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Augustine Jude Chetty (C3154509)
Lin Meng Qi (C3154507)
Tutor: Bernard Tay
Tutorial Group: A6_G2
Date: 21st May 2013 Outline Introduction
Strategies Implemented & Outcomes
Q&A Introduction Louis V. Gerstner, chairman and CEO of IBM in 1993
IBM face the most significant strategic challenges
Under the leadership of Gerstner, IBM successfully made a great turnaround
Fundamentally reshapes the organisation culture Issues Strategies Implemented Triggers of Change Sources of Resistance to Change Activities Contributing to Effective Change OD Practitioner as a Leader of Change Consultant Styles Matrix Managerial Responses to Resistance Approaches to Corporate Change IBM’s Business Leadership Model The Change Diamond Strategies & Theories Strategies & Theories Strategies & Theories Strategies & Theories Strategies & Theories Recommendations Questions & Answers References Technology Changes
Barrier to accepting changes
High Competition and Rapidly Changing Environment
Need for constant innovations
Inefficient Supply Chain Management Process
Long lead time within the Supply Chain
Decline in key business measurements Turnaround
8 Principles of Change
Directive & Coercive Leadership
Business Leadership Model: The ‘Change Diamond’
Systemic Leadership Approach & Intranet
Improving supply chain
Re-engineering of organization & market management process
24 ‘Performance Improvement Initiatives’
Directive, consultative, coordinated approach Industry Discontinuities – Technological changes
IBM prided itself on Mainframe Systems & Integrated Solutions (IBM, 2005)
1980s and early 1990s – PC Revolution (Applegate, 2009)
Rapid Environmental Changes
Organizational structure became obsolete and inefficient (Hill & Jones, 2009) Presiding Culture that opposed to changes
Reluctance to lose control
Narrow-Mindedness (Garud, Nayyar, 1997)
Reluctance to give up old habits
“Implied” lifetime employment (Applegate, 2009)
“In denial” (Applegate, 2009) 8 Principles of Change 1. The marketplace is the driving force behind everything we do.
2. At our core, we are a technology company with an overriding commitment to quality.
3. Our primary measures of success are customer satisfaction and shareholder value.
4. We operate as an entrepreneurial organization with a minimum of bureaucracy and never ending focus on productivity.
5. We never lose sight of our strategic vision.
6. We think and act with a sense of urgency.
7. Outstanding, dedicated people make it all happen, particularly when they work as a team.
8. We are sensitive to the needs of all employees and to the communities in which we operate. L. V. Gerstner Jr, Who Says Elephants Can’t Dance?: Leading a Great Enterprise Through Dramatic Change (New York: HarperCollins Publishers, 2002): 201-2 Effective Change Management The Organization Development (OD) Practitioner - Louis Gerstner
External Change Agent – No technological background (Applegate, 2009)
Previously the CEO of RJR Nabisco, food and tobacco company (Forbes, 2002)
Customer Oriented (Hitt, Ireland, 2007)
Competencies of an Effective OD Practitioner
Goal-Setting and Problem Solving Abilities
Ability to see things objectively Seeks high level of effectiveness
Seeks high level of employee satisfaction
Collaborative Problem Solving Communication
Met with employees to explain changes
Direct notes to employees (Applegate, 2009)
Participation & Involvement
CEO’s support of Bottom-up innovations
Culture of Inclusion (Yaun, 2006) Source: J. B. Harreld, C. A. O’ Reilly and M. Tushman, ‘Dynamic Capabilities at IBM: Driving Strategy into Action’, California management Review, (2007): P.35 Source: G. Kittle (2009). Making Change Work [PowerPoint Slides]. Retrieved from: http://www.slideshare.net/IBMNZ/making-change-work Strategies & Theories Systemic Leadership Approach
To drive a new culture
From a products and services company to a hardware, software and services company
Organisation Culture & Effectiveness
Culture affects the performance of organisation’s ability to implement change
Culture plays a significant role in implementing new strategy, new direction Guidelines for Culture Change
Formulate a clear strategic vision
Display top-management commitment
Model culture change at the highest levels
Modify the organisation to support organisational change Use of Intranet
Free flowing and shared information
Enriches a learning culture
IBM’s intranet – w3 On Demand Workplace
“Our intranet has evolved into an integrating platform that accelerates the speed with which we can find resources and knowledge to help our clients innovate and succeed.” Brian Truskowski, vice president and chief information officer, IBM.
Includes features such as blogging, personalisation of news Characteristics of A Learning Organisation
Structures: Emphasise teamwork, strong network across organisational boundaries, promote information sharing
Information systems: Gather, process and share rich and complex information to gain competitive advantage
Culture: Promote openness, creativity, experimentation by sharing information
Leadership: Communicate a compelling vision and provide empathy or support to lead others Re-engineering of organization & market management Process
24 ‘Performance Improvement Initiatives’
Directive management approach to direct change and consultative approach to maximise usage of knowledge from staffs
Using coordinated approach to connect relationship between IT and knowledge systems, people, processes, change through decision-making process, adding values to stakeholders
Consultative style of management
Emphasises a sharing of commitment between employee and the organisation Directive leadership
Spelling out the what and how of employees’ tasks
Link the actions of its units into a consistent pattern to enhance the operation
Using personal method of coordination, by promoting discussion, innovation, creativity and learning
Develop a shared set of values to predict responses of others to specific events Culture context
IBM operates in more than 170 countries
Intervention designs to fit the local culture of the particular country S.McLaughlin, R.A.Paton and D.K.Macbeth, ‘Managing change within IBM’s complex supply chain’, Management Decision, 44:8 (2006)
G. Kittle (2009). Making Change Work [PowerPoint Slides]. Retrieved from: http://www.slideshare.net/IBMNZ/making-change-worJ. B. Harreld, C. A. O’ Reilly and M. Tushman, ‘Dynamic Capabilities at IBM: Driving Strategy into Action’, California management Review, (2007): P.35
J. B. Harreld, C. A. O’ Reilly and M. Tushman, ‘Dynamic Capabilities at IBM: Driving Strategy into Action’, California management Review, (2007): P.35
IBM. (United States). (2012). 1990s: History of IBM. Retrieved May18, 2013, from http://www-03.ibm.com/ibm/history/history/decade_1990.html
McClelland, S. (1987). The Consultative Style of Management. Industrial Management, 29(1), 12.
Waddell, D.M., Cummings, T.G. and Worley, C.G., (2011). Organisational Change: Development and Transformation: Asia Pacific, 4th edition, Melbourne, Cengage Learning Australia Pty. Limited.
Wood, J., Zeffane, R., Fromholtz, M., Weisner, R., Creed, A., Shermerhorn, J., Hunt, J., & Osborn, R. (2010). Organisational Behaviour: Core concepts and applications (2nd ed.). Brisbane, Queensland, Australia. John Wiley & Sons. Balanced and Blended Leadership at IBM Conclusion Culture is Key
Leadership is important
Approaches used must cater to Organization’s needs
Make use of technology
There will always be resistance
Companies have to be ever ready for change
Combining different approaches might be necessary
Identify and rectify problems early
Was the breaking up of the territorial heads too dramatic?
Was this necessary for the turnaround at IBM?
(IBM, 2012) McClelland, S. (1987).
(Wood, J., et al., 2010). (Waddell, et al., 2011) (Waddell, et al., 2011) (Waddell, et al., 2011) (Waddell, et al., 2011)