TRANSFORMING ORGANIZATIONS:

WHY FIRMS FAIL?

DIXON D. PALETT (M-14-04)ISHAN PARASHAR (M-14-06)

FACULTY : DR . JAYA SRIVASTAVA

INTRODUCTION Amount of significant, often traumatic, change in

organizations increasing.

Trend of changes likely to continue.

To an extent downside of change is inevitable.

Significant amount of waste and anguish witnessed recently is avoidable

ERROR #1:-ALLOWING TOO MUCH COMPLACENCY

What causes complacency? Too much past success

Lack of visible crises

Low performance standards

Insufficient feedback from external constituencies

What causes this error? Overestimation of one’s

capability to change the organization

Underestimation of inertia of people in comfort zone

Not recognizing actions that can reinforce status quo

Lack of patienceExample:-

Adrien thought he could get the people in the company “induced, pushed or replaced” to implement change but saw a host of quality initiatives fail due this error.

ERROR #2:-FAILING TO CREATE A SUFFICIENTLY POWERFUL GUIDING COALITION

Why coalition is needed? “One man army” doesn’t

work.

Most successful cases, coalition is always powerful

Weak committee efforts and initiatives get undermined

What causes this error? Underestimating difficulties

of changing.

Little history of transformation

Low knowledge about the influencers in an organization

Example:- Claire was aware of the change needed and knew

urgency needed but the initiatives faded into oblivion within two years as the task force selected wasn’t proper.

ERROR #3:-UNDERESTIMATING THE POWER OF VISION

Why is it needed? Vision helps to direct, align

and inspire action

Needed to stir up the right kind of energy needed

Behind scene manipulation and avoiding discussions lead to chaos and confusion

What causes this error? Underestimating the value

of a proper vision

Insufficient communication of the vision

“Whenever you can’t describe it in 5 mins and get a reaction of understanding and interest, you’re in trouble”

Example:- Conrad made and distributed 4 inch thick notebook

detailing procedures, goals, methods and deadlines but without telling where it was leading and as result could neither rally them together nor inspire change.

ERROR #4:-UNDER COMMUNICATING THE VISION

Why is it important? Short term sacrifices

needed for change

No sacrifice till people know the end result and benefits thereof

Communication = word + deed

What causes this error? Good vision but only few

meetings or memos

Many speeches by head but managers silent

Not adhering to “walk the talk”

Example:- 1980 CEO earlier though communication done was

plenty but realized later it was short by miles and many decisions appeared inconsistent with their communication (hypocritical jerks)

ERROR #5:-PERMITTING OBSTACLES TO BLOCK THE NEW VISION

Why is it important? Implementation of change

requires action from a large number of people

Avoiding obstacles , disempowers employees and undermine the change

What causes this error? Refusal to adapt to new

circumstances Demands that are

inconsistent with transformation

Concern that one cannot blend in with the change and achieve expected operating results

Narrow job categories – undermines efforts to increase productivity

Compensation or performance appraisal s/m can force to choose b/w new vision and their self interest.

Example:-

Ralph – HR s/m ( inconsistent )-Din’t believe in need for change-concerned he could produce change - Expected operating results

ERROR #6:-FAILING TO CREATE SHORT-TERM WINS

Why is it important? Momentum of efforts to

change is lost if there are no short term goals to meet and celebrate.

People expect evidence of results within 6 – 18 months

Urgency level drop – when knowing it takes long time

Might give up / join resistance

What causes this error? Assumption that good

things will happen focusing grand vision

forgetting short-term

Example:- Nelson – big ideas person + 2 colleagues Inventory control – to reduce inventory cost w/o stock outagesDivisional controller – needed to see immediate result ( ans : time)IC model = new s/w + h/w

ERROR #7:-DECLARING VICTORY TOO SOON

Why is it important? Risk until changes sink

down deep into culture ( 3-10yrs)

Useful changes disappear

Premature victory celebration stops momentum

What causes this error? Urgency level is not

intense enough Guiding coalition is not

powerful enough Idealistic change initiators Self serving change

resisters War is over and troops

should be sent home (Once sent home , reluctant to return )

Reengineering theme – consultants were paid and thanked with first major project completion w/o checking if original goals were accomplished / acceptance by employees

Example:-

ERROR #8:-NEGLECTING TO ANCHOR CHANGES FIRMLY IN THE CORPORATE CULTURE

Why is it important? Change sticks only when it

becomes “ the way we do things around here “

Root in as social norms and shared values

Degradation if pressure associated is removed

If employees are left on their own , inaccurate links are created

What causes this error? Linking performance

improvements with flamboyant style instead of strategy

Choice of successors (less seasoned candidates)

Insensitivity / ignorance to culture

Economic orientation Analytic orientation

Example:-Charismatic Coleen’s lesson imbedded in cluture as “

value extroverted managers “ instead of “ love thy customer”

Retiring CEOs – Change leaders are required

SUMMARY : COMMON ERRORS Allowing too much complacency Failing to create a powerful guiding

coalition Underestimating the power of vision Under communicating the vision by a

factor of 10 ( or 100 or even 1000) Permitting obstacles to block the new

vision Failing to create short-term wins Declaring victory too soon Neglecting to anchor changes firmly in

the corporate culture

SUMMARY : CONSEQUENCES New strategies aren’t implemented well Acquisitions don’t achieve expected

synergies Reengineering takes too long and costs

too much Downsizing doesn’t get costs under

control Quality programs don’t deliver expected

results Frustration in employees Slow down on implementation Unnecessary resistance

CONCLUSION Errors are not inevitable Awareness and skill can avoid errors to a

large extend Understand why organizations resist

needed change Find appropriate multistage process to

overcome destructive inertia Leadership is required in a socially

healthy way more than just good management.

REFERENCE Reading material : Transforming Organizations : Why

firms fail (John P. Kotter )

THANK YOU