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Lecture Notes: Leading Change from the Middle Copyrighted material. All rights reserved to Professor Timm L. Kainen. These notes may not be...

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1 – 9A Leading Change from the Middle;

2 – High Potential;

3 – Leading Change – Why transformation efforts fail;

4 – Marie Jackson - Revitalizing;

5 – Why Change programs don’t produce changes;

6 – Alexander Bandelli A & B; (YOU ONLY NEED TO COMMENT ABOUT PART B)

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9ALeading Change from the Middle.pdf

Lecture Notes: Leading Change from the Middle
©Copyrighted material. All rights reserved to Professor Timm L. Kainen. These notes may not be
reproduced or electronically transferred without permission from the author. The previous lecture notes on power indicated that no
manager should be afraid to use power. But, that same manager
must also guard against the temptations of abusing it. This is a
delicate balancing act that has challenged us for centuries. Power is
required to get things done. This applies to both the management
of everyday operational responsibilities, and the management of
change. In the latter case, however, the pressures of time,
resistance and uncertainty often create built-in excuses for abusing
power. They offer temptations for “doing what we have to do, to
get the job done”.
“Change situations are inherently unstable. That instability can tempt us to power, or prompt
us to lead.”
--T. Kainen If we do not have a sound ethical rudder built into our
personal style, we can easily become corrupted by power--especially if we are operating outside our comfort zone. But, if we
get it right, power morphs into LEADERSHIP. That leadership is
then honed by our individual training and experience; and
modified by our own personal temperament and style. “Leadership is an art…acquired over
time…by those with the strength of
character…to master its form.”
-- LTC Skip Davison 1 The difference between the environments of daily operations,
as opposed to the speed and vector shifts of change, can sometimes
highlight the differences between “managers” and “leaders”.
Generally speaking, managers are more oriented toward stability;
while leaders are more comfortable with innovation and change.
Managers are good at diagnosing and influencing systems
and keeping the flow of work running smoothly. They keep
activities on track, maintain system predictability, and balance
revenues against costs to achieve reasonable productivity and
profitability. Managers can be criticized for only being good at:
“keeping the trains running on time,” but they can also be leaders
within those less heady circumstances. This is particularly true if
they are good at keeping an eye on the goals that are driving the
organization.
Leaders, on the other hand, are more oriented toward
providing direction, energizing others, and obtaining commitment
to the cause. They create a vision and influence others to share that
vision. They are concerned with bringing about change and
motivating others to support that change. This is probably why
Warren Bennis claims that: “A central factor in leadership is the ability to
influence and organize meaning.”
-- Warren Bennis However, some leaders are good at doing ONLY this. As
such, they can sometimes be criticized for “NOT keeping the trains
running on time,” or for not paying attention to the details required
for effective implementation. 2 “Managers are people who do things right;
leaders are people who do the right thing”
-- Bennis & Nanus Some leaders seem to behave more like managers. These
“transactional leaders” tend to get things done by engaging in
“transactions” with followers. They are good at spelling out
performance expectations, recognizing followers’ self-interests and
providing the appropriate rewards to get desired behavior. They
represent a more steady, and often, a less flamboyant approach.
The “transformational leader” is the opposite archetype.
These leaders are good at getting people to perform beyond
expectations. They tend to shoot for that proverbial 110%. (We
spoke of these types in the previous lecture on motivation and
performance). They work to broaden and elevate the goals of the
followers; to raise awareness and commitment; and get followers
to transcend self-interest. Many of these leaders operate from a
“referent” power base that is so strong that it has turned into
“charismatic leadership.”
The paradigm that seems to best identify the elements of
leadership effectiveness for me is the “the path-goal leadership
model. Here the emphasis is on the ability to manage the
relationship between effort, performance and rewards. Leaders are
seen as motivators who provide incentives. Path-goal leadership
theory is closely related to “expectancy theory” of motivation in
that leaders are seen as controlling and providing the means by
which followers achieve outcomes. It requires the use of multiple
tools:
• Encourage the desire for controllable outcomes
• Ensure rewards
• Direct subordinates
• Clarify expectations
3 • Provide resources
• Develop motivational forces
Leadership requires that we first be aware of our personal
style, temperament and “traits”--- energy level, analytical ability,
task knowledge, self-confidence, etc. Second, we need to be aware
of our decision-making style. Is it autocratic, laissez-faire,
participative or delegative? Does it “fit” the situation at hand?”
Third, we need to know how we tend to “behave?” Is our
preference more toward relationship building or task
accomplishment? Fourth, we need to be aware of followers’
capabilities? Can they do what needs to be done? Do we need to
“select” or “train” to get capability required? Fifth, we need to
know how well we adjust our behavior to the situation and
circumstances. Do we know where the organization is on the “S”
curve? Do we distinguish between mechanistic and organic
structures? Do we adjust for timeframes and budgets? Do we know
the technologies, markets and strategic goals? Do we have the
requisite substantive knowledge? A Personal Emphasis:
We spoke of leadership as flowing out of power. I find that it
is useful to think of leadership as the controlled and ethical use of
power. We can say that we have a certain style, but when you are
exercising leadership under pressure your personal style and
character may be tested in ways that you did not anticipate. “You can understand a man by observing his behavior,
but if you really want to know him, give him power.”
--Abraham Lincoln 4 You either can, or cannot, do it. You either take or fake the
responsibility. There is nowhere to hide when you are interacting
with the realities of a given situation. How you analyze it, make
decisions about it, and develop and implement a plan of action will
tell the story. And, don’t think for a minute that those being led are
not taking notes. They are directly connected to the situation and
they have both knowledge and expectations about it. They will
make a definite decision (often unspoken) about following you.
They will either trust and respect you or they will not. “Leadership is taking care of your people.
If you don’t understand that, forget the rest.”
-- Master Sergeant T. J. McClung
U.S. Marine Corps Drill Instructor Connecting Leadership to Change:
As you think about leading change, a simple, but useful,
model for thinking about that process is to ask about speed: Do I
need to go fast or slow? Generally speaking, the outside
circumstances will dictate the answer to this question.
The primary distinction between these two types of change is
the elements within them. The following comparison is useful in
understanding the difference in application.
Component Fast Slow Pre-planning
Participation
Approach to
resistance high
low
blow it
away low
high
win it
over 5 Generally, if changes in the market, competition or
technology are significant enough for the company to “do
something”, then it is likely that a fast paced change (problemsolving change) is needed. Or, there may be no immediate crises,
but the company may have failed to anticipate normal cycles and
now finds itself on the downside of the “S” curve. Further delay
would aggravate the missed opportunity, or accelerate the existing
lag.
On the other hand, slow paced change (developmental
change) is more appropriate when an organization and its
management are doing a good job at anticipating change. They
may be on the flat part of the “S” curve, but are beginning to see
new possibilities, or required adjustments, on the horizon. As such,
there is time available for them to begin implementing the required
changes at a slow pace where planning and participation can take
place as the change develops. The additional time also allows for
opportunities to win over resistance with logical arguments.
Conversely, this additional time also allows for the resistors to
have serious input that may be beneficial in making adjustments to
the change—a luxury not often afforded to them in fast-paced time
frames. On the other hand, this additional time can also provide
resistors enough time to sabotage the change effort.
Two final points: First, as a general rule it is better to keep
the components as a package under each category. For example, it
is usually counter-productive to reach the conclusion that a fast
paced change is needed, then do a lot of pre-planning with only the
inner circle (low participation) and then spend a lot of time trying
to “win over” the resistance. This last activity is what allows
resistance and sabotage to develop. Avoiding this trap probably
explains why Charlotte Beers was successful at using a fast paced
change. 6 However, remember that the reverse case is also true. If time
and circumstance are influencing you toward a slow paced change,
you must be prepared to tolerate the ambiguities of “planning as
you go”, the inevitable conflicts arising from multi-party
participation and the patience to win over resistors. This could,
indeed, be part of the explanation for Alexander Bandelli’s failure.
It is often difficult to separate the type of change needed (fast
vs. slow) from the style preferences of the manager doing the
change. The selection of speed should flow from an honest
analysis of the problem. However, sometimes a manager has only
one way of doing things and bends every analysis to that
preference. In such cases, the only tool s/he has is a hammer, so
every problem becomes a nail. At this point you may want to
review some of our earliest lectures & discussions on personal
style and decision-making to close the loop on these change
concepts.
©Copyrighted material. All rights reserved to Professor Timm L. Kainen. These notes may not be
reproduced or electronically transferred without permission from the author. 7

