UNIT 3

CHANGE MANAGEMENT
 Context
• Virtually every organization will, at some point, undergo a transition or
change in order to remain viable and scale. Whether on boarding new
employees, growing a department, or merging with another company, these
changes can have a significant impact on the trajectory of your business.
• Unfortunately, organizational change isn’t always easy to adapt to and can be
intimidating for all team members who find themselves impacted by it.
• As a manager tasked with overseeing organizational change or guiding your
employees through it, it’s important to know what the process looks like and
what to expect. Change, although challenging, can be a major opportunity
for growth and career advancement, so long as you know how to approach it.
 What is Change?
 Coping process of moving from a unsatisfactory present state to a desired
state
 Change is something that presses us out of our comfort zone.
 Change management
• Change management is defined as the methods and manners in which a
company describes and implements change within both its internal and
external processes. This includes preparing and supporting employees,
establishing the necessary steps for change, and monitoring pre- and post-
change activities to ensure successful implementation.
 The Change Process

REFREEZING
UNFREEZING MOVING
1. Reinforce the new behaviour
1. Identify the need for change 1.Compliance or force
2. Find ‘fits’ b/w organizational
2. Increase the driving forces 2. Internalisation
components
3. Reduce the resisting forces 3. Identification
3. Maintain ‘fits’ b/w the components
 CAUSES OF RESISTANCE TO CHANGE

INDIVIDUAL RESISTANCE
ECONOMIC REASONS PERSONAL REASONS SOCIAL REASONS
Fear of economic Status Quo Social Displacement
loss
Fear of unknown Peer pressure
Obsolescence of
skills Ego defensiveness
 Overcoming Resistance to Change
1. Education and Communication – Communicate the need for change and educate
affected people.
2. Participation and involvement – People should be involved, so that they do not fear
change.
3. Facilitation and Support – Managers should provide support, guidance, friendly
atmosphere.
4. Negotiation and Agreement
5. Building Trust and Confidence
6. Ensuring Job Security
7. Manipulation and Co-optation – presenting selective information or selecting the
most influential person of group for change implementation
 Organisational Change
• Organizational change refers to the actions in which a company or business
alters a major component of its organization, such as its culture, the
underlying technologies or infrastructure it uses to operate, or its internal
processes.
 Organisational change management
• Organisational change management is the method of leveraging change to
bring about a successful resolution, and it typically includes three major
phases: Preparation, implementation, and follow-through.
 Nature of Organisational Change
 Planned change
 Two types-
 Proactive change
 Reactive change
 Disturbs the existing equilibrium
 Varying speeds and degrees
 Changes in several ways
 To achieve organizational objectives
internal external

Deficiencies in the Market situation

existing system

Technology
Changes in
managerial
personnel
Population
dynamics
Other changes
Political and
legal system
 WORK ENVIRONMENT FACTORS
IN ORGANISATIONAL CHANGE
STRUCTURE FACTORS
Relation of parts
Number of levels
Degree of formalization

