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Leading Change

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Adhitya Nugraha

on 23 June 2014

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Transcript of Leading Change

For change to stick,
leaders must design and run an effective persuasion campaign
-one that begins weeks or months before the actual turnaround plan is set in concrete.

Managers must perform significant work up front to ensure that employees will actually listen to tough messages, question old assumptions, and consider new ways of working.

Comparing Theory of Change

5. Measure and Monitor Cultural Evolution
Executives should pay attention to four areas:
Business performance
. Are key performance indicators improving? Are relevant growth targets being reached more frequently? What is happening with less obvious indicators, such as local sales im- provements or decreases in customer complaints?
Critical behaviors.
Have enough people at multiple levels started to exhibit the few behaviors that matter most? For example, if customer relationships are crucial, do managers update the CRM database on a regular basis?
Have specific intervention mile- stones been reached? For example, has a new policy successfully been implemented? Are people living up to their commitments to key account targets?
Underlying beliefs, feelings, and mind-sets.

Are key cultural attitudes moving in the right direction, as indicated by the results of employee surveys?

Terpukau oleh Informasi & Rekomendasi yang terlalu banyak.

Tidak Fokus

Hasil rekomendasi tidak jelas

Perubahan melibatkan sumber daya (
human & economy
) yang banyak.

Pengetahuan proses perubahan saja tidak cukup.

Crack The Code of Change

Combination of Theory E&O
Penerapan Theory E&O tidak hanya dilakukan secara berurutan, namun dapat dilakukan secara simultan sehingga dapat menghasilkan profit dan produktifitas sehingga mencapai
sustainable competitive advantage
Namun hal ini membutuhkan
great will, skill and wisdom

Keuntungan yang lain dapat mengurangi kecemasan pekerja ketika adanya restrukturasi perusahaan.

Combination of Theory E&O

Theory E:
Pimpinan semakin jauh dari bawahan dikarenakan rasa bersalah dan menilai bawahan adalah bagian dari masalah. Sehingga pimpinan semakin menjauhi penerapan Theory O.
Tidak dapat mengembangkan kemampuan
human resources.
i.e. commitments, coordination, communication, creativity.

Theory O:
Loyalitas dan komitmen pimpinan kepada bawahannya dapat menjauhkan pimpinan dalam membuat keputusan yang sulit.
Kadang menangguhkan keputusan dan berharap agar produktifitas meningkat, namun produktifitas tidak cukup bila yang diperlukan perubahan struktur.


Help an organization achieve higher performance, better customer focus, and a more coherent and ethical stance.

1. Match Strategy And Culture.
Executives may underestimate how much a strategy’s effectiveness depends on cultural alignment.
Company shall promotes unusually high levels of collaboration and teamwork, reinforcing those traits through formal and informal mechanisms.

Five Principles
The mechanisms :
social architecture,
the collective ways in which people work together across an organization to support the business model.

(which describe what the culture values and make clear what people will be held accountable for);
(which change how work is done and thus integrate the new culture into the organization);
(which generate support for and provide the first demonstration of the new culture’s effectiveness); and
(which provide a framework for the new culture to grow, often by changing where and how decisions are made).

Tools for Culture Change

Strategy Cultural Change
Change the change
Listen the outspoken !
People who are outspoken about their objections to a change are often those who genuinely care about getting things right and who are close enough to the inner workings of an organization to recognize a plan’s pitfalls (unsuspected danger).
Build participation and engagement
Get everyone’s a “worry list” and an“idea list” from among the most common and important items.
Complete the past
As employees listen to new change proposals, they remember previous experiences. If you don’t know the history, an explanation for the resistance can remain elusive /difficult to achieve.

Five ways that can use resistance to effect change more productively:
Boost awareness
Dialogue and any talks.
Return to purpose
People who aren’t involved in the planning need to understand not only what is about to change but also why their jobs are being upended (set upside).
Decoding Resistance to Change
Under communicating the vision by a factor of ten
Some pattern of communication such as transformation vision in single meeting, speeches to employee, and newsletter.
Transformation is impossible unless 100's or 1000's of people willing to help, sacrifices and believe the change is possible.
Not removing obstacles to the new vision
Example of the obstacle is the organization structure: narrow job can undermine effort to increase productivity or difficult to think about customers.

Persuation Lesson
Not systematically planning for and creating short-term wins
Successful transformation, manager actively loo for ways to obtain performance improvement, establish goal in yearly plan, achieve objective and reward system.
Declaring victory too soon
Celebrating a win is fine, but declaring the war won is catastrophic (extremely unsuccessful)
Not anchoring changes in the corporation’s culture
Change stick when it become "the way we do things around here", when it seeps into the bloodstream of the corporate body.
Not establishing a great enough sense of urgency
Successful change effort begin when some individuals or some groups start to look hard at company's competitive situation, market position, technological trends and financial performance
Not creating a powerful enough guiding coalition
Major change is impossible unless the head of the organization is an active supporter.
Lacking a vision
Without a sensible vision, a transformation effort can easily dissolve into a list of confusing and incompatible projects that can take organization in the wrong direction or nowhere at all.
Why Transformation Effort Fail

There is a powerful lesson in all this for leaders.

