Organisational Change Management Volume 1

Management Practices that Bring Superior Results

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(Making 4 + 2 Work for You)

Introduction

There is a need to separate facts from fads and fiction. A 5-year study of 160 organisations was conducted and asked 2 basic questions:

i) Why do some organisations consistently outperform their competitors?

ii) Which of the many well-known business tools and techniques (around 200) can help an organisation to be great?

The results of the study stressed the need for a strong grasp of the 4 business basics, ie strategy, execution, culture and structure. These basics need to be supplemented by at least 2 of the following, talent, innovation, leadership and mergers/partnerships. Furthermore,these 8 essential management practices are more important than management tools and techniques used, such as CRM, centralisation/decentralisation, outsourcing, etc

Any organisation that follows the 4 + 2 formula was found to have a 90% chance of sustaining superior performance

Besides identifying the management practices that can significantly impact on an organisation's performance, a list of behaviours was developed that support excellence in each practice. These practices and accompanying mandates are outlined below.

Four Primary Management Practices

1 Strategy (devise and maintain a clearly stated, focused strategy)

Whatever your strategy, whether it is low prices or innovative products, it will work if it is sharply defined, clearly communicated, and well understood by employees, customers, partners and investors.

Build a strategy around simple, focussed, clear value propositions so that it has clarity and consistency and is deeply rooted in our understanding of your customers and a realistic appraisal of your own capacities.

Develop strategy from the outside in, based on what your customers, partners and investors have to say - and how they behave . not on your gut feeling or instinct.

Continually fine-tune your strategy based on changes in the marketplace - for example, a new technology, a social trend, a government regulation, or a competitor's breakaway product.

Clearly communicate your strategy within the organization and to customers and other external stakeholders.

Keep focused and be careful of how growth is pursued. It is generally best to grow your core business while expanding only into related markets; ancillary business can later become part of the core. Beware of the unfamiliar.

2 Execution (develop and maintain flawless operational execution)

As with strategy, it's not what you execute that matters, but how. No linkage or relationship was found between financial performance and tool/technique selection, such as outsourcing, supply chain management, etc. With any tool/technique, it is the disciplined attention to operations that counts.

You might not always delight your customers, but make sure you never disappoint them.

Deliver products/services that consistently meet, and exceed, customers' expectations/ needs/desires. Therefore, focus the organisation's energies and resources on making those processes as efficient as possible.

Put decision-making authority close to the front lines so employees can react quickly to changing market conditions.

Constantly strive to eliminate all forms of excess and waste; improve productivity at a rate that is roughly twice the industry average.

New technologies play an important, but not significant, role. They need to be judged on whether or not they lower costs and/or boost outputs significantly

3 Culture (develop and maintain a performance-oriented culture)

Building the right culture is important. Promoting a fun environment is not as important as promoting high-level performance and ethical behaviour by individuals/teams; it is important that all staff are accountable (not just managers) and not merely satisfied with out-performing competitors

Inspire all managers and employees to do their best

Empower employees and managers to make independent decisions and to find ways to improve operations - including their own.

Reward achievement with pay based on performance achieved, but keep raising the performance bar.

Pay psychological/non-financial rewards in addition to financial ones.

Create a challenging, satisfying work environment.

Establish and abide by clear organisation values.

4 Structure (build and maintain a fast, flexible, flat organisation)

The choice of which organizational structure defined by product, geography, customer, etc. is not as important as whether the structure reduces unnecessary bureaucracy (such as eliminating unnecessary layers of management, excess rules and regulations, outdated formalities, etc) and simplifies work, including processes, for all stakeholders (employers, suppliers, customers, etc).

Simplify. Make your organization easy to work in and work with.

Promote co-operation and the free, open exchange of information across the whole organisation; establish systems for the seamless sharing of knowledge.

Put your best people closest to the action, such as in customer contact.

Appreciate the importance of all staff members' contribution (not just management)

Keep revisiting/reviewing all core process/systems, etc.

Four Secondary Management Practices

The study found that it was not important to go beyond 2 of the 4 secondary practices, because there was no particular financial gain after achieving 2

1 Talent (hold on to talented employees and find more)

One of the best tests for talent in an organisation is the ease with which a senior executive, who leaves, is replaced from within. Furthermore, it is much cheaper to develop a star than it is to go out and buy one. Also, it is more reliable, because the organisation is getting a known quantity, and in the post-Internet boom, worker continuity and organisational loyalty is important.

