LEADING CHANGE

1. LEADING CHANGE Jim Clawson Darden Graduate School of Business University of Virginia

2. Can People Change? If so, how? If so, will they? (c) James G. Clawson

3. Levels of Human Activity 75% 85% 95+%

4. The Leadership Point of View • Do you SEE what needs to be done? • Do you UNDERSTAND ALL of the forces at play? • Do you have the COURAGE to act to make things better? (Inside-out) (c) James G. Clawson

5. Key Leadership Initiatives LEADER Developing Influence Strategic Thinking RELATION- SHIPS Design STRATEGY Commitment ORGANI- ZATION Committed Or Mercenary LEADING CHANGE (c) James G. Clawson

6. Leading Strategic Change Back-groundFactors RESULTS Efficiency Learning Employee Customer / Financials LeadershipPhilosophy Org’n Design Decisions Organization Culture (c) James G. Clawson

7. The Importance of Organizational Culture “Culture eats strategy for breakfast.” Sign hanging in the Ford Motor Company’s Organizational Change War Room “Culture isn’t just one aspect of the game—it is the game.” Louis V. Gerstner Jr., former CEO of IBM, Business Week, 2/12/07, p. 73) (c) James G. Clawson

8. Drop Down Menus for Design Decisions Organization Culture LeadershipPhilosophy Organizational Design Decisions (c) James G. Clawson

9. REWARDS Outplacement WORK DESIGN HIRING APPRAISAL DEVELOP- MENT Drop Down Menus for Design Decisions Organization Culture LeadershipPhilosophy Organizational Design Decisions Reward Systems Learning Systems (c) James G. Clawson

10. Human Resources Processes(adapted from Tichy et al) Creativity, Diversity, Energy? Reward Work Design Appraisal Outplacement Selection Learning Socialization (c) James G. Clawson

11. Study of New General ManagersJack Gabarro, HBS, HBR • 12 in USA • 12 in Europe • From within • From without • Into situations needing change • Into situations not needing change • What was the level of significant organizational change introduced? (c) James G. Clawson

12. TAKING CHARGE Number of Significant Changes 0 6 12 18 24 30 36 Time in Months Adapted from Jack Gabarro, Dynamics of Taking Charge, HBS Press (c) James G. Clawson

13. Taking Charge • Taking Hold: picking the low hanging fruit • Immersion: learning what else to do • Reshaping: major change efforts • Consolidation: settling in • Refinement: fine tuning The Dynamics of Taking Charge, Jack Gabarro, Harvard Business Review, May-June 1985 (c) James G. Clawson

14. Leading Strategic Change Requires . . . . • Vision (What do you see?) • Understanding (Rigorous analysis) • Courage (to initiate action) • THE “LEADERSHIP POINT OF VIEW” • Intelligence (c) James G. Clawson

15. Intellectual Intelligence (IQ) • Genetically endowed • Environmentally Encouraged • Focus of Most School Work • Processing Power • Curiosity • Discipline (c) James G. Clawson

16. Emotional Quotient (EQ) • Recognizing your own emotions • Managing your Emotions • Self Talk to get out of Emotional Hijackings • Paying Attention-Self Awareness Adapted from Daniel Goleman, Emotional Intelligence, Bantam, New York, 1995 (c) James G. Clawson

17. Social Quotient (SQ) • Recognizing the emotions of others • Empathy • Caring • Listening • Skill in Coaching & Resolving Conflicts (c) James G. Clawson

18. Change Quotient (CQ) • Recognizing the need to change • Emotional comfort with change • Understanding the Change Process • Skills in Leading the Change Process (c) James G. Clawson

19. You are always teaching. Every encounter between a superior and a subordinate involves learning of some kind for the subordinate. (It should involve learning for the superior, too, but that is another matter.) When the boss gives an order, asks for a job to be done, reprimands, praises, conducts an appraisal interview, deals with a mistake, holds a staff meeting, works with his subordinates in solving a problem, gives a salary increase, discusses a possible promotion, or takes any other action with subordinates, he is teaching them something. The attitudes, the habits, the expectations of the subordinate will be either reinforced or modified to some degree as a result of every encounter with the boss. . .The day‑by‑day experience of the job is so much more powerful that it tends to overshadow what the individual may learn in other settings. Douglas MacGregor, The Human Side of Enterprise pp. 199‑200

