© 2011 University of Southern California

Edward E. Lawler IIIMarshall School of BusinessCenter for Effective OrganizationsUniversity of Southern California

Built to Change: Management Reset Needed

NHDRN ConferenceNovember 17, 2011Bangalore, India

© 2011 University of Southern California 2

Drivers of the “New Normal”

The New Normal: Faster and Faster

ChangeFinancial, Social

and Environmental Accountability

Drivers of Agility

Technological Change

Globalization

Workforce Change

Drivers of Responsibility

The Rise of Community

The Rise of Environmental

Concerns

© 2011 University of Southern California

Signs of ChangeBut look at 2006 through a different lens and you'll see another story, one that isn't about conflict or great men. It's a story about community and collaboration on a scale never seen before. It's about… Wikipedia…YouTube and …MySpace. It's about the many wresting power from the few and helping one another for nothing and how that will not only change the world, but also change the way the world changes.

© 2011 University of Southern California

The B2∆ Model

CW95R (4)

• Why does planned change go so wrong so often?

1) We need better models, tools, and processes of organization change and development.

2) The concept of “stability” is a pervasive assumption in principles of organization design and buried deep in the managerial psyche. Most organizations are “anti-change.”

• Avoiding the “In Search of Excellence” trap.

© 2011 University of Southern California

Nature of Episodic vs. Continuous Change

Relatively higher levels of change over long periods of time

Relatively long periods of stability are punctuated by short bursts of transformational change

Amou

nt o

f Cha

nge

Time

Amou

nt o

f Cha

nge

Time

Episodic Change Continuous Change

© 2011 University of Southern California

Implications of Episodic vs. Continuous Change

• Change capability embedded in organization design

• Focus on ambidexterity• Change = Effectiveness• Stability = Enemy• Performance reflects change pattern• Decision making shared/decentralized• Resources allocated through

accountabilities

• Change capability lacking – rented when needed

• Focus on efficiency over innovation• Stability = Effectiveness• Change = Enemy• Performance reflects change pattern• Decision making centralized• Resources allocated through budgets

Amou

nt o

f Cha

nge

Time

Amou

nt o

f Cha

nge

Time

Episodic Change Continuous Change

© 2011 University of Southern California EL14V

Repaint our Stripesor change our DNA?

From Omar El Sawy, USC Marshall School of Business

© 2011 University of Southern California 8

The Four “Ways” of An Agile, Sustainable Management Organization

The way value is created…utilize a differentiated future focus, a sustainability-friendly identity, and a robust strategic intent

The way work is organized…employ a “maximum surface area” structure, a flexible resource allocation system, transparent information, and a dynamic work system

The way behavior is guided…leverage a shared leadership philosophy and a remodeled board of directors

The way talent is treated…focus on human capital development and flexible reward systems

© 2011 University of Southern California 9

SMO Performance Management Principles Establish a balanced scorecard that includes social and

environmental goals as well as performance objectives Set talent development objectives that include the

acquisition of sustainability related competencies, including collaboration, networking, relevant subject matter knowledge, and so on

Don’t assume an annual appraisal is often enough – agility requires relatively short cycle times of project progress taking

Use web-enabled technology to support flexible performance management processes

© 2011 University of Southern California 10

SMO Talent Principles

Build a “Travel Light” Talent Brand to Support Agility Use Competencies to Drive Talent Management Identify Pivotal Work Skills Create Career Diversity – Give Individual Choices Make Career Management the Individual’s

Responsibility

© 2011 University of Southern California

The “Ways” of a Sustainable Management Organization

My definition of leadership is very simple: if you positively influence someone, you are a leader.

Paul Polman, CEOUnilever

I think we are at the end of a difficult generation of business leadership. Tough-mindedness…was replaced by meanness and greed. The richest people made the most mistakes with the least accountability. In too many situations, leaders divided us instead of bringing us together.

Jeff Immelt, CEO G.E.

The way behavior is guided…leverage a shared leadership philosophy and a remodeled board of directors

© 2011 University of Southern California

MANAGEMENT APPROACHES

To what extent do the following approaches describe how your organization is managed?

MEANS

USA1 CANADA2 AUSTRALIA3 EUROPE4 UK5 INDIA6 CHINA7

Bureaucratic (hierarchical structure, tight job descriptions, top down decision making) 2.8 2.5 2.8 2.6 2.7 2.6 2.8

Low cost operator (low wages, minimum benefits, focus on cost reduction and controls)

2.067 1.867 1.967 2.167 2.27 2.91234 2.812345

High involvement (flat structure, participative decisions, commitment to employee development and careers)

3.07 3.1 3.27 3.27 2.9 3.1 2.7134

Global competitor (complex interesting work, hire best talent, low commitment to employee development and careers)

2.77 2.346 2.6 3.127 3.07 3.227 2.31456

Sustainable (agile design, focus on financial performance and sustainability) 3.3 3.67 3.5 3.4 3.4 3.77 3.026

Response Scale: 1 = Little or Not Extent; 2 = Some Extent; 3 = Moderate Extent; 4 = Great Extent; 5 = Very Great Extent1234567 Significant differences between countries (p ≤ .05)

© 2011 University of Southern CaliforniaQ23

“There is nothing wrong with change, if it is in the right direction.”

– Winston Churchill