MANAGING CHANGE FOR COMPETITIVE SUCCESS

1. MANAGING CHANGE FOR COMPETITIVE SUCCESS • Organisations today are set to change, as even successful companies may otherwise become gigantic bureaucracies. • They become dinosaurs – difficult to change. • Three of the USA’s once most successful companies have often been called dinosaurs. These three dinosaurs are:- (i) IBM (ii) General Motors (iii) Sears • All these were in top six companies in stock market valuation in 1972 • IBM the value leader – with $ 46.8 billion • General Motors was third – with $ 23.2 billion • Sears was sixth at - $ 18.2 billion. By 1992 non of them was there even in top 20. This happened because they did not change as was required to be done to maintain position Perhaps the biggest problem was their perception that there was no need to change.

3. WHY EFFECTIVENESS • White Star Liner, Once safest Ship in the World, did sink with 1513 People on Board • 850 Foot long, weighed 46,000 tons • Double hull, all watertight compartments • Mistake 1: Believing in Invincibility. • Mistake 2: Underrating the Threats in the Environment. • Mistake 3: Doing too Little too Late. • Mistake 4: Was carrying only 16 life crafts instead of 48.

4. THE CORPORATE TITANICS • Swiss Watchmakers held 65% of Market in 1968. Reduced to 10% by 1980. • Sears a retail giant in the sixties, Lost US$ 3.9billion in 1992. • In 1990 both, K-Mart Wal-Mart had overtaken and Wal-Mart made US$ 2 billion, K-Mart 1 billion. • GM’s Market value fell from Fourth in 1972 to Fortieth in 1992 and in 1992 it lost $23.5B (Biggest loss by any Company).

5. B-SCHOOLS IN INDIA • In 1991 there were only 130 B-Schools in India with 12,000 seats • Presently, there are 3,000 B-Schools with 1,50,000 seats • Half of them had been setup in last 5 years • Dowry index of IIM(A) students is Rs 50 to 100 Lacs

6. CHANGE IS THE CEO’s IMPERATIVE • India is experiencing the fast economic boom and opening to overseas market, the change will intensify • They must compete regionally and Globally • Commitment To change must come from top.

7. THE INERTIA OF CHANGE -FACTORS • The filtered view of real issues to CEOs • The faulty risk and reward formula • Standardisation and centralization problem • Responsibility Avoidance Culture • A Deep Emotional Attachment to the past • The Fear Based Organisation

8. CHANGING MINDSETS • Challenge of CEO is to eliminate the inertia of change • Change mindsets through:- • Decentralizing the organisation and empowering people. • Encouraging creativity, innovation & experimentation. • Rewarding those who manage change and implement change . • Fostering a Democratic work Place Based on trust Instead of Fear. • Re-designing the work to build responsibility, Ownership in People. • Encouraging People to use Influence rather than Authority. • Re-engineering Their Business to Stay Competitive.

9. ORGANISATION CHANGE METHODOLOGY • Assessment • Organization Re-design • Organisation Diagram on Page 25 • Diagnostic Transformation • Continuous Improvement

10. MAKING CHAANGE WORK • Encourage Participation of Staff in Planning Change. • Getting Top Management to be fully Committed to Implementing Change. • Continuously Encouraging and Re-enforcing Desired change in behaviour. • Recognising the extra efforts and energy expanded by Individuals that Change requires of them.

11. MASTERING THE FIVE LAWS OF CHANGE • The change capability of an Organisation is directly proportional to the degree of its leader's commitment. • The resistance to change is overcome when the pain arising from the status quo exceeds the pain of change. • When the cost of status quo exceeds the price of change. • The degree of success in change implementation is directly proportional to the degree of commitment of Company’s Leader. • The signs of change are indicative, in the sense that when they become clear, it is too late to change.

12. The causes for change could be (a) External Forces:- (i) Technological (ii) Economical (iii) Socio Cultural (iv) Political – legal etc. (b) internal Influences:- (i) Owners (ii) Managers (iii) Employees (iv) Board of Directors etc. (c) other Externals:- (i) Customers (ii) Suppliers (iii) Competitors (iv) Potential new entrants

13. TYPE OF CHANGES :- Technological : New equipments, new process Environmental : Govt. Regulations, social trends, economic fluctuation, Taxes, fashion trends etc. Internal to the organisation:- (i) Budget adjustment (ii) Policy changes (iii) Personnel changes etc. Choosing change will not guarantee success, but ignoring change will almost surely guarantee failures.

