Change Management for Competitive Advantage - Managing People Group Presentation

1. Change Management For Competitive Advantage A Tale of Two Era

2. Agenda Change Management Background Successful Change Elements iChange Conclusion

3. Change Management Background Change Management Background Successful Change Elements iChange Conclusion

4. Change Management – A Timeless Double Edged Sword “Whosoever desires constant success must change his conduct with the times” “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things” Nicollo Machiavelli (1469-1527) Renaissance Philosopher

5. Kotter and Lewin Eight Steps Process (Kotter, 1995) Three Steps Model (Lewin, 1947) Reinforce The Changes Refreeze Consolidate, Reassess & Adjust Create & Reward Short Term Wins Change Empower Others: Remove Barriers WORLD POLITICS Communicate The Vision technology Economic SHOCKS competition SOCIAL TRENDS Nature of Workforce Create A New Vision Form A Coalition Establish A Sense Of Urgency Unfreeze

6. We’ve Got The Concept! “More Than Half Of Organisations Attempting Transformation Programs Failed” (Kotter, 1995) “Change Management programs has a 70% Failure Rate” (Kotter, 2012a; Keller & Aiken, 2008; Miller, 2002) “60% Change Project Fail to meet schedule, budget and quality goals” (IBM, 2008)

7. Major Change Challenges MAJOR CHANGE CHALLENGES (Source: IBM, 2008 ) Soft Factors Hard Factors Changing mindsets and attitudes 58% Corporate culture 49% Complexity is underestimated 35% Shortage of resources 33% 32% Lack of commitment of higher management Lack of change know how 20% Lack of transparency because of missing or wrong information Lack of motivation of involved employees 18% 16% 15% Change of process Change of IT systems Technology barriers 12% 8%

8. What Makes Change Successful WHAT MAKES CHANGE SUCCESSFUL (Source: IBM, 2008 ) Soft Factors Hard Factors Top management sponsorship 92% Employee involvement 72% Honest and timely communication 70% Corporate culture that motivates and promotes change Change agents (pioneers of change) 65% 55% Change supported by culture 48% Efficient training programs 38% Adjustment of performance measures 36% 33% Efficient organisation structure Monetary and non-monetary incentives 19%

9. What’s The Problem? “Change Is Complex” Lewin assumes change is Linear where in current environment its no more applicable (Burnes, 1996; Higgs & Rowland, 2006) “Network Is In” Kotter’s 8 Steps is based on organisation with traditional hierarchal structure (Kotter, 2012b) “Need For Speed” GE Successfully Implemented Change, But It Took Them 5 Years! Is it fast enough today? (Jick, 1995; Kotter, 2012b) “Leadership Ability ” ..or the lack of it causes failure in change execution (Merell, 2012; Higgs & Rowland, 2010; Aiken et al., 2011; McKinsey, 2010; Miller, 2002)

10. Successful Change Elements Change Management Background Successful Change Elements iChange Conclusion

11. Is There A Solution? Desired State 1 3 Change Approach Status Quo 2 Leadership Behaviour Change Accelerators

12. Element #1: Change Approach ‘One Look’ Master Change ‘I Can Manage Change’ ‘I Trust People To Solve Things With Us’ Change Is Complex Change Is Straightforward Directive Change Change Approach Self-Assembly Change Emergent Change ‘Launch Enough Initiatives & Something Will Stick’ ‘I Can Only Create Conditions For Change’ Local Differentiation (Source: Higgs & Rowland, 2006 )

13. Element #1: Change Approach ‘One Look’ Master Change Top Down But Open To Adjustments Common Plans, Agreed Projects Build Skills In Leading Change Networks & Connections Established Across Organisations Identify Important Change Personnel And Keep Them Directive Change Change Is Complex Change Is Straightforward ‘I Can Manage Change’ Change Successful In Long Term, Continuous Change Approach Self-Assembly Change Emergent Change ‘Launch Enough Initiatives & Something Will Stick’ ‘I Can Only Create Conditions For Change’ Local Differentiation (Source: Higgs & Rowland, 2006 )

