Ask
Tell
EXPLORATION
Denial - Tell
• Confront: Hadapkan pada kenyataan mengenai adanya
tuntutan perubahan.
• Explain: Jelaskan alasan keharusan berubah.
• Explore: Gali perubahan sikap dan perilaku apa yang
diperlukan.
• Show: tunjukan sikap dan perilaku apa yang harus
lakukan.
• Allow: berikan waktu untuk mencerna dan merasakan
perubahan yang dibutuhkan.
Resistance - Ask
• Listen: dengarkan apa yang menjadi keprihatinan dan
kekawatiran staff dan tawarkan support.
• Acknowledge: Maklumi perasaan dan kegundahan.
• Allow: dengarkan dan lapangkan dada untuk menerima
komplain.
• Support: ikutlah berempati atas suatu kerugian atas
perubahan yang terjadi.
• Bersegera: menanggapi sesuatu hasil dari usaha
berubah, walau sekecil apa pun.
Exploration - Tell
• Konsentrasi pada prioritas perubahan.
• Fokuskan pada setiap tahap prioritas.
• Tentukan ukuran keberhasilan untuk setiap
prioritas.
• Pandu, latih, dan dampingi langkah-langkah
berubah.
• Mulai mengaktifkan pembentukan tim
kerjasama.
Commitment - Ask
• Akui dan rayakan sukses yang dicapai oleh seseorang
atau tim, berikan penghargaan (tidak harus materi) untuk
setiap kemajuan dan keberhasilah.
• Umpan Balik: diberikan sepanjang perubahan sedang
berjalan.
• Rencana ke depan berbagai kemungkinan perubahan
berikutnya.
• Membangun kerjasama tim yang telah ada agar lebih
solid dan lebih kuat lagi.
Komunikasi dalam Perubahan
DENIAL
RESISTANCE
COMMITMENT
Tell
Ask
Ask
Tell
EXPLORATION
Berurut,
Jangan
Meloncat
Berapa banyak dari Anda
di sini sebetulnya yang
TAKUT dengan
PERUBAHAN?
Kalau ada merasa
takut dengan perubahan
TOLONG ACUNGKAN TANGAN
19
Berapa banyak menurut anda
ORANG-ORANG di luar sana
yang takut dengan perubahan?
Kalau anda pikir banyak orang lain takut
(dengan perubahan),
TOLONG ACUNGKAN TANGAN
20
Fakta apakah yang
berbicara mengenai
‘pengakuan’ tadi?
Kebanyakan dari kita takut pada perubahan. Bahkan
ketakutan itu lebih besar dari pada apa yang kita
ingin akui terhadap diri sendiri.
21
Kita sering lupa melihat diri sendiri
pada saat melihat ‘banyak orang’
Apa yang kita persepsikan mengenai kebanyakan
orang, sebenarnya merupakan reflek-pikir (mirroring)
bahwa kita sendiri seperti yang kita pikirkan mengenai
orang-orang lain tersebut.
22
“Perhaps the only person
who likes change is
a wet baby.”
Anonymous
23
Based on the #1 Bestselling
Business Book
24
Understanding Through Animation
Who Moved My Cheese?
The Movie
25
SNIFF?
Who can smell change in the air.
26
SCURRY?
Who goes into action immediately.
27
HEM?
Who does not want to change.
“It’s Not Fair!”
28
HAW?
Who is startled by change, but then
laughs at himself, changes and moves
on to enjoy New Cheese.
29
The Sniff, Scurry, Hem & Haw
Parts of Ourselves
We may have a little bit of each of these
characters in us—which we can use to
help us deal with change.
30
Social Change
Diffusion of Innovations
Source: Rogers, Everett M. Diffusion of
Innovations, Fifth Edition. NY: Free Press.
Social Change
Adopter Categories
People and organizations typically can be classified according to the
timing of their adoption of new innovations.
1.
2.
3.
4.
5.
Innovators: Adventuresome, high risk.
Early adopters: Thoughtful, early adoption.
Early majority: The first to follow the lead of opinion leaders.
Late majority: Responding to pressure to adopt.
Laggards: Do not adopt for a variety of reasons.
Social Change
Social Change
Definitions
An innovation is an idea, practice, or object that is perceived as new. What might
seem familiar to some is new to others. Innovations can be material or
nonmaterial.
Diffusion is a process whereby an: (1) innovation is (2) communicated through
certain channels (3) over time (4) within social systems.
Creating social change requires: (1) a flexible political system (democracy), (2) a
willingness to change by people, and (3) a process of mobilizing resources for
change.