TASK FACTORS PEOPLE FACTORS

Variety Perception
Autonomy Attitudes
Significance Values
Feedback Motivation

TECHNOLOGY
FACTORS
Methods
Techniques
Processes
 Organisational Resistance
 Organizational Structure
 Resource Constraints
 Threat to power & influence
 Sunk Costs
 BRITISH AIRWAYS
• In 1981, British Airways appointed a new chairperson, John King. Early on, it was noticed
that the company was extremely inefficient and a lot of valuable resources were being wasted.
• To help the organisation become more profitable, the chairperson decided to restructure the
entire business. He decided that the most efficient way to do this was through a change
management plan.
• The organisation soon began to reduce its workforce. However, before this was completed, the
chairman - through his change management leadership - provided the business with reasons
for restructuring British Airways to help prepare them for the upcoming change.
• His plan saw him axe 22,000 jobs - including half of the board - replace older planes with
modern jets and eliminated unprofitable routes. One of his successors, Martin Broughton, paid
tribute to King for the role he played in the transformation.
• He said: “Lord King transformed the airline from a position of state-owned weakness to one
of financial strength and global renown as a pioneer privatised carrier.”
• So, through leadership and communication, he managed to direct the business through an
incredibly difficult time and turned British Airways into a profitable business.
 NETFLIX
• In 1997, the gargantuan media-services provider Netflix was born. Previously, the model offered
customers monthly subscriptions to have movies posted to their door. This meant they avoided the late
fees which traditional movie rental business imposed upon customers.
• From the beginning, Netflix proved to be a disruptive organisation which has likely resulted in its
capability to transform and adapt to the digital world. Streaming began in 2007 for the business and
meant subscribers no longer needed to wait for DVDs to come through the mail.
• Netflix successfully implemented change management to meet the needs of the consumers that would
begin to watch content online. At one stage, it was at a crossroads, when its long-term sustainability was
dependent on how it managed the change to a digital future.
• After surviving a drop in subscription numbers and stock figures, Netflix subscribers grew from 23
million in 2011 to more than 137 million in 2018. So trusting their plan worked, as the business knew
DVDs were on their way out and they needed to shift gears.
 DOMINO’S PIZZA
• The changes implemented by Domino’s Pizza finally saw the brand lift its sales over Pizza Hut
for the very time. Using savvy marketing, creative ordering methods and innovative technology,
things were finally looking positive in 2010.
• Back in 2008, Domino’s Pizza was struggling as stock had hit an all-time low. Despite the
importance the business had put on maintaining a positive brand image, its struggles were making
this a real challenge.
• In 2012, however, Domino’s Pizza was back on its feet due to a successful change management
implementation. The organisation’s pizza turnaround, thanks to digital transformation, rested on
the fact that key transformation players managed to convince top management to get on board.
Eventually, their enthusiasm trickled down throughout the entire business.
• Domino’s leveraged the wealth of consumer data through its custom operating system. This
helped keep the transaction costs low and provided Domino’s with insights about its customers.
Then there’s also the case of developing loyalty programmes and introducing special offers to
continue to drive up sales.
• Despite the successful change, it hasn’t stopped there. The brand has also tested drone and robot
delivery - even partnering with Ford on self-driving options.
 Types of Organisational Change

1. 2. 3.
Planned Fast First Order

Unplanned Slow Second order

 Importance of Change Management
The Ever-Changing World of Technology
• Without change, business leaders still would be dictating correspondence to
secretaries, editing their words and sending them back to the drawing board,
wasting time for all involved. Change that results from the adoption of new
technology is common in most organizations, according to Forbes. While it
can be disruptive at first, ultimately the change tends to increase productivity
and service delivery.
Customer Needs Are Constantly Evolving
• Customers who were satisfied with doing business during regular opening
hours just a few years ago now expect your business to be always open – and
available with the swipe of a smartphone. As the world evolves, customer
needs change and grow, creating new demand for new types of products and
services. This opens up new areas of opportunity for companies to meet
those needs.
The Changing Global Economy
• The economy can impact organizations in both positive and negative ways
and both can be stressful. A strong economy and increasing demand for
products and services will mean that companies must consider expansion
that might involve the addition of staff and new facilities. These changes
offer opportunities for staff, but also represent new challenges.
Change Means Growth Opportunities
• The importance of change in business environments allows employees to learn new
skills, explore new opportunities and exercise their creativity in ways that ultimately
benefit the organization through new ideas and increased commitment. Preparing
employees to deal with these changes involves an analysis of the tools and training
required to help them learn new skills. Training can be provided through traditional
classroom settings or, increasingly, through online learning opportunities.
Challenging the Status Quo
• Simply asking the question "Why?" can lead to new ideas and new innovations that
can directly impact the bottom line. Organizations benefit from change that results
in new ways of looking at customer needs, new ways of delivering customer service,
new ways of strengthening customer interactions and new products that might
attract new markets.
 Reasons /Driving Forces Of Change
• 1. External factors
• 2. Internal Factors
 External factors

Market Social
Govt. Policies
Changes Pressures

Economic
Tech Progress
conditions

Increase in
Demographic
raw material
Features
cost
 Internal factors

. . .
Change in Adoption of new
Productivity
leadership technology

Structural Decline in Industrial Relation

reorganisation profitability Problems
 Zoom cares not only about connecting
users, but its employees as well!
• The video conferencing technology company
-Zoom is known for its amazing culture, and
with good reason: their emphasis on people.
The business has a reputation for genuinely
caring about its employees. Zoom even
encourages employees to bring loved ones to
work so that teammates and coworkers can
meet the individuals who work behind the
scenes, who inspire them, and for whom they
work.
 Twitter: home for happy and fulfilled
employees‍
• Twitter employees can't get enough of the company's
culture! Rooftop meetings, amicable coworkers, and a
team-oriented workplace where everyone is motivated by
the company's goals have prompted this acclaim.