14. Element #1: Change Approach ‘One Look’ Master Change ‘I Can Manage Change’ ‘I Trust People To Solve Things With Us’ Most Effective In High Change Magnitude, Complex Approach Change Self-Assembly Change ‘Launch Enough Initiatives & Something Will Stick’ Emergent Change An Overall Purpose, Adjusted With Needs Few Big Rules As Guide Initiatives Star Small & Build Up Informal Networks To Build Understanding & Energy Step-by-Step, Not Whole Plan In Advance Tackle Hot Spots Local Differentiation (Source: Higgs & Rowland, 2006 ) Change Is Complex Change Is Straightforward Directive Change

15. Element #2: Leadership Behaviour  “Mover And Shaker” – Sets Pace For Others To Follow  Expects Others To Do What They Do  Personally Expressive And Persuasive  Holds Others Accountable For Delivering Task  Personally Controls What Gets Done Shaping Behaviour ‘Without Me Nothing Will Happen’  Develop People’s Skills In Implementing Change  Lets People Know How They Are Doing And Coaches Them To Improve  Gets People To Work Across Organisational Boundaries And Along Key Processes  Makes Sure The Organisation’s Processes And Systems Support Change  Works With Others To Create Vision & Direction  Helps Others To See Why Things Need Changing And Why There’s No Going Back  Shares Overall Plan Of What Needs To Be Done  Gives People Space To Do What’s Needed, Within Business Goals  Seeks To Change How Things Get Done Not Just What Gets Done LEADERSHIP BEHAVIOUR Creating Capacity Framing Change ‘We Cannot Change Unless We Learn & Grow’ ‘With Clear Boundaries, People Can Contribute’ (Source: Higgs & Rowland, 2006 )

16. Element #2: Leadership Behaviour Unsuccessful In Implementing Change – Works Against Implementation Shaping Behaviour ‘Without Me Nothing Will Happen’ Effective style in the long term change, particularly in organisation facing continuous change Most successful style in high magnitude and complex change that effects large numbers of people within the organisation LEADERSHIP BEHAVIOUR Creating Capacity Framing Change ‘We Cannot Change Unless We Learn & Grow’ ‘With Clear Boundaries, People Can Contribute’ (Source: Higgs & Rowland, 2006 )

17. Element #3: Accelerate Change Kotter’s 8 Accelerators Institutionalise Strategic Changes In The Culture Never Let Up, Keep Learning From Experience Build & Maintain Guiding Coalition  Form Change Team From Trusted Volunteers  Select From Different Hierarchy Formulate Department, Level & Skills strategic vision &  No Internal Hierarchy initiatives to  Enables Ease Of Information capitalise on opportunity Gathering & Processing CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Celebrate Visible Significant Short Term Wins Communicate Vision & Strategy Ensure Network Removes Barriers (Source: Kotter, 2012 )

18. Element #3 Accelerate Change Kotter’s 8 Accelerators Institutionalise Strategic Changes In The Culture Never Let Up, Keep Learning From Experience Build & Maintain Guiding Coalition Formulate strategic vision & initiatives to capitalise on opportunity CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Celebrate Visible Significant Short Term Wins Communicate Vision & Strategy Ensure Network Removes Barriers (Source: Kotter, 2012 )  Form Change Team From Trusted Volunteers  Select From Different Hierarchy Department, Level & Skills  No Internal Hierarchy  Enables Ease Of Information Gathering & Processing

19. Element #3 Accelerate Change Kotter’s 8 Accelerators Institutionalise Strategic Changes In The Culture Never Let Up, Keep Learning From Experience Build & Maintain Guiding Coalition Formulate strategic vision & initiatives to capitalise on opportunity CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Celebrate Visible Significant Short Term Wins Communicate Vision & Strategy Ensure Network Removes Barriers (Source: Kotter, 2012 ) Feasible & Easy To Communicate Emotionally Appealing & Strategic Inspire Network Of Change Creation By Employee Gives Objective, Information & Direction – Able To Make Decision On The Fly Without Need For Decision At Every Turn

20. Element #3 Accelerate Change Kotter’s 8 Accelerators Institutionalise Strategic Changes In The Culture Never Let Up, Keep Learning From Experience Build & Maintain Guiding Coalition Formulate strategic vision & initiatives to capitalise on opportunity CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Celebrate Visible Significant Short Term Wins Communicate Vision & Strategy Ensure Network Removes Barriers (Source: Kotter, 2012 ) Memorable & Authentic Vision Prompt Employees To Discuss This Creates Voluntary Buy Ins, Increasing Change Agents Organic Increase Of Network Promoting Speed Of Change

