Change Management - Concepts And Tools

1. Change Management- Concepts And Tools Hendra Kusnoto Advisor of GCG & Change Management PT ANTAM Tbk Presented for Faculty of Psychology UGM 4th December 2011, Yogyakarta

2. “God will not change people’s fate if they do not change it themselves” (Al-Qur’an, Ar-Ra’d: 11) hendra kusnoto

3. ‘R U MAD’? Are You Ready for “Making A Difference”? An Initiative of the Education Foundation hendra kusnoto

4. ‘Learning is an experience, everything else is just information.’  (Albert Einstein) ‘The mind is not a vessel to be filled, but a fire to be ignited.’  (Plutarch) hendra kusnoto

5. agenda • What is Change? • Two Sides of Change • People Oriented Change • Organizational Change • Managing Resistance to Change • Tools for Change • The Problems of Change • The Best Practice of Change • Antam’ Experience hendra kusnoto

6. What is change? • ”Change is inevitable. In a progressive country change is constant.” (Benjamin Disraeli,1804 - 1881) • ”We must become the change we want to see” (Mahatma Gandhi, 1869 - 1948) • ” Change the way people think, and things will never be the same” (Steve Biko, 1946 - 1977) •  ”If we don't change our direction we're likely to end up where we're headed” (Chinese Proverb) hendra kusnoto

7. What is change? • To change is to take different actions than previously. To take different actions than previously means to make different choices. Different choices produce change. The same produce sameness, a reinforcement of the status quo. • Change management is defined as the systematic deployment of change management programs, tools and processes throughout an organization. hendra kusnoto

8. What is change? • The goal of CM : • Create competitive advantage or economic value of an organization • Improve the utilization of human capital • Ensure vision/projects meet their goals hendra kusnoto

9. The Impact of Environmental Changes • Change: • Economic • Politic • Social • Technological Direct impacts Customers Suppliers Business partners Organization Indirect impacts hendra kusnoto

10. Challenges Facing Business Discontinuities in the business environment Old New Confidence and rigidity Insecurity and openness Permanence and certainty Turbulence and uncertainty Incremental change Revolutionary change Facts and theories Values Logic Intuition Boundaries and disciplines Interest, issues and problems Organization Adaptation Attitudes Feelings Personalities and vested interest Principles & business philosophy Quantity Quality and post – quality Getting ahead Achieving balance and harmony Drives Needs Producer centered Customer centered Focus on activity Focus on output Conflict and rivalry Cooperation and consensus hendra kusnoto

11. Challenges Facing Business Discontinuities in the business environment Old New Command and control Two-way communication & sharing Bureaucracy hierarchy Horizontal relationship Absolutes Solutions relative to context Simplicity Diversity and relative complexity One-dimension maximization Multi-dimensional trade – offs Answer Question Solutions Temporary accommodation Sanction Consent Authority Encouragement Departmentalism and procedures Business processes Discrete problems Holistic issues Uniformed customers Demanding customers Homogenous customers Diverse customers Standard products and services Tailored products and services Local customers International customers hendra kusnoto

12. Challenges Facing Business Discontinuities in the business environment Old New Established relationship Integration and fragmentation Sales Account management Individuals Teams The self and the organization The group and the environment The ‘here and now’ The consequences and the future Unsupported Facilitating processes & technology ‘Hoarding’ by the few Empowerment of the many Single discipline Multi – disciplinary Diversification Focus Generalization Segmentation Knowledge Competence Teaching Learning Specialist teaching institution Integration of learning & working Initial qualification Continual updating Lifetime practice Functional mobility hendra kusnoto

13. Challenges Facing Business Discontinuities in the business environment Old New Career ladders Succession of projects Standard employment Various patterns of work Commodity products Search for differentiation Limited competition Open competition Barriers to entry Diversity of supply Cartels and oligopoly Competition and choice Zero – sum relationship Positive – sum collaboration Independence and dependence Interdependence & partnership hendra kusnoto

14. Why we do change? • Any organization is facing today’s business challenges: • * Severe competition • * Rapid change in technology, communication and information hendra kusnoto

15. Benefits of change • To have competitive supremacy, increasing profits, and maximum control over organization’s destiny it is essential to innovate, learn quickly and respond quickly • Being aware of the environment and trends outside the organization and working with those within the organization who are keen to make change a strategic approach to required change hendra kusnoto

16. agenda • What is Change? • Two Sides of Change • People Oriented Change • Organizational Change • Managing Resistance to Change • Tools for Change • The Problems of Change • The Best Practice of Change • Antam’ Experience hendra kusnoto

17. Two Sides of Change • People Oriented Change • Organizational Change hendra kusnoto

18. Two Sides of Change • People Oriented Change: before changing other people, we have to change our self, first! • Organizational Change: changing the strategy, policy, system and procedures for achieving an high performing organization hendra kusnoto

