Leading Change

1. Leading Change Gemini Skills Workshop Gemini Consulting January 1999

2. Purpose of this session • To provide an overview of thinking about change: • And how it is changing. • To provide an overview of Gemini’s approach: • History and direction for the future. • To understand how we lead the change process and increase mobilisation and learning within the client organisation • To familiarise you with models, frameworks and vocabulary commonly used within Gemini and client teams.

3. Content of this session • Why and how to change: • Business environments. • The Roots of Gemini’s Approach to Change: • Core principles and tools. • Gemini’s Evolving Change Model: • Capability framework. • Value chain implications. • Client examples. • Change, Learning and Individuals: • Psychological safety. • Emotional cycle of loss. • Anxiety and aspiration. • Conditions for capability development. V-O

4. Why and how to change

5. WHY AND HOW TO CHANGE Truths about change—why it happens, where it happens • Technology • Economy • Government • Society • Customer/competitors . . . requirespersonalchange . . . requiresorganisationalchange . . . Externalchange . . . • Strategies • Structures/de-layering • Practices • Processes • Products • Role • Responsibilities • Habits • Thinking • Values • Behaviours

6. WHY AND HOW TO CHANGE Change requires individuals and organisations to think, act and perform differently • No matter how well motivated, an individual cannot make change alone. • And yet, it is the rate of individual change which determines the rate of organisational change. • Business change results from a critical mass of individuals participating in a change process together. Gemini works with our clients to involve multiple parts of an organisation, at different levels, to ensure sustainable change.

7. WHY AND HOW TO CHANGE Academics and practitioners are starting to apply thinking from science about living systems to organisations • The traditional view of organisations is largely derived from Newtonian physics: • Linear, rational, predictable. • Machine model: made up of parts; parts have limited and controllable impact on the whole. • Cultures of administration, planning, policy; values of control, hierarchy. • Role of managers is to control the work of others. • New thinking from physics is permeating other fields including business, organisations and leadership: • Non-linear, unpredictable, butterfly effect. • Living systems model: interconnected parts; direction of the whole system can be influenced rather than outcomes controlled. • Cultures of entrepreneurialism, innovation, experimentation: values of openness, learning. • Role of leaders is to amplify impact of events which create movement towards desired outcomes. B-U

8. Change requires leadership of people, not management of things Change requires critical mass to emerge—where, when and how cannot always be predicted; seeing and using opportunities is key The consultant or manager is part of the context, involved in the learning process: Client and consultant are learning about different things Creativity is the key value Change can be managed with a Gantt chart Change can be planned and controlled The consultant or manager is the driver, manager of the change process The consultant or manager is outside the process Control is the key value WHY AND HOW TO CHANGE Experimentation and learning are key to leading this change, control and pressure are not! Traditional Change Paradigm Evolving Change Paradigm

9. The Roots of Gemini’s Approach to Change

10. THE ROOTS OF GEMINI’S APPROACH TO CHANGE Gemini’s change approach is grounded in the practical tools developed from behavioural change insights by United Research Behavioural Change Insights • Change starts with an individual Tools • Central role of the Joint Team Member • Change happens in relationships • Partnership between JTM and Gemini consultant; coaching relationship; openness; trust • Small groups provide the means to accelerate individual change • Natural Work Team; Joint Team; RAT • Give people frameworks and vocabulary to help them articulate and understand their experience: then they can let go and move on • Emotional cycle of loss; LIFO • Use structure to build security and confidence about the process • Charters; milestones; deliverables • Make the change tangible ad meaningful • Business case • Provide ways of clarifying messy issues; externalise them, make them visible • PSTB; Brown Papers; RACI • Focus on the positive • Bs before Cs; opportunities not problems; “and”—not “but”; IWIK, H2; celebrate successes