Alexander Bandelli A & B.pdf

For the exclusive use of H. Nguyen, 2016.
Harvard Business School 9-899-146
Rev. June 26, 2000 Alexander Bandelli (A)
Alexander brings a whole new vision to our business.
—John Orrico, President, Transaction Services: Eastern Region
Alexander Bandelli, who had only been the District Manager of Ronsini & Fitch (R&F) in
Boston for a scant two months, leaned back on his chair in a private room at the Harvard Club, looked
at the case writers, and said “That’s what I have been doing for the past sixty days.” Since February
11, 1998, when R&F announced to the world that Bandelli was in charge of the Boston office
(including two smaller offices in Newton, Massachusetts, and Portland, Maine), Bandelli, had been
talking to staff and collecting as much information as possible. He had a two year contract to change
the nature of business from a sales-based individualized process to a collaborative team service-based
management environment. This would involve changing the mind set of the real estate brokers from
product orientation to a customer focus.
Senior management at R&F in Chicago saw the introduction of new blood to the Boston office
as an experiment. Bandelli had been drafted to turn the culture on its head and bring not only the
st
Boston office, but help bring R&F into the 21 century. A distinct culture had grown up around the
older established real estate brokers. Boston had a reputation of being a club with a set of brokers
who had been doing business one way for many years.
Bandelli continued: “I attended R&F’s national meeting a couple of weeks ago. This gave me
time to examine the list of priorities I made based on issues I’ve seen at the office and compare these
issues with challenges facing the company nationally. I know I have to build a team.” With the clock
ticking, Bandelli had less than two years to turn the office around. The remaining question for
Bandelli was how and where to start. Alexander Bandelli
Prior to joining R&F, Bandelli served as principal of the consulting firm, the Parthenon
Group, providing strategy development and senior advisory services to Fortune 1000 companies. He
previously spent four years with CB Commercial Real Estate Services, Inc., negotiating more than $80
million in lease and sales transactions for commercial retail properties. A native Bostonian, Bandelli
graduated from Harvard University with a bachelor’s degree in economics and an MBA from the
Harvard Business School. Bandelli epitomized the Boston mentality with his thick accent, excitable
personality, and absolute passion for his mandate. Research Associate Catherine Conneely prepared this case under the supervision of Thomas DeLong as the basis for class
discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
Copyright © 1999 by the President and Fellows of Harvard College. To order copies or request permission to
reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to
http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system,
used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of Harvard Business School.
1
This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
899-146 Alexander Bandelli (A) The Real Estate Industry1
The real estate industry underwent a difficult period in the early 1990s due to challenging
market conditions. All markets suffered, but the industrial and office property markets which were
the focus of R&F, were hit particularly hard. The Boston market was comparatively small, even
“parochial,” and the office relied on the industrial and office practices. Going into the mid- and late
1990s, its profitability seemed to lag behind the rest of the group, although the Boston market had
recovered to become the strongest real estate market in history. The Boston Ronsini & Fitch office
benefited from this and showed substantial revenues, but was barely profitable and lagged behind
the top four to five companies in the market as it was not perceived as a quality service provider.
The Boston office serviced the Metropolitan Boston area of over 1,500 square miles. (See
Exhibit 1.) By the late 1990s, the economy was growing steadily, with unemployment dropping to
3.7% in early 1998 in Massachusetts. Population had also increased slightly to 3.84 million residents
in the metropolitan area. The retail market (e.g., shopping malls) showed signs of recovery as retail
sales increased by 8% in 1996 due to a rise in tourism and continued economic recovery. The key
industries in the area included high technology, financial services, health care, education, and
biotechnology.
Of the 10 major markets, which contain 1.6 billion square feet of the U.S. office industry,
th
Boston accounts for 6.8%, with 108 million square feet and is 6 in size. Boston real estate firms had
access to an even smaller inventory and the massive migration of firms to other states and the vast
downsizing of a Massachusetts mainstay, the defense industry, was difficult to overcome. There was
a slow improvement, however, as the vacancy rate in the Boston market decreased from 17.1% in
1996 to 13% in 1997. Typical lease rates for good-quality industrial and warehouse space ranged from
$3.85 to $5.75 per square foot.
The office property market (3.5 billion square feet nationwide) had also been through some
tough times. The market had been saturated in the 1980s as speculators overbuilt office complexes
which could not hold their inflated prices in the recession of the early 1990s, selling for as little as one
third of their value. Despite dire predictions that the bottom would fall out of the office property
market as clerical workers were being replaced by office automation, it was discovered that
information technology staff had more than replaced those displaced by innovation. The office
market in Boston totaled 108 million-plus square feet with an overall market vacancy of 9.6% in 1996.
Average rents were between $26.50 per square foot downtown, $22 in Cambridge, and $24 on Route
128, and had been increasing steadily to reach $40-50 per square foot downtown, $35 in Cambridge,
and $30-35 on Route 128 by 1998 with vacancy down to 4.9%. Ronsini & Fitch2
Most Ronsini & Fitch (R&F) offices had recovered from the depressed market of the early
1990s. By 1998, R&F was one of the nation’s largest publicly traded commercial real estate services
firms with offices (including affiliate offices) in 85 markets and approximately 4,000 professionals and
staff, providing transaction, management, financial, and strategic services to clients. R&F serviced
clients internationally through the European headquarters in London. 1 Information in this section is taken from: Society of Industrial and Office Realtors, Comparartive Statistics of Industrial and Office Real Estate Markets (Washington, D.C.: Society of Industrial and Office Realtors, 1997), pp. 116; Urban Land Institute, Market Profiles 1997: North America (Washington, D.C.: Urban Land Institute, 1997),
pp. 25-32.
2 Information in this section is taken from the Ronsini & Fitch web site.
2
This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Alexander Bandelli (A) 899-146 R&F was founded as a residential brokerage company in Northern California in 1958.
Commercial and insurance brokerages soon followed as well as property and asset management, and
real estate development services. R&F went public (traded on both the New York Stock Exchange
(symbol: GBE) and the Pacific Stock Exchange) upon the completion of a 1981 merger with GMR
Properties of Jacksonville, Florida and began a pattern of growth with the acquisition of wellestablished real estate firms throughout the country. R&F had been in bad shape after the real estate
crash of the late 1980s, going through five CEOs in six years. The company was near bankruptcy and
was forced to restructure in the early 1990s by closing unprofitable offices, divesting non-strategic
businesses, and refocusing efforts on core businesses. There was a clear turnaround with the
elevation of Neil Young to CEO in 1996, who started by cleaning up the R&F balance sheet. Young
had a vision of R&F as a service company rather than merely a transactional company. R&F sold the
residential operation in 1994.
A wholly-owned property and facilities management subsidiary (Axiom Real Estate
Management, Inc., acquired by R&F in January 1996) was renamed Ronsini & Fitch Management
Services, Inc., in September 1997. The company also instituted a national affiliate program to help it
expand in markets where it did not have a formal presence. During 1997, the company relocated
from San Francisco to Northbrook, Illinois, a suburb of Chicago. In fiscal year 1997, R&F and
affiliates were involved in more than 16,000 transactions worldwide, valued at approximately $16.1
billion. Through its Management Services subsidiary and affiliates, R&F managed a total portfolio in
1998 of over 110 million square feet valued at over $12 billion (See Exhibit 2 for financial
information.) The Future of Real Estate
The real estate industry was undergoing a major transformation towards the end of the 1990s.
The industry was consolidating and continued securitization of the real estate business was pushing
real estate companies to offer one stop shopping for all service, extend coverage nationwide, and
implement a more sophisticated value added service requirement. R&F management foresaw that
the current trends would continue to evolve the industry as clients expected, and demanded, better
service from their brokers.
As well as focusing on improving the service side of the industry, there was also a movement
toward national accounts, “to better manage client requirements for more services in more markets
through a single point of accountability.” According to Bandelli, the industry was “moving towards
managed brokerage systems; meaning that management must allocate the resources of an integrated
systems of services and geographic locations in contrast to the traditional model where broker found
business and executed it.” Bandelli recognized that real estate was sales and service and the same
people had to do both. Bandelli was confident that the salesperson could focus more on service. R&F in Boston
When Bandelli joined the Boston office in early 1998, it was made up of twenty-eight sales
professionals, spread out between three offices. The company came to Boston in 1986 with the
purchase of the prestigious local real estate firm of Leggatt, McCall, and Warner. R&F had hoped to
buy into Leggatt’s great reputation and top position locally, but when the original partners left in
1989 upon the expiration of their contracts (followed by a second wave of people leaving), R&F found
that those who had made Leggatt’s reputation were no longer with the firm.
Despite the difficulties in measuring market share of real estate companies, management
knew that R&F was not one of the top five firms in Boston. R&F was clearly seen as a second tier firm
by peers and customers. While the Boston office had revenues of $9 million in 1997 (from fees and
commissions on sales and leasing), the top firms’ revenues were between $12-15 million.
3
This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
899-146 Alexander Bandelli (A) The financial performance of the office with regard to revenues was good, but profits were
poor. Earnings before interest, tax, and depreciation represented only 5% of revenues—some
$400,000 on $9 million—in sharp contrast to an industry average 15% to 20%. In addition, Bandelli
found that only three or four of the brokers at the firm were responsible for 50% of revenues
representing $1 million in revenues per person per year—the standard for “stars” in the industry.
The top three brokers in the Boston office made $1.9 million, $1.5 million, and $1.2 million
