Leading Change in Organizations

Leading Change in Organizations

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30 min
Leading Change in Organizations
Learning Objectives
After studying this chapter you should be able to:
Understand the different reasons for resisting change.
Understand the psychological processes involved in making major changes.
Understand the different ways that leaders can influence the culture of an organization.
Understand the characteristics of an effective vision.
Understand how to develop an appealing vision for the organization.
Understand how to implement a major change in an organization.
Understand the characteristics of a learning organization.
Understand how leaders can increase learning and innovation in organizations.
Leading change is one of the most important and difficult leadership responsibilities. For some theorists, it is the essence of leadership and everything else is secondary. Effective leadership is needed to revitalize an organization and facilitate adaptation to a changing environment. This subject became especially relevant in the 1980s when many private and public sector organizations were confronted with the need to change the way things were done in order to survive. This chapter builds on the previous one and provides a practitioner-oriented perspective on strategic, change-oriented leadership.
Major change in an organization is usually guided by the top management team, but any member of the organization can initiate change or contribute to its success. The chapter describes how leaders can influence the organization culture, develop a vision, implement change, and encourage learning and innovation. The chapter begins by describing different change processes and approaches.
Change Processes in Organizations
Efforts to implement change in an organization are more likely to be successful if a leader understands the reasons why people accept or resist change, sequential phases in the change process, different types of change, and the importance of using appropriate models for understanding organizational problems. Each topic will be examined more closely.
Different Reasons for Accepting Change
The initial reaction to a proposed change may be acceptance, and there are different reasons why a person may be willing to accept change rather than resist it. One explanation is in terms of the types of leader power that are used to influence the person to accept change and the types of influence processes that leaders actually use (see Chapter 7). Compliance with the change is likely if people believe that it is a legitimate exercise of leader authority (legitimate power), or if they fear punishment for resisting the change (coercive power). Commitment is a more likely outcome of a change initiative when people trust their leaders and believe that the change is necessary and likely to be effective (strong referent and expert power). Commitment to change is also facilitated by the leader’s use of an appropriate combination of proactive influence tactics (see Chapter 7). Herscovitch and Meyer (2002) also proposed similar reasons for acceptance of change, but they described the outcome in terms of continuance, normative, and affective commitment. By confounding outcomes with causes, their approach creates unnecessary conceptual confusion.
Resistance to Change
Resistance to change is a common phenomenon for individuals and organizations. There are a number of different reasons why people resist major changes in organizations (Connor, 1995), and they are not mutually exclusive.
1. Lack of trust
A basic reason for resistance to change is distrust of the people who propose it. Distrust can magnify the effect of other sources of resistance. Even without an obvious threat, a change may be resisted if people imagine hidden, ominous implications that will become obvious only at a later time. Mutual mistrust may encourage a leader to be secretive about the reasons for change, thereby further increasing suspicion and resistance.
2. Belief that change is not necessary
Resistance is more likely if the current way of doing things has been successful in the past and there is no clear evidence of serious problems that require major change. The signs of a developing problem are usually ambiguous at the early stage, and it is easy for people to ignore or discount them. If top management has overstated the organization’s performance, then convincing people of the need for change will be even more difficult. Even when a problem is finally recognized, the usual response is to make incremental adjustments in the present strategy, or to do more of the same, rather than to do something different.
3. Belief that the change is not feasible
Even when problems are acknowledged, a proposed change may be resisted because it seems unlikely to succeed. Making a change that is radically different from anything done previously will appear difficult if not impossible to most people. Failure of earlier change programs creates cynicism and makes people doubtful the next one will be any better.
4. Economic threats
Even if a change would benefit the organization, it may be resisted by people who would suffer personal loss of income, benefits, or job security. The latter concern is especially relevant when change involves replacing people with technology or improving processes to make them more efficient. Prior downsizing and layoffs raise anxiety and increase resistance to new proposals, regardless of the actual threat.
5. Relative high cost
Even when a change has obvious benefits for the organization, it always entails some costs, which may be higher than the benefits. Familiar routines must be changed, causing inconvenience and requiring more effort. Resources are necessary to implement change, and resources already invested in doing things the traditional way will be lost. Performance invariably suffers during the transition period as the new ways are learned and new procedures debugged. Concern about costs in relation to benefits will be more difficult to allay when it is not possible to estimate them with any accuracy.
6. Fear of personal failure
Change makes some expertise obsolete and requires learning new ways of doing the work. People who lack self-confidence will be reluctant to trade procedures they have mastered for new ones that may prove too difficult to master. A proposed change will be more acceptable if it includes provisions for helping people learn new ways of doing things.
7. Loss of status and power
Major changes in organizations invariably result in some shift in relative power and status for individuals and subunits. New strategies often require expertise not possessed by some of the people currently enjoying high status as problem solvers. People responsible for activities that will be cut back or eliminated will lose status and power, making them more likely to oppose a change.
8. Threat to values and ideals
Change that appears to be inconsistent with strong values and ideals will be resisted. Threat to a person’s values arouses strong emotions that fuel resistance to change. If the values are embedded in a strong organization culture, resistance will be widespread rather than isolated.
9. Resentment of interference
Some people resist change because they do not want to be controlled by others. Attempts to manipulate them or force change will elicit resentment and hostility. Unless people acknowledge the need for change and perceive they have a choice in determining how to change, they will resist it.
Resistance to change is not merely the result of ignorance or inflexibility; it is a natural reaction by people who want to protect their self-interests and sense of self-determination. Rather than seeing resistance as just another obstacle to batter down or circumvent, it is helpful to view it as energy that can be redirected to improve change (Ford, Ford, & D’Amelio, 2008; Jick, 1993; Maurer, 1996). Active resistance indicates the presence of strong values and emotions that could serve as a source of commitment for opponents who are converted to supporters. As noted in Chapter 4, it is essential for change agents to discuss a proposed or impending change with people who will be affected by it to learn about their concerns and suggestions.
Understanding resistance to change requires going beyond an examination of individual reasons for resisting. Resistance at the individual level is compounded by system dynamics at the group and organization level. Changes in one part of a system may elicit a reaction from other parts that nullifies the effect of the change. The interlocking nature of social systems creates tremendous inertia. Just as it takes miles to turn a supertanker at sea, it often takes years to implement significant change in a large organization.
Stages in the Change Process
Change process theories describe a typical pattern of events that occur from the beginning of a change to the end. One of the earliest process theories was Lewin’s (1951) force-field model. He proposed that the change process can be divided into three phases: unfreezing, changing, and refreezing. In the unfreezing phase, people come to realize that the old ways of doing things are no longer adequate. This recognition may occur as a result of an obvious crisis, or it may result from an effort to describe threats or opportunities not evident to most people in the organization. In the changing phase, people look for new ways of doing things and select a promising approach. In the refreezing phase, the new approach is implemented, and it becomes established. All three phases are important for successful change. An attempt to move directly to the changing phase without first unfreezing attitudes is likely to meet with apathy or strong resistance. Lack of systematic diagnosis and problem solving in the changing phase will result in a weak change plan. Lack of attention to consensus building and declining enthusiasm in the third stage may result in the change being reversed soon after it is implemented.
According to Lewin, change may be achieved by two types of actions. One approach is to increase the driving forces toward change (e.g., increase incentives, use position power to force change). The other approach is to reduce restraining forces that create resistance to change (e.g., reduce fear of failure or economic loss, co-opt or remove opponents). If the restraining forces are weak, it may be sufficient merely to increase driving forces. However, when restraining forces are strong, a dual approach is advisable. Unless restraining forces can be reduced, an increase in driving forces will create an intense conflict over the change, and continuing resistance will make it more difficult to complete the refreezing phase.
Stages in Reaction to Change
Another process theory describes how people in organizations react to changes imposed upon them (Gebert, Boerner, & Lanwehr, 2003; Krause, 2004; Jick, 1993; Woodward & Bucholz, 1987). The theory builds on observations about the typical sequence of reactions by people to sudden, traumatic events such as the death of a loved one, the breakup of a marriage, or a natural disaster that destroys one’s home (Lazarus, 1991). A similar pattern of reactions is assumed to occur during organizational change. The reaction pattern has four stages: denial, anger, mourning, and adaptation. The initial reaction is to deny that change will be necessary (“This isn’t happening” or “It’s just a temporary setback”). The next stage is to get angry and look for someone to blame. At the same time, people stubbornly resist giving up accustomed ways of doing things. In the third stage, people stop denying that change is inevitable, acknowledge what has been lost, and mourn it. The final stage is to accept the need to change and go on with one’s life. The duration and severity of each type of reaction can vary greatly, and some people get stuck in an intermediate stage. Understanding these stages is important for change leaders, who must learn to be patient and helpful. Many people need help to overcome denial, channel their anger constructively, mourn without becoming severely depressed, and have optimism about adjusting successfully.
Prior Experience and Reactions to Change
Despite the extensive literature providing guidance on how to initiate and manage change, many efforts fail to meet expectations (Burke, 2002). Large-scale change in organizations is difficult to study, and much of the research involves anecdotal accounts or case studies. However, recent years have seen an increase in research on conditions affecting the success of change efforts in organizations. The research has examined how contextual factors and individual factors jointly determine the amount of resistance or commitment to change.
How a person reacts to change depends in part on the person’s general confidence about coping with change successfully. This confidence is affected by prior experience with change as well as by traits such as self-confidence and internal locus of control orientation (see Chapter 7). Competing hypotheses can be made (Jick, 1993) about the effects of experiencing repeated, difficult change. One hypothesis is that experiencing traumatic change will “inoculate” people and leave them better prepared to change again without such an intense or prolonged period of adjustment. For example, having experienced and survived the loss of two jobs in 5 years, Sally is confident about taking more risky, less secure jobs in the future. The rival hypothesis is that repeated change leaves people less resilient and more vulnerable to adverse effects from subsequent change. The explanation involves prolonged stress and the inability to completely resolve the emotional trauma of an earlier change. For example, after losing two jobs in 5 years as a result of downsizing, Linda cannot deal with the threat of losing another job and seeks early retirement. A third possibility is that repeated change makes some people more resilient and others less resilient, depending on their other personality traits and their social support system.
