Discussion Document

1. 0 Discussion Document Change Management Opportunities at ABC Co

2. We started this dialog in February for three main reasons and agreed to undertake some initial diagnostic work Background Initial Actions • We are looking for opportunities to enhance our effectiveness in major transformations – in this case ABC Co • We are looking for opportunities to build a change management capability internally • We wanted to respond to client feedback about our team not providing adequate change management guidance Peter Jones interviewed nine members of the Corporal senior team who were working with ABC Co (we agreed it was premature to interview ABC Co staff) • Developed tentative conclusions about the need for change management at ABC Co which were shared with a sub-set of the team

3. Our objectives with this conversation are three-fold • Crystallize the issues at hand – both ABC Co and Corporal issues • Agree on the change management imperatives • Agree on a feasible course of action (in the context of our emerging change management philosophy and approach)

4. To recap what we heard – the team’s view of the situation and hypotheses as to the root cause… Observations about ABC Co Hypotheses • There is no widely held view that ABC Co’s survival is at risk • Limited clarity of vision at senior levels, virtually none at lower levels • No sense of a shared purpose – few models of effective teaming • No one is leading the charge – COO’s style is not one that inspires change, and the CEO is disengaged • The way of running the company will have to change – empowering employees with decision rights, making fact-based decisions etc. • ABC Co has high potential to go out of business • Initial momentum of change program has slowed • Many changes are incremental rather than fundamental • Leadership reticent to take risks, very political, hierarchical • The union burden is considerable and “intractable”

5. To recap what we heard – the client’s view of the situation and our hypotheses as to the root cause… Observations about Corporal Hypotheses • We don’t really understand what change management entails and how we deliver it. That is, how do we capture the hearts and minds of our clients? • We operate in silos with few opportunities to interact across teams • From the client: we are less effective at transferring our change management processes to ABC Co

6. We have drawn tentative conclusions based on the data, but these should be tested with a more thorough diagnostic Conclusions Implications • ABC Co is in crisis but functioning • ABC Co is not a candidate for organization change – at this moment. More has to be accomplished before the organization is ready for wholesale change e.g. plant closures, realigned roles etc. Right now, it is best to merely “nudge” the change • Resistance to change is greater than the forces that drive change RC  [ D x V x FS ] • Need to work on the forces that drive change [D x V x FS]  RC • Dissatisfaction with the current state or outlook for future • Vision for the future • First steps toward that vision • Leadership and the change process are entwined • Commence the change wherever you can – find the zealots and leverage them by teaming with them or coaching them • The union problem will not be solved by taking a passive stance • Find a way to address the union problem – regardless of who “owns” the problem today • No strategy for focusing the organization on the mission critical • Change teams started to take on the role of triaging, linking and focusing, but needs to be broader, deeper – and non-optional

7. How to “Nudge” Change at ABC Co Filename/RPS Number

8. Our philosophy is that successful transformation requires the optimization of technical and behavioral dimensions of organizations Dimensions of Successful Transformation Leadership Mission & Strategy Culture Performance Structure, Processes, & Systems Management System Teamwork Behavior Measures & Incentives “Relationships” “Soft-Wiring” “Behavioral” “Emotional” “Tasks” “Hard-Wiring” “Technical” “Rational”

9. The methodologies we apply to each dimension must therefore work in tandem An Integrated Methodology Phase I Phase II Phase III Diagnostic & Definition Design / Architecture Delivery “Technical” or “Rational” • Identify major strategic issues and scale and scope of change required • Develop vision and strategy • Translate strategy into detailed operating model and blueprint for action • Execute blueprint and roadmap to achieve results Change Management Approach Aligning Leadership & Preparing for Change Building Momentum & Breaking Down Barriers Mobilizing Workforce & Institutionalizing Change “Behavioral” or “Emotional” • Assess Organizational Culture and test capacity and willingness to change • Work with executives to create active sponsorship and develop change agenda • Formalize change processes and create high-performing project teams and apostles of change • Engage workforce and manage change process to ensure change sticks

10. Each phase of the methodology involves executing a series of targeted activities Activities Underlying Integrated Methodology Phase I Phase II Phase III Phase 0/Phase I Diagnostic Definition Design / Architecture Delivery • Interview internal and external stakeholders • Articulate range of options for change • Agree on appropriate scale and scope of change effort • Articulate core problems • Assess market and customer needs • Build value proposition • Identify and value strategic options • Assess internal capabilities • Define strategic agenda • Develop operating model (organization, processes, systems, incentives) • Assess resources and capabilities required • Build implementation plan • Establish targets and program mgmt. structure • Establish teams • Communicate program contents • Coordinate implementation • Monitor and report progress • Make mid-course corrections when necessary “Technical” or “Rational” Change Management Activities Aligning Leadership & Preparing for Change Building Momentum & Breaking Down Barriers Mobilizing Workforce & Institutionalizing Change • Interview and assess key stakeholders / constituencies • Identify major enablers and roadblocks to change • Develop hypotheses on approach to change • Assess and assemble leadership team • Identify and work through areas of resistance • Jointly agree on problem -- define case for change • Fully assess how organization works and ID levers of change • Set change agenda • Communicate to and mobilize key stakeholders • Assess how various constituencies will respond to change • Pick change leaders and create cross-functional teams • Begin to communicate and mobilize middle management • Employ teams to formalize plans for utilizing change levers and institutionalizing change • Build human systems to reinforce change • Incentives • Roles and job descriptions • Succession planning and development processes • Roll out change program and “touch” the organization • Communications • Training • Skills transfer “Behavioral” or “Emotional”

