Organisational Change Management Volume 2

Potential Challenges at Ingredient 2

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(establishing a sense of urgency)

(NB Challenges are not necessarily in order of importance and includes some suggestions on how to handle the challenges)

. As most people are risk averse, they prefer to stay inside their zones of comfort or

"...the idea is to take the risk, only when you know you can afford it..."

Robert Winston, 2002

. Not being honest with people; there is a need to be honest with people as the process will challenge deeply-held assumptions and values.

. Remember: what is defined as a sense of urgency or crisis is mainly based on perceptions. Whether or not a crisis is seen as dangerous depends upon the culture of the organisation, especially how senior management/leaders react.

. Need to be careful that sense of urgency does not go too far and create FUD (fear, uncertainty and doom)

. Need to have core activities and/or core assets under threat as the basis for developing a sense of urgency. Core activities are the ways the organisation performs best; core assets are the durable resources, including intangibles, which make the organisation more efficient at performing core activities. For the greatest acceptance for change by staff, need to have both core activities and assets under threat

. Complacency about a sense of urgency at all levels in an organisation, especially middle management which has a degree of autonomy.

. Not understanding that complacency is one of the key indicators of poor organisational performance. This means that staff are reluctant to challenge things. On the other hand, if there is a high amount of dysfunctional fighting with, for example, political point scoring and silo mentality dominating, etc the focus moves away from important issues. Ideally there is a need for a healthy degree of dissent, competition and tension with the right balance of alignment so that individuals and groups perform their best.

. A blurring of the distinction between "urgency" and "panic and/or anger"

. Insufficient patience ie "enough with the preliminaries, let's get on with it"

. Paralysis owing to possible negative responses from staff, ie become worried about staff morale, its effect on short-term business results, etc.

. Too many managers and not enough leaders, ie management's responsibility is to minimise risk, to keep the current system operating and to keep things under control, while change by definition requires modification of the current system and/or the creation of a new vision by leaders

. Less than 75% of senior management being supportive of the transition

. A currently successful organisation, ie staff need to be convinced that there is a need for a change

. Systems and personalities which do not allow for frank discussion of potentially unpleasant facts ie in order to gain acceptance of the opinion that the status quo is more perilous than launching into the unknown, it may be prudent to use outside elements such as experts, consultants, stockmarkets, customer surveys, etc

. Ineffectual information systems that are able to be manipulated, and restriction on information distribution to staff

. Change implementers overestimate their ability to facilitate big changes, or underestimate the difficulty of driving people outside their comfort zone. Thus

"...It is therefore likely that proposals to deliberately change the culture from either inside or outside would be totally ignored or strongly resisted. Instead, dominant members or coalitions will attempt to preserve and enhance the culture..."

Edgar Schein, 2004

. Sense of urgency is too "negative" and/or "personal"

. Looking for internal scapegoats and/or external excuses

. The avoidance of conflict ‐ despite its cost (human and organisational), conflict is an essential fuel for self-questioning and revitalisation

. Once things start to get better, people start to believe the worst is over, and drift back to old ways and habits

. Management's preoccupation with "empire preservation"and "personal agendas"leads them to neglect the critical issues that the organisation needs to face

. Too many silos/fiefdoms/cocoons/stovepipes, ie a culture of respecting each other's turf and not trespassing on that patch

. The existence of a "say yes, do no"ethos, ie indirectly killing off an issue. This can be described as "vicious compliance or kiss of yes", ie only pay lip service to the change process

. An unreasonably high regard for independence and autonomy ‐ as a result, confrontations are rare and conflict is camouflaged, and so learning from each other is a rare event

. A limited rewards system, ie rewarded for not making mistakes (not encouraged to be creative or innovative)

. Have survived many previous "near death experiences"

. Lack of motivation to change. The treatment of alcoholism, drug addition and weight loss all require a strong desire to change and a positive, rather than negative motivation from the sufferer. Remember:

"...change driven by fear or avoidance most likely is not going to last......change driven by hope and aspiration, that's pursued because it's desired, will be more enduring..."

Richard Boyatzis as quoted by AFRBoss, 2004

. Not understanding that culture can act like a defence mechanism to help avoid anxiety and to provide positive direction, self-esteem and pride. As Edgar Schein (2004) claims, these various conditions can make an organisation reluctant to accept cultural truths about itself and thus reluctant to change. Furthermore,

"...unless an organisation's personnel recognise a real need for change, unless they feel psychologically safe enough to examine data about the organisation, they will not be able to hear the cultural truths that the inquiry may have revealed, or, worse, they may lose self-esteem because some of their myths or ideals about themselves may be destroyed by the analysis. A potentially even more dangerous risk is that some members will achieve instant insight and automatically and thoughtlessly attempt to produce change in the culture that 1) some members of the organisation may not want, 2) some other members may not be prepared for and therefore may not be able to implement, and 3) may not solve the problem......to study that culture and reveal that culture to the insider, then, can be likened to an invasion of privacy, which under many conditions is not welcome..."

