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Extracts Module 1 Section 2 Kotter's 8 steps

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Extracts Module 1 Section 2 Kotter's 8 steps

  1. 1. Change management and business performance improvement Extract: Module 1 Section 2 Ged Melia
  2. 2. Module 1 Change management and transformation • The ‘big picture’ - a macroeconomic view • Where is all this change stuff coming from? • Why do we need to change when everything seems to be working OK? • John Kotter’s eight step change management framework. • Challenges at the organisational level: • Generating growth. • Aligning costs with expected revenues. • Should we hire consultants or do just get on it with ourselves? • ‘Resistance to change’ • Selected ‘best practice’ approaches: • Project management, service management, bid management and cost evaluation. Module 2 Business performance improvement • Continuous improvement • Improving processes. • The management control cycle. • Shared service centres. • Sourcing decisions. • IT projects. • Downsizing and restructuring. • Improving growth through combinations and via revenues. Seminar is in two parts
  3. 3. Module 1 - Change management and transformations Section 1: Drivers of change Section 2: A framework for change and transformation Section 3: Implications of Kotter’s studies Section 4: Designing and managing change projects Section 5: Should I hire a consultant? Section 6: Resistance to change
  4. 4. Section 2: A framework for change and transformation
  5. 5. John Kotter – ‘Leading Change’  John P. Kotter, a professor at Harvard Business School, wrote what is considered to be the seminal work on change management in 1996.  Following the success of a 1994 Harvard Business Review article, also titled ‘Leading Change’, he proceeded to write something more extensive.  ‘Leading Change’ the book sold well over 400,000 copies and made a significant contribution towards the then nascent field of change management.  It is still a good read and remains relevant today.  The book analysed ‘real world’ change management challenges across multiple organisations and came to a number of conclusions about why firms fail, and what makes change successful.  More importantly he identified an eight stage process which if followed could significantly improve the chances of a successful outcome.
  6. 6. Kotter’s eight steps 1. Establish or increase the sense of urgency 2. Establish the guiding teams 3. Develop/update the vision and strategy 4. Communicate to help obtain buy-in 5. Empower others to act 6. Produce short term wins 7. Consolidate and don’t let up 8. Embed new approaches and create a new culture
  7. 7. Kotter’s “Our iceberg is melting”  Kotter later published a follow-up: “Our Iceberg is Melting”. The book is a simple fable about a group of penguins who have always been living peacefully in a colony in Antarctica when Fred, the main character, discovers that the ICEBERG IS MELTING and his journey in inflicting a major cultural change  "Our Iceberg is Melting” provides a useful job of showing that most problems whether personal or business or under any conditions can be solved by knowing the right place to start from and by empowering leaders at all levels.
  8. 8. Kotter’s “Our iceberg is melting” A 2007 video of Harvard Business School Professor John Kotter talking about his book "Our Iceberg Is Melting”, with a familiar friend.
  9. 9. Complacency kills organisations If complacency is allowed to continue a transformation will fail, and ultimately, so will the business •Too much happy talk from senior management •Absence of a major and visible crisis •Too many resources •Low overall performance standards •Organisational structures that promote narrow functional goals •Incorrect performance measures •A lack of external performance benchmarking •‘Kill the bad news messenger’ approach; low candour/confrontation culture •Human nature Sources of complacency: •Allow a loss, weakness or an error to ‘blow-up’ •Eliminate excess •Set performance targets so high that BAU measures will not meet them •Introduce E2E performance measures •Ensure a wide base of employees are able to see poor performance results •Mandate regular communication with dissatisfied customers, shareholders etc. •Use external consultants to promote honest discussion •Promote the potential opportunities and rewards and the inability to pursue them •Stop the ‘happy talk’ Create a crisis to establish a sense of urgency: “Oh boy, we need to do something!” Step 1 – Create a sense of urgency
  10. 10. A single strong leader can be enough in a small organisation but larger, more complex entities, need a team approach. •Position power to ensure progress will not be blocked. •The right balance of expertise - experience, discipline, nationality etc. •Credibility, such that member reputation will help drive respect for decisions. •Enough leadership to drive necessary and often difficult changes. A ‘guiding coalition’ can only be effective with the right team members. It needs: Avoid recruiting people with room size egos and those who Kotter refers to as ‘snakes’, people who create mistrust and undermine teamwork. •As with other groups a newly formed change team may need the catalyst of one or more off-site events to help promote teamwork. •As well as establishing trust a key purpose of this phase is to build a common goal. Teamwork is essential but it will require the creation of trust •‘Sensible to the head’ •‘Appealing to the heart’ Develop a common goal which is: Step 2 – Establish the guiding teams “Let’s form a team to work out what to do”