respectively in 1997 (for a total of $4.6 million) earning between them over 50% of the office’s total
revenues ($8.7 million). The First Sixty Days
Looking back on his first sixty days, Bandelli acknowledged that the circumstances in the
Boston office “more or less met my expectations. The people who hired me were honest about the
situation and I was not surprised with what I encountered there.” Bandelli continued: “For the first
30 days, I talked to people and listened. For the second month, I talked to people more and got
involved with issues.” The three major problems Bandelli saw with the office concerned finance,
culture, and brand equity.
The financials were dismal, and the office ran on a very thin gross margin. Expenses at the
office were over budget. For example, the office “seat” cost per broker was over $90,000 in contrast to
the R&F average of $60-70,000 (the Boston market average was approximately $75,000). Revenue was
divided between brokers (taking 50% for fees with sliding scale up to 68% on highest dollar earnings)
and the office for overhead and profit. In fiscal 1997, participation, which is the pay-out to the
brokers in the form of advances against earnings, at the firm was at 65%, but should have been only
55%. The reasons for such high levels of participation were because half the brokers (14 out of 28) did
not earn enough to cover their advances and some earners were in very high brackets.
Brokers were paid on a “draw” system which gave brokers advances against their earnings
over the year (the amount of the advance was established by a “bogey number” of three components
– salary, benefits, and reimbursed expenses.) Fourteen brokers of the Boston staff were not making
budget, in fact, they were not even hitting their compensation numbers. In any real estate office, it
was to be expected that some of the newer, less well-established staff would not bring in the same
revenue stream as experienced brokers. The office could tolerate some investment in young brokers
but Bandelli also found that the office was supporting a start-up retail group of four highly-paid
brokers who were not from the area and had difficulty bringing in revenue to support their division.
In addition there were several older brokers who were having bad years, and several inadequate new
hires.
The office did not have a great reputation in the local market. Bandelli spoke to numerous
clients and people in industry who gave him a similar response: the R&F Boston office was not
providing the level of service necessary to compete in the market. The perception from their peers
was that the office did not have a lot of talent and was seen as having a weak team.
Bandelli felt the poor reputation stemmed from the office culture or lack thereof. Most
brokers were reluctant to share information with each other. The traditional decision point in a real
estate transaction for the broker was “should I split my commission with another broker to help me
win and service this client?” But now the emphasis was on service and Bandelli was challenged to
replace the traditional decision point with one which examined: “how can we best create a
relationship with the client?” The compensation structure, rewarding brokers for quantity, also made
it difficult for people to think of service. Leggatt has successfully had a salary and bonus structure
which facilitated team work and client service. Although Bandelli felt the compensation structure
must eventually be adjusted, he did not see it as the best or only way to guide the organization and
manage the business. He felt management could become the decision maker and it would be possible
to create a team service environment within the current compensation structure.
4
This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Alexander Bandelli (A) 899-146 The Three Cs
Bandelli saw the problems in terms of the “Three Cs”: lack of communication; lack of
cooperation; lack of collaboration. According to Bandelli, “team members drop the ball on
opportunities. We have weak people making decisions.” Brokers in the Boston office knew the
weaker members of the team. The stars were, therefore, reluctant to share opportunities with the less
capable members of the team. Bandelli found he had a few “problem children” in the office as well.
“About 30% of the people think what I’m doing is great and get on board right away, about 40% are
on the fence, and the final 30% will never get on board. The issue was how to make that happen.
Bandelli said: “For me, this is a unique opportunity to do something that will really stretch
me as a manager. I can see that the office is not performing and I want to make this the best firm in
Boston. I have the security of a two year contract so I can make the difficult decisions.” Ready, Aim…
“General management jobs, in general, are much different than consulting,” Bandelli
continued. “There isn’t enough time to do everything. It’s easy [in consulting] to figure out priorities
and figure out what you have to do. The difficulty is to know when to act on the right issues. You
have to trust yourself and trust the decisions you are making and … pull the trigger. The way to
succeed is by doing things and taking action.” He continued: “I have already drawn up a rough list
of priorities and I had time to go over the list at the national R&F conference.” Bandelli’s list of
priorities covered team building, team retention, office administration, financial analysis, service
delivery, creating processes, and attracting new clients.
First on Bandelli’s list of priorities was team building. Bandelli was concerned at the lack of
specialization in some areas of real estate practice at the Boston office. He discovered it would be
necessary to hire downtown team as “downtown leasing is the heart and soul of the Boston real estate
business,” and R&F had practically no presence in downtown Boston. The property management
side was also lacking—property owners did not typically think of R&F when looking for a company
to manage their property. Both the investment division and retail division also needed leaders. In
particular, getting the newly developed retail group on its feet was not only time consuming but also
a revenue drain. Bandelli also planned to hire a suburban team and consolidate the suburban office
in Newton with the downtown Boston office. (Expanding the downtown office in itself would be
another headache: the current space was too small for the consolidated staff to work out of. Bandelli
would have to tread very carefully.
In conjunction with creating a suburban team, Bandelli planned to create suburban territories
defining markets and responsibilities, as there was an obvious lack in R&F’s coverage of the areas the
office purported to cover. “Brokers would be assigned to a territory becoming specialists in that area
rather than overall generalists. This would show up the gaps in the Boston office coverage and
increase broker accountability.”
According to Bandelli, “Recruiting is a full time sales job, people in real estate careers hit
peaks and valleys.” Based on the real estate broker’s career cycle, Bandelli saw himself putting in
place a recruiting database. In order to make room for new people, Bandelli knew he would have to
fire many of the non-performing brokers, as well as some of the stars who were contributing to the
deal-oriented culture of the office. Making this task more difficult was the lack of termination
process. Bandelli realized he would have to create standards for monitoring performance and
establish a paper trail before he could start an office sweep.
Another priority was team retention. Bandelli was adamant about keeping the younger
people who were not yet established brokers. Once R&F had invested in their training, Bandelli
foresaw a problem with retention. Bandelli also planned to introduce performance reviews for
5
This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
899-146 Alexander Bandelli (A) brokers. The difficulty with measuring performance in the deal-based real estate industry was that
brokers gauged performance by how much money they made. Bandelli saw that in his pursuit of a
service-based business, he would have to define new methods of measuring success, for example,
how much repeat business a broker or office got, how many potential client presentations did brokers
give, how many presentations was R&F invited to attend, and perhaps most important, how much of
the business the office and brokers went for were they actually awarded.
Bandelli continued: “The first thing is to define the group vision and values and get buy in
for the objectives. I plan to hold an off-site meeting with brokers to set values. I want a shared set of
values to be the guiding force of the organization versus dollars.” Bandelli also planned to formalize
sales meetings, hosting in-house training topics, outside speakers, and market review – “basically, I
want to put in place a platform and a system for doing business.”
Another headache for Bandelli was the information collection and sharing processes which
would have to be revamped. R&F had no system in the Boston office for tracking exclusive clients,
new and existing client contracts, or new business opportunities. Bandelli visited other offices to gain
insight into R&F’s best practices. He had been to the New York office and was impressed with the
prospect tracking system database there. He was determined to put in place a similar knowledge
management system to share intellectual capital through the Boston team.
R&F had a company-wide product for real estate processes which allowed the company to
offer a consistent approach around the country while giving individual offices the ability to create
templates for local business situations. Bandelli planned to introduce the product as soon as possible.
“Consistency is lacking in the office,” he said, “and this product provides a detailed process and
deliverables, and will help us improve our presentation skills.” Bandelli also wanted to establish an
account management system—he had found that many of the brokers had a lackadaisical attitude to
maintaining and recording their client contacts and relationships.
Another aspect of creating a team vision could be achieved through “rookie” training. New
brokers would be trained in-house and sent to various R&F training seminars. Bandelli was
concerned about “how to teach sales skills.”
Adding to the cultural issues was the office infrastructure. Bandelli came to an office with
high turnover of administrative staff, old computer systems, and lack of defined processes.
“Everything here is a fire drill,” he exclaimed, “we are constantly reinventing the wheel. The
business operations manager only started last year and she is completely swamped. I have to spend
time with her and create a work plan to lay out the goals and objectives of the office for the coming
year.” With administration, Bandelli saw he would have to develop an entire management plan from
job descriptions to performance standards and measurement to training. Even such basics as official
legal forms were unavailable in the office. “There are no set forms or contracts in Boston office, the
brokers have been using their own forms up to now,” Bandelli said. Bandelli wanted to re-design the
marketing and research departments as well. “We have to give the brokers the best available tools to
do their jobs. The research and marketing functions must be world class.”
Financial problems also abounded in the Boston office. Bandelli knew he needed to create a
cost control plan and fix accounting irregularities, with the goal of hitting budget in 1998. He wanted
to establish monthly budget reviews (which meant staff would have to have 30 day plans) and
monthly revenue forecasts, so he could follow up with individua...