21. Element #3 Accelerate Change Kotter’s 8 Accelerators Institutionalise Strategic Changes In The Culture Never Let Up, Keep Learning From Experience Build & Maintain Guiding Coalition Formulate strategic vision & initiatives to capitalise on opportunity CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Celebrate Visible Significant Short Term Wins Communicate Vision & Strategy Ensure Network Removes Barriers (Source: Kotter, 2012 ) Guiding Coalition Can Create Solution Rapidly Ensure No Barriers Between Departments To Support Cooperation Solution Can Be Rapidly Duplicated Across Organisation With Team Mix

22. Element #3 Accelerate Change Kotter’s 8 Accelerators Institutionalise Strategic Changes In The Culture Never Let Up, Keep Learning From Experience Best Short-Term Wins Should Be Obvious, Unambiguous, & Clearly Related To The Vision Buoys Existing Volunteer Attract New Volunteers Success Breeds Success Build & Maintain Guiding Coalition Formulate strategic vision & initiatives to capitalise on opportunity CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Celebrate Visible Significant Short Term Wins Communicate Vision & Strategy Ensure Network Removes Barriers (Source: Kotter, 2012 )

23. Element #3 Accelerate Change Kotter’s 8 Accelerators Keep Up Urgency Else Volunteer Will Waiver, Change Slows Down Or Stops  Continue With Strategic Initiatives, Create New Ones  Enables Competitive Advantage With Shifting Business Environment Institutionalise Strategic Changes In The Culture Never Let Up, Keep Learning From Experience Build & Maintain Guiding Coalition Formulate strategic vision & initiatives to capitalise on opportunity CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Celebrate Visible Significant Short Term Wins Communicate Vision & Strategy Ensure Network Removes Barriers (Source: Kotter, 2012 )

24. Element #3 Accelerate Change Kotter’s 8 Accelerators New Direction And Method Must Sink Into Organisation Culture With Visible Results, Employees Will Want To Be Part Of This Culture Long Run Becomes Ingrained, Creating Organic Change Agent Network Institutionalise Strategic Changes In The Culture Never Let Up, Keep Learning From Experience Build & Maintain Guiding Coalition Formulate strategic vision & initiatives to capitalise on opportunity CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Celebrate Visible Significant Short Term Wins Communicate Vision & Strategy Ensure Network Removes Barriers (Source: Kotter, 2012 )

25. Elements Of Successful Change Desired State 1 3 Change Approach Leadership Behaviour Change Accelerators Emergent Change Status Quo 2 Framing Change Master Change Creating Capacity Kotter’s Eight Accelerators

26. iChange Change Management Background Successful Change Elements iChange Conclusion

27. John Sculley – The Marketing Genius 1980 1976 Apple Founded by Steve Jobs, Steve Wozniak & Ron Wayne 1978 Apple Lisa, world’s first Graphical User Interface computer launched 1985 RAPID GROWTH Macintosh, Apple main product, continually faced with Lisa and Macintosh SALES DECLINE Apple continues with Apple LISTED Apple gets on NYSE 1983 Jobs woo Pepsi’s John Sculley: Pepsi Challenge Genius Net Sales Declined by $20 Million Jobs was forced to quit – Board of Directors Wanted Change 1986 Project Newton Sculley’s Big Opportunity to transform Apple’s direction -Interoperability - New Technology

28. John Sculley vs Change Accelerators Onslaught of Microsoft with IBM PC partnership (1981), Graphical User Interface OS(1983) and Successful IPO (1986) High-End Products were beginning to FAIL Gathered a team of Experienced Engineers and housed them in abandoned warehouse No inter-department involvement in Project Team that was formed VISION “World’s first Tablet Computer with sophisticated Artificial Intelligence at desktop Computer prices to replace desktops” Two High-Budget video to show envisioned product positioning & features Video & strategy Communicated to everyone and create excitement as the Future PDA NEWTON - the new Technological Breakthrough saviour CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Build & Maintain Guiding Coalition Formulate strategic vision & initiatives to capitalise on opportunity Communicate Vision & Strategy

