Introduction to Change Management for MBAs

Session Eleven

Paul Gibbons, BS, MA, MSc

Future Considerations LLC

Gibbons Associates LLP

June 21, 2010

University of Wisconsin-MadisonEvening MBA

Strategic Leadership MHR 765

© 2010 Paul Gibbons

My background

• UW graduate• 10 years as investment banker or derivatives expert on Wall

Street• 8 years at PwC as change ‘guru’ (innovation/ change/

leadership/ learning organizations/ transformation)• 9 years founding and running my own change management

consulting firm

• www.futureconsiderations.com • www.paulgibbons.net

• [email protected]


Today’s agenda

• Introduction to Change Management 18:15 - 18:30• Concept overview 18:30 –

19:30• Break 19:30 – 19:45• Tools and practice 19:45 –

20:00• Questions/ discussion 20:00 –

20:30

Introduction to Change Management


Change Challenges

• 70% of mergers fail to deliver expected shareholder value*

• 60 – 80% of re-engineering efforts fail*• Reports in drawers• Strategies on shelves• Shhhh…. Don’t mention Project Phoenix…• Hundred million dollar overruns

To be taken with a grain of salt! However, the US M&A market ALONE was about $1.7 trillion in 2007 so even if out by a factor of 2…


Change Management

• Vast academic subject• Two year Masters program• Five year PhD program

• Substantial even for practitioners• PwC: 5 – day, 2 – day, 4 – day and 4 – day for basics

• Why so hard?


Thought exercise

• Think about a personal change (diet, lifestyle, relationship status, employment status)• Human psychological frailty

• Think about a change to a small system (family, community)• Social system resistance

• Think about a change to a business (say a merger)• Social and technical system resistance

• Think about a change to an ecosystem (multiple businesses, state and federal government, diverse communities, mixed ideologies…)• All of the above plus political and ideological


Definitions

• Change management is a structured approach to transitioning individuals, teams, and organizations from a current state to a desired future state. ...

• Activities involved in (1) defining and instilling new values, attitudes, norms, and behaviors within an organization that support new ways of doing work and overcome resistance to change; (2) building consensus among customers and stakeholders on specific changes designed to better meet their ...

• WARNING…. some people mean this… The change management process in systems engineering is the process of

requesting, determining attainability, planning, implementing, and evaluating of changes to a system. ...


Key concepts

• Resilience• Resistance• Stakeholder• Involvement• Complexity

Resilience


Resilience: definition

• Resilience in psychology is the positive capacity of people to cope with stress and catastrophe. It also includes the ability to bounce back to homeostasis after a disruption. ...


Why resilience is important

• Whether you are CEO, VP, middle manager, new hire, or administrator, how you respond emotionally to change will determine (at the very least) your level of enjoyment/ happiness/ satisfaction and your performance…

• BUT, as senior change leader, the effect of your mood, disposition, orientation (how you are handling stress) will be multiplied many many times over

Why?


Developing resilience #1

• ‘Inside job’ Don’t sweat the small stuff Grant me the serenity to accept the things… courage to change the

things…wisdom to know the difference

• ‘Western’… Change is: Personally difficult, conflict ridden, stressful Elizabeth Kubler-Ross on grieving/ loss Inventory of ‘stressors’ (divorce, death, birth, becoming rich,

becoming poor)

• ‘Eastern’… life is all change ‘You can never step in the same river twice’ (Heraclitus) All is flux, cycles, ebbs and flows Permanence is an illusion Attachment to status quo is what makes life difficult


Developing resilience #2

• SupportThings that enhance personal well-beingAristotle’s ‘friendship of virtue’ – friends don’t ‘co-sign your BS’

(they challenge, tell you the truth)

• Question:What sort of support mechanisms do you have?What do you need to remember to do?

