Ameliorating the organization through calculated maneuvering built upon change management

David Stephenson

Bury me on my face “ said Diogenes; and when he was asked

why he replied “ because in a little while everything will be

turned upside down”

Diogenes 412-323BC Greek philosopher

Ameliorating the organization through calculated maneuvering built upon change management

1. Training courses are the last thing we should do2. Communicate like a marketing manager3. New talent without culture change is waste of money4. Balance the consequences not just the measures5. Culture eats strategy for breakfast6. Bring the people with us7. Social networks enhance innovation

Truths about change & engagement

• Changes typically fail …only 30% achieve bottom line improvement …only 50% achieve share price increase

• Productivity drops by 25-50% during change

• >70% people don’t believe their orgs care about their wellbeing during change

The differentiating core change mgt competence for competitive

companies is…

• Harnessing an organisation of people who thrive on the challenges of ambiguity, complexity and uncertainty, and who can successfully and rapidly implement strategic and operational changes (INSEAD study 2004)

•Worst strike record in Britain – 50% of all UK (84,000 days)•Safety record 3 x worse than whole construction industry•16% of workforce experienced bullying & harassment•Losses of nearly £2m per day •Months from not being a going concern•Quality of service very poor…failed 1st class since 1992•Lost over 28 million letters a year•10,000 people off sick every day•Poor pay / 6 day week

For a few years we had…

3 years later…

• 195,000 jobs changed• 35,000 people left organisation – voluntarily• Best quality of service for decade• 92% reduction in strike days lost…plus symbolic ballot win• £537m operating profit…and growing• £1.5bn gross cost reduction

– E.g. reduced HR costs by 40%

• Paid all our people >£1,000 ‘Share in Success’ bonus• Pay rise to so that £300 a week for a 5 day week

Performance needs analysis

“the problem or performance issue”

Knowledge Skills

Motivation Environment

xxxx

Why, why, why, why, why…

yyyy

zzzaaa

bbb

ccc

Grab people’s attention

• Prize draw for all those with full attendance each 6 months

– 37 new Ford Focus cars in Year 1 (and in year 2!)– 75 x £2,000 holidays

• Fun way of raising serious issue

• Positive – attendance not absence

• High profile media coverage

The life of a new managerINPUT

•Enthusiastic•High expectations•External knowledge & experience

CAPABILITIESOperators know bestLow commercial acumen

STRUCTUREChains of commandEscalate decisions

PROCEDURESSlowComplexTime consumingPaperwork

INFORMATIONDifficult to accessOut of dateTime consuming

PERFORMANCE MANAGEMENT

MediocrityLimited consequenceGame the system

DisempoweredUnlearn Frustrated Not in control Low expectations

OUTPUT•Isolated maverick•Revert to type•Leave for a better life

How objective

the measure is

How serious the consequences are when performance is off-track

Profit

Customer

Mails integrity

People

Clearance Cost

These measures are primary drivers of

GM behaviour

These measures don’t drive GM behaviour, despite being on the scorecard

What is rewarded or punished?

2008

+

+

-

-

Culture

• Culture impacts strategy: new strategies will fail unless the underlying beliefs and assumptions change to support the new strategy

• Leaders impact culture much more than process, structure, systems etc. Leaders impact culture most by :

1. What they demonstrate is important2. How they react to a crisis3. How they treat their own4. How/who they reward or punish5. How/who they recruit or let go

Edgar Schein, Organizational Culture and Leadership, Jossey Bass Publishers, San Francisco, 1997.

We would rather be ruined than changed,We would rather die in our dreadThan climb the cross of the momentAnd let our illusions die.

— W. H. Auden

…take people with you

Awareness Belief Commitment•Awareness & understanding of the change

•Belief & buy-in to the change

•Adopting new ways of working

• Describe the change and reasons for the change• Describe the benefits of the change and how it’s going to happen • Describe what’s expected of me in the change• Describe what will make it a success• Understand what support is needed to do it

• Believe the benefits including what is in it for me• Understand the commitment needed to make it happen• Am prepared to make those commitments• See myself working successfully in the new environment• Understand my part in overcoming obstacles

• Have adopted the future state successfully• Take accountability for my part• Feel comfortable with the new environment

Awareness

Belief

Commitment I…

I..

I can..

Individual transition process

BA C

IndividualResponse

cycle

IndividualResponse

cycle

Awareness Buy-in Committment

What is the organisation trying to achieve?

Does this make sense for me?

Should I change?

Do I know what success looks like?

Have I adopted the new way of working?

Pyramid of resistance to change

Not knowing

Not able

Not willing

Intellectual capital & innovation

(Source: Subramanium and Youndt)

Incr

emen

tal I

nnov

atio

n

Rad

ical

Inn

ovat

ion

Organisation capital

Humancapital

Strong

.25

Strong

.30

Strong

.54

V Strong

.84

Negative

- .27

Social capital

Intellectual capital & innovation

(Source: Subramanium and Youndt)

Incr

emen

tal I

nnov

atio

n

Rad

ical

Inn

ovat

ion

Organisation capital

Humancapital

Strong

.25

Strong

.30

Strong

.54

V Strong

.84

Negative

- .27

Social capital

Strong human capital on its own actually hinders radical innovation, but mixed with strong social capital it can strongly enable radical innovation

Hypothesis by Subramanium and Youndt

2

2.5

3

3.5

4

4.5

5

5.5

Radical Innovative Capability

High human capital

Low human capital

Social capital

Low High

Both …. And ….• Why & what• Culture & strategy• Structures & behaviours• Consequences & measures• Talent pipeline & organisation• Social networks & formal networks• Marketing & engaging• Yin & yan

Strategy

Structure

ProcessReward

People

Holistic solutions…

“Organisation is more than just structure”“Different strategies lead to different organisations”“All parts must align for the organisation to be effective” Galbraith

“Give a man a fish, feed him for a day. Teach a man

to fish, feed him for a lifetime.”

Lao Tzu

Thank you

Any questions?