19. agenda • What is Change? • Two Sides of Change • People Oriented Change • Organizational Change • Managing Resistance to Change • Tools for Change • The Problems of Change • The Best Practice of Change • Antam’ Experience hendra kusnoto

20. People oriented change • Changing the mindsets: C Creating hope C Building beliefs C Shifting paradigms C Courage to Take Action hendra kusnoto

21. Creating hope • Creating hopes Dream.. Dream … Dream … hendra kusnoto

22. Creating hope Adapted from Ackerman (1997) • Developmental of change • Improvement of existing situation Performance Time • Transitional change • Implementation of a known new state • Management of the interim transition • state over a controlled period of time OLD state NEW state Transition Plateau Re-emergence • Transformational change • Emergence of a new state, • unknown until it takes shape, • out of the remains of the old • state; time period not easily • controlled Growth Chaos Birth Death hendra kusnoto

23. Creating hope • Creating a New Vision • Vision is a reality that has not yet come to be • Vision is not a dream • Vision reflects a depth and breadth of understanding that enables one to detect patterns or trend, and it guide a leader through the present and into the future • A vision of the future is more than just a plan or a goal. It • a picture of what we want to be in the future • Leader have a responsibility to transform the vision into reality • 23 hendra kusnoto

24. Creating hope Creating a New Vision A true vision must provide a clear image of desirable future – one that represents an achievable, challenging, and worthwile long – range target toward which people can direct their energies hendra kusnoto

25. Building beliefs Yes, I’m sure that I can be happy because of …. hendra kusnoto

26. Building beliefs • Values and Beliefs • Values and beliefs are the critical dimensions in leadership effectiveness because they serve as the basis for direction and action • A person with vision who cannot articulate beliefs and • values and inspire others is a dreamer, not a leader hendra kusnoto

27. Building beliefs • Values and Beliefs • Tom Peters and Waterman describe the seven basic beliefs shared by the excellent organizations they studies: • Belief in being the best • Beliefs in the importance of the details of execution • Beliefs in the importance of people as individuals • Beliefs in superior quality and service • Beliefs that most members of the organization should be innovators • Beliefs in the importance of informality to enhance communication • Beliefs and recognition of the importance of economic growth and profits • 27 hendra kusnoto

28. Building beliefs • Values and Beliefs • Ray Kroc, founder of Mc Donald’s, provide a good example of the leader’s role in promoting and protecting values. The stated values of McD are quality, service, value and cleanliness. • Motorola, the first winner of MBQNA is a organization with a strong belief system. Its stated “seven attributes of a quality system”. The attributes are follows: • Extend leadership and quality commitment form top to bottom • Communicate to every employee so that each knows that his • or her individual contribution helps • Train every employee and teach them the corporate language • 28 hendra kusnoto

29. Building beliefs • Values and Beliefs • Establish challenging goals and very high standards • Recognize success in achieving quality through • incentives and other rewards • Create a participative and cooperative culture • throughout the organization and between divisions • Develop a high quality, creative, receptive, and adaptive • work force by developing employees to their fullest • potential • 29 hendra kusnoto

30. Shifting paradigms So I have to change all the ways that I have done….. hendra kusnoto

31. Shifting paradigms hendra kusnoto

32. Shifting paradigms hendra kusnoto

33. Shifting paradigms hendra kusnoto

34. Courage to take action • Leader must possess the discipline, determination, and courage necessary to get the job done. “A unique feature of the human brain is its ability to form mental images of the future and to translate these images into reality though leadership and action”. • Leaders must possess more than vision and values. They must discipline, energy, determination, zeal, and courage to carry them through the difficult periods and more important, to keep them moving forward during thee good times as well. hendra kusnoto

35. Courage to take action Turning Point “The road stop here, what got you here, won’t get you there” Great Good Second Curve First Curve hendra kusnoto

36. Courage to take action Strategic Scenario - A Transformation Approach STRATEGIC TARGETS Long-Term Plan Strategic Scenario History Old Paradigms Industrial Economy Continuous Improvement Extrapolation Projection Interpolation GAP STRATEGIC INITIATIVES BAU Future Vision New Paradigms Knowledge Economy Innovation and Breakthrough 2008 2003 2003 (2012) 2011 (20XX) THE ROAD STOPS HERE hendra kusnoto

37. Courage to take action • Capacity for change • (resources) • Capacity here means resources and these are staff time and, • where appropriate, money. To implement change you need to • identify the resources that will be required before you proceed • and make sure these are provided. Often, the cost benefits from • implementing energy efficiency measures and waste • minimisation programmes can provide the financial resources for • an ongoing programme of improvement • It is usually the organisation’s own employees that have the • information, intuition, ideas and instincts necessary for • implementing change effectively. When given the capability and • the opportunity to participate in improvement programmes, it is • employees who often can find the greatest cost savings and • efficiency improvements hendra kusnoto