Talented staff are just as valuable and hard to replace as loyal customers

Fill mid- and high-level jobs with outstanding internal talent whenever possible. Successful organisations have a distinct preference for developing and promoting their own stars and an ability to retain their top performers

Create and maintain top-of-the-line training and development programs that can prepare staff for new jobs in the organisation and create conditions that encourage, rather than penalise, them for taking time away from their jobs for development.

Upwardly mobile staff are not solely responsible for preparing themselves for higher level positions; the organisation has a responsibility as well

Design jobs that will intrigue and challenge your best performers.

Keep senior management actively involved in the selection and development of people, ie succession planning.

Talent-rich organisations tend to attract able people from outside an organisation

2 Innovation (industry-transforming innovations)

Innovation is difficult.

An agile organisation turns out innovative products/services and anticipates disruptive events in an industry, rather than reacting when it may already be too late. This needs to be more than a marginal improvement to existing products.

Relentlessly pursue disruptive technologies to develop innovative new products and services that have the potential to transform your industry.

Seek innovative ideas from all sources both inside and outside the organisation/industry

Don't hesitate to cannibalize existing products and do resist the temptation to wring every last cent out of an existing product/service before introducing another to take its place.

Apply new technologies to enhance all operating processes, not just those dedicated to designing new products and services.

3 Leadership (find leaders who are committed to the business and its people)

Choosing great chief executives can raise performance significantly, ie CEOs can influence 15% of the total variance in an organisation's performance. Furthermore, the choice of CEO is just as important as whether the organisation stays in the same industry or enters a new one

Some common attitudes to leadership that are not important include the type of decision-making (whether independently or in collaboration with senior management; whether or not management relies on quantitative or qualitative assessment; personal characteristics such as being visionary or detail-oriented, secure or insecure, patient or impatient, charismatic or quiet, etc)

Skills and qualities that do matter include ability to build relationships at all levels in the organisation and to inspire the rest of the management team to do the same. In fact, senior management personnel who see themselves as fellow employees rather than masters can foster a more positive attitude. Furthermore, encourage management to strengthen its connections with people at all levels of the organisation.

Closely link the leadership team's pay to its performance.

Inspire management to hone its capacity to spot opportunities (before competitors do) and problems (before they become troublesome nightmares).

Appoint a Board of Directors whose members have a substantial stake in the organisation's success. They need to understand the business and be passionately committed to its success. These are more important than governance

4 Mergers and Partnerships (seek growth through mergers and partnerships)

Internally-generated growth (by innovation, etc) is essential, but organisations that can master mergers and acquisitions can also be winners. Many relatively small deals are more successful than a few, big deals

Enter new businesses (whether cross-selling opportunities, economies of scale, market shares, etc) that leverage and/or complement existing supplier and/or customer relationships and enhance core strengths. Do not enter deals to diversify into areas far removed from the core business.

When partnering, move into new businesses that make the best use of both partners' talents.

Invest substantial resources into the merger/partnership's establishment and development, including developing a system for identifying, screening and closing deals

(source: Nitin Nohria et al, 2003)

Organisational Change

Definitions

Change can be described as experiencing something different.

The basic aim is to make a change in how an organisation operates in order to cope with a new and more challenging environment, ie to create a peak and agile-performance organisation

(change can vary from a small adjustment to a fundamental shift such as re-inventing an organisation)

OR

"Increasing the organisation's capability to adapt to and adopt new ways of doing business"

Scott Simmerman, 1997

Remember: countries and markets are restructuring; technological leaps create new competitive scenarios and radically restructure value chains; large organisations try to act like small ones; think globally, act locally.

Some relevant quotes

"Change is a process (the art of becoming) not an event..."

Patrick Dawson, 2005

"...The fundamental task of management remains the same: to make people capable of joint performance through common goals, values, the right structure, and the training and development they need to perform and to respond to change."..Organisation today - has to be designed for change as the norm and to create change rather than react to it..."