Social Change
The Innovation-Decision Process
People and organizations typically follow a predictable process of steps in
adopting innovations.
1.
2.
3.
4.
5.
Knowledge: Information acquisition.
Persuasion: Evaluation of information based upon the opinions of others.
Decision: The acceptance of the innovation as a good idea.
Implementation: Trying out the innovation.
Confirmation: Deciding to permanently adopt the innovation.
Two-Step Flow of Communication
and Adopter Categories
Innovators
Sniffy
Early
Adopters
Scurry
Early
Majority
Haw
Potential target
audiences
Company Message
Opinion
leader(s)
Opinion recipient 1
Opinion recipient 2
Opinion recipient 3
Characteristics of Opinion Leaders
in contrast with their followers
•
•
•
•
•
•
•
•
More like, than unlike, their followers
More technically competent
More socially accessible
More cosmopolitan
More innovative (receptive to change)
Higher media exposure (more informed)
Higher social status
More conformist with social norms and values
Social Change
The Keys to Gaining Adoption of Innovations.
Education (information dissemination) is a necessary, but not sufficient factor of
adoption.
• People are understandably skeptical at first.
• Opponents will disseminate negative information.
• Negative information carries disproportionate weight in the short run.
Persuasion by opinion leaders can overcome skepticism and the negative inputs of
opponents.
• Opinion leaders are respected, outside agencies with no perceived vested
interest in the innovation.
Social Change
The Diffusion Effect.
Persuasion by Opinion Leaders.
• Opinion leader adoption deems the innovation as “ok.”
• The new idea/practice becomes socially acceptable.
Persuasion by Group Influence.
• As more and more persons adopt, social pressure builds for others to adopt.
• What once was “deviant” becomes “expected.”
Model of Transformational Leadership
Bass (1985)
TL motivates followers beyond the expected by:
 raising consciousness about the value and importance of specific
and idealized goals
 transcending self-interest for the good of the team or
organization
 addressing higher-level needs
Transformational Leadership Factors
Leaders who exhibit TL:
 have a strong set of internal values & ideals
 are effective in motivating followers to support
greater good over self-interest
Full Range of Leadership Model
Additive Effect of
Transformational Leadership
Guidelines for Transformational
Leadership (Yukl)
Articulate a clear and appealing vision.
Explain how the vision can be attained.
Act confident and optimistic.
Express confidence in followers.
Use dramatic, symbolic actions to emphasize key
values.
Lead by example.
Empower people to achieve the vision.
EARLY WARNING SYSTEM
The dynamics of change
‘paradigm’
The paradigm
Development
of strategy
Implementation
Corporate
performance
if
unsatisfactory
Step 1
Tighter control
Step 2
Reconstruct or develop
new strategy
Step 3
Abandon paradigm
and adopt a new one
Early Warning Signs
• Early Warning Signs
• In order to prevent these internal and external causes of
distress from festering until it is too late, effective
management teams must proactively look for potential
challenges, because the sooner they are identified, the
greater the likelihood that management can address them
successfully.
• Companies should remain vigilant by using four major
analyses:
–
–
–
–
management analysis,
trend analysis,
industry analysis, and
diagnostic and prediction models.
Management Analysis
• Management Analysis
– As the most common cause of internal distress, it
should come as no surprise that management of a
struggling company should be subject to a
rigorous analysis to determine whether it has the
personnel and skills in place to handle challenges.
Trend Analysis
• One of the best ways to determine whether a
company is heading for trouble is to analyze the
trends in its operating and financial performance.
• In postwar Japan, Dr. W. Edwards Deming used
trend analysis as a way to help then - struggling
Japanese car manufacturers produce high quality products, with the key observation that a
trend is often more important than the actual
numbers.
Sara Lee
Industry and Product Analysis
• In addition to monitoring trends in a
company’s own performance, managers
should use benchmarking to see where a
company stands in relation to its peers.
• Though no set of comparables will ever be
perfectly equivalent, it is valuable to see how
a company is performing compared to the
best, mean, or median performers in its field.
Strategic Drift
Amount of change
Environmental
change
5
3
Strategic
change
2
1
4
Time
Phase 1
Incremental change
Phase 2
Flux
Phase 3/4
Transformational
change or demise
SALES
VOLUME
TR
Rev
AR
and
MR
AR
Rev
MR
PowerPoint Slides Prepared
by Robert F. Brooker, Ph.D.