Research on the cumulative effects of experiencing repeated, intense changes is still limited, but it suggests that the more common effect is to increase stress and frustration (Rafferty & Griffin, 2006). The stress caused by earlier changes and a person’s self-efficacy for change jointly determine how the person will react to more changes. (Herold, Fedor, & Caldwell, 2007). Even for people who have strong confidence in their ability to handle change, too many changes in a short period of time can undermine commitment. People are likely to feel frustration and a sense of injustice if the burden of implementing change is placed on them without adequate support from the organization. Feelings of being unjustly treated are intensified when most of the benefits of the changes will accrue to others, such as top management.
Different Types of Organizational Change
The success of a major change depends in part on what is changed. Many attempts to introduce change in an organization emphasize changing either attitudes or roles but not both (Beer, Eisenstat, & Spector, 1990). The attitude-centered approach involves changing attitudes and values with persuasive appeals, training programs, team-building activities, or a culture change program. In addition, technical or interpersonal skills may be increased with a training program. The underlying assumption is that new attitudes and skills will cause behavior to change in a beneficial way. It is hoped that converts become change agents themselves and transmit the vision to other people in the organization.
The role-centered approach involves changing work roles by reorganizing the workflow, redesigning jobs to include different activities and responsibilities, modifying authority relationships, changing the criteria and procedures for evaluation of work, and changing the reward system. The assumption is that when work roles require people to act in a different way, they will change their attitudes to be consistent with the new behavior. Effective behavior is induced by the new role requirements and reinforced by the evaluation and reward system.
An example will clarify the difference between the two approaches to organizational change. A company is having difficulty getting people in different functionally specialized departments to cooperate in developing new products rapidly and getting them into the marketplace. One approach is to talk about the importance of cooperation and to use a process analysis intervention or team-building activity to increase understanding and mutual respect among people from different functions. This approach assumes that increased trust and understanding will increase cooperation back in the workplace. Another approach is to create cross-functional teams that are responsible for the development of a new product, and then reward people for contributions to the success of the team. This approach assumes that people who cooperate to achieve a common goal will come to understand and trust each other.
Over the years, there has been controversy about which approach is the most effective. Either approach can succeed or fail depending on how well it is implemented. Beer and his colleagues (1990) argue that a role-centered program is more likely to be successful than an attitude-centered program. However, the two approaches are not incompatible, and the best strategy is to use them together in a mutually supportive way. Efforts to change attitudes and skills to support new roles reduce the chance that the role change will be subverted by opponents before it has a chance to succeed.
Not all change efforts are focused on attitudes or roles. Another type of change is in the technology used to do the work. Many organizations have attempted to improve performance by implementing new information and decision support systems. Examples include networked workstations, human resource information systems, inventory and order processing systems, sales tracking systems, or an intranet with groupware for communication and idea sharing among employees. Such changes often fail to yield the desired benefits, because without consistent changes in work roles, attitudes, and skills, the new technology will not be accepted and used in an effective way.
Still another major type of change is in the competitive strategy of the organization. Examples of this strategy-centered approach include introduction of new products or services, entering new markets, use of new forms of marketing, initiation of Internet sales in addition to direct selling, forming alliances or joint ventures with other organizations, and modifying relationships with suppliers (e.g., partnering with a few reliable suppliers). To be successful, changes in competitive strategy often require consistent changes in people, work roles, organization structure, and technology. For example, the decision to begin providing a more intensive type of customer service may require service personnel with additional skills and better technology for communicating with customers.
Internal changes in an organization may emphasize either economic factors or human factors (Beer & Nohria, 2000). The economic approach seeks to improve financial performance with changes such as downsizing, restructuring, and adjustments in compensation and incentives. The organizational approach seeks to improve human capability, commitment, and creativity by increasing individual and organizational learning, strengthening cultural values that support flexibility and innovation, and empowering people to initiate improvements. Attempts to make large-scale change in an organization often involve some aspects of both approaches, but incompatible elements can undermine the change effort if not carefully managed. For example, making drastic layoffs to reduce costs can undermine the trust and loyalty needed to improve collective learning and innovation. It is difficult to improve organizational performance unless a leader can find ways to deal with the trade-offs and competing values involved in making major change, and this subject is discussed in more detail in Chapter 12.
Many organizations implement generic change programs that are popular at the time, even if there is little or no empirical evidence to indicate that they are effective. Some examples of popular change programs during the past two decades include downsizing, delayering, reorganization (e.g., into small product divisions), total quality management, reengineering, self-managed teams, outsourcing, and partnering (e.g., with suppliers). A common mistake is to implement a generic change program without a careful diagnosis of the problems confronting the organization. Change programs often fail to solve organizational problems and sometimes make them worse (Beer et al., 1990). The benefits obtained from changes made in one part of the organization often fail to improve the overall performance of the organization and may cause new problems for other subunits (Goodman & Rousseau, 2004). Before initiating major changes, leaders need to be clear about the nature of the problem and the objectives of the program.
Systems Models for Organizational Diagnosis
Just as in the treatment of a physical illness, the first step is a careful diagnosis to determine what is wrong with the patient. The organizational diagnosis can be conducted by the top management team, by outside consultants, or by a task force composed of representatives of the various key stakeholders in the organization. To understand the reasons for a problem and how to deal with it requires a good understanding of the complex relationships and systems dynamics that occur in organizations. Systems models that acknowledge complex relationships and cyclical causality can be used to improve organizational diagnosis (Gharajedaghi, 1999; Goodman & Rousseau, 2004; Senge, 1990).
In a systems model, problems have multiple causes, which may include actions taken earlier to solve other problems. Actions have multiple outcomes, including unintended side effects. Changes often have delayed effects that tend to obscure the real nature of the relationship. Sometimes actions that appear to offer quick relief may actually make things worse in the long run, whereas the best solution may offer no immediate benefits. A person who is impatient for quick results may keep repeating inappropriate remedies, rather than pursuing better remedies that require patience and short-term sacrifice.
A change in one part of a system often elicits reactions from other parts to maintain system equilibrium. The reactions tend to dampen or cancel out the effects of the initial change. An example is when a manager downsizes the workforce to reduce costs, but pressure to maintain the same output requires expensive overtime and use of consultants (including some of the same people who were downsized), thereby negating most or all of the cost savings.
Another common phenomenon is a reinforcing cycle wherein small changes grow into much bigger changes that may or may not be desirable. A positive example is when a change made to improve processes in one subunit is successful, and other subunits are encouraged to imitate it, resulting in more benefits for the organization than initially expected. A negative example is when rationing is introduced to conserve a resource and people rush to get more of it than they currently need, thereby causing greater shortages.
Influencing Organization Culture
Large-scale change in an organization usually requires some change in the organization culture as well as direct influence over individual subordinates. By changing the culture of an organization, top management can indirectly influence the motivation and behavior of organization members. Research on organizational culture provides further insight into the dynamics of transformational leadership and the processes by which a leader’s charisma may become institutionalized (see Chapter 9).
Nature of Organization Culture
Schein (1992, 2004) defines the culture of a group or organization as shared assumptions and beliefs about the world and their place in it, the nature of time and space, human nature, and human relationships. Schein distinguishes between underlying beliefs (which may be unconscious) and espoused values, which may or may not be consistent with these beliefs. Espoused values do not accurately reflect the culture when they are inconsistent with underlying beliefs. For example, a company may espouse open communication, but the underlying belief may be that any criticism or disagreement is detrimental and should be avoided. It is difficult to dig beneath the superficial layer of espoused values to discover the underlying beliefs and assumptions, some of which may be unconscious.
The underlying beliefs representing the culture of a group or organization are learned responses to problems of survival in the external environment and problems of internal integration. The primary external problems are the core mission or reason for existence of the organization, concrete objectives based on this mission, strategies for attaining these objectives, and ways to measure success in attaining objectives. Most organizations have multiple objectives, and some of them may not be as obvious as others. Agreement on a general mission does not imply agreement about specific objectives or their relative priority. Schein (1992, p. 56) provides an example of a company with consensus about having a line of winning products but disagreement about how to allocate resources among different product groups and how to market the products:
One group thought that marketing meant better image advertising in national magazines so that more people would recognize the name of the company, one group was convinced that marketing meant better advertising in technical journals, one group thought it meant developing the next generation of products, while yet another group emphasized merchandising and sales support as the key element in marketing. Senior management could not define clear goals because of a lack of consensus on the meaning of key functions and how those functions reflect the core mission of the organization.
All organizations need to solve problems of internal integration as well as problems of external adaptation. Objectives and strategies cannot be achieved effectively without cooperative effort and reasonable stability of membership in the organization. Internal problems include the criteria for determining membership in the organization, the basis for determining status and power, criteria and procedures for allocating rewards and punishments, an ideology to explain unpredictable and uncontrollable events, rules or customs about how to handle aggression and intimacy, and a shared consensus about the meaning of words and symbols. The beliefs that develop about these issues serve as the basis for role expectations to guide behavior, let people know what is proper and improper, and help people maintain comfortable relationships with each other.
A major function of culture is to help us understand the environment and determine how to respond to it, thereby reducing anxiety, uncertainty, and confusion. The internal and external problems are closely interconnected, and organizations must deal with them simultaneously. As solutions are developed through experience, they become shared assumptions that are passed on to new members. Over time, the assumptions may become so familiar that members are no longer consciously aware of them.