29. John Sculley vs Change Accelerators Sculley pooled talented engineers from different areas to enhance communication and development process with project permission directly from him Sculley publically launched Newton without recognition to the team – it was all for product marketing Other projects followed the same cycle with gap in 3 accelerators – company lost competitive edge with every failure Powerbook was the only new product rolled out Experimented with free reign of decision Newton team allowed to research Sales Growth drop sharply from $2 Billion in 1987 to $10 Million in 1990 Microsoft sells 1 Million copies of Windows 95 in four days in 1995 without telling Sculley Ensure Network Removes Barriers Celebrate Visible Significant Short Term Wins Never Let Up, Keep Learning From Experience Institutionalise Strategic Changes In The Culture

30. John Sculley vs Change Approach ‘One Look’ Directive Change “I Can Manage Change” Inflexible, Stiff Prescribed Steps & Recipes Strong Controls Master Change Higgs & Rowland Study: ‘I Trust People To Solve Things With Us’ Unsuccessful Approach Defensive Under Pressure, “Just Do It!” Bureaucratic Approach To Change Change Is Complex Change Is Straightforward To p Do w n A p p ro a c h, No F eed b a c k Change Approach Self-Assembly Change Emergent Change ‘Launch Enough Initiatives & Something Will Stick’ ‘I Can Only Create Conditions For Change’ Local Differentiation (Source: Higgs & Rowland, 2006 )

31. John Sculley vs Leadership Behaviour Higgs & Rowland Study: Unsuccessful Behaviour  Made himself CTO in 1990 and tightly controlled direction Shaping Behaviour ‘Without Me Nothing Will Happen’  Employee’s took him as an “Arrogant Person” LEADERSHIP BEHAVIOUR Creating Capacity ‘We Cannot Change Unless We Learn & Grow’  Stifled creation by enforcing tight SOP  Drives hard on his personal beliefs – sales & marketing insights ignored Framing Change ‘With Clear Boundaries, People Can Contribute’ (Source: Higgs & Rowland, 2006 )

32. John Sculley – A Dashboard View Sculley’s Newton centred change project Apple at the end of Sculley’s reign Change Approach Leadership Behaviour Change Accelerators Directive Change Shaping Behaviour Failed To Sustain Organic Buy-Ins Microsoft & IBM moved ahead Sales Growth Continues To Fall Low Product Innovation

33. Steve Jobs – The Creative Genius 2001 1997 Steve Jobs Reappointed CEO of Apple 3 major launches 2003 iTunes Store 2005 1998 iMac iTunes 2000 iPod was conceptualised Mac OS X Launched Apple Store iPhone 2010 iPod Shuffle 2006 MacBook Pro iPod 2007 2011 iPad Jobs Resigns Sales Increases to $28.5 Billion 2nd Global Most Valuable Brand

34. Steve Jobs vs Change Accelerators In 2000, Steve Jobs saw Huge Competitive Opportunity in Digital Music industry with popularity of MP3 and Napster - Project iPod was launched Authorised $10Million buy all Toshiba’s tiny disk drive for Project iPod CREATE SENSE OF URGENCY AROUND SINGLE BIG OPPORTUNITY Formed a Project Team group from Various VISION Communicated his vision of iPod to the Horizontal Teams All-in-one package:  Easy-to-use jukebox software  Elegant iPod  Store for downloading tunes seamlessly internal team, daily basis once prototype is there Hardware Engineering, Design Div., Copywriters, Mark eting Team, Partnerships and Interface Designer and others around the Shared Vision of the Product Build & Maintain Guiding Coalition “Whole Widget Goal” Formulate strategic vision & initiatives to capitalise on opportunity Work with his team to lobby the vision to music executives – iTunes-iPod launched with 200,000 songs in stock Communicate Vision & Strategy

35. Steve Jobs vs Change Accelerators Jobs maintained the Project iPod team from different areas of the business to work together to capitalise on the opportunity with speed! iPod was launched, all Apple employees were given an iPod to celebrate the team’s success It took them 3 months to develop the Preliminary Version Apple has excelled at Jobs successfully keeping pace with changes and successfully improve and refine the iPod maintain the competitive culture product line to iPod Shuffle, iPod Nano, iPod Touch and iPod Classic innovative products By 2006, 58 Million iPods were sold! and continues to develop more (9 major launches in a span of 10 years) iPhone, iPad , OS X, MacBook Pro etc. and 8 months final product Ensure Network Removes Barriers Celebrate Visible Significant Short Term Wins Never Let Up, Keep Learning From Experience Institutionalise Strategic Changes In The Culture