11. THE ROOTS OF GEMINI’S APPROACH TO CHANGE A Gemini change intervention takes place through a project organisation • The project is a joint team, made up of client people and Gemini people working together. • Gemini ways of working (processes, values, behaviour) provide role models of a To-Be culture and ways of working. • The project provides challenging work—an adventure zone—which requires client people to work in different ways, to experiment with their approach, in order to get the results required. • The project provides a safe place in which to experiment—risks are reduced through support from a Gemini consultant who has done this before, through change tools which structure problems and processes. • Content is used to provide safety, to give client people the confidence to innovate for themselves, not to provide the answer. • The vocabulary of the change tools reinforces positive orientation, can-do attitudes role modelled by the Gemini team members. V-O

12. THE ROOTS OF GEMINI’S APPROACH TO CHANGE Our change approach is evolving to adapt to shifts in client needs and to incorporate new insights about change Issues • H2 apply insights around the behaviour of complex, adaptive systems (such as people, organisations) to the process of business change. • H2 address change as a way of life: continuous change rather than a crisis event. • H2 address the “corporate big picture” rather than “the project and the joint team”. • H2 consult with clients on individual or organisational transformation, when their main or initial focus is content expertise or strategic insight . • H2 retain and spread learnings once joint teams dissolve, beyond the joint team during an engagement. Understanding “sustainable change” was chosen as an area of focus to increase Gemini’s differentiation.

13. Gemini’s Evolving Change Model

14. GEMINI’S EVOLVING CHANGE MODEL The vision for our Change Model emerged from three key drivers • Changing environments of clients: • Continuous change, driven by technology/market shifts. • Sustainable change. • Faster change. • Increased client capability (analytics, programme design and management, BPR tools). • Changes the consulting service market: • Increasing maturity/sophistication of buyers. • Highly imitative Big 6 players: increasing in size/skills: commoditising products (e.g. BPR). • Product/service life cycles shortening. • New specialist entrants in change management arena: visual identify, communications consultancies. • People and IT emerging as key integrating factor. • Lack of differentiation within general management consulting. • Low awareness and reputation of Gemini. • Sources of Gemini success with clients: • “How we worked with people – up and down and across the organisations.” • “The way we worked reflected the way work needed to be done in the future: empowered individuals and teams, values driven, results oriented.” V-O

15. Change as a process of loss and acceptance, a crisis-oriented adaptation to an imposed event, and resulting in achievement of a new status quo. Change as continuously responding to and shaping a dynamic environment through the on-going development of capability. GEMINI’S EVOLVING CHANGE MODEL We are positioning Gemini by putting a stronger emphasison a capability-oriented approach to the change process Traditional View Evolving View Unfreeze Create Aspiration Refreeze ... For superior results Move Develpo Capabilities Capitalize Capabilities This view is based on an underlying business model of a “systems view”, rather than a “machine view”, of organisations.

16. 1970s 1980s 1990s 2000s GEMINI’S EVOLVING CHANGE MODELc We view capability as the next generation of consulting and we intend to get there faster than our competitors + Capability Impact on the Organisation + Results + DirectionSetting Advice

17. GEMINI’S EVOLVING CHANGE MODEL We view change as a continuous process of translating aspirations into results . . . Change as an on-going, capability focused process Create Aspiration ... for superiorResults • Client need: • Faster change • Deeper change • Sustainable change Develop Capabilities Capitalise Capabilities ... through the development and capitalisation of capabilities.

18. GEMINI’S EVOLVING CHANGE MODEL We believe that all living systems, including business organisations, need an aspirational view on their future … The process of change - The creation of aspiration 1 Envision the desired future • “Reason why” • energizing • open • driven by value creation 2 Clarify the mid-term “To-Be” • “Strategic direction” • “Stretched targets” • attractive to financial community • customer driven • innovation focused • explicit and measurable • action focused 3 Understand the impact on capability • “Development stretch” • To-Be vs. As-Is • constraint based view • in line with strategic direction Time horizon … in order to continously adapt to or even shape their environment, and achieve the fast, deep, and sustainable change required to survive and evolve.

