Change Management

1. Change Management Imam T Saptono

2. About Speaker Imam T Saptono Mr. Saptono currently is co-leader of non-organic growth project at Bank BNI, he was also the Head of Corporate Secretary division at Permata Bank. His role as corporate secretary includes responsibilities in investor relations, media relations, capital market compliance and corporate administrations. During his professional career, he has successfully developed and improved the corporate secretary division at PT. Bank Permata Tbk and PT. Bank BNITbk. He also experienced in many corporate actions such as IPO, right issue, divestment etc. He received both his graduate ad undergraduate degree with distinction from IPB and is currently pursuing his doctorate degree (DBA) from the same distinguished institution.

3. Today’s Discussion • The Change Situation • Change and Transition • Why People Resist Change • Kotter’s 8 Stages • Popular Mistakes

4. Who is the master of the World : Dinosaurs vs Cockroach Both animals are predicted living at the same period since the fossils are founded at the same place

5. Mamalia mengambil alih ? • Mamalia pemangsa telur? • Makanannya tidak ada lagi? • Hujan meteor di bumi? • Letusan Gunung Api?

6. How well do you know this Dinosaurs • Zenith • RCA • GM, Chrysler, Ford • ITT • Lehman Brothers, Fannie Mae, Freddie Mac • Washington Mutual • Pan Am • E

7. The Change Situation • Change hasn’t changed • Change upsets our understanding of the the reality of things • Change requires risks • Change unhinges us – it requires new behaviors • Change threatens us on all levels

8. It Isn’t the Changes That Do You In... It’s the Transitions Change is situational • Move to a new site • Reorganization of roles on the team • Revisions to the pension plan • Transition is psychological • Has an emotional, feeling component

9. “Plans are useless, Planning is priceless” - Dwight Eisenhower Strategy Execution is a Key to Success

10. Change !! All about see, feel and change Re code your change DNA (Rhenald Kasali) See, Do, Get (7 Habits – Stephen Covey) • Help people see • Seeing something new hits the emotions • Emotionally charged ideas change behavior or reinforce change behavior • Give people analysis • Data and analysis influence how we think • New thoughts change behavior or reinforce change behavior

11. The Change Curve Anticipatory Reactive Good Crisis We need to move fast. Who can I Trust? Where do we start? What needs to change? Where do we start? Can we find an early win? Strategic Performance Things are going well. Do we really need to change? Can we experiment? Poor Speed Source: Nick Fry and Peter Killing, Strategic Analysis and Action, Fourth Edition, Prentice Hall Canada, 2000

12. Strategic Mindsets STRATEGIC INTENT MODEL STRATEGIC FIT MODEL Strategic thinking is driven by bridging gap between today’s reality and tomorrow’s vision Finding ways to leverage resources Outpacing competitors in building new advantages Making new industry rules Strategic thinking is driven by the match between current capabilities and existing opportunities Searching for sustainable advantages Finding protected niches Source, Hamel and Prahalad, Strategic Intent, HBR

13. Four Questions that Guide Strategic Choices WHAT CAN WE DO? (strengths and weaknesses) WHAT MIGHT WE DO? (external opportunities and threats) STRATEGY WHAT DO WE WANT TO DO? (organizational and individual values) WHAT DO OTHERS EXPECT US TO DO? (stakeholder expectancies)

14. Four Related Questions that Guide Strategic Choices WHAT CAN WE DO? (strengths and weaknesses) WHAT MIGHT WE DO? (external opportunities and threat) What new capabilities do we want to develop? How do we create new possibilities? STRATEGY What do we need to learn to care about? How do we partner to build shared expectancies? WHAT DO WE WANT TO DO? (organizational and individual values) WHAT DO OTHERS EXPECT US TO DO? (stakeholder expectancies)

15. Three Type of Change Improvement of what is; new state is a prescribed enhancement of the old state. Design and implementation of a desired new state; requires dismantling of the old state and management of the transition process; managed timetable. Market requirements force fundamental change in strategy, operations, and worldview: 1) New state is unknown. It emerges from visioning, trial and error, and learnings, 2) New state requires fundamental shift in mindset, organizing principles, behavior and/or culture, all designed tosupport new business directions. Critical mass oforganization must operate from new mindset and behavior for transformation to succeed and new business model or direction to sustain.