Edgar Schein, 2004

. Not appreciating the need to redefine your business. For example, not appreciating that

- the market has moved

- a new competitive model exists, such as IT versus newspapers (this requires "good radar"that is continually scanning the business horizons, and is not too dismissive of competitors)

- the current business model has reached its natural limit, ie top of the S-curve

(source: Catherine Fox, 2007g)

. Procrastination works against the impact of a sense of urgency, ie

"...we are now faced with the fact......that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history, there is such thing as being too late. Procrastination is still the thief of time. Life often leaves us standing bare, naked, and dejected with a lost opportunity. The tide in the affairs of men does not remain at flood - its ebbs. We may cry out desperately for time to pause in her passage, but time is adamant to every plea and rushes on. Over the bleached bones and jumbled residues of numerous civilizations are written the pathetic words 'too late'..."

Martin Luther King Jr as quoted by Alan Gore, 2006

. Realizing that using rule by "fist, fiat, fear and fury"is destined to fail in the long-term. Sometimes when rapid change is essential, fear etc tactics may work in the short-term and help the occasional turnaround. On the other hand, should it become the norm, they destroy the fabric of organisation.

. The field of neuroscience is suggesting that the concept of creating an insight may have a similar impact to creating a sense of urgency. The key to creating an insight is helping people understand the problem/challenge/situation, etc themselves and for them to focus on possible solutions. In this way people are getting ownership of the problem and the solution. It is thought

"...the energy of insight might be the thing that propels people through the fear of change and their automatic homeostasis response. If we want people to change, they need to come to an idea themselves, to give their brain the best chance of being energized by the creation on the wide-scale new map......the way to bring about insight is not to think about people's issues for them, but to help them reflect more deeply and support their ability to generate connections..."

David Rock et al, 2006a

. Furthermore, neuroscience is claiming that if the sense of urgency is seen as a too much of a threat, it is both mentally taxing and reduces productivity on the person and/or organisation, ie

"...this response uses up oxygen and glucose from the blood, they are diverted from other parts of the brain, including the working memory function, which processes new information and ideas. This impairs analytical thinking, creative insight and problem solving; in other words, just when people most need their sophisticated mental capabilities, the brain's internal resources are taken away from them..."

David Rock, 2009

. Not understanding the S-curve, ie beginning (1), a period of slow growth or decline (2), a period of rapid growth (3), a mature phase (4) and an ending (5). This can mean for another product or service to succeed, another must die, eg

- compact disc killed off vinyl records

- iTunes ended the influence of the large music stores

- the iPhone destroyed an industry

. Not realising that aligning Information Systems with other parts of the business is essential for success. Some questions around this include
i) do we have the right IT?
ii) how do we know it is right?
iii) how can we best align
our technology systems with our business?
Using 3 perspectives (business, application and technology). For example, describe the portfolio of applications that leverage aspects of your business, ie supply chain management, etc with information requirements, ie customer profiles, warehousing, research and development, etc, and technology infrastructure like data storage systems, security, etc..
Some questions around how business works without getting bogged down in operation details, eg
- How can IT support the processes and workplace required by your organisation?
- What information do you need to capture, store, share and manage in order to improve your organisation's performance?
- How can you your application portfolio, like supply chain, etc, leverage the special dynamics of the way you conduct business?
- How will IT architecture, standards and interface choices limit or leverage
the special dynamics of the way you conduct business?
- Which technology infrastructure, like communications, etc, is crucial to the performance of your business?
- In your organisation where does security play an important role and how does it influence your IT?
- What investments in IT research and development could improve the way the organisation does business?

. · Not understanding that people will hide behind procedures, systems, process, rules and regulations, etc despite how great the sense of urgency is to change or do things differently. For example, the Japanese in cars trying to escape the tsunami became stuck in "one-way" traffic jams. Even though no traffic was going the other way, the drivers refused to drive on the wrong side of the road to escape the coming wave of water. Thus many lives were lost unnecessarily.

. Need to appreciate how change occurs in states, ie importance of violence, or threat of it, as a fundamental incentive to change.

"...The shift to larger-scale societies depends......on technological changes and the economic surpluses they permitted, and were facilitated by the physical environment. But economic incentives by themselves do not seem to have been sufficient to bring these transitions about. Just as peasants in today's developing countries frequently refuse to adopt productivity-enhancing technologies, so too these early societies were often subject to institutional rigidities in production methods and social organisations that blocked change.