19. GEMINI’S EVOLVING CHANGE MODEL We are therefore developing our own definition of capability, based on our experience with our clients Definition of Capability • The ability to adapt and respond creatively to unforeseen circumstances or events to achieve a desired outcome. Definition of Capability at the Organisational Level • Organisational capability has five dimensions: • Environmental intelligence. • Asset management. • Process. • Alignment. • Learning and innovation. Capability is not competency, it is organisational, not individual: Competency = individual skills, knowledge, behaviour

20. To observe your organisation and what is in and outside the organisation. To understand who your customers are and their needs (today’s and tomorrow’s customers). To understand the borders of your organisation in a dynamic way (organisation as part of an ecology). GEMINI’S EVOLVING CHANGE MODEL The capabilities are defined generally - eachindustry has different dimensions for each of the five Environmental Intelligence Asset Management • To understand an organisation as a portfolio of assets (HR, knowledge, financial, physical, brands, customer relationships, supplier relationships) • Which assets are key to your strategy? • How assets create value for whom (customer, stakeholders, etc). • How to allocate resources to assets.

21. GEMINI’S EVOLVING CHANGE MODEL The capabilities are defined generally - each industryhas different dimensions for each of the five(cont.) • To link actions to produce reasonable output and create value. • To understand critical processes across functions and use these as key drivers for value. • To focus on decision points within processes as a key point of leverage. Process • To build a unified, focused leadership cadre(s). • To produce agreed sense of purpose and common mission. • To ensure that sense of purpose is lived to align individual activities to the organisation’s goals. • To align resource allocation, rewards, and performance management with these goals. Alignment • To reflect, review, understand and act on implications; to identify critical learning areas. • To capture knowledge and connect it to value (for customers, stakeholders). • To create space for risk. • To be open to challenge current assumptions and mindset. Learning

22. People Com-petencies Tools Process Systems Paradigms Environmental Intelligence Asset Management Process Alignment Learning & Innovation GEMINI’S EVOLVING CHANGE MODEL Capability can be found by identifying its component elements Developing capability takes place through the interaction of people in developing new competencies, designing and using new tools, processes and systems and in absorbing new paradigms—people are the integrating factor.

23. The process of change - The development of capabilities GEMINI’S EVOLVING CHANGE MODEL Developing capabilities therefore takes place byintervening at the individual, group or organisational level Environmental Intelligence Asset Management Process Delivery Capability Dimensions Alignment Learning/ Innovation Individual Key Group Organisation Development Levels • Capabilities can be developed and capitalised on individual, group and/or organisational levels.

24. The process of change - The capitalization of capabilities GEMINI’S EVOLVING CHANGE MODEL Effective transfer of client learnings from their partnership with Gemini enables clients to capitalise their capabilities Related Client Issues Gemini Project • Results of the project: • Capture the return on investment in capabilities in the specific business area • Apply capabilities to related issues or organisational units • Establish new base-line for a next generation of aspiration Environmental Intelligence Asset Management Capability Dimensions Process Intelligence Alignment Learning/ Innovation

25. GEMINI’S EVOLVING CHANGE MODEL Market development activities will put a strong focus on the value-added resulting from capability development The process of change - The role of Market Development • Client need: • Faster change • Deeper change • Sustainable change Market Development Perspective MDE Profile • Relationship driven • Industry and content focused • Aspiration- rather than crisis-oriented • Positioning change as a positive challenge rather than a “must achieve” or a “fix it” • Linking capability development to issue-based problem solving and benefits realisation • Strong on industry and content • “Experience heavy” • Role model for positive approach to change • Aspirational thinking • Pragmatic and flexible • Sound understanding of how change materialises in organisations, groups and individuals

26. GEMINI’S EVOLVING CHANGE MODEL An A&D will focus on the creation of aspiration, diagnosing development needs and creating a developmental experience 1 The process of change—The role of A&D: Creation of aspiration 2 3 A&D Perspective A&D Consultant Profile • Aspiration-driven rather than crisis-driven • Creating confidence in client people and tapping into their desire to develop themselves and their business • Focused on capability gaps • … as well as process gaps • Mobilising the organisation around aspiration • … in addition to “Quick Hits”/“Early Wins” • Giving the organisation a taste of the capability development experience • Strong on industry and content • Strong intuition: “taste and judgement” • Role model for positive approach to change, learning and growth • Strong tolerance for ambiguity • Aspirational thinking • Pragmatic and flexible • Open, not defensive • People-oriented • “Experience heavy” Leading interventions with a focus on aspiration requires a specific project approach and consultant profile.

