Organizational Change Management

Leaders I have been learning thru multiple theoretical and application material as I sharpen skills and work towards my doctoral program. Today I would like to post material on Organization Change Management and few examples how different leaders adopt change management process.

Virtually every organization will, at some point, undergo a transition or change to remain viable and scale. Whether onboarding new employees, growing a department, or merging with another company, these changes can have a significant impact on the trajectory of your business. Organizational change refers to the actions in which a company or business alters a major component of its organization, such as its culture, the underlying technologies or infrastructure it uses to operate, or its internal processes. Organizational change management is the method of leveraging change to bring about a successful resolution, and it typically includes three major phases: Preparation, implementation, and follow-through. There are the four most common types of organizational change:

Strategic transformational change: Transformational changes are those you make to completely reshape your business strategy and processes, often resulting in a shift in work culture. Like introduction of new technology, CRM or Window’s launch or Employee training and developing them on new skill

People-centric organizational change: A people-centric approach helps to re-align such change as an opportunity, rather than a threat. One way to achieve this is by creating a healthy learning culture. Good example for people-centric organizational change will be new hire onboarding and training.

Structural change: structural changes involve major shifts in the management hierarchy, team organization, and the responsibilities attributed to different departments, employees, or teams. These changes often overlap with people-centric changes as they directly affect most, if not all, employees. Merge & Acquisition , adding a new department or creation of a new team can be a relevant example of a structural changes

Remedial change: Remedial changes are reactionary. This type of change occurs when a problem is identified, and a solution needs to be implemented. As these changes are designed to address an issue; they call for immediate action. Dealing with loss of talent , customer communication issues.

Theories of Organization Change Management:

Four of the most popular change management models are Kotter's Eight-step Plan, Lewin's Change Management Model, The McKinsey 7S Model and the ADKAR Model. They all overlap in some respects but differ significantly in others, so it's important to determine what suits your organization's need

ADKAR Change Model: The word “ADKAR” is an acronym for the five outcomes an individual needs to achieve for a change to be successful: Awareness, Desire, Knowledge, Ability and Reinforcement. This powerful model is based on the understanding that organizational change can only happen when individuals change. The ADKAR Model addresses these challenges by equipping leaders with the right strategies and tools, and individuals with the right information, motivation, and ability to successfully move through changes in the organization. ADKAR Model. As a limitation of ADKAR model ,it ignores program management and the need to provide clarity of direction and the steps that are needed to get to the destination. It is better suited to smaller change initiatives. As ADKAR model only focuses on the people dimension which is will be a limitation for large scale changes.

Lewin’s Field Theory: Lewin's Field Theory proposed that behavior is the result of the individual and the environment. This theory had a major impact on social psychology, supporting the notion that our individual traits and the environment interact to cause behavior.

Lewin developed the change model to illustrate how people react when facing changes in their lives. The three stages of this process include unfreezing (the person has an existing state), moving or changing towards new ways of being, and then refreezing into a new state altogether. One of the biggest reasons that Lewin’s change management model is good is that it uses clear concepts and illustrations that make change management easy for many to understand. Some think that Lewin’s change management model is a little too simple. The steps within each phase can be interpreted in different ways, and it’s often necessary to “fill in the blanks” using another change management model.

The McKinsey 7S Model : The McKinsey 7S Model refers to a tool that analyzes a company's “organizational design.” The goal of the model is to depict how effectiveness can be achieved in an organization through the interactions of seven key elements – Structure, Strategy, Skill, System, Shared Values, Style, and Staff. The model is a powerful tool for assessing and analyzing the changes in the internal situation of an organization. It is based on 7 key elements, which determine the organization’s success, which should be interdependent and aligned for producing synergistic outcomes. The model can be used widely in various situations where an alignment is required. The McKinsey 7 S model refers to the seven key interrelated or integrated elements of an organization which are subdivided into hard and soft elements. The Hard elements are within the direct control of the management as it can be easily defined and identified. The following elements are the hard elements in an organization. Strategy, Structure and Systems. The?Soft elements?are less tangible and are difficult to be defined and identified as such elements are more governed by the culture. But according to the proponents of this model, these soft elements are equally important as the hard elements in determining an organization’s success as well as growth in the industry. The following elements are the soft elements in an organization: Shared Values, Style Staff and Skills. Model is useful in achieving key corporate goals and more effective than traditional model that only focuses on strategy and structure. 7S Model is also a good enable for bring department and processes together across the business. 7 S model ignores the importance of the external environment and depicts only the most crucial elements in this model for explaining the interdependence of the key processes and factors within the organization. The model has been criticized for lacking enough empirical evidence to support to support their explanation

Kotter’s Change Management Model: 8 Step Model of Change which John Kotter developed based on research of 100 organizations which were going through a process of change. He organize the change process in 8 distinct steps: 1) Creating a sense of urgency, 2) forming powerful guiding coalitions, 3) developing a vision and a strategy,4) communicating the vision, 5) removing obstacles and empowering employees for action, 6) creating short-term. wins, 7) consolidating gains and strengthening change by anchoring change in the culture 8) Make change stick. It is an easy step by step model which provides a clear description and guidance on the entire process of change and is relatively easy for being implemented. Emphasis is on the involvement and acceptability of the employees for the success in the overall process Since it is a step-by-step model, skipping even a single step might result in serious problems.