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Lecture: Leading Change from the Middle
Power is an important tool to be used in management but managers need to take care to not abuse
it. Sometimes time, resistance, and uncertainty can tempt people to abuse power. It is important
to have a moral or ethical grounding against which to weigh the need for power. Power used
correctly can be leadership but used incorrectly can be detrimental.
I think of all the employees that used to work for Enron. Many of whom I knew personally. I
used to work for a natural gas management company and had daily interactions with Enron as
they operated the northern pipeline which shipped gas from Texas up to where I live in
Minneapolis. I would go to Houston and meet with the people I worked with at Enron a couple
of times a year. I even had some of them up to the boundary waters on a canoe trip one year. It
was very difficult for them when the company collapsed. They lost not only their job but much
of their retirement which was made up of company stock. The Enron leadership abused power
and lacked the ethical foundation to shepherd its use.
The article discusses how managers are focused on the smooth operation of work. Leaders
provide direction and motivate others. Some leaders can be too focused on change and forget that
the business still needs to operate efficiently. Leaders can be transactional or transformational.
Path-goal leaders utilize encouragement, rewards, direction, clarification, resource allocation,
and motivation.
To be a good leader we need to identify our personal traits, decision-making style, behavior,
follower’s capabilities, and our ability to adjust. I really like the quote from the lecture notes that
“Leadership is taking care of your people. If you don’t understand that, forget the rest.” In some
of the articles we have read I feel there is too strong an emphasis on personal ambition. I prefer
the concept of the team and especially as the leader as guardian of the team. In life I tend to
prefer leaders that have a strong ethical foundation and search for win-win situations instead of
winner take all.
It is interesting to think about the speed of change. Sometimes it makes more sense to take things
slow and methodically and other times it makes more sense to rip the band aid off fast, as it
were. This is sort of intuitive on a subconscious level but I have not really analyzed the idea
before. In business it certainly seems that there is a bias for quick action. Although sometimes a
cautious approach may be more warranted.
Why Change Programs Don’t Produce Change
This article has a different approach to the change process. It suggest that it is not enough to
promote change from the top and even to have a change plan. The article says it is best to define
the general direction of change but not to dictate how to get there.
For successful change you need to first mobilize commitment to change through joint diagnosis
of the problems. Then a shared vision needs to be developed to organize for competitiveness.
After that consensus must be then be fostered and followed by allowing the revitalization to spread to all departments. This revitalization can then be institutionalized in structures. Finally, it
can be monitored and adjusted.
I like the concept of change coming from the periphery. The people actually performing tasks
and seeing the interactions between groups have a much closer view of problems at hand. They
often are best able to suggest improvements. The article even suggests they will make their own
ad hoc improvements. In my company we often talk about “looking for the workarounds”. Once
you identify workarounds you have probably identified a place where change needs to happen
and will have the greatest affect.
In some ways what this article is arguing for in part is employee buy in. Employees are most
likely to be onboard with change if the need has come from them. If the need has come from
above then it must be presented to and developed by those on the ground for successful
implementation.
One final point the stuck out to me from the article was that senior managers must make and
effort to adopt the team behavior, attitudes, and skills that they are demanding of others. This is
the hypocrisy pitfall. If they don’t, they will seem disingenuous and the employees will not
support them or their change.
Leading Change: Why Transformation Efforts Fail
Kotter argues for change to be an 8 step process. Establish a sense of urgency. Form a powerful
guiding coalition. Create a vision. Communicate that vision. Empower others to act on the
vision. Create short term wins along the way. Consolidate improvements and produce more
change. Finally, institutionalize the new approaches.
Creating a sense of urgency, I agree, is important. People have so much to do in their jobs these
days and their attention spans toward other efforts can be short at best. In general we do not like
to change. Processes and structures become comfortable and we become complacent. It always
seems there is someone with a new mission or catch phrase or something they want to try. If they
want to be met with more than a yawn they had better sell it and make a persuasive argument for
its need. Employees will be motivated if they are excited about, believe it will benefit them
personally, or at a minimum can see the benefit to the company.
I love that Kotter suggests the powerful guiding coalition is not just upper management with the
right titles but includes powerful people with “expertise, reputations, and relationships”. That is a
great statement. There are often well respected people in an organization that have followers or
admirers that trust their instinct and believe what they say. Getting those people involved on the
team will help its success and the reach of the change will be greater.
Communicating the vision is important. The article suggests you should be able to communicate
it in less than 5 minutes and get a positive reaction or you have more work to do. I think it is
even shorter than that. If you can’t deliver an elevator speech as to why the change is needed that
gets some agreement, my guess is the change may not be needed. True, you cannot communicate all the details in a short period of time but if it takes minutes before you can convince someone,
then it will take days and years of arguing to convince the entire organization.
In my ERP implementation class, it is stressed constantly that a communication plan is critical to
the success of a project. This plan must start from the very beginning of the project and continue
throughout. If you are not able to impart the knowledge necessary to the organization and
inform as well as motivate the employees. Change will not be successful.
Removing obstacles to success and providing short term wins are two additional steps along the
way. In any project or change, obstacles can derail success. They can increase costs, delay time,
and cause the change project to fail in its mission. Short term wins keep the momentum moving
as well. In a long process, people’s motivation can fade. Employees once for the change can
grow tired of it and now be against it. Celebrating milestone wins helps keep interest up.
Declaring victory too soon can be dangerous as well. Without making a political statement, I
think of George Bush landing on that aircraft carrier with the banner behind him claiming
victory. Change is difficult and slow. It does not always happen quickly.
Anchoring changes in the corporate culture is the final step. I think about skills I have developed
whether in athletics, my career, or other aspects of life. To be good, you often need to do
something so many times that it just becomes natural. It becomes a part of your thinking and
your actions on a subconscious level. The change needs to become the norm, natural and
automatic.
Are You a High Potential?
People that are successful have a drive to excel, a catalytic learning capability, and enterprising
spirit, and a good sense of opportunities and obstacles. The article suggests that companies
develop high potential lists, whether formally or informally, to use for advancement. They tend
to put more resources and opportunities toward those individuals.
To make it on this list you must deliver strong results, master new types of expertise, and
recognize that behavior counts. I think it is probably pretty obvious to most of us who in our
careers are high performers. I bet that most of us in graduate school probably fall onto that list
due to the fact we made the effort to get here.
The article suggests that high potential people are hardwired by having the ability to constantly
learn and incorporate that learning. They also have an enterprising spirit and search for new
challenges. They have dynamic sensors. I would could this the ability to think and adapt on the
fly. Speed is important in our fast paced world and the people that can act instinctually and still
make the right decisions certainly have an advantage. Of most of the good managers I have met,
I would say this is a consistent trait. It comes naturally to them in my experience but I believe it
can be developed to be even more effective. Navigating the business and economic environment
may be partially a science but it is also an art.