27. “Environmental intelligence” Asset- Management Process- Intelligence Alignment Learning & Innovation GEMINI’S EVOLVING CHANGE MODEL The Change Model approach was used to effectively address the capability issues of the client Key issues Putting the Change Model into Practice - The logic of A&D Aspirational Picture Capability Profile Capability-focused Interviews Competitive Profiling* Capability Workshops 5 1 5 What capability issues have to be adressed? 5 1 • Understand capability profile of key competitors • Build first hypotheses • Profile capabilities in relation to competition • Identify examples, issues, and best practices • Fine tune hypotheses • Discuss hypothesis on capability profile with key groups • Prioritise issues • Outline next steps 5 1 5 1 5 1 How do the competitors manage their capabilities? Where are future competitive advantages? The resulting capability profile served as the basis for change strategy and RD design. * Conducted by Shop/The Institute B-U

28. GEMINI’S EVOLVING CHANGE MODEL Results Delivery will develop sustainable capability quickly Environmental Intelligence The process of change - The role of RD: Development of capabilities Asset Management Capability Dimensions Process Development Levels Alignment Learning/ Innovation Indivi-duals Groups Organis-ations RD Perspective RD Consultant Profile • Creating an experimental environment • Creating safety, enabling discovery • “Hot Housing” • “Rapid prototyping” • “Action Learning” • Focused on capability development • … in addition to problem solving and benefits delivery • “Leaving a legacy” • Strong on industry and content • Deep understanding of how change materialises and able to play multiple roles: • Coach and sounding board on the individual development level • Facilitator, content expert and sparring partner on the group development level • Methodology expert on the organisational development level • Strong ability to get things done: do - reflect - improve (80:20 rule) • “Pilot fast - learn fast - adapt fast” approach . . . in addition to issue-based problem solving and benefits delivery.

29. GEMINI’S EVOLVING CHANGE MODEL At Lidl & Schwartz, Gemini Consulting developed the core capabilities to implement and run a completely new organisation Putting the Change Model into Practice - The Lidl & Schwartz example The Results The Approach The Client Situation • A new organisational structure was implemented • … based on a competency centre model • … with a process-oriented instead of a functional focus • The new managers were trained, coached, and educated on and off-the-job • … to successfully run the business in the new competence centres • As much as possible leading edge Gemini retail industry knowledge was transfered to the client • A capability-focused A&D quickly discovered that wide-scale organisational change would be required • The RD delivered against three objectives: • Build the appropriate systems and processes for rapid growth • Realign the organisation and develop the necessary capabilities to excel in the changed organisation • Develop a growth platform • The whole RD was based on an extremly close and trusting client relationship • Lidl & Schwartz is a German, 30’000 employee, DM 21B sales, hypermarket retailer • Their revenues had doubled over five years, but there were worries whether they would be able to stay on the fast track • Therefore, their original interest (1996) was to get consulting support on organisational design and alignment - areas they perceived as critical for future success Changing the client by using a capability-driven approach created client enthusiam and let to a m$ 10+ sale for Gemini. B-U

30. Individual Change and Learning

31. INDIVIDUAL CHANGE AND LEARNING Successful change is a continuous people-focused process . . . think of it as marketing to internal segments • Understand the needs of different populations or segments in the organisation • Understand how to communicate and engage the attention of different segments • Lots of feedback on progress • Positive reinforcement • Repetition: try it, fix it, try it again • Interim milestones • Frequently celebrate successes V-O

32. INDIVIDUAL CHANGE AND LEARNING Implementing change requires understanding the dynamics of anxiety and the need for psychological safety • The problem of organisational learning and transformation is to overcome the negative effects of past carrots and sticks. • To make people feel safe in learning, they must have a motive, a sense of direction and the opportunity to try out new things without fear of punishment. Source: “The Dynamics of the Green Room”, E. Schein, Sloan Management Review, 1993.