11. We have identified six elements that are necessary to support an effective and comprehensive change management program CHANGE MANAGEMENT CAPABILITIES Level of Importance by Phase Capability Element Description Phase 1 Engage the Top Phase 2 Cascade Down Phase 3 Mobilize 1. Leadership Alignment • CEO counseling and coaching • Alignment of senior team around vision, strategic agenda, imperatives • Senior leadership team effectiveness 4 2 4 2. Philosophy and Approach • Philosophy for dealing with change in the context of transformation • Comprehensive approach to change management 4 4 2 3. Organization Mobilization • Development of the change program infrastructure and process • Change management interventions (e.g. group facilitation, overcoming resistance etc.) at a change program team level 1 4 4 4. Communications • Effective communications program which serves to educate and involve employees in the change • Delivery of communications 1 2 4 5. Skills and Values • Development of new skills and modeling of values that are required/expected of employees in the new environment • Typically involves interventions such as training, action learning experiences 0 2 4 6. Measures and Rewards • Definition of metrics of program success • Definition of leadership incentives that will drive program success • Design of individual measurement and rewards to ensure desired behaviors skill development is reinforced 0 2 4

12. These skills and capabilities complement those Corporal has historically developed and applied to its client engagements Change Management Skills and Capabilities Traditional Corporal Skills and Capabilities V. • Leadership alignment – counseling and coaching, team effectiveness • Philosophy and approach – program design, organizational transformation • Organization mobilization – change architecture, interventions • Communications – communication planning and delivery • Skills and values – training and skill development, articulating and instilling values • Measurements and rewards – metric definition, incentive and compensation design • Analysis – customer segmentation, cost modeling, competitive landscape, etc. • Thought leadership – breakthrough thinking, digesting information and seeing whole picture • Structural design – designing New Operating Models, systems, processes • Program management – system design, task identification and integration • Client-handling – listening, delivering difficult messages, handling interpersonal issues • Industry knowledge – experience with markets, products, and customers

13. Imperatives to “nudge” change and suggested activities to accomplish these Imperative How • Build true alignment across the executive team • CEO/COO (e.g. around survival, role of the labor strategy) • VP’s and/or Executive Champions • Coaching of COO through interactions with CEO • Targeted coaching/team building with the Executive Champions • Improve teaming and build a sense of shared purpose • Change Management Teams (e.g. selected, or all) • Broader organization • Team building interventions around a pertinent business problem • Identify the zealots and start to work with them to build a sense of shared purpose • Clarify the vision and the roadmap to get there • Broader, deeper communications effort • Leverage the zealots • Construct a labor strategy that gives ABC Co some control and clout • Consider bringing in an expert in labor negotiations • Support the Corporal team to become more effective change agents • Individual coaching • Working session to build a sense of team and to provide some coaching on change management

14. However first we must support our assertions… Imperative How • First, we need to support our assertions and make a case for doing anything • Perform an organizational performance diagnostic with appropriate segments • Executive Champions • Change management team leads plus selected team members

15. A five to six month plan should be considered, commencing with a ABC Co diagnostic and a focus on Corporal ~ 5 weeks ~ 8-10 weeks ~ 8-10 weeks Step 1: Launch Step 2: Create a Shared Purpose Step 3: Build Effective Teams • Organizational Performance Diagnostic [1] • The Effectiveness Institute (Jack Estes) conducting the diagnostic then analyzing the results • Supporting Corporal • 2-3 days of Jack Estes, working with Ari and Bob • 2-3 days of Jack Eestes designing and conducting a workshop for the Corporal team • Executive Team Building • 6-8 days of Jack Estes • 4 days of Zoe Dell • Supporting Corporal • 2-3 days of Jack Estes • Executive Team Building • 6-8 days of Jack Estes • 4 days of Additional Actions: • COO Coaching • Labor Negotiations Expert • Communications Utilizing the Zealots [1] Additional (or different) change management interventions may be recommended beyond those identified in this plan

16. The necessary conditions for making this successful The right change management experts with the right tools – Currently developing a small cadre of experts – Estimate a 8-12 days per month level of effort for Jack Estes, 2 days per month for Zoe Dell, recognizing that there will be ebb and flow of activity The right Corporal resources, so that we can learn and improve – Member(s) of the core team at 7-8 days per month level of effort – Providing oversight and an institutional link to the change management experts Client commitment to change – Client sponsor who is, or who can become a zealot – Understands the importance of and difficulty of effecting behavioral change Vehicle to house the change program – Team or workstream with clout – Resources to support a change program 1. 2. 3. 4.