Slide 56
Amount of change
Sky Digital
Environmental change
Strategic change
Time
Amount of change
On-digital
Environmental change
Strategic change
Time
Diagnostic and Prediction Models
• Finally, several diagnostic and prediction
models exist to assist in the analysis of a
company ’s situation.
• Naturally, these models work on a “ garbage
in, garbage out ” basis, so any inputs, such as
financial data, must be heavily scrutinized to
ensure that they drive the proper conclusions.
Condition and Causes of Distress
External Causes
• As the name suggests, external causes represent exogenous
shocks to all or a significant part of the company, sending
management into a tailspin / chaos. Here are some
common external causes of companies ’ declines:
–
–
–
–
–
–
–
Economic Downturns
Industry-wide Issues
Shifts in Consumer Demand
Changes in Technology
Government Regulation
Changing Interest Rates
Changes in Business Model
Internal Causes
• Though managers are naturally eager to point to
external causes so as to deflect blame, a study
suggested that causes of distress coming from
within the company are six times more likely to
cause a firm ’ s failure.
–
–
–
–
–
Blind Pursuit of Growth
Overextension of Credit
Insufficient Capital
Fraud and Dishonesty
Product Issues
Cash Flow Timing Across the
Organizational Life Cycle
The gap between cash outlay for salaries and supplies that occurs later in a company’s
life (G2) typically exceeds that same gap earlier (G1).
Cash-flow Healthiness
• Fixed Charge Coverage Ratio (FCCR) = Cash
Flow / Fixed Charges
• Funded Debt to EBITDA = Funded Debt /
EBITDA
• Current Ratio = Current Assets / Current
Liabilities
• Tangible Net Worth = Tangible Assets − Total
Liabilities
Typical Covenants Tripped by
Downturns
Fixed Charge Coverage Ratio (FCCR) = Cash Flow / Fixed
Charges
• The fixed charge coverage ratio measures a company’s
ability to pay its fixed expenses, typically comprising
interest expense, the current portion of long - term
debt, capitalized leases, and rents.
• Lenders often insist on a minimum FCCR of, for
example, 2.0x, indicating that cash flow divided by
agreed - upon fixed charges must equal or exceed 2.0,
with cash flow measured quarterly on a rolling four quarter basis and adjusted for any unusual or one time items.
Typical Covenants Tripped by
Downturns
Funded Debt to EBITDA = Funded Debt / EBITDA
• Like many such measures, this ratio uses earnings
before interest, taxes, depreciation, and amortization
(EBITDA) as a proxy for cash-flow and compares it to
the company’s leverage as represented by funded debt,
which consists of outstanding debt, any deferred
purchases, and capitalized leases.
• Banks require that this ratio not exceed a specified
maximum ratio. Funded debt to EBITDA is expressed as
a maximum ratio, such as 4.0x, indicating that funded
debt may not exceed four times EBITDA for a similar
four - quarter rolling period.
Typical Covenants Tripped by
Downturns
Current Ratio = Current Assets / Current Liabilities
• The current ratio measures a company ’ s ability
to pay the liabilities it reports as due in the next
twelve months, as represented under generally
accepted accounting principles (GAAP) by its
current liabilities, possibly excluding the current
portion of long – term debt.
• It assumes that the company’s reported current
assets will be used to pay those expenses, so it
simply sets a minimum threshold of current
assets divided by current liabilities such as 1.5x.
Typical Covenants Tripped by
Downturns
Tangible Net Worth = Tangible Assets − Total
Liabilities
• This figure (also equal to total equity less
intangible assets) represents a cushion of sorts
for lenders, assuming that assets could be
monetized at their book values to cover the
company ’ s liabilities.
• However, as noted here and in Chapter Four as
well, GAAP accounting will differ significantly
from actual market values, so this covenant
should be treated with caution.
Z-Score (Altman)
Z-Score (Altman)
Tabel Z-Score
Strategic Change Leadership
Model of Transformational Leadership
Bass (1985)
TL motivates followers beyond the expected by:
 raising consciousness about the value and importance of specific
and idealized goals
 transcending self-interest for the good of the team or
organization
 addressing higher-level needs
Transformational Leadership Factors
Leaders who exhibit TL:
 have a strong set of internal values & ideals
 are effective in motivating followers to support
greater good over self-interest
Full Range of Leadership Model
Additive Effect of
Transformational Leadership
Guidelines for Transformational
Leadership (Yukl)
Articulate a clear and appealing vision.
Explain how the vision can be attained.
Act confident and optimistic.
Express confidence in followers.
Use dramatic, symbolic actions to emphasize key
values.
Lead by example.
Empower people to achieve the vision.