final paper-diego pardo-change management
TRANSCRIPT
INTERNATIONAL SCHOOL OF MANAGEMENT
MBA PROGRAM
FINAL PAPER – CHANGE MANAGEMENT
COMPARISON OF THE COOPERATIVE CONTEXTUAL CHANGE MODEL (3MC)
WITH SELECTED ARTICLES
PRESENTED TO: PROF. ALESSANDRO BISCACCIANTI
PRESENTED BY: DIEGO PARDO
PARIS – JUNE 2010
1
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY
2. COMPARISON OF M3C WITH ARTICLES
3. THE HARD SIDE OF CHANGE MANAGEMENT
4. ALL I EVER NEEDED TO KNOW ABOUT CHANGE MANAGEMENT I
LEARNED AT ENGINEERING SCHOOL
5. CRACKING THE CODE OF CHANGE
6. LEAD CHANGE: WHY TRANSFORMATION EFFORTS FAIL
7. THE PASSIVE AGRRESIVE ORGANIZATION
8. REFERENCES
2
1. EXECUTIVE SUMMARY
The Model of Cooperative Contextual Change (M3C) has a very effective and
complete context of what is needed before, during and after the process of change
management to maintain stability, reduce stress and achieve the different stakes of
the organization. Seeing it on contrast with other theories and models of other
authors in the mentioned article below, we can see that they have much similarities
and the same north direction, but the model goes deeper into the relationship and
reliability of the individuals. It embraces the whole process – of awareness,
stability, performance, and competitiveness - and doesn´t leave any loose parts. Its
steps or elements to stability are well defined and embrace in a whole the theory of
other authors (where each of them only refers to certain elements of stability).
The articles analyzed in this paper are The Hard Side of Management by Sirkin,
Keenan & Jackson (2005), All I Ever Needed to know about Management I Learned
it at Engineering School by Dickhout (1997), Cracking the Code of Change by Beer
and Nohria (2000), Lead Change: why Transformation Efforts Fail by Kotter
(2207), and The Passive Aggressive Organization by Neilson, Pasternack & Van
Nuys (2000).
This paper will take you through the four elements of M3C and make a contrast
with these five selected articles that have made change management essential for
today´s and future organizations. As you will see many elements of this articles are
very interesting and can aggregate value to the process, but they all lack of the
completeness of the Cooperative Contextual Change Model.
3
2. COMPARISON OF M3C WITH ARTICLES
As we saw in the seminar energy transforms and changes. Everything is energy!
When there is change stress is created and triggers all kind of fears. This stress
becomes a resistance to change and for this, the action is to trigger stability. By
creating change through stability we are creating conditions for learning.
There are four elements of stability to implement the Model of Cooperative
Contextual Change (M3C) seen during the three days of the seminar. These four
elements of stability (taught by Professor Alessandro Biscaccianti Ph.D.) are the
following: explicit stake (awareness), co-built & co-opted ground rules (stability),
systematic interfaces to initiate and regulate actions (performance), and solution-
oriented mindset (competitiveness).
I am going to explain each one of these four elements of the model and then relate,
compare and contrast them with the five articles chosen below. Not all the articles
have common factors or relations with the M3C. I think that the M3C is so complete
and well structured that in all the articles selected, and Kotter by my opinion is the
one that approaches most to the structure (then the DICE system). The others have
parts that can be related to some element of stability or simply talk about other
alternatives for solutions but not going into the root of the problems without
disaccrediting their valuable input on how to asses changing systems (some don´t
start with reducing stress levels from the beginning but induce theories of how to
manage change aversion with Laws – for example the article written by Dickhout
(2007)).
4
The 1st element of stability is to provide persistent direction and to make what is
at stake for everybody. During time there are going to be crisis (changes) and to
get to the stake and perform positively, the stability is crucial in this process
(stress levels have to be reduced). There has to be some cleaning done with the
conflicts in the system. The sponsor has to be the driver for change and he has to
be committed, convinced and aware of the stake (which is checking the
applicability of the model). The purpose of this element is to bring awareness of
the need for change. Individuals have to exchange and share information
between each other to see the big picture and have the entire context of the
situation.
