Chapter 18

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Chapter
18
Creating and Managing Change
McGraw-Hill/Irwin
Management, 7/e
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.

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Learning Objectives
After Studying Chapter 18, You will know
What it takes to be world class
How to manage change effectively
How to create a successful future

Managing Change
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Becoming World Class
Managers today want, or should want, their
organizations to become world class
To some this may seem like a lofty, impossible,
unnecessary goal but it is a goal that is
essential to survival and success in today’s
intensely competitive business world
Being world class requires applying the best and
latest knowledge and ideas, and having the ability
to operate at the highest standards of anyplace
anywhere
World-class companies create high-value products
and earn superior profits over the long run

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Sustainable, Great Futures
Over the years world-class companies have
been widely admired, been considered the
premier institutions in their industries, and
made a real impact on the world
World class companies also
Turn in extraordinary performance over the long run
Have strong core values in which they believe deeply; and
they express and live the values consistently
They do not focus on beating the competition; the focus
primarily on beating themselves
Great companies have core values, know
what they are and what they mean, and live
by them – year after year

Sustainable, Great Futures
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The Tyranny of the ‘Or’
Many companies, and individuals, are plagued
by the tyranny of the or
This refers to the belief that things must be
either A or B, and cannot be both
Examples include
Choose to either change or remain stable
Be conservative or bold
Have control and consistency or creative
freedom

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The Genius of the ‘And’
Organizational ambidexterity; genius of the ‘and’
refers to the ability to achieve multiple things
simultaneously
Purpose beyond profit and pragmatic pursuit of
profit
Relatively fixed core values and vigorous change
and movement
Conservatism with the core values and bold
business moves
Clear vision and direction and experimentation
Long-term thinking and investment and demand
for short-term results
Visionary, futuristic thinking and daily, nuts-andbolts
execution

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Organization Development
Organization development is a system wide
application of behavioral science knowledge to
develop, improve, and reinforce the strategies,
structures, and processes that lead to
organization effectiveness
It improves the organization’s ability to respond to
external groups like customers, stockholders,
governments, employees, and other stakeholders
It has an important underlying value orientation –
it supports human potential, development, and
participation in addition to performance and
competitive advantage

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Achieving Greatness
Three are four key factors to achieving greatness
Strategy – focused on customers, continually fine-tuned
based on marketplace changes, and clearly
communicated to employees
Execution – good people, with decision-making
authority on the front lines, doing quality work and
cutting costs
Culture – one that motivates, empowers people to
innovate, rewards people appropriately, entails strong
values, challenges people
Structure – making the organization easy to work in and
easy to work with, characterized by cooperation and the
exchange of information and knowledge throughout the
organization

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Managing Change
Shared leadership is crucial to the success of
most change efforts
People must be not just supporters of change
they also need to be implementers
There needs to be a permanent rekindling of
individual creativity and responsibility, a true
change in the behavior of people throughout the
organization
The essential task is to motivate people fully to
keep changing in response to new business
challenges

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Motivating People to Change
People must be motivated to change
Managers tend to underestimate the amount of
resistance they will encounter
Some general for resistance include:
Inertia – people don’t want to disturb the status
quo
Timing
Surprise
Peer pressure

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Motivating People to Change
Some change-specific reasons for resistance
include
Self-interest
Misunderstanding
Different assessments
Management tactics

Motivating People to Change
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A General Model for Managing Resistance
Motivating people to change often requires
three basic stages
Unfreezing
Moving
Refreezing

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Specific Approaches to Enlist Cooperation
Most managers underestimate the variety of
ways they can influence people during a
period of change
Some effective approaches include
Education and communication
Participation and involvement
Facilitation and support
Negotiation and rewards
Manipulation and cooptation
Explicit and implicit coercion

Specific Approaches to Enlist
Cooperation
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Harmonizing Multiple Changes
Total organization change involves
introducing and sustaining multiple policies,
practices, and procedures across multiple
units and levels
Total organizational changes can
Affect the thinking and behavior of everyone in
the organization
Enhance the organization’s culture and
success
Be sustained over time

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Leading Change
Successful change
requires managers to
actively lead it
Leaders must start by
examining the current
realities facing the
organization
From here they can
create a sense of
urgency

Leading Change
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Shaping the Future
A newspaper reporter found a variety of
forecasts about the global future, but clear
agreement on two things
A very different world is roaring up on us
The history of our times will be the story of
how we prepared for this different world –
which so far, is mostly a story of how we have
failed to prepare

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Shaping the Future
Most change is reactive
Reactive change is in response to pressure; it is
problem driven change
Implies that you are a follower not a leader
Proactive change means anticipating and
preparing for an uncertain future
It implies being a leader and creating the future
you want
On the road to the future will you be:
The windshield
The bug
Or the driver

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Thinking about the Future
If you think only about the present, or wallow
in the uncertainties of the future, your future
is just a roll of the dice
“The global economy could be on the cusp of an
age of innovation equal to that of the past 75 years. All the right
factors are in place: Science is advancing rapidly, more countries
are willing to devote resources to research and development and
education, and corporate managers, too, are convinced of the
importance of embracing change” - Business Week

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Creating the Future
Companies can try different strategic postures to
prepare to compete in an uncertain future
Adapters take the current industry structure
and its future evolution as givens
Shapers try to change the structure of their
industries, creating a future competitive
landscape of their own design
The challenge is not to maintain your position in
the current competitive arena, but to create new
competitive arenas, transform your industry, and
imagine a future that others don’t see
Create your own advantages

Creating the Future
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Shaping Your Own Future
If you are an organizational leader, and your
organization operates in traditional ways, your
key goal should be to create a revolution,
genetically reengineering your company before it
becomes a dinosaur of the modern era
Creating the future you want for yourself requires
setting high personal standards
Don’t’ settle for mediocrity
Become a life long learner
Consciously and actively manage your own
career
Become indispensable to your organization

Shaping Your Future
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Learning and Leading
Continuous learning is a vital route to
renewable competitive advantage;
organizations and people should constantly
explore,
Discover
Take action
The philosophy of continuous learning helps
your company achieve lower cost, higher
quality, innovation, and speed – and helps
you grow and develop on a personal level

Learning and Leading
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Learning and Leading
A leader should be able to create an environment
in which others are willing to learn and change so
their organizations can adapt and innovate [and]
inspire diverse others to embark on a collective
journey of continual learning and leading
To do this you will need to commit to life long
learning
Life long learning requires occasionally taking
risks; moving outside of your ‘comfort zone’;
honestly assessing the reasons behind your
successes and failures; and being open to new
ideas

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Learning and Leading
As a leader you will inhabit and grow into
different stages in life
This suggests that you not only do these things
but you do them well
These stages are:
Level 1 – Highly capable individual
Level 2 – Contributing team member
Level 3 – Competent manager
Level 4 – Effective Leader
Level 5 – Level 5 executive

Learning and Leading
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The future
A successful future derives from adapting to
the world and shaping the future; being
responsive to others’ perspectives and being
clear about what you want to change;
encouraging others to change while
recognizing what you need to change about
yourself; understanding current realities and
passionately pursuing your vision; learning
and leading.

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Concluding Thought
For yourself, as well as for your organization,
be ambidextrous: recognize and live the
genius of the and.