Case Study #1 : Microsoft Organization Changes

After Microsoft founder Bill Gates stepped down as its CEO in 2000, he was replaced by his Executive Vice-President of Sales and Support, Steve Ballmer. Despite Gates staying in the company as Chief Software Architect, the tech giant’s stock plummeted dramatically following the announcement (Farber, 2013). This was not due to the company suddenly being unprofitable-able. During his tenure from 2000 - 2014, Steve Ballmer managed to contribute to the company’s profitability and increased the net income by 215% to USD 23bn (Vance, 2012). However, while Ballmer succeeded in protecting Microsoft’s core market, the company failed to keep up with the rapid expansion of its “creativity-driven competitors” Google and Apple (Dhillon & Gupta, 2015, S. 55). Microsoft’s Zune failed to take on the iPod (Rosoff, 2012) and Bing could not compete with Google (GlobalStats, 2019). This perceived lack of innovation was reflected in the company’s stock price. These factors combined with Ballmer’s narrow vision for the future led to Microsoft’s product development starting to lag the competition. Consequently, many talented employees left the company to join the more forward-thinking companies (Olster, 2011). This decline was first felt within Microsoft’s culture, as it became increasingly narrow-minded and unwieldy – which in turn led to the internal competition boiling over into open hostility (Brass, 2010). During the following years, Steve Ballmer was repeatedly voted as one of the world’s tech CEO’s with the lowest employee approval ratings (Kingsley-Hughes, 2011).

Satya Nadella was formally introduced as the CEO of Microsoft on February 4, 2014. Nadella (2017) set himself the following goals for turning the company around and reaching his vision of “One Microsoft”: As part of the transformational journey.

? Communicate clearly and regularly our sense of mission, worldview, and business and innovation ambitions.

? Drive cultural change from top to bottom and get the right team in the right place.

? Build new and surprising partnerships in which we can grow the pie and delight customers.

? Be ready to catch the next wave of innovation and platform shifts. Reframe our opportunity for a mobile- and cloud-first world and drive our execution with urgency.

? Stand for timeless values and restore productivity and economic growth for every-one.”

Satya’ drove following changes in the business

1)???Competitive Culture to a Cooperative Culture with feedback loop system

2)???Product Focus to Customer Focus

3)???Software and Personal Computer to Cloud and Mobile Workforce

4)???Silo-Structure to Cooperation oriented structure.

5)???Incremental Innovation to Anticipating the next disruptions

6)???Licensing Model to Supporting the Open Source.

At the end Satya created invited all top executives and families for a conference to create the culture mindset of Microsoft going forward and together they defined three core pillars. 1) Customer Obsessed 2) Diverse and Inclusive 3) On Microsoft.

More than five years after Nadella’s takeover as Microsoft’s CEO, the stock prices had consistently grown - from 2012-2016 from an initial value of $30.59 to $68.78 in Q2 of 2017 (Dhillon & Gupta, 2015). Under Satya Nadella, Microsoft has turned over a new leaf towards a more customer focused, inclusive culture. Yet, the company is still very much in the process of restructuring itself. So far, Nadella’s mantra of “mobile first, cloud first” seems to have stuck. Like other tech-giants, Microsoft’s is betting on AI to be the future of all applications. Apart from using AI to support their products, Microsoft wants to make sure to keep Nadella’s promise of a “customer-obsessed” company. Overall, Microsoft’s robust financial performance as well as their paradigm shift has revived their credibility as an innovative and creative company. This in turn has restored the confidence of its investors and even the developer community as whole.

Case Study #2 - Change Management at Google

Like most of the organization, Google have gone through multiple change and change is constant process . At Google, leadership came up with a four-step approach to business-driven organizational change they call them "Change Rules." The framework of approach ?“give legs to change efforts and improve outcomes:

1. Start with the “why” and “what.” As one of our leaders said, “Change is constant, but this framework allows us to test and clarify strategic business decisions before they are finalized.”

2. Go slow to go fast. As early as possible, involve employees in creating solutions, rather than just sharing decisions, and you’ll front load the toughest conversations and make it easier to bring everyone along.

?3. Commit to landing, not just launching. Be sure you’re focused on effecting the change, not just announcing it.

?A case study, Project Oxygen, was conducted by Garvin (2013) about a behavior measurement to Google’s manager, why managers matter and what the best manager’s do. In early days of Google, there are not many managers. In a flat structure, most employees are engineers and technical experts. In fact, in 2002 a few hundred engineers reported to only four managers. But over time and out of necessity, the number of managers increased. Then, in 2009, people and team culture at Google noticed a disturbing trend. Its project identifies eight behaviors (Bulygo 2013; Garvin et al. 2013) of a good manager that considered as quite simple that the best manager at Google should have. The results of Project Oxygen explore the performance of Google’s best technical managers, the most instrumental element found was “making that connection” between manager and employee. The connection between them is vital, but it is only a part of the study. Project first recognizes that employees who give their best efforts and align their behaviors with organizational goals, frequently use the word “connection” to describe why they are so devoted; culture and subculture would play a crucial role in business achievement, for a smooth operation.

From my personal perspective, servant leadership demonstrate the best for the organization change management. The 10 characteristics that define a servant leader (Spears, 2010) are listening, empathy, healing, awareness, conceptualization, foresight, persuasion, stewardship, commitment to growth, and community building. Servant leaders empower and nurture their followers to grow both professionally and personally. Followers often become servant leaders in the process. The most effective leaders seek to make a difference in the lives of other people and do not seek fame, wealth, or power (Keith, 2008). The servant leader is the best leader to take the organization through change (Keith, 2008). Servant leaders will not use organizational change as a reason to build their power or make changes based on personalities, factions, and competition between rivals. Power is a gift from those who trust the leader consistent with Greenleaf’s (1977, 2002) depiction of legitimate power.