Sirkin, Keenan & Jackson (2005) state en their article that the hard elements of
an organization have to be addressed before focusing on the soft ones
(leadership, corporate culture, employee motivation). These hard elements are
defined as DICE (duration, integrity, commitment and effort) an especially
integrity and commitment have to do with this first element of the M3C due to
the cleaning of conflicts. If you don´t have everybody under the same umbrella,
stake or objective you will encounter too much resistance during the process.
The need for change and DICE are totally converged with sharing the perception
to be developed.
In the article of Kotter (2007) he completely aligns this element of stability with
his first and third stage. The first stage talks about establishing a sense of
urgency. Drive individuals out of their comfort zone (very complicated) and
create a sense of urgency to change. This drive has to be made by the sponsor of
the M3C and totally reflects the third stage of Kotter by creating a vision. It’s
5
the need to clarify the direction which everyone must be on. It has to be direct in
the changing effort and there have to be strategies made to eventually deliver
that vision on the long run. This is making the context´s assessment and see if
everyone is on the same page and know why the change is needed and where are
we going.
The second element of stability is to encourage and promote the co-construction
and co-operation of the ground rules necessary to handle the interfaces between
the parts of the system and consequently enforcing those ground rules
permanently. The stake is setting the correct team and making people part of
something (remember that people support what they help to create!); make them
feel members to enhance the team´s stability. In this element the ground rules
are crucial for decision making (and it will reduce the friction of future problem
solving). There has to be communication, negotiation, decision making and
action to define the stake by strong consensus (making the rules). Very
important the relationship they are very different) between hierarchy and
leadership because the latter is available for everyone at every level while the
first one is used for stability.
Sirkin, Keenan & Jackson (2005) state en their DICE, specially the “I” of
integrity that is about picking the right team for the job. We know that there is
no perfect person or team but there has to be an effort of picking the right
quality team for to lead the process. Each team member has to have roles,
commitments, responsibility and accountability. Creating membership to
enhance the team´s stability is about integrity (they are well directed and
correlated with some of the elements of stability).
6
Dickhout (1997) states in his law of leadership that leaders are the trigger for
change. Sometimes it is hard to find (a true leader) but the acts and thoughts of
the leader will have big consequences on the change development. It is totally in
symphony with the second element of stability that also focuses on building a
team with strong consensus for creating the rules. This team as Dickhout says
has to share a vision and have aligned coalitions. His law of leverage also
applies here because it focuses on the things that will have the greatest impact
and addressing those changes. Finding the right levers and knowing how to use
them can multiply the effect by a thousand. It’s very similar to establish the
ground rules to play and know where the levers are going to be created (under
these rules).
Kotter (2007) says in his second stage that forming a powerful guiding coalition
is crucial. A minimum mass is created so that there is enough power for
coalition. Not only is the top level of management needed, but various levels
downstream of managers to generate momentum. These leader teams have to
include cross functional department heads. Encourage them to work as a team
outside the boundaries of the normal hierarchy. This is setting the team and
creating membership! (and as I said before Kotter goes similarly with the M3C
in many stages and related structure of steps).
The third element of stability is to adopt the systematic relationship methods’ to
initiate and regulate actions. Its purpose is to ensure individuals in the
organization gain power to enhance the team´s performance. The contextual
driveship is being able to give employees the necessary tools to have leadership
7
even if they are not on top of the hierarchy. There are two key concepts in the
model that are reliability and autonomy. Reliability is defined by the function of
commitment and competences (and the model has a reliability matrix to see
where it is located – stable, unstable, negative, positive). And autonomy, is
defined as the function of reliability and the inverse of the stake (autonomy also
has a matrix with the level of the stake and reliability). The autonomy curve
defines in which part of the curve a company is (between optimizing and
structuring) with respect to its level of autonomy (low – teaching; limited –
training; sufficient – delegating; and high – empowering).
Beer and Nohria (2000) state in their article that by the integration of the two
theories (theory E and O), we can create surplus value and great payoffs to the
corporation in the constant dynamic world of the present. Both of them will
create economic value for the shareholders and develop the structures of the
organization. But all of this with leadership and setting the direction from the
top and engage the people below. This converges with third element of ensuring
individuals power to enhance the team´s performance (initiating and regulating
actions). A reward system to use incentives to reinforce change but not to drive
it is propped by these authors. All of these factors try to make contextual
driveship.