• It's impossible to beat having team members that are

pleasant and friendly to one another, as well as excellent
at and enthusiastic about what they do. There is no
programme, activity, or set of regulations that can
compare to having happy and pleased employees who
believe their work counts.
 Diagnosing organisational capability to change
1. Organisational culture
2. Vision of future
3. Commitment of Top management
4. Risk taking attitude of top management
5. Risk taking capabilities of top management
6. Degree of flexibility
7. Effective communication
8. Commitment and participation of workforce
9. Convergence of organisational goal with individual goals
 Formula for change
• The formula for change is an equation used by business managers to put into place
organizational programs to overcome inertia and improve efficiency and
productivity. Originally the formula for change was postulated by David Gleicher.
• Known commonly as Gleicher's Formula, the original formula for change was C =
(ABD) > X. In the equation, C stands for change. This equals A, which is current
dissatisfaction in an organization, times B, a desire for a better state of conditions,
times D, a list of practical steps to make change happen. X is the cost that has to be
paid or overcome for actual change to take place.
 Levels of change model
• 1. LEVEL 1: EFFECTIVENESS : The easiest change to make is to learn the
basics - what are the right things to do and how to immediately change enough to
become effective in a new job. The Pareto Principle states that 20% of the things
being done actually yield 80% of the total payoff. To maximize effectiveness, energy
must be shifted to and focused on doing that 20% (the right things).
• LEVEL 2: EFFICIENCY : Level 2 change requires a thorough understanding of
all the aspects of the new job or business activity in order to identify and then focus
on doing very well those things which have the most important impact and make
the largest contribution. Level 2 changes are based largely on personally adjusting to
new standards and procedures, and involve coaching or explanations by others
familiar with the job or business activity.
• LEVEL 3: IMPROVING - DOING THINGS BETTER. Change at this level involves
thinking about ways to improve or fine-tune -- ways to speed things up, shorten delivery
time, increase functionality, reduce downtime. Level 3 change makes
something more effective, more efficient, more productive, and more value-adding - frequently
with customer input.
• LEVEL 4: CUTTING - DOING AWAY WITH THINGS. This level of change involves
analysis of core functions and applies the Pareto Principle to focus on stopping doing things
- cutting out the 80% of things that only yield 20% of the value. In the simplest case, change
at Level 4 focuses on eliminating waste. If this can be done systemically while keeping all
organizational interrelationships and subsystems in perspective, major company-wide results
can be achieved.
• LEVEL 5: COPYING - DOING THINGS OTHER PEOPLE ARE DOING. Level 5
marks the transition from incremental to fundamental change. Copying, learning from, and
"reverse engineering" can dramatically boost innovation at significantly lower costs than
starting from scratch. Benchmarking how other organizations are doing things and then
enhancing upon their processes is the hallmark of the successful innovator.
• LEVEL 6: DIFFERENT - DOING THINGS NO ONE ELSE IS DOING. Change at
Level 6 is about either doing something very different or doing something very differently - and
transitions into degrees of novelty which not only move an organization "out-of-the-box",
they move the organization into areas where nobody else is doing it. Level 6 is a shift into 3-
Sigma thinking. Such trailblazing and greater degrees of risk-taking can bring about
genuinely new things, often by synthesizing seemingly unconnected concepts and
technologies - or by totally shifting perspective around the possible uses of a product.
• LEVEL 7: IMPOSSIBLE - DOING THINGS THAT CAN'T BE DONE. "What is
today impossible, but if it were possible it would fundamentally change the way you do
business?" Joel Barker's famous question reframes thinking extremely well for Level 7.
Market constraints, resource limitations, or company culture are too often seen as
insurmountable barriers. As a result, discoveries at Level 7 frequently build on major
mindshifts connected with exploratory thrusts into the unknown - bold, significant and long-
term visions and change so different that it cannot be compared to anything else known at
the time.
Any change requires time, resources and personal energy. The higher the level of change, the
more time, resources and personal energy the change will require in implementation.
Further, it is not a straight-line relationship across the 7 levels, it is geometric and explodes
in terms of difficulty as the change level increases.
 Technological Change
• In 1968, Peter Drucker coined the phrase Age of Discontinuity to describe
the way change forces disruptions into the continuity of our lives.
• Technological change occurs when there is a change or addition to the
existing scientific principles which give a specific technology its particular
character.
• Technical process describes the capability of a technology to satisfy human
wants for goods and services
 CHARACTERISTICS OF
TECHNOLOGICAL CHANGE
• It is inevitable (unexpected)
• It is an ongoing activity
• It occurs in all organizations
• It occurs in all functions of organization
• It leads to change in technologies, products, services, tools, processes and
the systems of the organization
 IMPORTANCE OF TECHNOLOGICAL
CHANGE
• It helps in managing risk and uncertainties in order to prevent huge cost in an organization
• It brings some times challenges with it, without which life may become monotonous and
repetitive
• It helps in tapping new market or new market segments
• It sometimes brings new threats which act as stimuli for improvement
• It helps organizations to move from current to next higher status of business operations
• It enables the organizations to abandon some negative cultural values and some osculate
practices and methods
• It may be used to raise motivation among employees
 CHANGES IN ORGANIZATION
PROCESS DUE TO TECHNOLOGICAL
CHANGE
• It controls and reduces processes wastage
• Improves quality of output
• Controls and reduces work in process inventories
• Help in gaining competitive edge
• Sustaining competitiveness
 Evolution of communication and
information technology