High Potential.pdf

For the exclusive use of H. Nguyen, 2016. www.hbr.org Leaders at your company are
constantly wondering that
about you, whether they own
up to it or not. Here’s how to
get them to answer yes. Are You a High
Potential?
by Douglas A. Ready, Jay A. Conger,
and Linda A. Hill Included with this full-text Harvard Business Review article:
1 Article Summary
Idea in Brief—the core idea
2 Are You a High Potential? Reprint R1006E This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016. Are You a High Potential? Idea in Brief
Nearly all companies identify their highpotential managers. Processes for developing lists of high potentials vary, but the
rising stars who make the grade are remarkably similar in their core characteristics and
behaviors. In a sense, they share a basic
anatomy.
The constitution of a high potential includes four intangible factors: a drive to
excel, a catalytic learning capability, an
enterprising spirit, and dynamic sensors
that detect opportunities and obstacles.
The best exemplars of the high-potential
profile exhibit all four in spades. COPYRIGHT © 2010 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. Getting onto a high-potential list is extremely desirable, but it can demand great
sacrifice. And the consequences of falling
off the rolls after having been given the
honor can be substantial and permanent. page 1 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016. Leaders at your company are constantly wondering that about you,
whether they own up to it or not. Here’s how to get them to answer yes. Are You a High
Potential?
by Douglas A. Ready, Jay A. Conger,
and Linda A. Hill COPYRIGHT © 2010 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. Some employees are more talented than others. That’s a fact of organizational life that few
executives and HR managers would dispute.
The more debatable point is how to treat the
people who appear to have the highest potential. Opponents of special treatment argue
that all employees are talented in some way
and, therefore, all should receive equal opportunities for growth. Devoting a disproportionate amount of energy and resources to a select
few, their thinking goes, might cause you to
overlook the potential contributions of the
many. But the disagreement doesn’t stop
there. Some executives say that a company’s
list of high potentials—and the process for creating it—should be a closely guarded secret.
After all, why dampen motivation among the
roughly 95% of employees who aren’t on the
list?
For the past 15 to 20 years, we’ve been studying programs for high-potential leaders. Most
recently we surveyed 45 companies worldwide
about how they identify and develop these
people. We then interviewed HR executives at harvard business review • june 2010 a dozen of those companies to gain insights
about the experiences they provide for high
potentials and about the criteria for getting
and staying on the list. Then, guided by input
from HR leaders, we met with and interviewed
managers they’d designated as rising stars.
Our research makes clear that high-potential
talent lists exist, whether or not companies acknowledge them and whether the process for
developing them is formal or informal. Of the
companies we studied, 98% reported that they
purposefully identify high potentials. Especially when resources are constrained, companies do place disproportionate attention on developing the people they think will lead their
organizations into the future.
So you might be asking yourself, “How do I
get—and stay—on my company’s high-potential
list?” This article can help you begin to answer
that question. Think of it as a letter to the millions of smart, competent, hardworking, trustworthy employees who are progressing
through their careers with some degree of satisfaction but are still wondering how to get page 2 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Are You a High Potential? where they really want to go. We’ll look at the
specific qualities of managers whose firms
identified them as having made the grade. The Anatomy of a High Potential Douglas A. Ready ([email protected])
is a visiting professor of organizational
behavior at London Business School
and the founder and president of
ICEDR, a global talent-management
research center in Lexington, Massachusetts. Jay A. Conger is the Henry
R. Kravis Research Professor in Leadership Studies at Claremont McKenna
College and a visiting professor of
organizational behavior at London
Business School. Linda A. Hill is the
Wallace Brett Donham Professor of
Business Administration at Harvard
Business School. harvard business review • june 2010 Let’s begin with our definition of a high-potential
employee. Your company may have a different
definition or might not even officially distinguish high potentials from other employees.
However, our research has shown that companies tend to think of the top 3% to 5% of their
talent in these terms:
“High potentials consistently and significantly outperform their peer groups in a variety of settings and circumstances. While
achieving these superior levels of performance,
they exhibit behaviors that reflect their companies’ culture and values in an exemplary manner. Moreover, they show a strong capacity to
grow and succeed throughout their careers
within an organization—more quickly and effectively than their peer groups do.”
That's the basic anatomy of a high potential.
Gaining membership in this elite group starts
with three essential elements.
Deliver strong results—credibly. Making
your numbers is important, but it isn’t enough.
You’ll never get on a high-potential list if you
don’t perform with distinction or if your results
come at the expense of someone else. Competence is the baseline quality for high performance. But you also need to prove your credibility. That means building trust and confidence
among your colleagues and, thereby, influencing
a wide array of stakeholders.
Look at Jackie Goodwin, a bank executive
cited by her HR department as a high potential. Jackie started out in the insurance division
but wanted to switch to banking, which she
perceived as a career path with more room for
growth. Her general management skills were
highly regarded, and she had a proven track
record in financial services within insurance.
The banking side’s desire for new blood and a
lack of succession planning in the region positioned her well as an outsider. Indeed, her
record was as strong—if not stronger—than
that of the insiders.
When Jackie was offered a stretch assignment in the banking division—a promotion to
vice president and regional operating officer in
Germany, the bank’s second largest European
operation—she accepted it, even though the
odds were against her. Nobody there had heard of her, and she knew little about banking. What’s more, she’d been forced on the regional president, who wanted someone with
experience. Her biggest challenge was to gain
credibility. The German staff was accustomed
to running its own show, so Jackie figured she’d
fail if she couldn’t get the team on her side.
Jackie resolved to make helping her new colleagues a priority. In her first three weeks, she
met with dozens of managers and openly acknowledged that she faced a steep learning
curve. She also focused on achieving small
wins on issues that had long been thorns in
their sides. For example, she went out of her
way to streamline the process for opening new
accounts. As for her skeptical boss, she aimed
to take as much off his plate as possible. She
would ask, “What time-consuming tasks would
you like to see addressed within 90 days?”
Then she’d get right to work. For instance, he
disliked confrontation, so Jackie tackled issues
with potential for conflict, such as redesigning
planning processes and resolving decision
rights. She gained a reputation as a problem
solver, and her influence grew steadily. Today,
Jackie is the head of all commercial lending for
the bank and is still considered a rising star.
Master new types of expertise. Early in
your career, getting noticed is all about mastering the technical expertise that the job requires. As you progress, you need to broaden
that expertise. You start by managing an employee or a small group, and then move on to
larger teams and positions (for instance, at corporate headquarters) that require you to exercise influence despite having limited formal
authority. For example, in senior roles technical excellence might fade in value relative to
strategic-thinking and motivational skills. At a
certain point, you will face the challenge of letting go as much as the challenge of adding on.
Don’t aspire, for example, to be the best engineer and the best design team leader at the
same time.
For some, such lessons are learned the hard
way. One exceptionally talented software engineer, whom we’ll call Luke, had won many accolades during a relatively short career. Confident in his potential, Luke’s managers put him
in charge of a team that was creating a product
extension expected to attract a whole new category of users. Luke was well liked and happily
took on the challenge, but he failed to recognize that technical skill alone wouldn’t suffice. page 3 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Are You a High Potential? Half of survey
respondents said their
top teams spend less
than 10% of their time
developing highpotential leaders. After several missed deadlines, company executives created a face-saving, senior-level “expert” post for him. Meanwhile, they put another technically skilled employee, who also
had project-management expertise, in charge.
Luke, no longer a high potential, went on to
have a fairly distinguished career as a technical
expert, but not in an enterprise leadership role.
Recognize that behavior counts. Although
your performance gets you noticed and promoted early in your career, your behavior is
what keeps you on the radar as a high potential. Outstanding skills never really diminish in
importance, but they become a given as you
are expected to excel in roles with broader
reach. Prospective candidates for that coveted
high-potential label must demonstrate a behavioral shift from “fit and affiliation” to “role
model and teacher.”
The rise of general manager Phil Nolan to
the executive ranks of his company, a market
leader in laundry products, was due in large
part to his role-model qualities. Phil was placed
in charge of the firm’s troubled core product, a
liquid detergent whose sales were in a multiyear downward slide. Two high-visibility marketing managers had each been given a chance
to reinvigorate product sales. Both had tried
price-reduction tactics, to no avail. Then it was
Phil’s turn. But, with a background in product
development rather than marketing, he was
the dark horse candidate.
Fortunately, corporate executives saw more
in Phil, who had engineered a turnaround at a
troubled product-development group by fos- tering cooperative relationships and teamwork. Highly trustworthy, he could engage
people in very candid conversations about
business challenges. As a result, he was able to
get to the core of a problem quickly and find
viable solutions. Phil not only was superb at
motivating people, but also had a keen eye for
patterns and an impressive strategic vision. He
applied all those skills to the new assignment.
Within the first year in his new role, Phil led
his team to grow product sales by 30%. In our
interview with the company’s HR executive, she
emphasized Phil’s ability to win people over:
“There is humility to him despite the fact that
he is now the public face of the brand. Phil
helps his peers succeed rather than threatening
them. He is a role model for the organization.” How High Potentials Are Hardwired
You’re doing everything right. You’re delivering value and early results. You’re mastering
new areas of expertise as you face increasingly