33. INDIVIDUAL CHANGE AND LEARNING Change involves letting go in order to move on—this will always be a personal choice, and is not easy to achieve Rational (c. f. Kurt Lewin) Unfreeze Move Refreeze Emotional - “Me” (c. f. Bridges) Endings Transitions Beginnings

34. INDIVIDUAL CHANGE AND LEARNING Our role is to help others through change... • Listening and accepting • Focusing: ask questions to pinpoint real issues • Restating: hearing it restated by someone else can help a personto clarify their real interests • Signal shift-move the conversation on • Explain purpose of change • Link to his/her concerns • Summarise: bottom line • “Were my comments clear?” • “What are your ideas for the future?” • “These are my ideas” • Agree to finite steps • Clarify Endings • Disengagement • Disorientation • Disidentification • Disenchantment • Share Transition • Explain • Confront/identify • Neutralise • Transfer • Engage Beginnings • Vision & Plans • Communications • Symbols & ceremonies • New Starts

35. What people in change (usually) get: What people in change want: • Autocratic Behaviour • Avoidance • “Rah rah” • Uncertainty • Insecurity • Empathy • Information • Ideas • Certainty • Security INDIVIDUAL CHANGE AND LEARNING … and one step towards helping people in change is to give them what they need in such situations

36. Security • Competence • Relationships • Sense of direction • Territory iNDIVIDUAL CHANGE AND LEARNING People need Information and secuirty because they may experience a sense of loss during change Control, knowledge of what the future holds and place in the organisation What to do, how to manage (can be embarrassing) Familiar contracts (customers, colleagues, managers, group membership) Understanding of where you are going, why, how Area that ‘belonged’ to you (work space, responsibilities) This sense of loss can generate an emotional cycle which may stall in a number of unproductive phases before acceptance of a new direction is complete. B-U

37. Satisfaction Certainty Confidence Optimism Hope Time Pessimism Doubt INDIVIDUAL CHANGE AND LEARNING Needs and responses from people vary during different emotional stages experienced in a changing environment The Emotional Cycle of Organisational Change This cycle traces the loss of hope, expectation and an envisioned future and the acceptance of a different set of expectations.Different people will be in different places at different times. Source: Daryl Conner, adapted from Kubler-Ross’s Emotional Cycle of Loss: see “On Death and Dying”.

38. Honeymoon period • Ideas look great on paper • All major obstacles appear to have been anticipated Phase 1:Uniformed optimism – Certainty Phase 2:Informed pessimism – Doubt • Problems surface, not all solutions are obvious • Morale drops (“Why did I ever get involved in the first place?”) • A turning point occurs, a sense of accomplishment replaces a sense of pushing against problems • Problems have not all disappeared, but people’s hopes are based on realistic data Phase 3:Hopeful realism –Hope Phase 4:Informed optimism – Confidence • Optimism continues to develop • A fresh burst of energy appears • Successful change has been made • Official change effort is complete • The outcome is frequently much different from that anticipated in Phase 1 Phase 5:Rewarding completion – Satisfaction INDIVIDUAL CHANGE AND LEARNING Understanding the emotional cycle can help us deal with the change process V-O

39. INDIVIDUAL CHANGE AND LEARNING We can help people to change by responding appropriately to their current state • People in contentment or denial are not frozen: • Events will move them soon enough; little can be done to hasten the day; rational problem-solving will delay it. • Make presence felt and accepted by acting appropriately; support their right to stay there as long as they wish. • To mobilise energy, we need to work with people in confusion or renewal: • Seeds of success are sown in confusion and sprout in renewal. • To get past resistance, people have to express it out loud. • Letting go of the past is a pre-condition for moving forward: • Letting go happens in its own time. • The urge to hold on is to protect sense of identity, certainty, meaning: • No unfreezing techniques are likely to help. • Realistic patience and a sense of an appropriate time. • Scale must underlie and guide the change process itself • Any task may shake people into denial; respond by keeping talking and waiting it out. • People need support when in anxiety, not admonitions to hurry up and change faster. Source: Marvin Weisbord: op cit. V-O

40. You cannot make anybody change!