16. Business imperatives outline what the company must do strategically to be successful, given its customers’ changing requirements. (i.e change to the company’s mission, strategy, goals, products and services, pricing or branding) Organizational imperatives specify what must change in the organization’s structure, systems, processes, technology, resources, skill base or staffing to successfully realize its strategic business imperatives. Cultural Imperatives – Cultural imperatives denote how the norms, or collective way of being, working and relating in the company must change to support and drive the organization’s new design, strategy and operations. The aggregate set of customer requirements that determine what it takes for a business to succeed in its marketplace. (i.e the actual product or service needs, speed of delivery, customization capability, level of quality, need for innovation, level of customer service, etc) Leader and Employee Mindset – Mindset encompasses the worldview, assumptions, beliefs or mental models Leader and Employee Behavior – Collective behavior creates and expresses an organization’s culture. Behavior speaks to more than just overt actions; it describes the style, tone or character

17. The Success Syndrome Outcome . Decreased customer focus . Increased cost . Less innovation . Capacity-to-act problems Environmental Disequilibrium Success Syndrome . Codification . Internal focus . Insularity, arrogance, and complacency . Complexity . Conservatism . Disabled learning Denial and Defensive Reactions Sustained Success Declining Performance Do More of the Same Continue doing those things that contributed to success in the past . The Death Spiral

18. Feel they will suffer Organization does not communicate clearly Perceive more work with few opportunities Required to give up ingrained habits Organization lacks adequate rewards Organization lacks sufficient resources Solicit employee input Script a clear, logical message Provide rewards and incentives Identify new behaviors to support the change Develop rewards aligned with the change Prioritize work based on available resources Why Do People Resist?

19. Loss of job security Employees harbor unresolved resentments Change has poor introduction Organization has poor internal communication Communicate how employees and the organization will benefit from renewed relevance Allow employees to express their grief Acknowledge missteps; reaffirm commitment and clarify expectations & timeline Delegate communication tasks to one person/team Why Do People Resist?

20. Producing change • Is 80 percent leadership- establishing direction, aligning, motivating, and inspiring people- • And 20 percent management - planning, budgeting, organizing, and problem solving Unfortunately, in most of the change efforts, these percentages are reversed

21. What is change management? A structured process and set of tools for leading the people side of change.

22. The Change Steps by Kotter

23. The Change Behavior

24. The role of Management & Leadership Produce a degree of predictability & order and has the potential to consistently produce the short term results expected by various stakeholders Produce change, often to a dramatic degree, and has the potential to produce extremely useful change

25. Trigger 1: Create a common sense of urgency • Identify and discuss anticipation to potential crises or looming crises, or major opportunities for change on objective and on emotional grounds • Examine market and competitive realities • Formulate the “why to change” • Refer to leading and peer scientific research / models / best practice

26. Lewin’s Three-Step Process Organizational Change Changing Refreezing Unfreezing Empowering Driving Change and Eliminating Resistance

27. How Strong Are You to Unfreeze the Organization?

28. FUTURES PUSH AND PULL Ideas, Images, Hopes, Fears PRESENT FUTURE Technology, Demographics, Economics, Science etc CONSTRAINTS

29. Motivation Theory by Bechard & Harris (1987) • Motivation to change • A = disstatisfaction • B = future expectation • C = practicallity • D = cost AxBxC > D  Change !!!!!

