Change Theory

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Tvab02

Business Finance

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Leaders can improve the chances for a successful change outcome by following Kotter’s eight-step change theory. Pick three of the eight-step change theory components and give an example for each step that explains how leaders can implement it to effect change.

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Stage 1: Create Urgency Everyone in an organization, from executives to employees, is willing to change if it’s important. Politicians know this well and constantly invoke crises to win over constituents. Urgency wins support and cooperation. If the people in the organization, in particular the leaders, feel complacent, they have no impetus to change. If everything is OK, they will maintain the status quo. However, in a crisis situation, leaders are motivated to get involved and to recruit followers, which adds momentum to any change initiative. The economic crash provided one strong reason for organizational change. Many companies have had to downsize in the face of decreased revenue, and although layoffs are never popular, the urgency of many situations requires organizational changes, especially if change means potentially saving the organization or its viability in the marketplace. Stage 2: Form a Guiding Coalition A strong team with a shared objective can implement change far better than a single individual, and this force is needed for transformation within an organization. With a diverse team, members can find ways to share and communicate the new vision in ways that their specific followers can understand—the CFO can explain the reasons for change in a way that wins buy-in from the finance department, and the head of research and development can show how changes will benefit that department. In addition to communication, a guiding team can oversee the creation of new processes within the organization far better than a single executive can. A team can also draw on more resources than an individual, even a powerful CEO, and demonstrate quick results, which in turn can secure support from more leaders and employees. When John Chambers became CEO of Cisco Systems, he put together an executive team that could help him make and implement decisions. Thanks to this team, Cisco has acquired an average of 10 companies per year under Chambers (Useem, 2009). Cisco not only bought a rival telepresence vendor for $3.3 billion, Scientific-Atlanta for $6.9 billion, and BNI Video for $99 million, but they have also spent $5 billion on buying NDS group in order to improve their knowledge of software and professional services, as well as expand their presence in video communications, according to Chambers (“Cisco to Acquire,” 2012). Team members identify potential acquisitions and lead the process, allowing constant organizational change that would not be possible with a single leader attempting to manage everything. Stage 3: Create a Vision and a Strategy A clearly articulated vision simplifies organizational change for employees. Instead of listing dozens of minute decisions, a vision sets a general direction and motivates employees toward that positive outcome, and the strategy defines how that goal will be accomplished. A simple vision can direct thousands of individuals, and even if initial steps in the change are painful, such as losing colleagues through downsizing or breaking up an established team during reorganization, it provides a picture of a hopeful outcome. A change vision is a guide for what an organization will look like after changes have been made, and for what opportunities there are for the organization after the changes have been implemented. It is a good tool for motivating employees to support the changes (Kotter, 2011). An effective change vision is: easy to understand, easy to communicate, short and tothe-point, is emotionally appealing, and applicable to a wide range of people (Kotter, 2011). If a change vision is created effectively, it should help others to “buy in” to the change. A vision statement is different from a mission statement. A mission statement is based on the present and aims to explain the purpose of the organization, while a vision statement is focused on the future and aims to inspire and lead the organization in the right direction (Arline, 2014). In addition to a vision statement, an organization needs to have a strategy. O’Connor and O’Connor (2015) collected statistics from Harvard Business School Press, Fortune magazine, and Ernest & Young, finding that 90% of strategies fail because of poor execution, 70% of CEO failures are due to this poor execution, and 66% of strategies are not even attempted to be executed. Expert on execution, Larry Bossidy, former Chairman and CEO of Honeywell International, wrote “People think of execution as the tactical side of business, something leaders delegate while they focus on the perceived ‘bigger’ issues. This idea is completely wrong. Execution is not just tactics—it is a discipline and a system. It has to be built into a company’s strategy, its goals, and its culture. And the leader of the organization must be deeply engaged in it” (Altfeld, n.d.). Toward that end, Bossidy (2002) stated that the “‘Leader’s 7 Essential Behaviors’ form the first building block for getting things done: 1—Know your people and your business; 2—Insist on realism; 3—Set clear goals and priorities; 4—Follow through; 5—Reward the doers; 6—Expand people’s capabilities; and 7—Know yourself” (p. 57). Bossidy’s other building blocks for execution were “Creating a framework for cultural change; Having the right people in the right place; The people process: making the link with strategy and operations; The operations process: making the link with strategy and people” (Bossidy, 2002, p. 57). O’Connor and O’Connor (2015) took a look at why so many business strategies fail, and came up with 10 reasons. 1. The strategy is formulated without a team, or the team members are not the right people for the job. 2. The strategy does not motivate employees. 3. There is a separation in responsibility regarding creating the strategy and implementing the strategy. 4. The company is internally focused, not taking into account outside factors. 5. Lack of structure and accountability. 6. Too many strategies are attempted to be implemented so the process becomes unfocused. 7. Strategy results are not measured to check on progress and success. 8. The execution team does not have meetings to discuss the progress of the strategy. 9. The entire company is not updated on the progress of the strategy, which would increase understanding and transparency. 