Ways to Influence Culture
Leaders can influence the culture of an organization in a variety of ways (Deal & Kennedy, 1982; Schein 1992, 2004; Trice & Beyer, 1993; Tsui, Zhang, Wang, Xin, & Wu, 2006). The different types of influence can be grouped into two broad categories (see Table 10-1). One approach involves direct actions by the leader, and the other involves creation or modification of formal programs, systems, organization structure, facilities, and cultural forms. The effects of leaders on culture are stronger when the two approaches are consistent.
Table 10-1 Ways to Influence Organizational Culture
Leadership Behavior
• Espoused values and visions
• Role modeling and attention
• Reactions to crises
Programs, Systems, Structures, and Cultural Forms
• Design of management systems and programs
• Criteria for rewards and personnel decisions
• Design of structure and facilities
• Symbols, rituals, ceremonies, and stories
Leadership Behavior
Leaders communicate their values when they articulate a vision for the organization, make statements about the values and ideals that are important, and formulate long-term objectives and strategies for attaining them (see guidelines later in this chapter). Written value statements, charters, and philosophies can be useful as supplementary forms of communication, but they have little credibility unless they are supported by leader actions and decisions. One way for leaders to communicate values and expectations is by actions showing loyalty, self-sacrifice, and service beyond the call of duty. In their daily activity, leaders also communicate their priorities and concerns by their choice of things to ask about, measure, comment on, praise, and criticize. In contrast, by not paying attention to something, a leader sends the message that it is not important.
Because of the emotionality surrounding crises, a leader’s response to them can send a strong message about values and assumptions. A leader who faithfully supports espoused values even when under pressure to take expedient actions inconsistent with them communicates clearly that the values are really important. For example, one company with lower sales avoided layoffs by having all employees (including managers) work fewer hours and take a pay cut; the decision communicated a strong concern for preserving employee jobs.
Programs and Systems
Formal budgets, planning sessions, reports, performance review procedures, and management development programs can be used to emphasize some values and beliefs about proper behavior. Orientation programs can be used to socialize new employees and teach them about the culture of an organization. Training programs designed to increase job skills can also be used to teach participants about the ideology of the organization. Other approaches for socialization of new members include use of formal mentors who are selected because they are able to model and teach key values, and the use of internships, apprenticeships, or special assignments to work in subunits of the organization where the culture is strong (Fisher, 1986).
Criteria for Rewards and Personnel Decisions
The criteria used as the basis for allocating tangible rewards signal what is valued by the organization. Formal recognition in ceremonies and informal praise communicate a leader’s concerns and priorities. Failure to recognize contributions and achievements sends a message that they are not important. Finally, differential allocation of rewards and status symbols affirms the relative importance of some members compared to others. For example, in comparison to companies in the United States, Japanese companies use far fewer status symbols and privileges of rank such as large offices, special dining rooms, and private parking spaces. The criteria emphasized in recruiting, selecting, promoting, and dismissing people provide another way to communicate values. The effect on culture is stronger if the organization provides realistic information about the criteria and requirements for success, and the personnel decisions are consistent with these criteria.
Design of Organization Structure and Facilities
The design of organization structure may reflect values and beliefs about people and processes. A centralized structure reflects the belief that the leader can determine what is best, whereas a decentralized structure or the use of self-managed teams reflects a belief in individual initiative and shared responsibility. The design of facilities may also reflect basic values. Providing similar offices and having the same dining facilities for all employees is consistent with egalitarian values.
Cultural Forms
Cultural values and beliefs are also influenced by cultural forms such as symbols, slogans, rituals, and ceremonies (Trice & Beyer, 1993). Many different changes are possible, including elimination of existing cultural forms that symbolize the old ideology, modification of existing cultural forms to express the new ideology, and creation of new cultural forms. The following description of changes in the U.S. Postal Service provides some examples (Biggart, 1977).
When Winton Blount became the new Postmaster General in 1972, he initiated a number of changes to signal a new ideology which emphasized efficiency, competitiveness, and self-sufficiency rather than service at any cost and dependence on Congress. Changes in symbols included a new name for the post office, a new logo (an eagle poised for flight rather than Paul Revere riding a horse), new postal colors, and a new typeface for publications. The employee newsletter was drastically changed from a media for disseminating trivial information to a vehicle for advocating the new ideology and celebrating the success of local post offices that achieved the new efficiency standards. An advertising office was created to promote a new image for the postal service, and a training institute was established to train thousands of postal supervisors each year in management procedures consistent with the new ideology.
Rituals, ceremonies, and rites of passage can be used to strengthen identification with the organization as well as to emphasize core values. In many organizations new members are required to make a public oath of allegiance, to demonstrate knowledge of the ideology, or to undergo an ordeal to demonstrate loyalty. Also common are ceremonies to celebrate a member’s advancement in rank, to inaugurate a new leader, and to acknowledge the retirement of a member. Rituals and ceremonies may also involve the communication of stories about important events and dramatic actions by individuals. However, stories and myths are more a reflection of culture than a determinant of it. To be useful the story must describe a real event and convey a clear message about values.
Culture and Growth Stages of Organizations
The influence of a leader on the culture of an organization varies depending on the developmental stage of the organization. The founder of a new organization has a strong influence on its culture. The founder typically has a vision of a new enterprise and proposes ways of doing things that, if successful in accomplishing objectives and reducing anxiety, will gradually become embedded in the culture. However, creating culture in a new organization is not necessarily a smooth process; it may involve considerable conflict if the founder’s ideas are not successful or other powerful members of the organization have competing ideas. To succeed, the founder needs an appropriate vision and the ability and persistence to influence others to accept it. If the founder does not articulate a consistent vision and act consistently to reinforce it, the organization may develop a dysfunctional culture reflecting the inner conflicts of the founder (Kets de Vries & Miller, 1984).
One of the most important elements of culture in new organizations is the set of beliefs about the distinctive competence of the organization that differentiates it from other organizations. The beliefs are likely to include the reason why the organization’s products or services are unique or superior and the internal processes that account for continued ability to provide these products and services. Implications for the relative status of different functions in the organization and the strategies for solving crises differ depending on the source of distinctive competence. For example, in a company that is successful due to its development of innovative products, the research and development function is likely to have higher status than other functions, and the likely response to a recent decline in sales is to introduce some new products. In a company that has been able to provide a common product at the lowest price, manufacturing will have higher status, and the response to a decline in sales is likely to involve the search for ways to reduce costs below those of competitors.
The culture in young, successful organizations is likely to be strong because it is instrumental to the success of the organization, the assumptions have been internalized by current members and transmitted to new members, and the founder is still present to symbolize and reinforce the culture. In such an organization, the culture will evolve slowly over the years as experience reveals that some assumptions need to be modified. Eventually, as the organization matures and people other than the founder or family members occupy key leadership positions, the culture will become more unconscious and less uniform. As different subcultures develop in different subunits, conflicts and power struggles may increase. Segments of the culture that were initially functional may become dysfunctional, hindering the organization from adapting to a changing environment.
In general, it is much more difficult to change culture in a mature organization than to create it in a new organization. One reason is that many of the underlying beliefs and assumptions shared by people in an organization are implicit and unconscious. Cultural assumptions are also difficult to change when they justify the past and are a matter of pride. Moreover, cultural values influence the selection of leaders and the role expectations for them. In a mature, relatively prosperous organization, culture influences leaders more than leaders influence culture. Drastic changes are unlikely unless a major crisis threatens the welfare and survival of the organization. Even with a crisis, it takes considerable insight and skill for a leader to understand the current culture in an organization and implement changes successfully.
Developing a Vision
The research on charismatic and transformational leadership indicates that a clear and compelling vision is useful to guide change in an organization (see Chapter 9). Before people will support radical change, they need to have a vision of a better future that is attractive enough to justify the sacrifices and hardships the change will require. The vision can provide a sense of continuity for followers by linking past events and present strategies to a vivid image of a better future for the organization. The vision provides hope for a better future and the faith that it will be attained someday. During the hectic and confusing process of implementing major change, a clear vision helps to guide and coordinate the decisions and actions of thousands of people working in widely dispersed locations.
Desirable Characteristics for a Vision
A number of writers have attempted to describe the essential qualities of a successful vision (Bennis & Nanus, 1985; Kotter, 1996; Kouzes & Posner, 1995; Nanus, 1992; Tichy & Devanna, 1986). A vision should be simple and idealistic; a picture of a desirable future, not a complex plan with quantitative objectives and detailed action steps. The vision should appeal to the values, hopes, and ideals of organization members and other stakeholders whose support is needed. The vision should emphasize distant ideological objectives rather than immediate tangible benefits. The vision should be challenging but realistic. To be meaningful and credible, it should not be a wishful fantasy, but rather an attainable future grounded in the present reality. The vision should address basic assumptions about what is important for the organization, how it should relate to the environment, and how people should be treated. The vision should be focused enough to guide decisions and actions, but general enough to allow initiative and creativity in the strategies for attaining it. Finally, a successful vision should be simple enough to be communicated clearly in 5 minutes or less.
Elements of a Vision
The term vision has many different meanings, which creates widespread confusion. It is unclear whether a mission statement, strategic objective, value statement, or slogan constitutes an effective vision. In the absence of direct research on this question, one way to answer it is to examine each construct in relation to the desirable characteristics for a vision.
The mission statement usually describes the purpose of the organization in terms of the type of activities to be performed for constituents or customers. In contrast, an effective vision tells us what these activities mean to people. The core of the vision is the organization’s mission, but different aspects of it may be emphasized. A successful vision tells you not only what the organization does, but also why it is worthwhile and exciting to do it. A successful vision makes the typical dull, abstract mission statement come alive, infusing it with excitement, arousing emotions, and stimulating creativity to achieve it. Here is a possible vision for a company that makes automobiles:
We will create an empowered organization to unleash our creativity and focus our energies in cooperative effort; it will enable us to develop and build the best personal vehicles in the world, vehicles that people will treasure owning because they are fun to use, they are reliable, they keep people comfortable and safe, and they enable people to have freedom of movement in their environment without harming it.