To create a
receptive environment,

persuasion is the ultimate tool
Persuasion promotes
understanding breeds
acceptance leads to

Without persuasion,
even the best of turnaround plans will fail to take root

Persuasion Campaign Phase

Theory O
Theory E
The Importance Of
Change's Sake
Adhitya Nugraha
Economic Value (
Pengukuran kesuksesan perusahaan
hanya berdasarkan
shareholder value.

i.e. Economic incentive, drastic layoffs,
downsizing, restructuring.
Organizational Capability (
Tujuannya untuk mengembangkan
budaya perusahaan dan
kemampuan orang dengan cara
individual & organizational learning, obtaining feedback,
reflecting, and making further changes
Based on
Why & How Change Should be Made
Home Depot
An Entrepreneurial Environment
Home Depot’s culture, set primarily by the charismatic Marcus , was itself a major factor in the company’s success.
It was marked by an
high-spiritedness and a willingness to take risks; a passionate commitment to customers, colleagues, the company, and the community; and
an aversion to anything that felt bureaucratic or hierarchical.
Individual autonomy and a focus on sales at any cost eroded profitability
, particularly as
stores weren’t able to benefit from economies of scale
that an organization the size of Home Depot should have enjoyed.
Home Depot board had decided that Nardelli to drive continued growth needed.

Current problems:
Poor inventory turns, low margins, and weak cash flow.

Cultural transition can be
achieved systematically
, even
under less than favorable conditions
, not simply through the charisma of the person leading the change but through the
use of mechanisms that alter the social interactions
of people in the organization.
Enhance the core by
improving the profitability
of current and future stores in existing markets;
Extend the business by offering related services
such as tool rental and home installation of Home Depot pr
oducts; and
Expand the market,
both geographically and by serving new kinds of customers, such as big construction contractors.

To meet his strategy goals, Nardelli had to build an
that understood the opportunity in, and the importance of, taking advantage of its growing scale
Common metrics that produced
company wide data
in areas that had been
inconsistently measured before
These new performance measurements had an
operational purpose
psychological effect
Initially, these metrics
showed employees that things weren’t going as well as many had thought
. For example, data quantifying customer perceptions of the Home Depot shopping experience replaced anecdotal (not true/reliable) reports of customer satisfaction.
At the same time, the metrics
reinforced the collaborative behavior and attitudes
that Nardelli and Donovan wanted to encourage.
Nardelli instituted a two-hour
Monday morning conference call
in which the top 15 or so executives give individual reports on the previous week’s activities in their areas of responsibility.
Initially, the call helped Nardelli
educate himself about the business
. But over time, his questions evolved and began
focusing more on holding people accountable for what they had promised to do the previous week
In fact, the calls have become a powerful tool for Nardelli in his efforts to
create a culture of cooperation and accountability.
Week after week, the top executive team comes together, hears the same information, makes decisions, and commits to actions that are reviewed by everyone in sub- sequent calls. This process, repeated like a drumbeat, has built the
executive group into a highly integrated team
Nardelli knew that there still was
significant opposition
within the organization to the changes they were making.
So over the course of several months in late 2002 and early 2003, Donovan set up a series of
five-day learning forums
for district and store managers – nearly 1,800 people in all.
Getting – and sustaining – employee commitment to the new culture has continued in an array of ongoing
leadership-training programs,
including the
Future Leaders Program,
Store Leadership Program,
and the
Merchandising Leadership Program
. And it has
filtered into a variety of business operations.
resulting system was shaped by input from those directly responsible
for using it, and as a
result excitement about and support for it spread
workers could understand and appreciate the business benefits
of scanned receiving
When Nardelli became CEO, Home Depot’s purchasing operation comprised
nine divisional purchasing offices, many of which had different pricing agreements with the same supplier.
This meant that the
retailer was acting as if it were nine $5 billion companies rather than a single $45 billion company,
thus squandering (waste) the chance to drive down costs and boost gross margins.
This change would have a significant cultural impact. The creation of the new organization –
defining the new roles, establishing new purchasing processes, staffing the new positions –
was to be accomplished in 90 days.
Emphasize New Cultural Priorities
Integrate the New Culture into The Organization
Build Support for Culture Change
Create a Framework for The Radically New Culture
2. Focus on a Few Critical Shifts in Behavior
When choosing priorities, it often helps to conduct a series of “safe space” discussions with thoughtful people at different levels throughout your company to learn what behaviors are most affected by the current culture—both positively and negatively.

3. Honor the Strengths of Your Existing Culture
Any corporate culture is a product of good intentions that evolved in unexpected ways and will have many strengths such as deep commitment to customer service or a predisposition toward innovation.
Acknowledging the existing culture’s assets will also make major change feel less like a top-down imposition and more like a shared evolution.
The same surveys of employee behavior, in- depth interviews, and observation that you use to diagnose your culture’s weaknesses can also clarify its strengths.

4. Integrate Formal and Informal Interventions
As you promote critical new behaviors, making people aware of how they affect the company’s strategic performance, be sure to
integrate formal approaches—like new rules, metrics, and incentives—with informal interactions
Only a few companies understand how to do this well. In our experience, most corporate leaders favor formal, rational moves and neglect the informal, more emotional side of the organization. They adjust reporting lines, decision rights, processes, and IT systems at the outset but overlook informal mechanisms, such as networking, communities of interest, ad hoc conversations, and peer interactions.

Decoding Resistance
A seemingly healthy,
well-performing company can be more vulnerable
than you might think because of a buildup of corporate cholesterol: natural human dynamics that limit communication, creativity, and efficient resource allocation.

Rather than wait for the heart attack to strike, executives should consider changing
their firm’s structures, rewards, and processes while performance is still good.

Surveying the workforce can help executives determine how urgent the need is for change and what kind of changes to contemplate
. Companies that take charge of change in this way are high performers and popular places to work.
To determine what kind of changes you need to make, look at your total in each category.
If your highest score is in the
section, then you need to contemplate changing the basis on which the company is organized (such as product or function).

If you score most in the
section, you need to make sure that your next change is different from your last one.

If you score high in the
section, then you need to make multiple changes all at once in order to shake up the organization.
Integration E/O in %
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