Resistance


Structure of resistance

Individual Rational/ analytical Social (friendships, communities, solidarity) Political (alliances, coalitions, power, control) Ideological (ethics, worldview, religion) Emotional (loss, anxiety, resentment)

GroupCulture (norms, values, unwritten rules)Authority structures/ leader attitudes/ behaviourGroup dynamics (group think, in-group, Abilene…)

Systemic“Hard” aspects of system that determine behaviour (reward,

structure, processes, systems, etc)


Symptoms of resistance

• Distancing Missing meetings/ un-returned calls Missing deadlines, breaking agreements Denial, “checking out” – emotional distancing Absenteeism/ turnover

• Dissent Overt disagreement – disputation, argumentation Covert disagreement – gossip, slander, rumour, dishonesty Organised resistance – strikes, union intervention

• Delay Intentional slowdown (like filibuster) Prevarication (endless discussion & planning) Procrastination

• Destruction Sabotage


Dealing with resistance

• Complicated, not one size fits all• Appreciate perspective: Shopfloor doesn’t care about an extra .5%

ROI!

• It rarely works to steamroller over people and groups unless you have a very big stick• Engage, engage, engage

• If it isn’t rational, then more facts and analysis won’t help• Most change is under communicated by a factor of ten (Kotter)• High-touch communication essential for people/ groups with

power (not posters, emails…)• Keep your friends close, but your enemies closer (Lao Tzu, Vito

Corleone, Machiavelli or Tony Soprano)

Stakeholder


Stakeholder

• Someone who will benefit from, be harmed by, or take an interest in…When change fails, it is often the case that a powerful

stakeholder or stakeholder group has been neglected, or alienated

• The stakeholder map is the simplest and most underused change tool…

• Once mapped, then…How much power do they have?How much do they benefit (harmed)?How do they feel now? How do we need them to feel? By

when?What influence strategies need to be used?


Change can be achieved through commitment or compliance

Engagement"I see the implications for me / us"

Understanding"I know why and what will change

Awareness"I am being told about something"

Positive perception"I see the opportunity in this change"

Testing"I will put myself at stake for this change. I want to do something."

Action“ I am acting for this change, but sometimes it is hard”"

Embodiment“This is natural for me – how else could I do it?"

Negative perception"I feel threatened by this change"

Testing“What are the consequences? Testing the consequences.”

Reaction“Experience of change - and of consequences"

Compliance

“ I have to do it this way!It is not as bad as it looked”

Each stage requires energy At each stage there is a

price for–continuing / staying–for dropping off

The commitment curve

Involvement


The most important model

Increasing Involvement. Commitment, Creativity and Decision Making (and time and complexity)

Complexity


Complexity: technical


Complexity: dynamic

Newtonian view

Cause and effect are uni-directional linear Y = M * X capable of isolation (reductionism) close in time and space

Leading to… simplistic solutions quick fixesunrealistic expectations

about benefits flow


Complexity: social complexity

• Not such a big issue where power is concentrated in hierarchies such as a single branch of the military

• However, where power is diffused…Improving school performanceTeachers/ teachers unionsProperty tax payersSchool board representativesLegislators: local, state and federalParentsChildrenSocial services


Complexity: take-away

• Knee-jerk reactions may be jerk reactionsAutomatic reactions are based on ‘old-school’ way of thinking

• Test hypotheses about cause and effectMost common error = changing the organization structure

• Try to model the systemCannibalizing own market share

• Identify the blockage/ leverage pointExample: throughput and reward

• Become an observer

Practice


Practice• Identify key stakeholders • Prioritize 3-5 • Analyze (power, benefits, risks) • Resistance: why might they?

• How do they see the situation?

• Do I need commitment or compliance? How much? What can I afford? What happens if I’m wrong (risks)?

• Involvement • To gain commitment, which approach is appropriate?


Discussion

• Identify key themes and learning with neighbor

• Come up with two questions..


Further questions?

• Paul GibbonsLeading and managing changeLeadership developmentInnovationCulture changeCoaching

• [email protected]

• +1 608 512 5916

Introduction to Change Management for MBAs

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Transcript of Introduction to Change Management for MBAs