10. The company does not take an objective perspective, or bring in an outsider to manage the creation and execution of the strategy. In order to ensure that a strategy is successful, these 10 common reasons for strategy failure must be considered. Leong (2014) observed that there are three reasons companies may face problems with forming a vision for the future state, that is, too big, too numbers-driven to implement, and too complicated to achieve. Leong (2014) writes that “Vision statements may be lofty and inspirational, but they don’t take the place of the tactical actions workers must take to move toward the future.” Vision statements that are too far-reaching can create a “paralyzing environment” in which leaders continue to pursue ill-defined plans. Vision statements that are too numbers-driven may be understood by employees but not agreed upon. Vision statements that are also too complicated also cause confusion. To avoid these errors, responsible and talented leaders and managers should be clear, engage their teams and work with them to see how work connects to and fits with the vision to ensure successful change efforts and outcomes. Stage 4: Communicate the Vision Simply having a vision is not enough. In order to keep followers motivated, leaders need to constantly communicate that vision, reinforcing the shared, positive outcome. Consistency of message is important in transformative change, as it keeps leaders and employees focused on the desirable end to a disruptive process; so instead of concentrating on potentially upsetting daily changes, leaders from the CEO down to managers should promote the same message of a positive outcome. ASSOCIATED PRESS/Wong Maye-E Piyush Gupta, CEO of DBS, Singapore’s largest bank, made one of his priorities to clarify the bank directed and future vision. Piyush Gupta, CEO of DBS, Singapore’s largest bank, made one of his priorities to clarify the bank directed and future vision. He held off-site meetings for three days to develop with his team a clear strategy, the outcome being a “nine-point strategic road map that the bank has executed during the past four years” (Leong, 2014). He is guiding DBS to be a leading Asian bank by ensuring that its leadership works closely together building franchises in wealth management, SME banking, transaction banking, and treasury and markets. Leaders who can create clear visions and strategies with their teams and companies are more likely to succeed in planned changes than those who do not. After Steve Jobs left Apple and before his death, Tim Cook took his place as CEO in August of 2011. Employees were faced with uncertainty. Would Apple be the same? What changes would be made? How would this affect the products that were created and the day-to-day work of the employees? In order to combat this uncertainty, Cook’s first email as CEO stated “Apple is not going to change” (Kane, 2014). What he actually meant is that the fundamentals of Apple would not change. In the days to come, he would demonstrate through his actions how the culture of Apple would become more relaxed and focused on teamwork. Cook started a charity program as one change, which was well received by employees. He also started communicating with employees more frequently through e-mails, meetings, and even during lunch. Cook decided that he would introduce himself to different employees in order to create more intimate relationships. What also contributed to strengthening Cook’s new role was his early e-mails reassuring employees that they would still have their jobs. He also communicated the change in culture through his actions—frequent e-mails and getting to know individual employees. His clear communication throughout the early change process was a critical aspect of also managing that change. Goman (2013) believes that Pennington’s book, Make Change Work: Staying Nimble, Relevant, and Engaged in a World of Constant Change (2013), correctly outlines five common questions that employees have about change, and that these questions should be addressed. 1. 2. 3. 4. 5. What is changing? How will this change the day-to-day operations for individual employees? Will this change actually bring improvement? How is the success of the change going to be measured? How much support is behind the change, and who is supporting it? Goman (2013) also stresses the importance of nonverbal communication, such as body language. Body language has the power to reinforce or derail verbal communication. Leaders and executives need to align their body language with their verbal communication. For example, leaders speaking about being open to ideas and comments while they are on a stage and behind a podium find that their message is not effective because their verbal and nonverbal communication is not in alignment. However, a leader speaking to a group while they are on the same level, without anything between the speaker and audience, is more effective at communicating the message. Stage 5: Empower Action The first half of Kotter’s eight-stage plan involves motivating employees by keeping them informed and focused on a positive outcome. Empowering employees to act also removes resistance to change by including followers in the process. Instead of this change being imposed from above, followers can engage in and affect the outcome. This empowerment can occur through knowledge, resources, and discretion to support and further change. When FedEx implemented teams, it trained and empowered its employees, who then collaborated to improve internal processes. Although the change was disruptive, it resulted in buy-in. Stage 6: Create Quick Wins Organizational change takes time, so it is important to demonstrate quick results to keep employees motivated to stay on board for the long haul. The most effective short-term wins are highly visible, so that many followers can see the results; unambiguous, so that the change initiative can’t be questioned; and clearly a product of the transformation. Employees want to know that their efforts and the difficulties of the process are worth completing, and short-term wins prove that they should continue and that their current path will lead to a positive outcome. When the U.S. government changes hands between political parties, it employs this strategy. The new ruling party tries to pass a few straightforward bills that its constituents support in order to demonstrate effectiveness and progress. Stage 7: Build on the Change In this stage, leaders build on the support gained through short-term wins in order to produce enough momentum to push for larger efforts. Successful change leaders do not declare victory after small wins, but use them to bolster the energy and confidence that followers can achieve more significant goals. As employees see the results of larger initiatives, they have even more drive to complete the change. In the case of attempting to turn a company around during a recession, the success of a new product may serve as impetus for an entirely new line. The initial success of a relatively small experiment can motivate excitement and drive for the larger project, just as the Rockefeller Foundation uses small successes to leverage larger investment. Stage 8: Make it Stick Transformations are not complete until they become part of an organization’s culture. During this stage, leaders model new values, attitudes, and behaviors so that employees understand the permanent improvement, much like developing norms in team building. Leaders can use this stage to celebrate and promote employees who adopt the new values or beliefs of the organization. These individuals in turn can serve as examples for others and reinforce the revised norms.
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Running Head: CHANGE THEORY

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Change Theory
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CHANGE THEORY

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Change is inevitable to any individual or organization. Every leader is called to be an
agent of change at their distinct levels of influence. However; change is resisted even when it’s
for the benefit of those affected. As a leader, it’s necessary to adopt a reasonable procedure that
creates better chances of a successful outcome of change. This paper outlines three important
steps that any leader should embrace for change.
A leader must create the urgency for change. Organizationa...


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