This vision conveys an image of what can be achieved, why it is worthwhile, and how it can be done. Note that the vision is flexible enough to encourage the possibility of finding alternative power sources in the future and developing other types of vehicles besides conventional ground cars (e.g., fusion-powered air cars, as in the movie Back to the Future).
A value statement is a list of the key values or ideological themes considered important for an organization. The values usually pertain to treatment of customers, treatment of organization members, core competencies, and standards of excellence. Common themes include satisfying customers, achieving excellence in products or services, providing an innovative product or service, developing and empowering employees, and making important contributions to society. A value statement provides a good beginning for developing a more complete vision. However, just listing values does not clearly explain their relative priority, how they are interrelated, or how they will be expressed and achieved. An effective vision statement provides a glimpse of a possible future in which all the key values are realized at the same time.
Slogans are statements used to summarize and communicate values in simple terms. However, a slogan is limited in how many values can be expressed. Consider the following examples: technology is our business, quality is job one, we feel good when you feel good, all the news people want to read, and partners in making dreams come true. Only the last slogan has more than one value; it describes the ideal service provided to customers and the ideal relationship among the providers. Slogans can be useful as part of a larger vision, but overemphasis on a simplistic slogan can trivialize the vision and diminish important values not included in the slogan (Richards & Engle, 1986).
Strategic objectives are tangible outcomes or results to be achieved, sometimes by a specific deadline. A performance objective may be stated in terms of the absolute level of performance (e.g., profits, sales, return on investment), or the relative level of performance (e.g., becoming number one in the industry or region, outperforming a traditional rival). Neither type of objective is likely to involve enduring, ideological themes. Performance objectives are useful to guide planning and facilitate evaluation of progress, but the focus of a vision should be on values and ideological themes, not on improvement of economic outcomes or outperforming rivals. If performance objectives are included in a vision, they should be regarded as milestones along the way toward achieving ideological objectives.
Project objectives are defined in terms of the successful completion of a complex activity (e.g., developing a new type of product, implementing a new MBA program, establishing a subsidiary in China). These objectives can emphasize economic outcomes, ideological outcomes, or both. For example, a pharmaceutical company has a project to develop a new vaccine that will prevent a disease; successful completion of the project will improve profits, provide health benefits to society, and enhance scientific knowledge. A limitation of most project objectives is their relatively short time perspective. When the project is completed, the vision is ended. Project objectives can be included in the long-term vision for an organization, or a supplementary vision can be built around an especially important project. However, no single project should be allowed to eclipse the fuller, more enduring vision for the organization.
To understand what an effective project vision looks like, it is helpful to examine a specific example. When Walt Disney conceived the idea of Disneyland, it was an entirely new type of activity for his company, and it was unlike any earlier amusement park. It would be expensive to build, and it was uncertain whether enough visitors would be attracted to yield a profit. At the time it was not obvious that Disneyland would become such a phenomenal success, and people were skeptical about the risky project. An inspiring vision was needed to gain support from other key members of top management and outside investors. Disney’s vision for the park was described in the following way:
The idea of Disneyland is a simple one. It will be a place for people to find happiness and knowledge. It will be a place for parents and children to spend pleasant times in one another’s company: a place for teachers and pupils to discover greater ways of understanding and education. Here the older generation can recapture the nostalgia of days gone by, and the younger generation can savor the challenge of the future. Here will be the wonders of Nature and Man for all to see and understand. Disneyland will be based upon and dedicated to the ideals, the dreams and hard facts that have created America. And it will be uniquely equipped to dramatize these dreams and facts and send them forth as a source of courage and inspiration to all the world. Disneyland will be something of a fair, an exhibition, a playground, a community center, a museum of living facts, and a showplace of beauty and magic. It will be filled with the accomplishments, the joys and hopes of the world we live in. And it will remind us and show us how to make those wonders part of our own lives. (Thomas, 1976, p. 246)
Most of the evidence about the importance of a vision for successful change in organizations comes from leadership research that is focused more on the process of envisioning than on the content of the vision. As noted in Chapter 9, the visions articulated by effective leaders were sometimes elaborate and sometimes simple. A descriptive study on the content of organizational visions found that most of them were expressed in the form of a performance objective or value statement that was very brief, strategic, and future oriented (Larwood, Falbe, Kriger, & Miesing, 1995). A study by Berson, Shamir, Avolio, and Popper (2001) found that leaders who were rated as highly transformational were more likely to develop visions that were future oriented and reflected a high level of optimism and confidence. A study of small entrepreneurial firms by Baum, Locke, and Kirkpatrick (1998) found that the CEO of the fastest growing firms was more likely to communicate a vision that emphasized future growth. The results from these studies seem to suggest that few organizations actually have a well-developed vision with significant ideological content. In recent years some scholars have begun to question whether the importance of a vision for organization change has been overstated. More research is needed to determine what type of vision is sufficient to guide and inspire change in organizations and the conditions where an ideological vision is most important.
Applications: Procedures for Developing a Vision
It is extremely difficult to develop a vision that will elicit commitment for major change from the many diverse stakeholders whose support is needed. Such a vision cannot be generated by a mechanical formula. Judgment and analytical ability are needed to synthesize the vision, but intuition and creativity are important as well. To develop an appealing vision, it is essential to have a good understanding of the organization (its operations, products, services, markets, competitors, and social-political environment), its culture (shared beliefs and assumptions about the world and the organization’s place in it), and the underlying needs and values of employees and other stakeholders. In most cases a successful vision is not the creation of a single, heroic leader working alone, but instead it reflects the contributions of many, diverse people in the organization (Tichy & Devanna, 1986). The vision is seldom created in a single moment of revelation, but instead it takes shape during a lengthy process of exploration, discussion, and refinement of ideas.
Table 10-2 lists tentative guidelines to help leaders develop a vision. The guidelines are based on leadership theories, empirical research, and practitioner insights (e.g., Conger, 1989; Kotter, 1996; Kouzes & Posner, 1987; Mumford & Strange, 2002; Nadler, Shaw, Walton, & Associates, 1995; Nanus, 1992; Peters, 1987; Peters & Austin, 1985; Strange & Mumford, 2005; Tichy & Devanna, 1986; Trice & Beyer, 1993).
Table 10-2 Guidelines for Formulating a Vision
• Involve key stakeholders.
• Identify strategic objectives with wide appeal.
• Identify relevant elements in the old ideology.
• Link the vision to core competencies.
• Evaluate the credibility of the vision.
• Continually assess and refine the vision.
Involve key stakeholders
A single leader is unlikely to have the knowledge needed to develop a vision that will appeal to all the stakeholders whose support is necessary to accomplish major organizational change. Even when the initial ideas for a vision originate with the leader, it is desirable to involve key stakeholders in refining these ideas into a vision with widespread appeal. Key stakeholders may include owners, executives, other members of the organization, customers, investors, joint venture partners, and labor unions.
Often the best place to begin is with senior executives, the group most likely to have the broad perspective and knowledge necessary to understand the need for change. An important source of ideas for a vision is to discuss beliefs and assumptions about the determinants of performance for the organization and changes that will affect future performance. It is easier to develop an ambitious but realistic vision for the organization if the key executives have accurate shared beliefs about the determinants of company performance and opportunities for the future. A shared “mental model” is useful both for developing a credible vision and for strategic planning (see Chapter 12).
Executives are not the only stakeholders to consult when formulating a vision. It is also essential to understand the values, hopes, and aspirations of other people in the organization. Gaining this insight can be difficult if people are unable or reluctant to explain what is really important to them. Kouzes and Posner (1987, p. 115) described how leaders may learn about the needs and values of followers:
Leaders find the common thread that weaves together the fabric of human needs into a colorful tapestry. They seek out the brewing consensus among those they would lead. In order to do this, they develop a deep understanding of the collective yearnings. They listen carefully for quiet whisperings in dark corners. They attend to the subtle cues. They sniff the air to get the scent. They watch the faces. They get a sense of what people want, what they value, what they dream about.
Identify shared values and ideals
The appeal of a vision depends on its ideological content as well as on its relevance for the challenges facing the organization. If the vision embodies shared values and ideals for most members of the organization, it is more likely to elicit their commitment. Thus, another useful procedure is to identify and understand what values and ideals can be incorporated in the vision. Discovery of shared values often requires considerable time and effort, and there is no guarantee of success. If serious disagreement exists about the essential qualities for an ideal organization, then it will be difficult to find a vision that transcends these differences.
One approach is to ask executives to develop a personal vision statement describing what they see as their ideal future role in the organization. The personal vision statements can be examined to identify shared values and appealing images of how the organization should be transformed. Another approach to identify shared values and ideals is to ask people to describe what the best possible future would look like for the organization. One technique suggested by Tichy and Devanna (1986) is to ask executives to write a magazine article in journalistic style describing the organization as they would like it to be at a specified time in the future. A variation of this technique is a role play in which half of the executives (the “reporters”) interview the remaining executives and ask them to describe how they would like the organization to be in 10 years. Still another technique is to have people describe a fictitious organization that would be able to compete effectively with the leading companies in a specified market. The group then determines how the current organization differs from the fictitious one and looks for ways to close the gaps.
Identify strategic objectives with wide appeal
It is sometimes easier to get agreement on strategic objectives than on a more elaborate vision, and a group discussion of objectives can provide insight about values and ideals to include in a vision. The first step is to ask people to identify specific performance objectives that are challenging and relevant to the mission of the organization. Then ask people to discuss the relative importance of the various objectives and the reasons why an objective is important. Look for shared values and ideals that can become the basis for a vision with wide appeal.