Peter Drucker, 2001

"It has become a truism that the only constant is change; with one change overlapping with another, the time-frame to accomplish change is shortening"

Harvard Business Review, 1998

"Control the change or it will control you - you can resist change and win one or more battles, but you will lose the war"

Noel Tichy, 1999

"Three things can be said about change in today's increasingly competitive environment: it's hard, it's necessary and most people are bound to resist it"

Noel Tichy, 1999

"It is not the strongest of the species that survives, nor the most intelligent; it is the one that is the most adaptable to change"

Charles Darwin as quoted by Norman Augustine, 1998

"It's not the biggest who eat the small, it's the fast who eat the slow"

Gary Jackson, 2003

"An organisation is a web of interconnections; a change in one area can throw a different part of the organisation off balance. Managing these ripple effects and the unexpected outcomes is the challenge of change"

Harvard Business Review, 1998

"Change or die"

Jack Welch as quoted by Business Book Summary, 1993

"The question that faces the strategic decision-maker is not what his/her organisation should do tomorrow. It is what do we have to do today to be ready for an uncertain tomorrow"

Peter Drucker as quoted by AFRBoss, 2000

"...Good ideas are everywhere. Good judgment is a relatively scarce commodity...."

Al Gies, 1997

"...creative thinking at its best - meaning it was chock-full of failures and dead ends..."
Brent Schlender 2015
Management needs to be
"...more open to the talent of others, be inspired by and challenged by that talent, but also......inspiring them to do amazing things..." you can't do yourself plus make decisions with sincerity, depth of feeling and rationality.

John Lasseter (Pixar) as quoted by Brent Schlender, 2015

"...talk about the topic, not about who was right who is wrong. For a lot of people, their egos are tied up in an idea that gets in the way of learning. You have to separate yourself from the idea..."

Ed Catmull (Pixar) as quoted by Brent Schlender, 2015

"Given the choice between changing and proving that change is not necessary, most people will get busy on the proof"

John Kenneth Galbraith as quoted by AFR, 1999

"In the 1990s, the sea-swell of rapid, continuous changes in markets, customer preferences and technology has threatened to capsize countless organisations. Issues related to corporate culture - specifically culture-embraced change - are no longer interesting topics to think about when you have the time: they are matters of survival"

Lila Booth as quoted by Harvard Management Update, March 1999

"Change is the watch word of life. It is characteristic of living systems to continuously renew themselves. If you are not changing, you're dead"

Harvard Management Update, March 1999

"Why are there so few examples of companies that have been able to institute and sustain large-scale changes or to create a culture that continues to welcome change"

Lila Booth as quoted by Harvard Management Update, March 1999

"Environment has moved rapidly from change as the exception to change as the rule"

Scott Simmerman, 1998

"The priority is on agility, the ability to anticipate and facilitate change"

Taizo Nishimuro, CEO, Toshiba, Fortune, Aug 1999

"The organisation is a human community. It is a living system, like the plant or the teenager. There is no one driving it but there are many tending the garden"

Peter Senge et al, 1999

"If there's one essential quality that underpins success in a world of stupefying change, it's resilience - the capacity to adapt to radically new circumstances and emerge form the crisis not merely unbroken but substantially stronger"

Gary Hamel, 2001a

"the challenge of unpredictability can be met by remaining flexible at all times, recognising change as inevitable and an opportunity, and not locking yourself into a set path"

Michael Chaney as quoted by Catherine Fox, 2002

"if you keep going the way you are, you will miss the road of the future"

Charles Handy, 2002

"...change does not come from a slogan or a speech. It happens because you put the right people in place to make it happen..."

Jack Welch as quoted by Jack Welch et al, 2001

"when the rate of change inside an institution becomes slower than the rate of change outside, the end is in sight.."

Jack Welch as quoted by Jack Welch et al, 2001

"...The nature of change itself is changing. Dealing with change is becoming an essential competence for survival, not a periodic or one-off program. No longer consisting of one-off, pragmatic initiatives, change is now an ongoing process in which new ideas are obsolete almost as fast as they are introduced..."

Anne Deering as quoted by James Nelson, 2006

"The real voyage of discovery consists not in seeking new lands, but in seeing with new eyes"

Marcel Proust as quoted by David Osborne et al, 1993

"...Do you want to be the pebble in the pond that creates the ripples of the change...
Tim Cook as quoted by John Kehoe, 2015

 

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