38. Courage to take action • “We are what we repeatedly do. Excellence then, is not an act, but a habit” – Aristotle • “Energy is equal to desire and purpose” - Sheryl Adams • Having got the other three factors in place (pressure, a clear shared vision and capacity) you now have to implement the planned change. • Keeping up momentum is what matters here and implementing the PLAN – DO - CHECK – ACT • management methodology is essential to maintaining the • effectiveness and appropriateness of the change. Good • monitoring and analysis of the resulting data is essential. • > Make sure you continue to keep employees informed of • progress hendra kusnoto

39. agenda • What is Change? • Two Sides of Change • People Oriented Change • Organizational Change • Managing Resistance to Change • Tools for Change • The Problems of Change • The Best Practice of Change • Antam’ Experience hendra kusnoto

40. Organizational change:Change Management Orientation * Theory E Theory E has as its purpose the creation of economic value, often expressed as shareholder value. Its focus on formal structure and systems. It is driven from the top down with extensive help from consultants and financial incentives. Change is planned and programmatic* Theory O Theory O has as its purpose the development of the organization’s human capability to implement strategy and to learn from actions taken about the effectiveness of a changes made. Its focus is on the development of a high – commitment culture. Its means consist of high involvement, and consultants and incentives are relied on far less to drive change. Change is emergent, less planned and programmatic hendra kusnoto

41. Organizational change:Change Management Orientation Theories E and O of Change Theory E Theory O Purpose & Means Purpose Maximize economic value Develop organizational capabilities Leadership Top – down Participative Focus Structure & systems Culture Planning Programmatic Emergent Motivation Incentives lead Incentive lag Consultants Large/knowledge – Small/process driven driven hendra kusnoto

42. Organizational change:Change Management Orientation Dimensions Of Change Theory E Theory O Theory E and O Combined Goals Maximize shareholder value Develop organizational capabilities Explicitly embrace the paradox between economic value and organizational capabilities Manage change from the top down Encourage participation from the bottom up Set direction from the top and engage the people below Leadership Focus Emphasize structure and systems Build up corporate culture, employees’ behavior and attitudes Focus simultaneously on the hard (structures and systems) and the soft (corporate culture) Plan and establish programs Experiment and evolve Process Plan for spontaneity Reward System Motivate through commitment – use pay as fair exchange Motivate through financial incentives Use incentives to reinforce change but not to drive it Consultants analyze problems and shape solutions Consultants support management in shaping their own solutions Use of Consultants Consultants are expert resources who empower employees hendra kusnoto

43. Two strategies of chAnge • Incremental Change Strategy – taking necessary changes in sequential order • Fundamental Change Strategy – the whole organization and its relationship will simultaneously change hendra kusnoto

44. Fundamental Change Generate energy, allocate resources, shift paradigms, develop transformation team, develop transformational leaders at all levels MANAGEMENT CHANGE Product portofolios, market repositioning, value proposition, competitive advantages, the winning formula, business success model (KPI, strategic initiative) STRATEGY CHANGE STRUCTURAL CHANGE Realignment and rebuilding of policies, management systems, organization structures, business processes, enabling technology CULTURAL CHANGE Cultural assessment, value definition, a set of behaviors, socialization, internalization, externalization (Moments of Truth), reassessment hendra kusnoto

45. PEOPLE STRATEGY KPI & Goals Strategic Initiatives EXECUTION Management Disciplines Reward/Incentives RESULTS HUMAN CAPITAL THE STRATEGY MODEL The Strategy Model for Fundamental Change • CULTURE • Business Acumen • A Culture of Excellence • LEADERSHIP • Results-Based • Transformational • STRUCTURE & SYSTEMS • Accountability • Relationship • CHANGE • Fundamental, Strategic and Comprehensive • First WHO then WHAT THE SOCIAL CAPITAL hendra kusnoto

46. The Business Transformation Implementation of Change Model (Simplified Framework) 1. Anticipate Change 2. Generate Confidence 3. Initiate action 4. Liberate thinking 5. Evaluate results TECHNOLOGY CHANGE BUSINESS TRANSFORMATION • Phase One: • FOCUSED • Communicate Vision, Strategy and • commitment • 2. Phase two: • Fast Target • 3. Phase three : • Build on going • capability Results PROCESS CHANGE PEOPLECHANGE Source : AGILE Change hendra kusnoto

47. agenda • What is Change? • Two Sides of Change • People Oriented Change • Organizational Change • Managing Resistance to Change • Tools for Change • The Problems of Change • The Best Practice of Change • Antam’ Experience hendra kusnoto

48. Managing resistAnce to change Lewin’s Force Field Analysis Model Restraining and Driving Forces RF Desired Condition RF DF DF Restraining forces Current Condition Driving forces After change Before change hendra kusnoto

49. Managing resistAnce to change Level of Acceptance

50. SUCCESS FACTORS FOR CHANGE USING ADKAR Post-implementation Successful Change Implementation Phases of a change project Concept and Design Business Need Awareness Desire Knowledge Ability Reinforcement Phases of a change for employees hendra kusnoto