Identify relevant elements in the old ideology
Even when radical change is necessary in an organization, some elements in the current ideology may be worthy of preservation. Look for values and ideals that will continue to be relevant for the organization in the foreseeable future. Sometimes traditional values that were subverted or ignored can serve as the basis for a new vision, as in the following example.
A manufacturing company that once had a reputation for making the best products in the industry decided to pursue a strategy of cost reduction to compete with the inexpensive products of foreign competitors. The strategy was not successful. After several years of declining sales the company lost its dominant position in the market and its products were perceived to be of inferior quality. Major changes were made to implement a new strategy that emphasized quality and innovation rather than low price. The strategy was justified as a return to key values from the glorious early years of the firm.
Link the vision to follower competencies and prior achievements
A successful vision must be credible. People will be skeptical about a vision that promises too much and seems impossible to attain. Leaders face a difficult task in crafting a vision that is both challenging and believable. Lofty visions often require innovative strategies, and untested strategies are risky and difficult to assess. In the absence of a tested strategy, people need a basis for believing the vision is attainable. One way to build follower optimism about the vision is to link it to their ability to collectively solve problems and overcome difficult obstacles. If people have been successful in past efforts to accomplish difficult objectives, the leader can use these successes to build confidence in their ability to do it again.
When President Kennedy first articulated his visionary objective to land a man on the moon by the end of the decade, only about 15 percent of the necessary technology and procedures had been developed, and it was not evident that so many difficult things could be done successfully in such a short time. However, the availability of scientists and engineers with the necessary expertise and confidence to tackle these formidable problems made the vision more credible.
Continually assess and refine the vision
A successful vision is likely to evolve over time. As strategies to achieve the vision are implemented, people can learn more about what is feasible and what is not. As progress is made toward achieving the vision, new possibilities may be discovered, and objectives that seemed unrealistic may suddenly become attainable. Although some continuity in the vision is desirable, it is helpful to keep looking for ways to make the vision more appealing and credible (e.g., new metaphors, slogans, and symbols that capture the essence of the vision). The development of a vision is an interactive, circular process, not a simple, linear progression from vision to strategy to action. Indeed, an intensive review of strategy may provide the ideas for a new vision, rather than the other way around. As external conditions change, or progress is much faster than expected, it may be necessary to make major changes rather than minor adjustments.
Implementing Change
Organization scholars have been interested in determining how the approach used to implement change affects the success of the effort. It is likely that the success of efforts to transform an organization depend in part on when, where, and how various aspects of the change are implemented, and who participates in the process in what ways.
Responsibility for Implementing Major Change
Large-scale change in an organization is unlikely to be successful without the support of top management. However, contrary to common assumptions, major changes are not always initiated by top management, and they may not become involved until the process is well under way (Beer, 1988; Belgard, Fisher, & Rayner, 1988). Major changes suggested by lower levels may be resisted by top managers who are strongly committed to traditional approaches and do not understand that the old ways of doing things are no longer appropriate. As noted in Chapter 12, the major transformation of an organization often requires the replacement of top management by new leaders with a mandate for radical change.
The essential role of top management in implementing change is to formulate an integrating vision and general strategy, build a coalition of supporters who endorse the strategy, then guide and coordinate the process by which the strategy will be implemented. Complex changes usually involve a process of experimentation and learning, because it is impossible to anticipate all the problems or to prepare detailed plans for how to carry out all aspects of the change. Instead of specifying detailed guidelines for change at all levels of the organization, it is much better to encourage middle and lower-level managers to transform their own units in a way that is consistent with the vision and strategy. Top management should provide encouragement, support, and necessary resources to facilitate change, but should not try to dictate the details of how to do it.
The Pace and Sequencing of Changes
A debate continues among change scholars about the optimal pace and sequencing of desired changes. Some scholars have advocated rapid introduction of changes throughout the organization to prevent the buildup of resistance, whereas other scholars favor a more gradual introduction of change to different parts of the organization at different times. The limited amount of longitudinal research does not yet provide clear answers to these questions, but some evidence favors the latter approach (e.g., Beer, 1988; Hinings & Greenwood, 1988; Pettigrew, Ferlie, & McKee, 1992). In a 12-year study of 36 national sports organizations in Canada, Amis, Slack and Hinings (2004) found evidence that major change was more successful when it was implemented slowly, beginning in highly visible, important ways that convey the message that the change is a serious, long-lasting effort. Controversial changes occurred in a nonlinear way, with delays and reversals as aspects of the change were modified to deal with opponent concerns or postponed until a time when opponents would be more receptive to them. This process provided opportunities for the change agents to establish trust and use a process of collaborative problem solving for contentious issues.
Whenever feasible it seems beneficial to change interdependent subunits of the organization simultaneously so that the effects will be mutually supporting. However, in a large organization with semi-autonomous subunits (e.g., separate product divisions) simultaneous change is not essential, and it may not be feasible to implement change in all subunits at the same time. One way to demonstrate the success of a new strategy is to implement it on a small scale in one subunit or facility on an experimental basis. A successful change that is carried out in one part of an organization can help to stimulate similar changes throughout the organization. However, it is unwise merely to assume that the same changes will be appropriate in all subunits, especially when they are very diverse. This type of mistake is more likely to be avoided when middle managers are allowed to have a major voice in determining how to implement a strategy in their own organizational subunits (Beer, Eisenstat, & Spector, 1990).
Successful implementation of a major new strategy usually requires changes in the organization structure to make it consistent with the strategy. However, when structural change is likely to be resisted, it may be easier to create an informal structure to support the new strategy and postpone changes in the formal structure until people realize that they are needed. Informal teams can be created to facilitate the transition, without any expectation that these temporary structures will become permanent. For example, one company created temporary task forces to plan and coordinate changes; they eventually evolved into permanent cross-functional committees with formal authority to plan and monitor continuing improvements in product quality and operational procedures.
Applications: Guidelines for Leading Change
Successful implementation of change in organizations requires a wide range of leadership behaviors. Some of the behaviors involve political and administrative aspects, and others involve motivating, supporting, and guiding people. Even the people who initially endorse a change will need support and assistance to sustain their enthusiasm and optimism as the inevitable difficulties and setbacks occur. Major change is always stressful and painful for people, especially when it involves a prolonged transition period of adjustment, disruption, and dislocation. The following guidelines describe current thinking about the best way to implement a major change in an organization (see Table 10-3). The guidelines are based on theory, research findings, and practitioner insights (Beer, 1988; Connor, 1995; Jick, 1993; Kotter, 1996; Nadler et al., 1995; Pettigrew & Whipp, 1991; Tichy & Devanna, 1986). Although the guidelines describe actions a chief executive can take, many of them also apply to other leaders who want to make major changes.
Table 10-3 Guidelines for Implementing a Major Change
• Create a sense of urgency about the need for change.
• Communicate a clear vision of the benefits to be gained.
• Identify people whose support is essential and any likely resistance.
• Build a broad coalition to support the change.
• Fill key positions with competent change agents.
• Use task forces to guide the implementation of changes.
• Empower competent people to help plan and implement change.
• Make dramatic, symbolic changes that affect the work.
• Prepare people for change by explaining how it will affect them.
• Help people deal with the stress and difficulties of major change.
• Provide opportunities for early successes to build confidence.
• Monitor the progress of change and make any necessary adjustments.
• Keep people informed about the progress of change.
• Demonstrate continued optimism and commitment to the change.
Create a sense of urgency about the need for change
When changes in the environment are gradual and no obvious crisis has occurred, many people fail to recognize emerging threats (or opportunities). An important role of the leader is to persuade other key people in the organization of the need for major changes rather than incremental adjustments. To mobilize support for proposed changes, it is essential to explain why they are necessary and to create a sense of urgency about them. Explain why not changing will eventually be more costly than making the proposed changes now. If people have little sense of the problems, it is important for the leader to provide relevant information and help people understand what it means. For example, distribute a summary of customer complaints each week with selective quotes from irate customers. Arrange for people to meet with dissatisfied customers. Prepare analyses of costs involved in correcting quality problems. Compare the performance of the organizational unit to the performance of key competitors as well as to unit performance in prior years.
Communicate a clear vision of the benefits to be gained from change
When it is necessary to make major changes in an organization, a vision of what the changes will do to achieve shared objectives and values is very helpful in gaining commitment for the change. The desirable characteristics of a vision, different features that may be relevant, and guidelines for developing an appealing vision were described earlier in this chapter.
Identify people whose support is essential and any likely resistance
To evaluate the feasibility of various strategies for accomplishing major change in the organization, a leader must understand the political processes, the distribution of power, and the identity of people whose support is necessary to make the change happen. Before beginning a major change effort, it is useful to identify likely supporters and opponents. Time should be set aside to explore each of the following questions. Which key people will determine whether a proposal will be successfully implemented? Who is likely to support the proposal? How much resistance is likely and from whom? What would be necessary to overcome the resistance? How could skeptics be converted into supporters? How long will it take to get approval from all of the key parties?
Build a broad coalition to support the change
The task of persuading people to support major change is not easy, and it is too big a job for a single leader to do alone. Successful change in an organization requires cooperative effort by people who have the power to facilitate or block change. It is essential to build a coalition of supporters, both inside and outside the organization. A supportive coalition may be even more important in pluralistic organizations that have collective leadership (e.g., hospitals, universities, professional associations) than in hierarchical business organizations where the top management team may have sufficient power to authorize major change (Denis, Lamothe, & Langley, 2001). The first step is to ensure that the executive team is prepared to undertake the difficult task of implementing major change in the organization, and some changes in the team may be necessary. Supporters are needed not only within the top executive team, but also among middle and lower levels of management. In a study by Beer (1988) of six companies undergoing a major change effort, the companies with a successful transformation had more middle managers who supported the changes and possessed relevant skills to facilitate it. The external members of the coalition may be consultants, labor union leaders, important clients, executives in financial institutions, or officials in government agencies.