• It helps in developing mutual trust and understanding between the employees of the
company
• It provides level playing ground to the organization to compete with the outside
world
• It enables regular review of the organization at the highest level
• It benefits the organization in establishing good and healthy industrial relations
• Helps in extracting new business opportunities from the outside world
• Fasten up the business operations
Types of Technological Change
 Change Management Strategy
• Strategy Defined
• A coordinated set of actions that fulfill the firm’s objectives, purposes, and goals.
• It is not a single act in a firm.
• Without a strategy, managers have:
• No well-defined business path to follow
• No roadmap to manage by
• No cohesive, reasoned action plan to produce successful performance
 Characteristics of Strategy
• Ongoing Process
• Defines the nature of the businesses in which
the firm will compete
• Purposeful
• Indicates decision making direction
• Defines the firm’s contribution to society and
other constituent groups
 CHANGE MANAGEMENT STRATEGY
1. Normative-Re-Educative Strategy:
This approach believes that changing the norms, attitudes and values of individuals will lead to changes in their
behaviours. It is based upon core beliefs, values and attitudes. So change will occur as individuals change
their attitudes and this leads them to want to behave differently. People are social beings and will adhere to
cultural norms and values. Change is based on redefining and reinterpreting existing norms and values, and
developing commitments to new ones.
2. Rational-Empirical Strategy:
This strategy is based on persuasion, and assumes that individuals are rational and as such they will follow their
own self-interest once this is made clear to them. The benefits of a change therefore need to be highlighted
and sold to the individuals as being of personal benefit to them. People are rational and will follow their self-
interest once it is revealed to them. Change is based on the communication of information and the
proffering of incentives.
3. Power-Coercive Strategy:
This strategy is based on the application of power, with the belief that most people are
compliant to those who have greater power. A potential issue with this process is
that once the power is removed, individuals may revert to previous behaviours.
People are basically compliant and will generally do what they are told or can be
made to do. Change is based on the exercise of authority and the imposition of
sanctions.
4. Action-Centred Strategy:
This focuses on the actions which include problem solving, looking at problems and
focusing on remedial actions.
5. Environmental – Adaptive Strategy:
People oppose loss and disruption but they adapt readily to new circumstances.
Change is based on building a new organisation and gradually transferring people
from the old one to the new one.
 John P. Kotter’s Eight steps to successful
change
• Increase urgency – inspire people to move, make objectives real and relevant.
• Build the guiding team – get the right people in place, with right emotional
commitment.
• Get the vision right – get the team to establish a simple vision and strategy.
• Communicate for buy-in – Involve as many people as possible, communicate
the essentials.
• Empower Action – Remove obstacles, enable constructive feedback and lots of
support from leaders.
• Create short-term wins – Set aims that are easy to achieve. Finish
current stages before starting a new one.
• Don’t let up – Foster and encourage determination and persistence.
Highlight achieved and future milestones.
• Make Change Stick – Weave change into culture.
 Innovation Culture
An organizational culture is basically a sum of all the practices, processes,
habits, values, structures, incentives, and naturally people, that the
organization has.
An innovation culture is an organizational culture that really values and
supports innovation, so that people can actually make innovation happen.
Aristotle once said: “We are what
we repeatedly do.”
 How to create a more innovative culture
• 1. Understand the status quo – and why it is like it is
• Every culture has strengths that have made the company into what it is, but also
their challenges that are holding it back.
• It’s also really important to understand why things are the way they are. Is the
company mostly a result of the people that have been hired? Has it perhaps been
shaped by the choices made in rewarding and promoting employees, or by the
structure and processes the organization has?
• By truly understanding the mechanics of your cultural system, you can preserve and
cherish the strengths, but also introduce changes to things that can actually make a
difference.
2. Cultural change starts from the top
• A full-blown cultural transformation is such a massive undertaking that it always has to start
from the top. It requires strong leadership and extensive commitment from top
management.
• Leaders really do need to become role models for the kind of behavior that is expected
from everyone, but that isn’t enough.
3. …but truly happens from the bottom-up
• As mentioned, while the transformation has to start from the top, it doesn’t happen if
employees throughout the organization don’t buy-in, or if the ways of working within the
company don’t also change at the grassroots level.
• Remember, culture is simply a representation of the way people act in their day-to-day, and
if that doesn’t change, nothing will happen regardless of how often you talk about the new
culture.
 4. Clear focus – and quick wins to gain momentum
• In a large organization, you can’t possible change everything overnight. Thus,
it’s really important that you don’t even try to do that.
• Just choose a few of the most important areas that can really make a
difference and start from those. Make sure that you can score some “quick
wins” with the first initiatives, as this will help get everyone onboard and
excited about the upcoming journey.