20. Can you change anything in the world “out there” without changing yourself first? Society Organization Team Self

21. “Ten short years.... the one thing that we have done consistently is to change .... It may seem easier for our life to remain constant, but change, really, is the only constant. We cannot stop it and we cannot escape it. We can let it destroy us or we can embrace it. We must embrace it.” Michael Eisner Disney 1994 Annual Report (c) James G. Clawson

22. Change and Learning In a world of change, learners will inherit the earth, while the learned shall find themselves perfectly suited for a world that no longer exists. Eric Hoffer, Ordeal of Change (c) James G. Clawson

23. Models of Change (L3L 4e, Ch. 24, p. 339) • Kurt Lewin • Michael Beer • John Kotter • Tim Gallwey • MIT Model • Elizabeth Kubler-Ross • James O. Prochaska • Peter Senge • Jim Clawson (c) James G. Clawson

24. Kurt Lewin • Unfreeze • Retrain • Refreeze RETRAIN (c) James G. Clawson

25. Beer’s Leading Change Cp = D x M x P > C Cp = Probability of Change D = Dissatisfaction with Status Quo M = Clear Model or Vision of the Future P = Clear Process for Managing the Change C = Cost of Making the Change from Leading Change, Michael Beer, HCS (c) James G. Clawson

26. Kotter’s 8 Errors in Leading Change • Allowing complacency • Failing to create a guiding coalition • Underestimating the power of vision • Under-communicating the vision by 10, 100, or 1000 • Allowing Obstacles to block the vision • Failing to create short-term wins • Declaring victory too soon • Neglecting to anchor changes in culture (c) James G. Clawson From Leading Change, John Kotter, HBS Press, 1996.

27. Kotter’s Eight Stage Process for Creating Transformation • Establish a sense of urgency • Create a guiding coalition • Develop strong vision and strategy • Over communicate the vision and strategy • Redesign to encourage broad-based action • Generate short-term wins • Consolidate gains in redesign and HR • Anchor changes in the culture Adapted from Leading Change, John Kotter, HBS Press, 1996 (c) James G. Clawson

28. Inner Game of Change Self 1 (Shoulds) and Self 2 (Inner Self) • Select the right measures • Focus attention and see what happens • Listen to Self 2 Adapted from Tim Gallwey, Inner Game of Work (c) James G. Clawson

29. Nevis’ MIT Phases of Change Complacency/ Turbulence / Resistance / Small Wins / Consolidation / New Baseline

30. Susan Campbell’s Stages of Change • Feeling Unsettled: Something isn’t right. • Denial: It’s not that bad. • Facing the Present: I see things as they are. • Letting Go: The past isn’t working; the future is unclear. • Envisioning: I know what I want. • Exploring new Options: Maybe I can do it. • Committing to Action: I can do it. • Integrating the Change: I am doing it. Adapted from From Chaos to Confidence, Susan Campbell, Simon & Schuster, New York, 1995 (c) James G. Clawson

31. Change as Dying a Little Death Elizabeth Kuebler-Ross Emotional Pendulum of Change DENIAL Disconfirming Data (c) James G. Clawson

32. Denying the Message Denying the Messenger DENIAL Denying One’s Ability to Do Anything Denying the Relevance of the Message (c) James G. Clawson

33. Emotional Pendulum of Change Disconfirming Data DENIAL ANGER BARGAINING DESPAIR EXPERIMENTATION HOPE INTEGRATION (c) James G. Clawson

34. Prochaska’s Spiral of Change (c) James G. Clawson

35. Prochaska’s Spiral of Change Recycling is likely for as many as 85%. 6. Termination 5. MAINTENANCE 4. ACTION 3. Preparation 2. Contemplation 1. Pre-Contemplation (c) James G. Clawson

36. Senge’s Model of Change Most Change Agents Stay BELOW the Line FUTURE What do we need to do tomorrow? Who do we need to partner with? INTERNAL Do Alone EXTERNAL Need to collaborate What are we doing today? Who do we partner with today? TODAY (c) James G. Clawson The Necessary Revolution, Peter Senge, 2008