Use task forces to guide implementation of changes
Temporary task forces are often useful to guide the implementation of major change in an organization, especially when it involves modification of the formal structure and the relationships among subunits. Examples of typical responsibilities for a task force include exploring how key values in the vision can be expressed more fully; developing action plans for implementing a new strategy that cuts across subunits; designing procedures for performing new types of activities; and studying how the appraisal and reward structure can be modified to make it more consistent with the new vision and strategy. The composition of each task force should be appropriate for its responsibilities. For example, a task force to improve customer service should include people from all the functions that affect the quality of this service, and the task force should actually meet with some important customers. The leader of each task force should be someone who understands and supports the new vision and has skills in how to conduct meetings, manage conflict, and involve people in constructive problem solving.
Fill key positions with competent change agents
It is especially important to get the commitment of people directly responsible for implementing the change—the people in key positions who will make it happen. These “change agents” must support the change with their actions as well as their words. They should be people who are committed to the vision and have the ability to communicate it clearly. Whenever possible, people in key positions who cannot be won over to the new vision and strategy should be replaced. If left in place, opponents may go beyond passive resistance and use political tactics in an effort to block additional change. Pockets of resistance can develop and grow strong enough to prevent the new strategy from being implemented successfully. Acting quickly to remove opponents who symbolize the old order not only removes people who will resist change; it also signals that you are serious about the change.
Empower competent people to help plan and implement the change
A major change is less likely to be successful if top management tries to dictate in detail how it will be implemented in each part of the organization. Whenever feasible, the authority to make decisions and deal with problems should be delegated to the individuals or teams responsible for implementing change. Competent supporters in key positions should be empowered to determine the best way to implement a new strategy or support a new program, rather than telling them in detail what to do. Empowering people also means reducing bureaucratic constraints that will impede their efforts and providing the resources necessary for them to implement change successfully.
Make dramatic, symbolic changes that affect the work
If feasible, make dramatic, symbolic changes that affect the everyday lives of organization members in significant ways. When members are immediately affected, it becomes more obvious that the change is really going to happen and they need to adjust to it. One type of symbolic change involves how the work is done and the authority of various parties over the work. For example, in a manufacturing company that adopted a new strategy of total product quality, the position of quality inspector was eliminated, production employees were given the responsibility for checking quality and correcting any quality problems, quality circles were established to identify ways to improve quality, and employees were empowered to stop the production line to correct quality problems. Another type of symbolic change involves where the work is done. In a large insurance company that reorganized from a functionally specialized hierarchy into 14 small, semi-autonomous divisions, the CEO sold the old high-rise office building and relocated each division into its own, separate, low-rise facility. The move emphasized to employees the new strategy of empowering each division to find its own ways to improve customer service. Symbolic changes may also involve cultural forms such as symbols, ceremonies, and rituals.
Prepare people for change by explaining how it will affect them
Even when a change is necessary and beneficial, it will require difficult adjustments by the people who are most affected. If people are unable to handle the stress and trauma of change, they will become depressed or rebellious. Even enthusiastic change agents are not immune from the difficulties experienced in a long-term change effort. Alternating successes and setbacks may leave change agents feeling as if they are on an emotional rollercoaster ride. Ambiguity about progress and the recurring discovery of new obstacles increase fatigue and frustration. These negative aspects of change are easier to deal with if people expect them and know how to cope with them. Rather than presenting change as a panacea without any costs or problems, it is better to help people understand what adjustments will be necessary. One approach is to provide a realistic preview of some typical types of problems and difficulties people can expect. For example, ask people who have experienced a similar change to speak about their experiences and what they did to get through the change successfully. Make available training on how to manage stress, anxiety, and depression. Form support groups to help people cope with the disruptions caused by a major change. Use electronic networks to enable members of the organization to get advice and support from each other more easily.
Help people deal with the stress and difficulties of major change
When radical changes are made, many people experience personal pain at the loss of familiar things to which they had become attached. The trauma of change may be experienced regardless of whether the change involves new strategies and programs, new equipment and procedures for doing the work, new facilities, and new management practices, or new leaders. It is difficult for people to accept the failure of past decisions and policies, and it may be necessary to help them accept the need for change without feeling personally responsible for the failure. Ceremonies and rituals may be used to help people express their grief and anger over the loss of sentimental elements of the old organization. An example is provided by the following description of a special management conference held in a large electronics company that had recently undergone many changes (Deal, 1985, p. 321).
The conference opened with a general discussion of culture and then continued with three successive small-group sessions of thirty participants each. When asked for metaphors to capture the essence of the company, the group overwhelmingly came up with transitive images: afloat in a stormy sea without an anchor, a two-headed animal, and so on. Each group specifically addressed the issue of loss. In the last session, the CEO was present; the word had spread that the discussions were yielding some significant perceptions. The tension in the room was obvious. At one point, the participants were asked to name what they had lost, and these were written on a flip chart. The list included values, symbols, rituals, ceremonies, priests, and heroes. As people contributed specific losses, someone got up and dimmed the lights. The emotion was obviously high. The group then launched into a discussion of the positive features of the company in its new incarnation. The CEO incorporated much of the preceding discussion into an excellent closing speech, and the company moved ahead.
Provide opportunities for early successes to build confidence
The confidence of an individual or team can be increased by making sure people experience successful progress in the early phases of a new project or major change. Some skeptics will only become supporters after they see evidence of progress in initial efforts to do things a new way. Kouzes and Posner (1987) recommend breaking up a challenging task into initial small steps or short-term goals that do not appear too difficult. People are more willing to undertake an activity if they perceive that their efforts are likely to be successful and that the costs of failure would not be great. As the initial steps or goals are accomplished, people experience success and gain more self-confidence. Then they are willing to try for larger wins and to invest more resources in the effort.
Monitor the progress of change and make any necessary adjustments
Innovative changes are by nature ventures into uncharted waters, and it is impossible to predict all of the obstacles and difficulties that will be encountered. Many things must be learned by doing, and monitoring is essential for this learning. Feedback about the effects of change should be collected and analyzed to evaluate progress and refine mental models about the relationship among key variables that affect the performance of the organization. Monitoring is also important to coordinate different aspects of the change. Accurate, timely information is needed about the effect of the changes on people, processes, and performance. This information can be gathered in a variety of ways, one of which is to hold frequent progress review meetings with people in key positions.
Keep people informed about the progress of change
A major change, like any other crisis, creates anxiety and stress in people who are affected by it. When a new strategy does not require many visible changes in the early stages of implementation, people will begin to wonder whether the effort has died and things are going back to the way they were. People will be more enthusiastic and optimistic if they know that the change program is progressing successfully.
One way to convey a sense of progress is to communicate what steps have been initiated, what changes have been completed, and what improvements have occurred in performance indicators. Hold ceremonies to announce the inauguration of major activities, to celebrate significant progress or success, and to give people recognition for their contributions and achievements. These celebrations provide an opportunity to increase optimism, build commitment, and strengthen identification with the organizational unit. Recognizing the contributions and accomplishments of individuals makes the importance of each person’s role in the collective effort more evident.
When obstacles are encountered, explain what they are and what is being done about them. If the implementation plan must be revised, explain why it was necessary. Otherwise, people may interpret any revisions in the plan or schedule as a sign of faltering commitment.
Demonstrate optimism and continued commitment to the change
Responsibility for guiding various aspects of the change can be delegated to other change agents, but the leader who is identified as the primary proponent and sponsor of the change must continue to provide the attention and endorsement that signal commitment to see it through to the end. Initial enthusiasm and support for a major change may decline as problems are encountered, setbacks occur, and people come to understand the necessary costs and sacrifices. People look to their leaders for signs of continued commitment to the change objectives and vision. Any indication that the change is no longer viewed as important or feasible may have ripple effects that undermine the change effort. Supporters will be lost and opponents encouraged to increase overt resistance. Continued attention and endorsement signal a leader’s commitment to see the change program through to a successful conclusion. The leader should persistently promote the vision guiding the change process and display optimism that the inevitable setbacks and difficulties will be overcome. The leader must reject easy solutions for dealing with immediate problems when these solutions are inconsistent with the underlying objectives of the change effort. Demonstrating commitment is more than just talking about the importance of the change. The leader must invest time, effort, and resources in resolving problems and overcoming obstacles. When appropriate, the leader should participate in activities related to the change. For example, attendance at a special meeting or ceremony relevant to the change effort has a clear symbolic meaning for other people in the organization that the change must be important.
Innovation and Organizational Learning
The environment of most organizations is becoming increasingly dynamic and competitive. Competition is becoming more intense, customer expectations are rising, less time is available to develop and market new products and services, and they become obsolete sooner. To succeed in this turbulent environment, organizations need to have people at every level who are oriented toward learning and continuous improvement.
Organizational learning involves acquiring and using new knowledge. The new knowledge can be created internally or acquired from outside the organization (Nevis, Dibella, & Gould, 1995). After new knowledge is acquired, it must be conveyed to the people who need it and applied to improve the organization’s products, services, and work processes (Crossan, Lane, & White, 1999). How knowledge is acquired, disseminated, and applied will be described in more detail in the next part of the chapter.
Internal Creation of New Knowledge
Many organizations have formal subunits with primary responsibility for research and development of new products and services, and some organizations also have subunits with responsibility for continually assessing and improving work processes. These dedicated subunits can be an important source of innovation in organizations, but they are not the only internal source; many important innovations are developed informally by employees apart from their regular job activities. Efforts to help employees find better ways to do the work or to make improvements in products usually require only a small investment of resources in the developmental stage.