5. Communicate, communicate, communicate – and with purpose

• As most of us in leadership positions have learned, you really need to keep
communicating the same things over, and over, and over to get the message
through.
Abilities of Innovative Organisations
Importance of building culture and change
 Nurturing Innovation
• In today’s highly competitive marketplace, innovation has become a necessity.
Innovation allows companies to grow, not only in profits, but in market share
and brand recognition. As the rate and quality of demand from consumers
and B2B customers increases, so do their expectations that what you’re
selling them is the most up-to-date, cutting edge product they can buy. If
you’re not suitably invested in innovation, you can bet that your competitors
are.
 How does an organisation nurture innovation?
• Instill a desire for understanding what customers care about. It can sometimes be confusing as an
employee to clearly understand on whose behalf your efforts are devoted, or at least in what order: The
company? Customers? Management? Shareholders? All of those constituencies are important, but without
happy customers, without excellent solutions to real world problems, there is no effective business.
Encourage employees at every turn to understand the challenges customers face, the missing pieces, to
empathize. Truly great innovation follows from this.
• Grant employees unstructured time. Allow a percentage of time in which people can pursue ideas they’re
passionate about. This provides flexibility to work on innovations that may be valuable. You can impose
general guidelines to ensure there’s relevancy while still allowing the knowledge worker to have fun in this
idea playground. You might be surprised at how many more ideas are captured and not slipping through the
cracks.
• Reward employees for ideas or inventions. Consider establishing an inventor incentive program to
encourage employees to submit new and useful ideas. The pros outweigh the cons.
• Host company-wide contests to encourage broader participation. Holding contests is a great way to
garner ideas from employees whose day job isn’t centered around new product development. Just make sure
to celebrate the winners with prizes, executive recognition, or even the freedom to use company resources to
pursue the idea.
 Empowering Employees to Innovate
• Once employees are motivated to start innovating, it’s important to empower them with the
tools and resources needed to turn their ideas into reality:
• Make it safe and comfortable to innovate. Employees need to know that their ideas will
see the light of day and that they’ll be heard by their managers and colleagues. They need
respectful feedback and an encouraging environment in which to pitch ideas, test them, fail
and learn.
• Provide innovation tools. Employees need tools in order to explore their ideas further.
Examples include easy and fast access to research and prior art, testing or brainstorm
frameworks, customer information and survey data, a network to share and iterate on ideas,
and a well organized internal IP database.
• Establish training in innovation methods so they can keep getting better, and help others
as well. Provide relaxed-setting refreshers on best practices for time allocation, company
relevancy, confidentiality, customer careabouts, alignment if IP with company strategy, etc.
Role of Leadership in Change Management
• Encourage collaboration rather than competition
• Encourage training and coaching
• Improve communication
• Encourage teamwork
• Improve participation of work force
• Reduce conflicts by problem solving
• Encourage creativity
If the leader is inefficient, it can lead to more conflicts, decline in performance
and even failure of projects.