36. Steve Jobs – How iPod Changed the World “The Biggest Apple project of 2001 which showcased everything best about Steve Jobs” “With Apple's iTunes and iPod, he revived the single, put music libraries in fans' pockets and posed a challenge to brick-and-mortar record stores and radio.” “To date Apple holds over an 85% market share for electronic music and has sold over half a billion tracks.” “If there was ever a product that catalysed what’s Apple’s reason for being, it’s this. Because it combines Apple’s incredible technology base with Apple’s legendary ease of use with Apple’s awesome design.” (Source: 2001, quoted in Steven Levy’s Eulogy)

37. Steve Job’s Change Approach ‘One Look’ Master Change “I Trust People To Solve Things With Us” Directive Change Du p l i c a t ed S k i l l To Ot h er Pro j ec t Created Vision, Team Refined Created Network Connections Via i Po d Tea m ‘I Can Manage Change’ Higgs & Rowland Study: Successful Approach Skills Required Were Hired, Trained Others Change Approach Kept Main Drivers Of iPod, involved in successful iPhone, iPad etc Self-Assembly Change Emergent Change ‘Launch Enough Initiatives & Something Will Stick’ ‘I Can Only Create Conditions For Change’ Local Differentiation (Source: Higgs & Rowland, 2006 ) Change Is Complex Change Is Straightforward Drove Change Efforts

38. Steve Job’s Leadership Behaviour  Provide Continuous Technical Skills Training And Encourage Employees To Propose Their Ideas To Be Considered  Works Closely With The iPod Team To Provide Constructive Feedback On Their Design Shaping Behaviour  Breaks Down Barriers And Put Teams Across Functional Lines In The iPod Team ‘Without Me Nothing Will Happen’  Create Cross Functional Operations Team – iTunes, Apple Store And iPod Team Worked Together For The Launch Facilitates To Have Other Departments Processes , Example Purchasing Process, To Support The Project Success LEADERSHIP Higgs & Rowland Study: BEHAVIOUR Successful Behaviour Creating Capacity Framing Change ‘We Cannot Change Unless We Learn & Grow’ ‘With Clear Boundaries, People Can Contribute’ (Source: Higgs & Rowland, 2006 )

39. Steve Jobs – A Dashboard View Apple at the end of Jobs’ reign Leadership Behaviour Change Accelerators Master Change Jobs’ iPod centred change project Change Approach Creating Capacity Succeed In Sustaining Change 2nd Global Most Valuable Brand Great Increase of Revenue and Share Price High Product Innovations

40. Steve Jobs Change Effects Apple Stats Macs sold (mm) US PC Share Revenue ($b) Cash ($b) Share Price ($b) 4 11% $30 $80 $400 3 8.25% $22.5 $60 $300 2 5.5% $15 $40 $200 1 2.75% $7.5 $20 $100 0 1997 2011 0% 1997 2011 $0 1997 2011 $0 (Source: Frommer, 2011 ) 1997 2011 $0 1997 2011

41. Conclusion Change Management Background Successful Change Elements iChange Conclusion

42. Challenges Relevancy Across Country  Studies UK & US Based Fit To Model  Organisations May Not Fit Into Discussed Leadership & Approach Model  May Not Be Easy To Map & Transform To Proposed Model  Culture & Economic Status May Vary Effectiveness In Other Countries Business Evolution  Affects Relevancy Of Frameworks CHANGE MANAGEMENT Accelerated Structure  Can’t Change Overnight New Structure Running Parallel  Reporting Line & Politics May Hinder Progress  Continual Monitoring Of Effectiveness Of Change Program

43. Summary • Change is complex • There is no “single recipe” for successful Change Management • Major considerations needs to be given to: – Change Approach – Leadership Behaviour – Change Accelerators • While recognising challenges, organisations could use proposed models as a start and modify accordingly based on organisation context • Even if company is having competitive advantage, should not have false sense of security and continue to change to remain a leader as seen in Apple’s case

44. Parting Words “It’s not the strongest of the species who survive, nor the most intelligent, but the ones most responsive to change” Thank You!

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