Many good ideas die before having a chance to be tested, because it is not possible to gain approval for them in an organization where traditional ways of doing things are favored. To facilitate the development and approval of innovations, it is helpful to have sponsors or champions who will shepherd new ideas through the long and tedious review and approval process in organizations. Also important is an impartial but systematic process for reviewing and assessing new ideas suggested by individual employees or teams. Examples include “venture boards” or “innovation teams” to identify high potential ideas and determine which ideas will receive additional funding and development (Pryor & Shays, 1993).
One way to assess the feasibility of new ideas is to test them on a small scale. In recent years, the trend has been for more organizations to use small experiments and controlled tests to facilitate learning. A well-known example of an organization with an experimental orientation is Wal-Mart, which regularly conducts hundreds of tests in its stores on sales promotions, displays, and improving customer service. Small-scale experiments provide an opportunity to try out new ideas without the risks entailed by major change programs. People who like the traditional ways of doing something may be more willing to try a new approach if they do not have to be concerned about appearing foolish or incompetent. People who are skeptical about a controversial new approach may be willing to conduct an experiment on a small scale to evaluate it. People will be more objective in evaluating the outcome of a change when they do not have to make it appear successful to protect their reputation (Nystrom & Starbuck, 1984). The amount of learning that results from an experiment depends on how well it is designed and executed. Even a simple experiment can provide useful information. However, experiments do not always produce useful knowledge, and the results may even be misleading. Careful planning is needed to ensure that a controlled test yields clear, meaningful results.
External Acquisition of New Knowledge
New ideas and knowledge can also be acquired from outside of the organization. One way to counteract the “not invented here” syndrome is to identify relevant best practices used in successful organizations. This process is sometimes called “benchmarking” (Camp, 1989). An example is provided by Main (1992).
The benchmarking manager for Xerox read an article about the success of L.L.Bean, the catalog retailer, in filling customer orders quickly and accurately. He organized a fact-finding visit to the headquarters office of L.L.Bean in Freeport, Maine. The team found that good planning and software support helped to make Bean three times faster than Xerox in filling small orders. The team used this knowledge to help redesign the procedures used at Xerox warehouses, resulting in significant improvements.
Another example is provided by Peters and Austin (1985).
The owner of a chain of successful dairy stores conducts regular visits to competing stores accompanied by several of his employees. They look for things the competitor does better, and everyone is challenged to find at least one good idea that can be used. Nobody is allowed to discuss things done better by their store, which would bias the visitors to look for negative rather than positive things. During the return trip in the van, the discussion of ideas and how to implement them provides a unique opportunity for each employee to become an empowered member of a team of retailing experts.
Imitating the best practices of others can be a useful source of innovation, but you should be careful to evaluate the relevance of these practices before adopting them. Moreover, it is important to remember that imitation alone seldom provides much of a competitive advantage. It is also necessary to improve upon the best practices of others, and to invent new approaches not yet discovered by competitors.
Studying what other organizations do is not the only way to acquire knowledge from outsiders. Other ways include purchasing the right to use specific knowledge from an organization, hiring outsiders with special expertise to fill key positions, using external consultants to provide training in new processes, and entering joint ventures that will provide learning opportunities. For example, General Motors gained valuable insights about Japanese production methods from the automobile plant jointly operated with Toyota. More recently, IBM has made an alliance with Motorola to design a new generation of microprocessors and with Apple Computers to create operating systems.
Knowledge Diffusion and Application
New knowledge is of little value unless it is made available to people who need it and is used by them. Some organizations are successful at discovering knowledge, but fail to apply it effectively. One example is provided by a multinational company that established a “center of marketing excellence” in its Australian operations (Ulrich, Jick, & Von Glinow, 1993). Successful pilot programs increased market share by 25%, but the lessons learned never reached the European and U.S. divisions, where the benefits would have been even greater. Similar examples can be found in many organizations.
Secrecy is the enemy of learning, and easy access to information about the organization’s operations, including problems and failures, facilitates learning. There are several different approaches to encourage and facilitate knowledge sharing in organizations (Earl, 2001). An increasing number of companies have sophisticated information systems to facilitate easy access by employees to relevant information. An employee with a difficult task can discover how other people in the organization handled a similar task in the past, and employees can interact with each other to get advice and support about common problems.
A more formalized mechanism for translating learning into practice is to describe best practices and effective procedures in written or electronic manuals. For example, when the U.S. Army discovers an effective way to conduct some type of operation, it is translated into doctrine to guide others who will be performing the same operation. Formal doctrine can be useful, but it is not as flexible or easily updated as posting best practices and lessons learned on an interactive network. Moreover, formal doctrine often ends up being used in a way that discourages subsequent learning and innovation.
Another approach for diffusing new knowledge in an organization is a special purpose conference to facilitate sharing of new knowledge and ideas among the subunits of an organization. General Electric conducts “best practice” workshops to encourage sharing of ideas among managers. A large government agency holds a conference each year to enable participants from different facilities to present new ideas and informally discuss how to improve service quality.
Seminars and workshops can be used to teach people how to perform new activities or use new technology. When it is not feasible for people to attend a conference or workshop, a team of experts can be dispatched to different work sites to show people how to use new procedures. An alternative approach is to transfer individuals with new knowledge to other units, or assign them on a temporary basis to teach others. A person who has participated in a successful change can serve as a catalyst and consultant for change in another unit.
Learning Organizations
All organizations learn things, but some do it much better than others. The term learning organization has been used to describe organizations that learn rapidly and use the knowledge to become more effective (e.g., Crossan et al., 1999; Fiol & Lyles, 1985; Huber, 1991; Levitt & March, 1988). In these organizations, the values of learning, innovation, experimentation, flexibility, and initiative are firmly embedded in the culture of the organization (Baer & Frese, 2003; James, 2002; Kotter & Heskett, 1992; Miron, Erez, & Naveh, 2004; Popper & Lipshitz, 1998). The leaders develop and refine shared conceptual tools and mental models for understanding how things work, how to adapt to the environment, and how to achieve the organization’s objectives. People at all levels are empowered to deal with problems and find better ways of doing the work. Knowledge is diffused or made easily available to anyone who needs it, and people are encouraged to apply it to their work. Top management creates and sustains processes to nurture ideas and support changes initiated by people at lower levels in the organization. Resources are invested in promoting learning and funding entrepreneurial activities. The formal appraisal and compensation system provides equitable rewards for knowledge creation, sharing, and application (Bartol & Srivastava, 2002). The advantage of a learning culture is shown by Meyer’s (1982) study of how hospitals responded to a physicians strike.
The hospital that adapted most successfully had a culture in which innovation, professional autonomy, and entrepreneurial activity were strong values. The administrator anticipated the strike and encouraged a task force to develop scenarios describing how it would affect the hospital. Supervisors were asked to read the scenarios and develop contingency plans. When the strike actually occurred, the hospital was able to adapt quickly and continue making profits, despite a drastic drop in the number of patients. When the strike ended, the hospital was able to readapt quickly. In the process the hospital even discovered some new ways to cut operating costs.
Applications: Guidelines for Increasing Learning and Innovation
Leaders at all levels can help to create conditions favorable to learning and innovation (Vera & Crossan, 2004). The terms “exploration” and “exploitation” are sometimes used to describe the difference between acquisition and application of new knowledge, and research on the influence of leaders on these processes was reviewed by Berson, Nemanich, Waldman, Galvin, and Keller (2006). The following guidelines (see Table 10-4) are based on theory, research findings, and practitioner insights (e.g., Berson, Nemanich, Waldman, Galvin, & Keller, 2006; Cavaleri & Fearon, 1996; Chaston, Badger, Mangles, & Sadler-Smith, 2001; Garvin, 1993; James, 2002; McGill, Slocum, & Lei, 1993; Nadler et al., 1995; Schein, 1993a; Senge, 1990; Ulrich, Jick, & Von Glinow, 1993; Yeung, Ulrich, Nason, & Von Glinow, 1999).
Table 10-4 Guidelines for Increasing Learning and Innovation
• Encourage appreciation for flexibility and innovation.
• Encourage and facilitate learning by individuals and teams.
• Help people improve their mental models.
• Leverage learning from surprises and failures.
• Encourage and facilitate sharing of knowledge and ideas.
• Set innovation goals.
• Reward entrepreneurial behavior.
Encourage appreciation for flexibility and innovation
Major change will be more acceptable and less disruptive if people develop pride and confidence in their capacity to adapt and learn. Confident people are more likely to view change as an exciting challenge rather than an unpleasant burden. To develop an appreciation for flexibility and adaptation, encourage people to view all practices as temporary. Each activity should be examined periodically to determine whether it is still needed and how it can be improved or eliminated. Encourage subordinates and peers to question traditional assumptions about the work and to “think outside the box” when solving problems. Encourage people to apply creative ideas for improving work processes. Encourage and support relevant learning practices and quality improvement programs (e.g., after-activity reviews, benchmarking, Six Sigma, TQM, quality circles).
Encourage and facilitate learning by individuals and teams
Organizations can learn only when individual members of the organization are learning (Senge, 1990). More individual learning will occur if the organization has strong cultural values for personal development and lifelong education, and it provides training and development programs to help individuals learn new skills (see Chapter 15). However, providing learning opportunities is not enough to guarantee actual learning will occur. Leaders should keep subordinates informed about relevant learning opportunities (e.g., workshops, training programs, college courses) and make it easier for them to pursue these opportunities (e.g., allowing time, providing education subsidies). Leaders can also encourage and facilitate collective learning by teams (see Chapter 11). Finally, leaders can provide tangible rewards to encourage individuals to acquire new knowledge and apply it to improve their job performance.