Sirkin, Keenan & Jackson (2005) in their DICE talk about Commitment and
Effort and these correlate with the functions of autonomy and reliability (and
reflected in the matrixes) of the M3C. There has to be commitment and effort
from all levels. If employees from the bottom of t he pyramid don´t see these
8
qualities in the ones of the top, the change will not succeed (and always all of
them under the same stake).
Kotter (2207) states in his stage #5 that empowering others to act on the vision
is essential. If some system or structure is undermining the vision, it must be
removed or changed. Thinking out of the box, taking risks and non conventional
form of thinking and doing thinks must be encouraged. There can be problems
with employees that resist to change but they must be removed (or adapt to the
change process). And stage #6 says that planning and creating short-term wins
to define performance improvements and making a reward scheme to
compensate individuals who achieve them is crucial. This short term wins add
value and bring hopes high to the change process. These stages embrace the
third element of stability which purpose is to enhance performance. They are
initiating and regulating actions - there is commitment, interdependence and
reliability involved.
The fourth element of stability is to have a solution-oriented mindset with
cooperative innovation. The stake is producing meaningful solutions to
stimulate creativity to multiply the team´s competitiveness. There has to a
balance between the knowhow (experience), the behaviors, and the knowledge.
Individuals are asked to give solutions (that are simple and effective) better than
problems.
Kotter 2007 in his last two stages embraces this last element of stimulating
creativity to enhance competitiveness. By consolidating improvements and
producing more change. Promoting and empowering individuals that implement
9
the vision is recommended. The change process can be refueled by new projects
and change agents. And by institutionalizing new approaches they consolidate
unions between the new behaviors and corporate success. Show employees how
the new approaches and attitude have helped improve the performance of the
organization. Create new norms and values that are shared with the new
changes.
Dickhout (2007) says in his Law of Feedback and Adjustment that it is
important during the process there are constant adjustments to the program (it
impulses the competitiveness and empowers people to be solution oriented with
cooperative innovation – the forth element of stability). Even the same change
can create opportunities. It is important to have structures, objectives and targets
to provide contingencies on how to adjust on unexpected results. By analyzing
constantly and supervising the changes there will be a better response from the
organization. To respond in a dynamic form will create a time advantage.
3. THE HARD SIDE OF CHANGE MANAGEMENT
This article by Sirkin, Keenan & Jackson (2005) states that two out of every there
transformation programs do not succeed. There are two kinds of elements in a
company: the hard and the soft. The soft elements are leadership style, corporate
culture, and employee motivation among others. These types of elements are
overemphasized in the change management process and the hard elements are not
addressed first and properly. These essential hard elements are known by the
authors as DICE: duration, integrity, commitment and effort.
10
When any change management process is started, there is almost no agreement on
what points are the ones that trigger the change initiatives. Each top executive can
have different priorities on how to prioritize the key factors to success (in
transformation) because each one has his point of view and own experience. They
usually focus on the soft elements mentioned before. They are important, but there
are some elements that have to be addressed before those to manage a successful
change: the hard ones (DICE). These factors have three characteristics: first, they
can be measured in some kind of way; second, they can be communicated outside
and inside the company; and third, the company can influence them rapidly.
The four hard elements DICE are the following:
D uration: time is of an essence in change management projects. Companies
think that if a project is too long then it will have less probabilities of
succeeding. But the authors have seen that if there is a long project but it is
reviewed frequently, it has more chance of success than a short time project that
is not reviewed frequently. Corporations should review their transformations
projects at least each two months (and if it is a very complicated project it can
be narrowed to two week revisions). The time between each review is more
important than the life span of the change process (reviewing is the key).
Milestones should be made and observing their impact are the best strategy to
asses this hard element.
I ntegrity : this element is about picking the right team for the job. We know that
there is no perfect person or team but there has to be an effort of picking the
right quality team for to lead the process. But this team also has its day to day
work, so they have really to be compromised to go the extra mile to lead the
11
change management and also do their daily work. Each team member has to
have roles, commitments, responsibility, accountability and work together
(integrity). Sponsors have to measure the integrity and firmness of the team by
making private surveys to have feedback from the members. These teams have
to be problem solving oriented, organized and accountable for the decisions
made.