37. Senge’s Model of Change • Not from the top, from the bottom or middle, anywhere • Organize in groups and teams not individuals • Only need a few, e.g. 10 out of 8 • Start people thinking, give them new insights • Find stories to tell about value creation that we can’t escape • Spend three years “hanging out” talking with people • Network more, meet more people who are knowledgeable • Spread it slowly (like zoysia grass) • Listen and hear it from your peers • Success depends on the richness of your networks • Create visual images for people (they stick) • Be consistent • Remember executives can screw it up (c) James G. Clawson

38. Problem Leadership LEADERSHIP ACTIVITY Questions Answers Problem Solving Old New Problem Finding New Old Problem Creating New New Adapted from Pathfinding by Harold Leavitt, 1995 (c) James G. Clawson

39. BASELINE BEHAVIOR L L L L L L L L L L CLAWSON’S GENERAL CHANGE PROCESS NEW BASELINE CONFIRMATION (4e, p 344) EXPERIMENT SEARCH FOR ALTERNATIVES NEW DATA DISCON- FIRMING Change from Baseline ENTHUSIASM ENGAGEMENT LEARNING HURT or PAIN DENY DISTORT DISCOUNT IGNORE CURRENT COMFORT ZONE Discon- firming Data ENCOUNTER NEW DATA CONFIRMING DATA

40. Clawson Sequentially • Help people get out of their comfort zones (habits) • Be willing to deliver disconfirming data • Identify and collaborate with like-minded groups • Be willing to help people through pain and denial • Help people identify alternative approaches (creativity, innovation) • Help people plan their experiments (active coaching) • Help interpret results data from experiments (encouragement) • Reward and reinforce successes (encouragement) • Be relentless in reinforcement • Behave consistently all the time (c) James G. Clawson

41. Leadership Technique and Consequence • Level One Techniques: Pay, rewards, punishments, threats, coercion, intimidation • Level Two Techniques:logic, data, evidence, reason, statistics, charts, analysis • Level Three Techniques: vision, purpose, values, stories, music, symbols, strategy, TPOV BUY-IN Passion Engagement Agreement Compliance Apathy Passive Resistance Active Resistance (c) James G. Clawson

42. What can I do to make it happen? • Expand and sharpen your vision • Expand your skill set • You teach what you tolerate • Create win-win’s for all parties • Become an ally, not an adversary • Accept and channel the other’s point of view • Change yourself, not others

43. Does experience lead to wisdom? “Most people do not accumulate a body of experience. Most people go through life under-going a series of happenings which pass through their systems undigested. Happenings become experiences when they are digested, when they are reflected on, related to general patterns, and synthesized.” Saul Alinsky, Rules for Radicals, quoted by Henry Mintzberg in “The Five Minds of a Manager” HBR 11/03

44. LEARNING FROM EXPERIENCE "To most men, experience is like the stern lights of a ship which illumine only the track it has passed.” --Samuel Taylor Coleridge "Experience is not what happens to a man, it is what a man does with what happens to him." --Aldous Huxley

45. Good is the Enemy of Great “Conversely, perpetuating mediocrity is an inherently depressing process and drains much more energy out of the pool than it puts back in. … ‘I want them to have a great experience, and to have the experience of being part of something absolutely first class.’” Running Coach, p. 208 “WE TEACH WHAT WE TOLERATE.” Marietta Frey

46. There are only two parties: the establishment and the movement. Of which are you a member? Emerson

47. Einstein/AA • The definition of insanity is expecting different results while you continue doing the same thing.

48. You are always teaching. Every encounter between a superior and a subordinate involves learning of some kind for the subordinate. (It should involve learning for the superior, too, but that is another matter.) When the boss gives an order, asks for a job to be done, reprimands, praises, conducts an appraisal interview, deals with a mistake, holds a staff meeting, works with his subordinates in solving a problem, gives a salary increase, discusses a possible promotion, or takes any other action with subordinates, he is teaching them something. The attitudes, the habits, the expectations of the subordinate will be either reinforced or modified to some degree as a result of every encounter with the boss. . .The day‑by‑day experience of the job is so much more powerful that it tends to overshadow what the individual may learn in other settings. The Human Side of Enterprise pp. 199‑200

49. Will you (not can you) change? • Will you ever become anything more than a vessel transmitting the memes and genes of previous generations on to the next? • Will you rise above (transcend) your legacies and lead others to do the same? If not, …

50. Importance of Learning The only real source of competitive advantage may be the capacity to learn. Arie de Geus, The Living Company