Help people improve their mental models
In addition to conscious beliefs about the causes of performance and the source of problems, people have implicit assumptions of which they are unaware, and these assumptions bias how they interpret events. Obtaining more information about a complex problem will not help a person solve it without a good mental model to interpret the information. As noted earlier in this chapter, to develop a better understanding of complex problems often requires systems thinking. Leaders should help people understand and improve their mental models about the way things work in organizations and the reasons for success or failure. By helping people to understand complex systems, a leader can increase their ability to learn and solve problems (Senge, 1990). In this way the leader also helps people understand that they are not powerless and can collectively influence events in the organization.
Leverage learning from surprises and failures
Surprises and failures usually provide more opportunity for learning than expected events and outcomes. Things that turn out just as expected confirm existing theories or assumptions, but do not provide new insights. Unfortunately, many people tend to discount or ignore unexpected information that does not fit their theories or assumptions about how things work. Some of the most important scientific discoveries resulted from investigating unexpected “accidents” or “anomalies” that would be overlooked by people only interested in confirming prior beliefs. It is helpful to specify in advance what results are expected from an activity or change and the underlying assumptions on which the prediction is based. Otherwise, instead of using unexpected results to reevaluate the model, people are more likely to overlook them or assume that they could have been predicted in advance. Make specific predictions and reasons for them a regular part of the planning process, and make evaluation of outcomes in relation to predictions a regular part of the after-activity review process.
Encourage and facilitate sharing of knowledge and ideas
Leaders at all levels should encourage and facilitate the effective dissemination knowledge in the organization. Attend meetings with people from different subunits of the organization (or send a representative) to discuss ideas for solving common problems. Encourage subordinates to share relevant ideas and knowledge with other people in the organization who can use it to improve their own performance. Encourage subordinates to support and make use of knowledge management programs (e.g., a resource directory, databases, groupware, etc.). Invite experts or outside consultants to inform members of the unit or team about relevant discoveries, new technology, and improved practices.
Set innovation goals
The pressure of meeting normal task deadlines tends to leave little time for reflective thinking about ways to make things better. A leader should encourage entrepreneurial activity and help employees find the time to pursue their ideas for new or improved products and processes. One way to increase the number of creative ideas is to set innovation goals for individuals or teams. A special meeting is scheduled on a monthly or quarterly basis to discuss these ideas and review progress. Goals can also be set for the application of ideas to improve products and work processes. For example, some companies set a goal to have new products or services (e.g., those introduced within the last 3 years) account for a substantial percentage of sales each year.
Reward entrepreneurial behavior
Employees who invent new products or suggest ways to improve existing products and processes should receive appropriate recognition and equitable rewards. The support and cooperation of many people are needed to get new ideas accepted and implemented effectively in an organization. It is essential to provide recognition and equitable rewards not only to the individuals or teams who contribute creative ideas, but also to individuals who serve as sponsors, advocates, and champions for innovations.
Summary
One of the most important and difficult leadership responsibilities is to guide and facilitate the process of making a major change in an organization. People tend to resist major change for many reasons, including distrust, doubts about the need for change, doubts about the feasibility of change, doubts that the benefits from change would justify the costs, fear of economic loss, fear of losing status and power, fear of personal failure, perception the change is inconsistent with values, and resentment about interference from above. Resistance should be viewed as a normal defensive response, not as a character weakness or a sign of ignorance.
The change process can be described as having different stages, such as unfreezing, changing, and refreezing. Moving too quickly through the stages can endanger the success of a change effort. People typically transit through a series of emotional stages as they adjust to the need for a drastic change in their lives. Understanding each of these change processes helps leaders guide and facilitate change. It is also helpful for leaders to realize that changing attitudes and roles at the same time is more effective than using either approach alone.
Organizational culture involves assumptions, beliefs, and values that are shared by members of a group or organization. It is much easier to embed culture in new organizations than to change the culture of mature organizations. Culture can be influenced by several aspects of a leader’s behavior, including examples set by the leader, what the leader attends to, and how the leader reacts to crises. An indirect form of leadership influence on culture is achieved by creating or modifying management systems, programs, structures, and cultural forms. Both approaches should be used together in a mutually consistent way.
Before people will support radical change, they need to have a vision of a better future that is attractive enough to justify the sacrifices and hardships the change will require. To be inspiring, the vision must include strong ideological content that appeals to organization members’ shared values and ideals concerning customers, employees, and the mission of the organization. The vision is usually created in a progressive, interactive process involving key stakeholders.
A leader can do many things to facilitate the successful implementation of change. Political actions include identifying likely supporters and opponents, creating a coalition to approve changes, forming teams to guide the implementation of changes, filling key positions with competent change agents, making symbolic changes that affect the work, and monitoring the progress of change to detect problems that require attention. People-oriented actions include creating a sense of urgency, articulating a clear vision of the likely benefits, preparing people for change, helping them cope with change, providing opportunities for early successes, keeping people informed, demonstrating continued commitment to the change program, and empowering people to help plan and implement change.
As workforce knowledge becomes more important as a source of competitive advantage, the capacity to learn is becoming even more important to an organization. New knowledge and innovative ideas can be discovered through reflection, research, and systematic learning activities, or acquired externally by imitation, purchase of expertise, or participation in joint ventures. The discovery of new knowledge is of little use to the organization if it is not disseminated to people who need it and used to improve products, services, and processes. Individual leaders can do many things to encourage and facilitate learning and innovation in the organization.
Review and Discussion Questions
1. What are major reasons for resistance to change?
2. What are process theories of change and how are they useful?
3. What is organization culture and how can it be influenced by leaders?
4. What are the desirable characteristics for a vision?
5. Discuss the utility of developing a mission statement, strategic objectives, values lists, and catchy slogans.
6. What are some guidelines for formulating a compelling vision?
7. What are some reasons why efforts to change organizations often fail?
8. What are some guidelines to help leaders implement change?
9. What is a learning organization and what kind of learning occurs?
10. How much influence do leaders have on learning and innovation in organizations?
11. How can leaders increase collective learning and innovation?
Key Terms
adaptation to environment
benchmarking
change agent
core competencies
cultural forms
culture change mechanisms
diffusion of knowledge
innovation
learning organization
mental models
mission statement
organizational culture

organizational diagnosis
organization growth stages

resistance to change

stakeholders symbolic changes
systems thinking
value statement
vision
Case: Ultimate Office Products
Ultimate Office Products was an old, established manufacturing company in the turbulent office products industry. Discount merchandisers and office product superstores were spreading rapidly and altering the traditional distribution channels once dominated by wholesalers and smaller retail stores. The growing power of the superstores was forcing manufacturers to improve customer service. The traditional manufacturers were being challenged by new companies more willing to cut prices and use technologies favored by the superstores, such as electronic orders and billing. Ultimate Office Products was losing market share and profits were declining.
Richard Kelly was the director of information systems, a newly created position in the company. When the CEO met with Richard to discuss his new responsibilities and objectives, she explained that it was essential to speed up order processing and improve customer service. Richard knew that the order processing system used by the company was obsolete. He prepared a plan to automate the system and got approval from the CEO for it. Then he purchased new computer workstations and a software package to support them. The software would enable customers to make electronic orders, and it would improve order processing, billing, and inventory control. However, months after the equipment and software arrived, it was still waiting to be used. The managers from sales, production, accounting, shipping, and customer service could not agree about the requirements of the new system, which was necessary to get it operating. These managers were Richard’s peers, and he had no direct authority over them. Even though he encouraged cooperation, meetings among the managers usually ended with heated accusations about who was responsible for the company’s problems. Most of the managers disagreed about the reason for the delays in filling orders, and some questioned the need for an expensive new system. Meanwhile, the CEO was becoming impatient about the lack of progress. She made it clear that, after spending a small fortune on new technology, she expected Richard to find a way to resolve the problem. Richard decided it was time to take a different approach.
His first step was to gather more information about the reasons for delays in processing and filling orders. He began by having his staff map the workflow from the time orders were received until the filled orders were shipped. As he suspected, many unnecessary activities created bottlenecks that could be eliminated to speed up the process. The problems extended across functional boundaries and required changes in all departments. The preliminary results were presented to the CEO, who agreed on the need for dramatic improvements and authorized Richard to begin reengineering the process. Despite having the support of the CEO, Richard knew that widespread commitment would be needed for major changes to be successful. Richard met with the department managers to get their assistance in forming some cross-functional task forces. Although he knew that one task force would probably be enough to determine what changes were needed, he wanted to involve more people in the change process so that they would understand and support it. An outside consultant was secured to advise the task forces in their work.
Each task force examined a different aspect of the problem. They analyzed processes, met with key customers to learn what they wanted, and visited other companies to learn how they processed orders more efficiently. As people began working together to understand the system, they began to realize how serious the problems were. The participants were able to put aside their functional biases and cooperate in finding ways to improve efficiency and customer service. Each team made recommendations to the steering committee, composed of Richard and the department managers. The CEO also attended these meetings to emphasize their importance. When one of the department managers opposed a change, everyone in the meeting looked at the CEO, who made it clear that she supported the task force recommendation. Within a year, the company eliminated many of the steps formerly required to process an order, and the average number of days to fill an order was reduced by nearly half. Many more orders were being made electronically, and most mistakes in the billing process were eliminated. As people discovered that they could actually change things for the better, many of them volunteered to serve on teams that would continue to look for ways to improve quality and customer service.
SOURCE: Copyright © 1996 by Gary Yukl
Questions
1. Why did Richard fail in his first attempt to implement change?
2. Identify subsequent actions by Richard that were more effective for implementing change in the organization.
3. Evaluate the change leadership provided by the CEO.

 

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Richard failed in the first attempt to implement change because he did not implement appropriate aspects that are necessary for change. Characteristics of visions are significant in the development of change. Richard could have implemented visions in order to acquire appropriate change. Failure of earlier change programs creates cynicism and makes people doubtful the next one will be any better…………………………………………………….

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