C ommitment : There are two groups of people that are key factors to have
committed in order to launch and have success the change project. The first are
the most influential executives in the company and the second are the employees
that are going to be affected directly by this change of processes, systems and
structures. If individuals form the lower side of the organization don´t see that
their leaders are committed to the project then everything will fall like a stack of
cards. Top executives have to communicate the need for change from the
beginning and not at the middle of the program. One on one conversations are
very good feedback. Believe in the company´s employees and that they can also
bring new fresh ideas that can lead to success (don´t underestimate them).
E ffort : generally before starting a change project employees already have a big
load of work and their schedules are pretty tight. The company has to be very
careful to the additional workload that this transformation project is going to add
to the members of the process. It is recommended that if their workload
increases for more than 10% is better to reduce their tasks in their daily
activities or get help from outsiders. If there are too stressed out with too much
work, they won´t be able to do either of the tasks effectively. This hard element
12
has to be thought before so that the change efforts are not frustrated later
because of excess demands.
By assessing these four hard elements before going into the soft elements we can
create a framework that can help the executive team evaluate the change pillars and
where are the success key factors of the project. These types of assessments are
subjective but they give an objective framework to make the right decisions on the
future process.
4. ALL I EVER NEEDED TO KNOW ABOUT CHANGE MANAGEMENT I
LEARNED AT ENGINEERING SCHOOL
This article written by Dickhout (1997) from McKinsey and Company of the
Toronto´s office, is about he had from his younger years the curiosity of how would
things worked. He followed his father´s footsteps by studying mechanical
engineering (and he says that they specialize in how make things go round and
round – in other words “making change”) and was overwhelmed by the forces of
nature and how this science could help him understand the power and trivialities in
life. Then many years later he saw himself working for McKinsey (consulting
worldwide company) and helping his clients to design change programs and make
them work by effective execution.
Dickhout states that many literature and books of management are sometimes useful
they lack of dynamic and change characteristics. They seem still and static. The
systems are not frozen, they are in constant change and they need to be assessed in
13
that manner. There are five basic premises he thinks that are the best changing
programs for organizational change and these are:
The Law of Constituent Balance : the company´s constituent stakeholders are
often on imbalance which is the reason and need for change. They compare it
with the balance and imbalance of an ecosystem. When the ecosystem is
knocked out of its balance, there are changes and redistribution of resources
until the balance is gained again. The same happens with a company. The
imbalance of the corporation should be used to create the conditions for change.
Management is key for these changes to be made.
The Law of Leverage : this law talks about focusing the change on the things that
will have the greatest impact and addressing those changes. Finding the right
levers and knowing how to use them can multiply the effect by a thousand
(simple levering mechanics). So it is very important to identity the real changes
to be made (and not do changes on everything), and when identified they have
to be treated with tenacity (more than normal or average). It is also important to
see the company in a number of layers (or dimensions) and see the entire
picture. Focusing on economic (costs and revenues) levers, then on
organizational (structures and processes) and finally on performance (mission,
vision and values).
The Law of Momentum : Energy has to be liberated to make the change work.
This energy can come from the inside (management) or the outside
(shareholders or consultants) of the system. All major change will need other set
of behaviors and these have to be well exploited by the leader change manager.
Consistency is crucial to go from a low to high performance accomplishment
14
because it is not automatic (it takes time). So, momentum has to be created
between these steps so that leadership, shared vision and capabilities are
endorsed. Achieving results and building more energy for the next step is the
answer.
The Law of Feedback and Adjustment : it is important that during the process
there are constant adjustments to the program. Even the same change can create
opportunities. It is important to have structures, objectives and targets to provide
contingencies on how to adjust on unexpected results. By analyzing constantly
and supervising the changes there will be a better response from the
organization. To respond in a dynamic form will create a time advantage.
The Law of Leadership : and at last, leadership is the trigger for change.
Sometimes it is hard to find (a true leader) but the acts and thoughts of the
leader will have big consequences on the change development. The leadership
team should not be big (two to three) and they should be role models. Have a
shared vision and align coalitions.