The archaeological record suggests instead that the dynamic force that induced the major transitions from band to tribe to state to modern state was military competition. It is only the threat of violence that created strong demand for new forms of political organisations to ensure communities' physical survival. The Charles Tilly hypothesis that "the state made war and war made the state" was meant to apply to state formation in early modern Europe. But military competition drove the formation of modern states in ancient China as well......military competition was critical in compelling France, Russia and Japan to build modern bureaucracies under absolutist conditions. Military fiascos played a role in motivating the passage of the Northcote-Trevelyan report on civil service reform in Britain; many of the major expansions of state in the United States were made for reasons of national security during the two world wars, the Cold War and the so-called war on terrorism. Conversely, it was the infrequency of interstate war in Latin America that explains in part the relative weakness of the States there.

The role of violence in producing political order may seem contradictory, since political order exists in the first place to overcome the problems of violence. But no political order has ever permanently eliminated violence; they simply push the organisation of violence to higher levels. In the contemporary world, state power can provide basic peace and security for individuals in societies that encompass more than 1 billion people. Of those states are still capable organising highly destructive violence between themselves, and they are fully capable of maintaining domestic order. External competition is not the only way that violence or the threat of violence has driven political institution building. Violence has regretfully been necessary to overcome institutional rigidity and political decay. Decay occurs when incumbent political actors have transcend cells within the political system and block possibilities from institutional change. Oftentimes these actors are so powerful that they can be eliminated only through violent means. This was true of the venal officeholders of the ancient regime in France, who as a class had to be physically dispossessed during the revolution. Other powerful agrarian oligopolies - the Prussian Junkers and the landowning classes in Russia and China - lost their hold only as a result of war and revolution. The landowning classes in Japan, South Korea and Taiwan were forced to divest their holdings against the backdrop of American military power......commercialisation of agriculture in England under the parliamentary enclosure movement, necessary to create a modern cabalistic land tenure system, required a slow-motion revolution under which peasants were forcibly driven off the land their families had inhabited the generations.

A final respect in which violence or threat of violence. It is important to political development is the formation of national identities, which are often critically to successful State building and political order more generally. The idea territorial boundaries should correspond to cultural units required the redrawing of boundaries or the physical removal of populations, neither of which could be accomplished without substantial violence. Even where national identity was deliberately designed to be inclusive and non-ethnic, as in Tanzania or Indonesia, lingua francas and other coherent stories of nationhood had to be imposed through authoritarian political methods. In Europe, nations which have been successfully liberal democracies in the second half of the 20th century were all the products of violent nation building in the preceding centuries......violence was important in incentivising filial innovation as a historical matter, but it does not remain a mystery condition for reform in cases that come later. Those societies have the option of learning from earlier experiences and adapting other models to their own society......a deeper question is whether true innovation can be sustained in the absence of greater individual freedom.......It is true that like and accidents have played a role in kick-starting political and economic changes historically. But like and accidents may have been more important for the first societies building new institutions and the ones that come later. Today, there is a large body of accumulated experience about institutions, and a growing international community that shares information, knowledge and resources. There are, moreover, model cars and entry points towards development...... all societies, authoritarian and democratic, are subject to decay over time. The real issue is their ability to adapt and eventually fix themselves...... democratic political systems are often slower to respond to mounting problems than authoritarian ones, but when they do, they are often more decisive because the decision to act is based on border buying.

If there has been a single problem facing contemporary democracies......it has been centred in their failure to provide the substance of what people want from government, personal security, economic growth and quality basic public services like education, health, and infrastructure that are needed to achieve individual opportunity. Proponents of democracy focus, for understandable reasons, on limiting the power of tyrannical or predatory states...... while the American economy remains a source of miraculous innovation, American government is hardly a source of inspiration around the world. At the present moment......there is no automatic historical mechanism that makes progress inevitable, or that prevents decay and backsliding. Democracies exist and survive only because people want and are willing to fight for them; leadership, organisational ability, and oftentimes sheer good luck are needed for them to prevail......specific evolution means that no particular political system will be in equilibrium with its environment forever..."

Francis Fukuyama, 2014

. Sometimes a sense of urgency can appear to come from no-where. Thus the need to be opportunistic. Some examples:
i) Ireland (for centuries the Catholic Church in Ireland dominated the debate on social reform in that country.  The Church maintained very strong views against same sex marriages; this inhibited any reforms in this area. Starting in late 1980s with the exposure of the Church's sexual abuses of children, etc and following in the 1990s, a series of criminal cases and Irish Government Inquiries established that hundreds of priests had abused thousands of children over recent decades. Also, exposed was the way the Church hierarchy covered up these misdemeanours, eg the abusing priests were moved to other parishes to avoid embarrassment or a scandal, victims were not believed and/or treated badly, etc. This exposure significantly weakened the credibility of the Church in Ireland and encouraged social reform. As a result, Ireland was one of the first nations in the world (2015) to legalise same sex marriage. A similar story is evolving around other social reforms in Ireland that the Church has previously opposed like abortion, single mothers, children born out of wedlock, etc. This is a case where a loss of credibility caused a sense of urgency.)