14. Changes are reactive changes. • Proactive or planned changes. • Most organisation fall some where between reactive and proactive changes. • Business are two complex to have totally planned changes, but at least some, planning for changes are always needed. “How to achieve planned changes is the question”

15. PLANNED CHANGES:- (Volitational change) • Basic reasons for planned changes are :- To improve the means for satisfying the economic needs of members To increase profitability To promote human work for human beings To contribute to individual satisfaction and social well being • Planned change is achieved with the help of change agent. Change agent is one who is responsible for taking up leadership role in managing the change process. Change agent could be member of organisation or external. For complex and lengthy change programme, it is usually desirable that out side change agents manage the process. The external change agents bring specialised expertise and skills required to introduce the planned changes.

16. PROCESS OF PLANNED CHANGES:- • Un freezing • Moving to the new levels • Identification • Internalisation • Re-freezing at the new level. Un freezing Change in the behaviour of individual Change in Organisation Changing Requires Calls for Re-freezing

17. FORCE FIELD ANALYSIS:- Forces for maintaining “ Status Que” Desiredbalancepoint Present balance point Forces for change

18. According to force field theory, any behaviour is result of an equilibrium between driving and restraining forces. • The driving forces push one way. • The restraining forces push the other way. • The behaviour which emerges is the reconciliation of two • Change will occur when driving forces are stronger then restraining forces.

19. REGISTANCE TO CHANGE:- Individual / Group resistance factors Economic factors Psychological factors Social factors Factors for organisational resistances are:- Threat to Power Organisational structure Resource constraints Sunk cost

20. Economic Factors:- • Workers may apprehend technological unemployment. • Workers fear that they will be idle for much of their time due to increased efficiency of technology. • Workers may fear that they will be demoted if they do not acquire new skills. • Setting higher job standards may reduce Bonus or pay incentives.

21. Psychological Factors:- • Workers may not like criticism of present method. • Reduction in personal pride due to lack of new skills. • May apprehend boredom and monotony generated by new technology. • They may have to put up harder work to learn new technology. • They may not have the knowledge of entire change.

22. Social Factors:- • New social adjustments, discarding old social and making new. • New social set up will be less satisfying than present. • If implementers are strangers to worker, they resist them. • Workers also resist change brought in abruptly. • Change will benefit either organisation or employees.

23. OVER COMING RESISTANCE TO CHANGE Use following strategies :- • Effective Communication. • Consultation with union leaders. • Education and Training. • Facilitation and support. • Negotiation. • Manipulation and co-operations. • Coercion. • Use of group dynamics in bringing change.

24. MANAGEMENT OF CHANGE:- Following guide lines must be followed to successfully implement the change:- • Identification of need for change • Determination of elements to be changed • Planning of change • Force field analysis • Soliciting workers participation • Implementation of change • Appraisal

25. ORGANISATION DEVELOPMENT:- According to “R Beckhard,” Organisation development is an effort:- • Planned • Organisation wide • Managed from top • Increases organisation effectiveness and health . • Planned interventions in the organisation process. • Using behavioural science knowledge.

26. STEPS IN ORGANISATIONAL DEVELOPMENT :- • Diagnosis of problem • Planning strategy for change • Implementing change • Evaluation Change Agent :- A change agent is a person who will initiate change in the organisation and monitor its implementation to achieve the desired customs or goals.

27. SUMMARY:- Change is the only thing that is permanent in nature. Even then most people resist change as far as possible, probably because they feel that it is being imposed on them. Change refers to any modification which occurs on the overall work environment of an organisation. If people decide to change their own work environment, then there is no resistance to change because it is their own decision. If it is their own decision they see to it that it is implemented properly and becomes a success story. The effectiveness of an organisation may drastically be improved by involving people in the change process from the initial stage of change process. People become internally motivated and committed for the success of change if they feel that they have taken this decision on their own without any force or imposition.

28. IMP EXERCISES ON CHANGE:- Exercises from test your executive skills. (A) Are you developing your subordinated ? (B) Can you handle consultants ? Cases on change management (A) Creating a new entity Cases in Management (B) Introducing new systems Book of AIMA Ref :- 1. Executive skills for Global Managements 2. AIMA Publication Essential of Management by BP Singh and AK Singh