complex challenges. You embrace your organization’s culture and values. You exude confidence and have earned the respect of others.
Maybe you’re regularly putting in a 50-hour
week and getting excellent reviews. Nevertheless, high-potential status remains elusive.
This can be infuriating because the real differentiators—what we call the “X factors”—
are somewhat intangible and usually don’t
show up on lists of leadership competencies
or on performance review forms. Here are
those factors, which can tip the scales and
help you achieve and maintain that coveted Should You Tell Her She’s a High Potential?
Whether or not a company should make its list of
high potentials transparent is an evergreen question. In our surveys of 45 company policies and in
our work with firms during the past 15 to 20
years, we have found a growing trend toward
transparency. The percentage of companies that
inform high potentials of their status has risen
from 70% about a decade ago to 85% today. Employers, we believe, are coming to see talent as a
strategic resource that, like other types of capital,
can move around. Executives are tired of exit interviews in which promising employees say, “If I
had known you had plans for me and were serious about following through, I would have
stayed.” harvard business review • june 2010 Nevertheless, making your list of high potentials transparent increases the pressure to do
something with the people who are on it. If you
tell someone you view her as a future leader, you
need to back that up with tangible progress in her
professional development. Otherwise, she may
feel manipulated and even lose motivation. In one
case, we witnessed a near riot at a company offsite, where a group of high potentials said they felt
“played”—that their status was just a retention
tactic, with no real plans to promote them. Either
approach has risks: If you don’t make the list public, you might lose your best performers; if you opt
for transparency, you’ll heighten the expectation of
action. page 4 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Are You a High Potential? 93% of survey
respondents said that
high potentials get
promoted faster than
other employees do.
Self-fulfilling prophecy
or great selection? Anatomy of a
High Potential
High potentials always deliver
strong results, master new types
of expertise, and recognize that
behavior counts. But it’s their intangible X factors that truly distinguish
them from the pack. The Four X Factors of High
Potentials
1. Drive to excel
2. Catalytic learning capability
3. Enterprising spirit
4. Dynamic sensors harvard business review • june 2010 high-potential rating.
X Factor #1: A drive to excel. High potentials
aren’t just high achievers. They are driven to
succeed. Good, even very good, isn’t good
enough. Not by any stretch. They are more
than willing to go that extra mile and realize
they may have to make sacrifices in their personal lives in order to advance. That doesn’t
mean they aren’t true to their values, but
sheer ambition may lead them to make some
pretty hard choices.
X Factor #2: A catalytic learning capability.
We often think of high potentials as relentless
learners, but a lot of people out there learn
continually yet lack an action or results orientation. The high potentials we have come
across possess what we call a “catalytic learning capability.” They have the capacity to scan
for new ideas, the cognitive capability to absorb them, and the common sense to translate
that new learning into productive action for
their customers and their organizations.
X Factor #3: An enterprising spirit. High potentials are always searching for productive
ways to blaze new paths. They are explorers
and, as such, take on the challenges of leaving
their career comfort zones periodically in
order to advance. It might mean a risky
move—a tricky international assignment, for
instance, or a cross-unit shift that demands an
entirely new set of skills. Given high potentials’ drive to succeed, you might think they’d
be reluctant to take such a chance. But most
seem to find that the advantages—the excitement and opportunity—outweigh the risks.
X Factor #4: Dynamic sensors. Being driven
to excel and having an enterprising spirit, combined with the urge to find new approaches,
could actually become a recipe for career disaster. High potentials can get derailed for a
number of reasons. They may, for instance, be
tempted to impulsively accept what seems like
a hot opportunity, only to find that it’s a break
(not a stretch) assignment or that there’s no
long-term career payoff. Another possibility of
derailment comes from a desire to please.
High potentials may avoid open disagreement
with the boss or resist giving honest, potentially disappointing feedback to a peer. Successful high potentials have well-tuned radar
that puts a higher premium on quality results.
Beyond judgment, high potentials possess
what we call “dynamic sensors,” which enable
them to skirt these risks, even if just barely. They have a feel for timing, an ability to
quickly read situations, and a nose for opportunity. Their enterprising spirit might otherwise
lead them to make foolish decisions, but these
sensors help them decide, for example, when
to pursue something and when to pull back.
High potentials have a knack for being in the
right place at the right time. Anatomy of an X Factor Exemplar
One of the many high potentials we met was
Vineet Kapoor, described as a rising star by his
bosses at Swiss medical device company Synthes. This more than $3 billion business manufactures and markets implants and biomaterials used in surgery and regeneration of the
skeleton and soft tissues.
In school, long before ending up at Synthes,
Vineet intended to pursue science and had a
passion for improving the lives of people in
emerging economies such as India. That basic
vision remained with him, but his career took
an unexpected path. After college, to the surprise of his peers, he chose accounting in order
to gain financial expertise that would serve
him well in any business career. He accepted a
position with Indian professional services firm
A.F. Ferguson, which had a leading portfolio of
audit clients (it was eventually acquired by Deloitte in 2004). He then moved to Arthur
Andersen (which merged with Ernst & Young)
and eventually to KPMG in Gurgaon, India,
where his then-boss was charged with leading
the India practice. This move initially meant a
pay cut for Vineet, but also another chance to
learn about building a business.
Vineet recounted other intriguing opportunities that had opened up during his consulting career, when the Sarbanes–Oxley Act became law in the U.S. in 2002. Clients were
banging down his door. Although compliance
work promised handsome compensation, it
didn’t match his priorities of learning and effecting large-scale positive change in emerging
economies. So Vineet moved to Synthes,
where his X factors were evident in spades.
A drive to excel. A drive to succeed can,
well, drive some people to the brink. The key
is to channel the instinct. So, for instance,
Vineet decided he should always think like
people one level above him. That meant asking many questions—sometimes to the consternation of his peers and bosses—but he balanced his incessant questioning with an page 5 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Are You a High Potential? You’re doing everything
right. You’re delivering
value and early results.
But high-potential
status remains elusive.
Developing your X
factors puts it in reach. harvard business review • june 2010 insatiable desire to deliver. Nobody could
doubt his commitment to the work and the
company, and Vineet’s ambition was not a
matter of personal triumph. In fact, as country
manager for India he created a 150-page book
celebrating the contributions of his colleagues
and highlighting their common values. It became something of a textbook for the Indian
operation at Synthes, and employees found it
illuminating. Indeed, it generated so much
buzz that some employees who had left the
company actually returned because the organization had been energized by it.
Vineet was not driven primarily by a wish to
get ahead. His original aspiration was what fueled him. To that end he wrote an 85-page
business plan that included a vision for bringing world-class education to all Indian surgeons, including those in remote areas. Synthes’s CEO has said that the plan changed how
the company looked at India.
A catalytic learning capability. When Vineet
traveled to the United States for a Synthes
strategy meeting, he stayed on longer to be a
“fly on the wall” with the U.S. salespeople.
During his stay, Vineet went with them on
dozens of sales calls. Having gotten the CEO’s
attention with his growth strategy, Vineet
thought the company would be able to execute it only with the help of more and different employees. He took what he’d learned
from the U.S. sales staff to create a new salesperson competency profile for India—one
that highlighted entrepreneurship, an attribute he thought would be crucial for delivering on the promise of the Indian market.
An enterprising spirit. For Vineet, one of
the toughest aspects of career growth was
leaving his comfort zone, both professionally
and personally. He turned down several opportunities, including one that would have required relocating to the United States. But he
eventually took a post as director of strategic
initiatives for the Asia Pacific region, a move
that forced him to leave India for Singapore.
To prepare himself, Vineet agreed to a year of
global rotation, spending part of his time in
the U.S. corporate office and the rest in the European headquarters in Switzerland. He had
to adapt his personal style and develop new
strategies. He knew how to lead a team as a
country manager, but supporting other country managers in achieving their visions was
daunting. Vineet loved running his own busi- ness and having P&L responsibility; the new
job meant playing a support role and getting
things done through influence instead of direct control.
Dynamic sensors. High potentials may be
resented and envied as well as admired—all of
which can be a source of stress. A true high potential understands this and strives to reduce
animosity. Vineet certainly cared about how he
was perceived. When he was first offered the
country manager lead for India, at age 29, he
considered turning it down because he thought
others might see him as too young or inexperienced. That awareness of others’ perceptions is
a defining attribute of a high potential. Developing Your X Factors
The X factors of high potentials not only don’t
show up in leadership competency models,
but also are difficult to teach and learn, particularly in a classroom setting. Nevertheless,
you can boost your odds of developing your X
factors.
Becoming aware of where you’re falling
short is the first step. For instance, if you find
yourself repeatedly getting blindsided by
events, chances are your dynamic sensors
aren’t very strong. Some people are more attuned to their environment than others, but
you can learn to improve your radar by taking
simple measures such as listening to others
more carefully, observing their reactions to
what you say, and refreshing your network of
relationships so that it better attunes you to
the new businesses and markets your company
is pursuing.
Catalytic learning requires an interest in acting, not just learning. Learning without actually changing your behavior is an opportunity
wasted. It may be difficult to develop more
drive or an enterprising spirit, but with reflection you can begin to be more proactive or
take a few more risks. This all speaks to the importance of investing time and energy in selfreflection. You must also recognize the value of
seeking advice from a coach or mentor—and
of figuring out where an adviser’s help ends
and your independence begins. High-Potential Status Has Its
Downsides
It’s great to be recognized for...