ii) Tobacco (despite on-going research showing the major health risk of smoking, eg addiction to nicotine, causes cancer (there are around 70 chemicals in tobacco that are known to cause cancer), increases the chance of heart disease (strokes, heart attacks, etc), etc, the tobacco industry is a very powerful lobby group which resisted any restrictions on the sale/advertising, etc of cigarettes, etc. Yet in Australia, 2 people were instrumental curbing the power of the tobacco industry, ie
- Dr Bronwyn King (medical professional specialising in cancer who convinced the Australian financial industry, like super funds, etc to disinvest around A$2 b. away from the tobacco industry)
- Prof Simon Chapman (Public Health academic who was pivotal in convincing the government to only allow plain packaging on cigarette packets. This was the last place that cigarette companies could advertise their product).
As change agents, both these 2 people stress that the keys to their success in changing mindsets were
- research (have indisputable evidence to back up their points of view and to counter the opposition's allegations, understand the basis for evidence behind others' points of view, be pro-active rather than reactive, use improved technology, etc)
- be opportunistic (be prepared to take advantage of "lady luck", eg unexpected opportunities, etc)
- communications (get the community/stakeholders, etc on side, eg get their acceptance by linking tobacco with health issues and alcohol drink driving with road accidents/trauma; always be available to the media, understand how the media works, eg 7 second news grab, etc)
- have a support team with a wide range of knowledge, expertise, experience, etc who are motivated both professionally and personally (many experts in the financial industry supported Dr King and gave her financial advice; she had over 1,000 "coffee" meetings)
- be patient & persevere (to the point of being so single-minded that one is regarded as boring; be ready for personal attacks; recognise that it can take years to change mindsets, etc)
- have a champion supporter (eg Hon. Nicola Roxon, Australian Minister of Health who in 2011 introduced legislation restricting cigarette packaging)

. A sense of urgency can come from a corporate crisis but it can cost tens of millions of dollars. One in 4 companies don't survive as a crisis that generates bad publicity, lost sales, increased costs damage brands and reputation, raise the prospect of lawsuits and make stock prices fall significantly. It is crucial that management handles the crisis skilfully as they may not get a second chance. There is a need for a crisis management plan that assumes a worst-case scenario, eg fatalities. In addition to keeping the organisation operating and eventually recovering, there is a need to become proactive to get ahead of the story, ie deepening its customer connection.

.Need to understand Crisis Management. Every organisation needs to prepare itself on how to handle a potential crisis.  This involves planning, simulations and thinking about reputational risk issues.  With the rise of social media and 24 hour news cycle, there are increasing risks, especially around reputation that are becoming harder to manage. One of the biggest challenges facing organisations is gaining executive approval and sign-off on how to immediately respond to the media.

Some tips include

- crisis responses need to be fed into the established channels of communications
- initially acknowledge the event (have some approved responses ready)
- have clearly established approval pathways through the organisations so that communications can respond quickly to the changing situation
- get the senior manager to respond with empathy to the event
- use social media like Twitter, YouTube, ie video is better at conveying emotion than the typed word
- maintain control of the narrative by continually communicating (even if little new information to report)
- never allow a public information vacuum to develop as it will be filled with misinformation.

It is a delicate balancing act defending your organisation and its financial interest without appearing disrespectful to the people impacted by the disaster.

Some examples of poor handling of the crisis include

- Dreamworld's Ardent Leisure (deaths of 4 people in a raft accident on a water ride at the Gold Coast (Australia) theme park in 2016. The day after the accident its share prices fell by 20+ %; it will take years to rebuild its reputation. Some of the things they could have handled better include

i) media revealing that the theme park had a history of safety problems; with staff afraid to speak out for free of reprisal
ii) the failure of the company to make direct contact with families of the victims; yet the organisation claimed otherwise
ii) holding its AGM a couple of days after the accident where a decision on CEO's incentive payment (worth around A$ 1 m.) was on the agenda and approved by the board (later the CEO donated part of the bonus to the families of the victims via the Red Cross)
iii) announcing a re-opening date of the theme park for a memorial day, ie 3 days after the tragedy and before the police investigation, etc was completed. It subsequently had to cancel the memorial day

- Samsung (after a well-publicised launch of its new smart phone in 2016, some phones started bursting into flames)

- Crown Resorts (the arrest of 18 employees including top expatriate executives in China in 2016; their arrests are around promoting gambling in China)

Some good handling of a crisis include

- BHP Billiton (its response after the mudslide in its joint venture in Brazil wiped out an entire village and killed around 20 people in 2005.  Its CEO immediately fronted of the media, apologised to the families affected and flew to the scene of the disaster)

- AirAsia (plane crash in 2014 where the CEO tweeted regular updates about the recovery efforts and expressed his concern for the victims' families)

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