5. CRACKING THE CODE OF CHANGE
This article of Beer and Nohria (2000), talks about combining the quick creation of
economic value for shareholders and patiently develop a trusting corporate culture
in the long term to transform the way business change. Companies have realized
that either they change or they die. Even the dot-com´s know that they have to
manage change effectively with the exponential entrepreneurial growth. There are
15
two theories of change: theory E is change based on economic value and theory O is
based on organizational capability.
Going deep into each theory (through six dimensions of change: goals, leadership,
focus, process, reward system and use of consultants) we have that theory E
manages the change from the top level downstream, it focuses on structures and
systems, its process is by planning programs, and the reward system is based solely
on financial motivators. The theory O as we said earlier has as an objective develop
organizational capabilities, its leaders empower the lower levels and upstream (the
contrary of theory E), it focuses on creating corporate culture, and its reward system
is motivated with commitment.
But the real thing us that many companies use both theories. They try to apply both
of them but are not able to break the frictions between the two. The right path is two
combine the two but it is not easy because they go on opposite ways. But here is a
way to reduce the frictions between these two and create shareholder value and
stronger institutions. Companies that achieve these goals will gain profitability and
productivity as a synergy.
If combined the theories E and O we have the following (Beer and Nohria, 2000):
Goals: explicitly embrace the paradox between economic value and
organizational capability.
Leadership : set the direction from the top and engage the people below.
Focus: focus simultaneously on the hard (structures and systems) and the
soft (corporate culture).
Process: plan for spontaneity.
Reward system : use incentives to reinforce change but not to drive it.
16
Use of Consultants: are experts’ resources that empower employees.
The best way to combine these two theirs is two sequence them. The tension
between E and O goals has to be worked and confronted. On the other side you have
to setup the vision from the top of the organization and have commitment and
engage from the lowest part. The use of consultants can create very important value
through specialized knowledge and tactical competences that nobody has in the
inner side of the organization.
The integration of the two theories can create surplus value and great payoffs to the
corporation in the constant dynamic world of the present. Both of them will create
economic value for the shareholders and develop the structures of the organization.
“To thrive and adapt in the new economy, companies must simultaneously build up
their corporate cultures and enhance shareholder value; the O and E theories of
business change must be in perfect step” (Beer and Nohria, 2000).
6. LEAD CHANGE: WHY TRANSFORMATION EFFORTS FAIL
“Guiding change may be the ultimate test of a leader –no business survives over the
long term if it can´t reinvent itself. But human nature being what it is, fundamental
change is often resisted mightily by the people it most affects: those in the trenches
of the business. Thus, leading change is both absolutely essential and incredibly
difficult” (Kotter, 2007).
In this excellent article by John Kotter he basically states that change is not an event
but a process (and a long one). Managers have to understand that during this process
17
there are several stages that have to be followed in a certain order without taking
shortcuts. He presents these eight stages and the actions needed in each one:
I. Establish a sense of urgency : drive individuals out of their comfort zone
(very complicated) and create a sense of urgency to change. Convince at
least 75% of the managers that a change is needed. Looking at the market
and competitive factors for potential crises and opportunities not seen yet.
Do not paralyze for the overcoming risks.
II. Form a powerful guiding coalition : it is very important that a minimum mass
is created so that there is enough power for coalition. Not only is the top
level of management needed, but various levels downstream of managers to
generate momentum. These leader teams have to include cross functional
department heads. Encourage them to work as a team outside the boundaries
of the normal hierarchy. Commitment is key and has to be shared throughout
the group to lead the change effort.
III. Create a vision : the need to clarify the direction which everyone must be on.
It has to be direct in the changing effort and there have to be strategies made
to eventually deliver that vision on the long run. It can’t be vague or too
complicated (five minute rule).
IV. Communicate the vision : the vision has to be communicated through every
mean and media possible (along with the strategies to achieve it). Teaching
new pattern and behaviors with leading coalition. It is very important that
the communication is clear and direct (everyone understands). This point
can be very difficult is for example there are downsizings to be made. But
there has always got to be the ethical standards that embrace the vision.
18
V. Empower others to act on the vision : if some system or structure is
undermining the vision, it must be removed or changed. Thinking out of the
box, taking risks and non conventional form of thinking and doing thinks
must be encouraged. There can be problems with employees that resist to
change but they must be removed (or adapt to the change process).