  11. 11. Step 3 – Develop/update the vision & strategy “Why don’t we move to a new iceberg?” Vision is essential for clarifying direction, motivation and alignment. Leadership is about vision and strategy while management is about plans and budgets. •Imaginable. •Desirable to stakeholder groups. •Feasible with realistic and attainable goals •Focused enough to provide guidance in decision-making •Flexible enough to accommodate changing conditions and needs. •Capable of being communicated in minutes. Characteristics of an effective vision: The most effective transformational visions tend to be ambitious, appeal to both customers and shareholders, exploit fundamental trends and do not exploit anyone. A vision must be strategically feasible in the context of known constraints. •Build a first draft. •The guiding team should modify it through review and discussion. •Ensure that there is effective teamwork. •Promote both analytical and aspirational thinking. •Accept that progress can sometimes involve some intellectual retrenchment. •The vision will evolve over time and with new conditions. •Ultimately the end result should be ‘desirable, feasible, focused, and flexible. Creating an effective vision:
  12. 12. Step 4 – Communicate to help obtain buy-in “We should tell everybody about it” The real power of a vision is unleashed when there is a common understanding of its goals and directions. Communication usually takes place but is often poorly executed, often due to the sheer magnitude of the task. •Keep it simple. No technobabble or MBA speak. •Use metaphors, analogies and examples. •Use multi-media and face to face meetings and forums, large and small. •Don’t be afraid of repetition. •Ensure that senior manager behaviours are consistent with the message. •Address and explain any apparent inconsistencies; don’t ignore them. •Be interactive, two-way vs. one-way communication is far better. It often helps people feel more involved in the transformation process. Guidance notes:
  13. 13. Step 5 – Empower others to act “We need to send some scouts out to find us a new home. Who will volunteer?” Major transformation requires the involvement of many people, but those people need to feel able to act. People need empowering to help remove obstacles. •Sclerotic structures. that can make it very difficult for employees to act. •A skills deficit. Training needs need to be identified an addressed, skills and attitudes. •Outdated systems and processes. need to be aligned with the vision and strategy. •Supervisory resistance. Obstacles can include: •Communicate the vision. Actions will be far easier to initiate if employees have a shared sense of purpose. •Ensure that structures are aligned with the vision, and don’t block action. •Provide employees with the right skills and attitude training. Ensure that this is more than a ‘one-off’ event. •Make sure that key systems and processes are congruent with the vision, including information and personnel systems. •Challenge management and supervisory staff who are not tuned-in to the empowerment process. To aid change empowerment:
  14. 14. Step 6 – Produce short term wins “The scouts have some great news about another iceberg. We should give them a medal” Short term wins are as important as a long term vision. Regular wins help sustain a long term programme. •Visible to large groups of people. •No ambiguity. •Clearly related to the change effort. Characteristics of good short term wins include: •Provides evidence that the time and sacrifices are worth it. •To reward change agents – morale and motivation. •Helps to fine-tune vision and strategy – provides data. •Undermines cynics and self-serving resisters. •Provides reassurance to senior management. •Helps create momentum. Role of short term wins •Plan for short term wins. •Believe that they can be achieved as well as long term goals. •Ensure that sufficient management time is devoted to achieving them. Although important short term wins should not be pursued at the expense of the future. Avoid apparent wins that are simply accounting gimmicks. A balance of management and leadership is required for a successful transformation effort.
  15. 15. Step 7 – Consolidate and don’t let up “Perhaps we can find an even better route to make it easier for the young and old” Achieving short term wins is important but care should be taken that achievements does not create an atmosphere of complacency Resistance is always waiting in the wings. •Years of work can become undone in a few months. •Don’t let corporate culture or interdependencies become obstacles. Kotter’s cardinal rule on change: ‘ Whenever you let-up before the job is dome, critical momentum can be lost and regression may follow.’ •May need to involve more people to achieve the desired objectives. •And time! Interdependencies can appear insurmountable in complex organisations. Multiple change projects and programmes are challenging and will require extensive planning and delegation. •Momentum for more change is well established. •More people are involved than at the start. •Senior leaders keep the urgency levels up. •Project management and leadership is evident in lower ranks. •Unnecessary interdependencies are eliminated. Stage 7 success looks like: A change programme can last years.
  16. 16. Step 8 – Create a new culture “This is a great iceberg, even better than the last. We should keep on moving; maybe become nomads like the birds” Culture, the norms, behaviours and shared vales among a group of people. Sustained cultural change is the greatest challenge of all. It is essential to identify and address older cultural values if they are not compatible with future direction. Organisational culture can change between divisions and units. Long term internal staff may be oblivious to it, and yet operate and enforce it. •Adapt, update and evolve an old manual rather than destroy it. •A globalised unit will need to synthesise corporate values with local ones. Helpful elements of an older culture may form a useful platform for a new one: •Usually comes at the end of the transformation. •Will depend on the results delivered. •Requires a lot of face to face communication and discussion. •May involve changing key people. •Appropriate succession decisions are vital to a successful change. Changing the culture:

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