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Leading Change-why transformation efforts fail.pdf

For the exclusive use of H. Nguyen, 2016. www.hbrreprints.org B E S T O F H BR
Leaders who successfully
transform businesses do eight
things right (and they do them
in the right order). Leading Change
Why Transformation Efforts Fail
by John P Kotter
.
• Included with this full-text Harvard Business Review article:
1 Article Summary
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
2 Leading Change: Why Transformation Efforts Fail
10 Further Reading
A list of related materials, with annotations to guide further
exploration of the article’s ideas and applications Reprint R0701J This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
BEST OF HBR Leading Change
Why Transformation Efforts Fail The Idea in Brief The Idea in Practice Most major change initiatives—whether intended to boost quality, improve culture, or
reverse a corporate death spiral—generate
only lukewarm results. Many fail miserably. To give your transformation effort the best chance of succeeding, take the right actions at each
stage—and avoid common pitfalls. Why? Kotter maintains that too many
managers don’t realize transformation is a
process, not an event. It advances through
stages that build on each other. And it
takes years. Pressured to accelerate the
process, managers skip stages. But shortcuts never work.
Equally troubling, even highly capable
managers make critical mistakes—such as
declaring victory too soon. Result? Loss of
momentum, reversal of hard-won gains,
and devastation of the entire transformation effort. COPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. By understanding the stages of change—
and the pitfalls unique to each stage—you
boost your chances of a successful transformation. The payoff? Your organization flexes
with tectonic shifts in competitors, markets,
and technologies—leaving rivals far behind. Stage Actions Needed Pitfalls Establish a
sense of
urgency • Examine market and competitive realities for potential crises and untapped
opportunities.
• Convince at least 75% of your managers that the status quo is more dangerous than the unknown. • Underestimating the difficulty of driving
people from their comfort zones
• Becoming paralyzed by risks Form a powerful guiding
coalition • Assemble a group with shared commit- • No prior experience in teamwork at the
top
ment and enough power to lead the
change effort.
• Relegating team leadership to an HR,
quality, or strategic-planning executive
• Encourage them to work as a team
rather than a senior line manager
outside the normal hierarchy. Create a
vision • Create a vision to direct the change effort. • Presenting a vision that’s too complicat• Develop strategies for realizing that vision. ed or vague to be communicated in five
minutes Communicate • Use every vehicle possible to commu- • Undercommunicating the vision
the vision
nicate the new vision and strategies for • Behaving in ways antithetical to the
achieving it.
vision
• Teach new behaviors by the example of
the guiding coalition.
Empower
others to act
on the vision • Failing to remove powerful individuals
• Remove or alter systems or structures
who resist the change effort
undermining the vision.
• Encourage risk taking and nontraditional ideas, activities, and actions. Plan for and
create shortterm wins • Define and engineer visible performance improvements.
• Recognize and reward employees contributing to those improvements. Consolidate
improvements and
produce
more change • Declaring victory too soon—with the
• Use increased credibility from early
wins to change systems, structures, and first performance improvement
policies undermining the vision.
• Allowing resistors to convince “troops”
that the war has been won
• Hire, promote, and develop employees
who can implement the vision.
• Reinvigorate the change process with
new projects and change agents. Institutionalize • Articulate connections between new
new
behaviors and corporate success.
approaches
• Create leadership development and
succession plans consistent with the
new approach. • Leaving short-term successes up to
chance
• Failing to score successes early enough
(12-24 months into the change effort) • Not creating new social norms and
shared values consistent with changes
• Promoting people into leadership positions who don’t personify the new
approach page 1
This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016. Leaders who successfully transform businesses do eight things right
(and they do them in the right order). BEST OF HBR Leading Change
Why Transformation Efforts Fail
by John P Kotter
. COPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. Editor’s Note: Guiding change may be the ultimate test of a leader—no business survives over
the long term if it can’t reinvent itself. But,
human nature being what it is, fundamental
change is often resisted mightily by the people it
most affects: those in the trenches of the business. Thus, leading change is both absolutely essential and incredibly difficult.
Perhaps nobody understands the anatomy
of organizational change better than retired
Harvard Business School professor John P.
Kotter. This article, originally published in the
spring of 1995, previewed Kotter’s 1996 book
Leading Change . It outlines eight critical success factors—from establishing a sense of extraordinary urgency, to creating short-term
wins, to changing the culture (“the way we do
things around here”). It will feel familiar when
you read it, in part because Kotter’s vocabulary
has entered the lexicon and in part because it
contains the kind of home truths that we recognize, immediately, as if we’d always known
them. A decade later, his work on leading
change remains definitive. harvard business review • january 2007 Over the past decade, I have watched more
than 100 companies try to remake themselves
into significantly better competitors. They
have included large organizations (Ford) and
small ones (Landmark Communications),
companies based in the United States (General Motors) and elsewhere (British Airways),
corporations that were on their knees (Eastern
Airlines), and companies that were earning
good money (Bristol-Myers Squibb). These efforts have gone under many banners: total
quality management, reengineering, rightsizing, restructuring, cultural change, and turnaround. But, in almost every case, the basic
goal has been the same: to make fundamental
changes in how business is conducted in order
to help cope with a new, more challenging
market environment.
A few of these corporate change efforts have
been very successful. A few have been utter
failures. Most fall somewhere in between, with
a distinct tilt toward the lower end of the scale.
The lessons that can be drawn are interesting
and will probably be relevant to even more or- page 2 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Leading Change •• •B EST OF HBR ganizations in the increasingly competitive
business environment of the coming decade.
The most general lesson to be learned from
the more successful cases is that the change
process goes through a series of phases that, in
total, usually require a considerable length of
time. Skipping steps creates only the illusion of
speed and never produces a satisfying result. A
second very general lesson is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and negating
hard-won gains. Perhaps because we have relatively little experience in renewing organizations, even very capable people often make at
least one big error. Error 1: Not Establishing a Great
Enough Sense of Urgency Now retired, John P. Kotter was the
Konosuke Matsushita Professor of
Leadership at Harvard Business School
in Boston.
harvard business review • january 2007 Most successful change efforts begin when
some individuals or some groups start to look
hard at a company’s competitive situation,
market position, technological trends, and financial performance. They focus on the potential revenue drop when an important
patent expires, the five-year trend in declining
margins in a core business, or an emerging
market that everyone seems to be ignoring.
They then find ways to communicate this information broadly and dramatically, especially
with respect to crises, potential crises, or great
opportunities that are very timely. This first
step is essential because just getting a transformation program started requires the aggressive cooperation of many individuals. Without
motivation, people won’t help, and the effort
goes nowhere.
Compared with other steps in the change
process, phase one can sound easy. It is not.
Well over 50% of the companies I have
watched fail in this first phase. What are the
reasons for that failure? Sometimes executives
underestimate how hard it can be to drive people out of their comfort zones. Sometimes they
grossly overestimate how successful they have
already been in increasing urgency. Sometimes
they lack patience: “Enough with the preliminaries; let’s get on with it.” In many cases, executives become paralyzed by the downside possibilities. They worry that employees with
seniority will become defensive, that morale
will drop, that events will spin out of control,
that short-term business results will be jeopardized, that the stock will sink, and that they
will be blamed for creating a crisis. A paralyzed senior management often comes
from having too many managers and not
enough leaders. Management’s mandate is to
minimize risk and to keep the current system
operating. Change, by definition, requires creating a new system, which in turn always demands leadership. Phase one in a renewal
process typically goes nowhere until enough
real leaders are promoted or hired into seniorlevel jobs.
Transformations often begin, and begin
well, when an organization has a new head
who is a good leader and who sees the need for
a major change. If the renewal target is the entire company, the CEO is key. If change is
needed in a division, the division general manager is key. When these individuals are not new
leaders, great leaders, or change champions,
phase one can be a huge challenge.
Bad business results are both a blessing and
a curse in the first phase. On the positive side,
losing money does catch people’s attention.
But it also gives less maneuvering room. With
good business results, the opposite is true: Convincing people of the need for change is much