30. Types of change strategy,(Chin & Benne) Power-coercive People will change when made to do so by those in power

31. Rational People will change if/when they realize it’s advantageous to them

32. Normative-reeducative People do what they’re rewarded for

33. Trigger 2: Form a Powerful Leadership & Coalition of Partners • Assemble a group with enough and potential power to lead the change effort • Encourage the group to work together as a team • Seek strategic partners outside your organisation

34. The Transformation Process BREAKTHROUGH ! BUILD UP… Confront the Brutal Facts Level 5 Leadership First Who... Then What Hedgehog Concept Culture of Discipline Technology Accelerators Disciplined People Disciplined Thought Disciplined Action FLYWHEEL

35. Trigger 3: Create a Vision and Strategy • Create a vision to help direct the change effort • Develop strategies for achieving that vision • Define demonstrative actions  execution is very important

36. Trigger 4 : Lead and communicate the change process • Use every vehicle possible to communicate the new vision and strategies • Your change agents and change agents in waiting are the people you rely on • Mixed approach to the hesitating and the pro-active resistors. • The group of the defensive resistors should not be targeted

37. The 4 communicative approaches for change Cognitive approach: objective datato convince the ‘rationalist’ Learning approach: Training and guidance on best and promising practices to convince the ‘learning’ Conversational approach: maintain conversational interaction with stakeholders to convince the ‘willing’ Coercise approach to the active resistors and non -willing

38. Disagreement over organizational goals Total information available Agreement over organizational goals Decision making by calculated plan Agreement over the appropriate means for achieving goals RATIONAL VS POLITICAL VIEWS OF DECISION MAKING RATIONAL POLITICAL Selection information available Disagreement over the appropriate means for achieving goals Decision making by negotiation, bargaining and compromise

39. I will forget TELL ME Remember this… I might remember SHOW ME I will never forget INVOLVE ME

40. Trigger 5 : Empower staff and stakeholders to act on the Vision • Change systems, structures that seriously undermine the vision • Encourage risk taking and non-traditional ideas, activities and actions • Get rid of obstacles and routines that adverse change • Facilitate new behaviours by the example of the guiding coalition and example

41. Change : All about the power

42. Formal StructureAuthority = Power

43. Hidden/Informal StructureAuthority = Power University college Love Affair Families Social Activities

44. Trigger 5 : Ensure resources for Short-term Projects and Wins • Ensure budgets and human resources for demonstrative and innovative projects that have proven to be successful in other countries • Ensure budgets and committed staff to initiate risk projects • Hire and promote employees who can implement the vision.(in case you don’t find them within your organisation, hire expertise for change from outside)

45. Min mentality level

46. Trigger 6 : Implement Demonstrative Projects and Instruments • Plan for publicly visible improvements • Facilitate and create those improvements and projects • Encourage demonstrative projects • Recognise and reward employees involved in the improvements

47. Trigger 7 : Evaluate, Consolidate and Institutionalise New Approaches, Produce More Change • Use your increased credibility to change policies, structures and routines that don’t fit the vision • Reinvigorate the process with new projects, themes and change agents • Articulate the connections between the new behaviours and corporate success

48. Points to Remember • Change takes time and persistence • Individuals go through stages in the change process • Individuals have different needs at different stages • Successful change efforts require planning, organization, resources and action • Change is more likely to occur when a team is given responsibility for managing implementation

49. We Must Focus on 6 Key Areas Strategy & Stakeholder Relations Resources & Core Skills People Values Culture Knowledge Management Operational Processes & Structures Financial and Social Performance

50. Shaping Strategy in the Face of Uncertainty S&SR People Values Culture Knowledge Management Resources & Core Skills Operational Processes & Structures Financial and Social Performance Demography Environment The Economy Commercial Developments Global Developments Infrastructure Media Education Lifestyles Crime Natural World Climate Providers of Finance Technology Government Policy Suppliers Workers Electronic Markets Alternative Providers Interest Groups Public Expectations & Values Regulation Substitutes