Change Management

Duane P. Truex, Ph.D.

Associate Professor Robinson College of Business Department of Computer Information Systems

Two Change Management Truisms

1. 2. We prefer the familiar to the comfortable. We prefer the comfortable to the better.

So our role is -to make the better both familiar and comfortable.

Look Familiar?
The Natural Reaction to Change
Productivity Deny the change Accept it

Resist it

Consider it Reject it Time

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Types of Organizational Change Programs

Structural change (e.g., a machine model of organization)
Organization parts are sets of functional parts. Management shifts, eliminates, changes the parts. Driven from the top down Examples: mergers, acquisitions, divestiture

Cost cutting
Elimination of non-essential activities; squeezing cost from operations

Process change (e.g., BPR)

Focus on how things are done

Cultural change
People-sided From command-and -control toward participative management From product-push to customer-orientation
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Two different approaches to change

Change drivers
Near-term economic improvement (or turnaround) Improvement in organizational capabilities Termed Theory E or Theory O
(HBS Michael Beer and Nitin Nohria)

Theory E and Theory O

Theory E: Economic
Dramatically and quickly improve shareholder value Measured by improved cash flow or share price All implicit contracts between company and employees are suspended; produce or you are gone; failure is NOT an option All organizational elements are like chess pieces on a chessboard Non value-add elements are especially valuable Top-management and inner-circle driven Examples: GE under J. Welsh; IBM under L. Gerstner
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Theory O
Goal is to change
Organizational culture to one supporting learning and high performance Committed, capable, relatively autonomous employee is best asset
Implicit contract can never be broken

May be incompatible with top-down direction

Highly participative from within the ranks

Examples: Schwab, Merck, 3 M, Intel, Microsoft

E, O which is best?

Neither is a shoe in

Theory E may lead to short-term gains but hurts long term

Look at the IBM example And may backfire 1990s downsizing did not guarantee higher performance

Theory O is a huge, multi-year project Hybrid approaches generally preferred

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Comparing Theories of Change

Seven steps to Creating Change

1. 2. 3. 4. 5. 6. 7.

Mobilize energy and commitment through joint identification of problems and solutions Develop a shared vision Identify the leadership Focus on results, not on activities Start at the periphery, then let it spread Institutionalize success through policies and structures Monitor and adjust as you go
People will quit, elements will fail, the setting may change

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Eight Factors for Successful Change Management

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Critical points in the change process

Old status quo
Reject

Foreign element introduced

Try to reject foreign element
Cant reject Accommodate

Try to accommodate foreign element in old model

Cant accommodate

Transforming idea

Try to transform old model to receive foreign element

Transform

Cant transform

C H A O S

Try to integrate
Integrate Master

Cant integrate

New status quo

Practice to master transformed model

Cant master

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Change management process Change management vs. Change Control

Change management is a construct focusing on the organizational elements Change control largely concerned with the technical
assessing, choosing, implementing changes to the technical system

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Change management approach

While change
Create a project team dedicated to change Communicate the vision and goals of this team Monitor people/organizational issues Determine change management processes/practices Reorganize to support processes and practices Implement processes and practices Monitor completion of the plan; tasks and milestones Communication feedback, revise processes and practices as required Further the buy-in with continuous training/skills updating

Repeat

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Where should we direct change efforts?

High

Form Relationships
Market Differentiating

Innovate

Who Cares?
Low Low

Keep Pace

Mission Critical

High
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Caveats
Changing behaviors is a pain, however, being properly aligned and focused might be the most important work we do. What differentiates today can be parity tomorrow (i.e. Fast Pay). Constantly evaluate and re-evaluate previous decisions and priorities. Then make adjustments, a.k.a. change There are no complexity initiatives -they seem to happen by themselves.
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