VI. Plan for and create short-term wins : defining performance improvements
and making a reward scheme to compensate individuals who achieve them is
crucial. This short term wins add value and bring hopes high to the change
process. Try not to leave anything to chance and take control of the
situation. Because change takes time, this wins give momentum and helps
keep the urgency level up.
VII. Consolidate improvements and produce more change : use credibility from
already accomplished goals and objectives to change systems or something
that undermines the vision. Do not declare victory to soon (that maybe in the
first results of improvement) and never lower the guard. Promoting and
empowering individuals that implement the vision is recommended. The
change process can be refueled by new projects and change agents.
VIII. Institutionalize new approaches : consolidate unions between the new
behaviors and corporate success. Show employees how the new approaches
and attitude have helped improve the performance of the organization.
Create new norms and values that are shared with the new changes.
7. THE PASSIVE AGRRESIVE ORGANIZATION
19
This article written by Neilson, Pasternack & Van Nuys (2000) talks about that not
many companies have a “resilient” organization with timely information and
excellent based decisions. Instead, the vast majority have serious challenges and
unhealthy environments. These types of companies are called passive-aggressive.
Its authors state that this category is called from the organization quiet but fierce
resistance to corporate directives. Employees do not do their best and feel free to
not be effective or efficient (no accountability). They do not feel the need to learn,
share or achieve any goals. Passive-aggressive corporations can have or too much
control or have a total lack of it. The top management (people with authority) act
under the false impression that they can´t control things which actually they can,
and vice versa. So basically the lines of authority are not well defined, the merits are
not rewarded and the employees just pass their days as if nothing is happening
(there is no effort for improvement).
Besides the passive-aggressive organization there are six other types (Nielson,
2000):
Resilient : highly adaptable to external market with coherent business strategy.
Just in Time : inconsistently prepared for change but can face a challenge
without losing the big picture.
Military Precision : dominated by a small senior team and executed efficiently its
operating model.
Overmanaged: its multiple layers of management create paralysis and problems
in decision making.
20
Outgrown : too big and complex to be managed a small team but with
democratized decision making.
Fits and Starts: have very talented and motivated people but that go in different
directions.
Companies’ don´t start with passive aggressive in them. Naturally a company is
born healthy and starts to grow and its organizational structures start to get a
complex form. Then decentralization comes because of the size and globalization
and trouble comes with resistance and failure on objectives.
In passive-aggressive organizations there are four factors that freeze initiative:
ineffective motivators (do not reward effectively their individuals for their added
value in the company); unclear decision rights (nobody knows where their rights,
responsibility and limits start or end); wrong information (people care more about of
forms inside the company that of being competitive on the long term); and
misleading structure (there are no clear measures of how to create value).
These types of organizations are very averse to change. But hey can be cured with
the following key factors:
Bring in new people: individuals from the outside (they call new blood) can by
leaders in change management. They don´t have the inner habits, have new
relationships and interpersonal skills that are more effective (treat the company
as a business).
Turn every block in the company: because these types of organizations are so
misaligned, the most effective way to claim their attention is to change
everything at once so that it has a big impact and the reactions will be in the
same scale.
21
Make the decisions and stick with them: clarifying who makes the decisions (the
rights) and then respect the people who make them. Individuals have to start to
be accountable between each other and regain trust.
Share the information: the decisions have to be made with a clear priority of
what information is relevant.
Match motivators to contribution: it is very important to correlate the motivators
of the employees to the value they add in the long term.
All of these factors are important but if the senior management is not completely
engaged, then it won´t work.
8. REFERENCES
Beer, M., & Nohria, N. (2000). Cracking the Code of Change. Boston: Harvard
Business Review.
22
Dickhout, R. (1997). All I Ever Needed to Know About Change Management I Learned at Engineering School. Toronto: McKinsey & Company.
Kotter, J. P. (2007). Lead Change: Why Transformation Efforts Fail (3rd ed.).
Boston: Harvard Business Review.
Neilson, G. L., Pasternack, B. A., & Van Nuys, K. E. (2000). The Passive-
Aggressive Organization. Boston: Harvard Business Review.
Sirkin, H.L., Keenan, P., & Jackson, A. (2005). The Hard Side of Change
Management. Boston: Harvard Business Review.
23