harder, but you have more resources to help
make changes.
But whether the starting point is good performance or bad, in the more successful cases I
have witnessed, an individual or a group always facilitates a frank discussion of potentially unpleasant facts about new competition,
shrinking margins, decreasing market share,
flat earnings, a lack of revenue growth, or
other relevant indices of a declining competitive position. Because there seems to be an almost universal human tendency to shoot the
bearer of bad news, especially if the head of
the organization is not a change champion, executives in these companies often rely on outsiders to bring unwanted information. Wall
Street analysts, customers, and consultants can
all be helpful in this regard. The purpose of all
this activity, in the words of one former CEO of
a large European company, is “to make the status quo seem more dangerous than launching
into the unknown.”
In a few of the most successful cases, a group
has manufactured a crisis. One CEO deliberately engineered the largest accounting loss in
the company’s history, creating huge pressures
from Wall Street in the process. One division
president commissioned first-ever customer
satisfaction surveys, knowing full well that the page 3 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Leading Change •• •B EST OF HBR results would be terrible. He then made these
findings public. On the surface, such moves can
look unduly risky. But there is also risk in playing it too safe: When the urgency rate is not
pumped up enough, the transformation process cannot succeed, and the long-term future
of the organization is put in jeopardy.
When is the urgency rate high enough?
From what I have seen, the answer is when
about 75% of a company’s management is honestly convinced that business as usual is totally
unacceptable. Anything less can produce very
serious problems later on in the process. Error 2: Not Creating a Powerful
Enough Guiding Coalition
Major renewal programs often start with just
one or two people. In cases of successful trans- formation efforts, the leadership coalition
grows and grows over time. But whenever
some minimum mass is not achieved early in
the effort, nothing much worthwhile happens.
It is often said that major change is impossible unless the head of the organization is an
active supporter. What I am talking about
goes far beyond that. In successful transformations, the chairman or president or division general manager, plus another five or
15 or 50 people, come together and develop
a shared commitment to excellent performance through renewal. In my experience,
this group never includes all of the company’s
most senior executives because some people
just won’t buy in, at least not at first. But in
the most successful cases, the coalition is
always pretty powerful—in terms of titles, EIGHT STEPS TO TRANSFORMING
YOUR ORGANIZATION 1
2
3
4
5
6
7
8 harvard business review • january 2007 Establishing a Sense of Urgency
• Examining market and competitive realities
• Identifying and discussing crises, potential crises, or major opportunities Forming a Powerful Guiding Coalition
• Assembling a group with enough power to lead the change effort
• Encouraging the group to work together as a team Creating a Vision
• Creating a vision to help direct the change effort
• Developing strategies for achieving that vision Communicating the Vision
• Using every vehicle possible to communicate the new vision and strategies
• Teaching new behaviors by the example of the guiding coalition Empowering Others to Act on the Vision
• Getting rid of obstacles to change
• Changing systems or structures that seriously undermine the vision
• Encouraging risk taking and nontraditional ideas, activities, and actions Planning for and Creating Short-Term Wins
• Planning for visible performance improvements
• Creating those improvements
• Recognizing and rewarding employees involved in the improvements Consolidating Improvements and Producing Still More Change
• Using increased credibility to change systems, structures, and policies that
don’t fit the vision
• Hiring, promoting, and developing employees who can implement the vision
• Reinvigorating the process with new projects, themes, and change agents Institutionalizing New Approaches
• Articulating the connections between the new behaviors and corporate
success
• Developing the means to ensure leadership development and succession page 4 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Leading Change •• •B EST OF HBR If you can’t communicate
the vision to someone in
five minutes or less and
get a reaction that
signifies both
understanding and
interest, you are not
done. information and expertise, reputations, and
relationships.
In both small and large organizations, a successful guiding team may consist of only three
to five people during the first year of a renewal
effort. But in big companies, the coalition
needs to grow to the 20 to 50 range before
much progress can be made in phase three and
beyond. Senior managers always form the
core of the group. But sometimes you find
board members, a representative from a key
customer, or even a powerful union leader.
Because the guiding coalition includes members who are not part of senior management,
it tends to operate outside of the normal hierarchy by definition. This can be awkward, but
it is clearly necessary. If the existing hierarchy
were working well, there would be no need for
a major transformation. But since the current
system is not working, reform generally demands activity outside of formal boundaries,
expectations, and protocol.
A high sense of urgency within the managerial ranks helps enormously in putting a guiding coalition together. But more is usually required. Someone needs to get these people
together, help them develop a shared assessment of their company’s problems and opportunities, and create a minimum level of trust
and communication. Off-site retreats, for two
or three days, are one popular vehicle for accomplishing this task. I have seen many groups
of five to 35 executives attend a series of these
retreats over a period of months.
Companies that fail in phase two usually underestimate the difficulties of producing change
and thus the importance of a powerful guiding
coalition. Sometimes they have no history of
teamwork at the top and therefore undervalue
the importance of this type of coalition. Sometimes they expect the team to be led by a staff
executive from human resources, quality, or
strategic planning instead of a key line manager. No matter how capable or dedicated the
staff head, groups without strong line leadership never achieve the power that is required.
Efforts that don’t have a powerful enough
guiding coalition can make apparent progress
for a while. But, sooner or later, the opposition
gathers itself together and stops the change. Error 3: Lacking a Vision
In every successful transformation effort that I
have seen, the guiding coalition develops a harvard business review • january 2007 picture of the future that is relatively easy to
communicate and appeals to customers, stockholders, and employees. A vision always goes
beyond the numbers that are typically found
in five-year plans. A vision says something that
helps clarify the direction in which an organization needs to move. Sometimes the first
draft comes mostly from a single individual. It
is usually a bit blurry, at least initially. But
after the coalition works at it for three or five
or even 12 months, something much better
emerges through their tough analytical thinking and a little dreaming. Eventually, a strategy for achieving that vision is also developed.
In one midsize European company, the first
pass at a vision contained two-thirds of the
basic ideas that were in the final product. The
concept of global reach was in the initial version from the beginning. So was the idea of becoming preeminent in certain businesses. But
one central idea in the final version—getting
out of low value-added activities—came only
after a series of discussions over a period of
several months.
Without a sensible vision, a transformation
effort can easily dissolve into a list of confusing and incompatible projects that can take
the organization in the wrong direction or
nowhere at all. Without a sound vision, the
reengineering project in the accounting department, the new 360-degree performance
appraisal from the human resources department, the plant’s quality program, the cultural change project in the sales force will not
add up in a meaningful way.
In failed transformations, you often find
plenty of plans, directives, and programs but
no vision. In one case, a company gave out
four-inch-thick notebooks describing its change
effort. In mind-numbing detail, the books
spelled out procedures, goals, methods, and
deadlines. But nowhere was there a clear and
compelling statement of where all this was
leading. Not surprisingly, most of the employees with whom I talked were either confused
or alienated. The big, thick books did not rally
them together or inspire change. In fact, they
probably had just the opposite effect.
In a few of the less successful cases that I
have seen, management had a sense of direction, but it was too complicated or blurry to
be useful. Recently, I asked an executive in a
midsize company to describe his vision and received in return a barely comprehensible 30- page 5 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Leading Change •• •B EST OF HBR minute lecture. Buried in his answer were the
basic elements of a sound vision. But they were
buried—deeply.
A useful rule of thumb: If you can’t communicate the vision to someone in five minutes or
less and get a reaction that signifies both understanding and interest, you are not yet done
with this phase of the transformation process. Error 4: Undercommunicating the
Vision by a Factor of Ten
I’ve seen three patterns with respect to communication, all very common. In the first, a
group actually does develop a pretty good
transformation vision and then proceeds to
communicate it by holding a single meeting or
sending out a single communication. Having
used about 0.0001% of the yearly intracompany communication, the group is startled
when few people seem to understand the new
approach. In the second pattern, the head of
the organization spends a considerable amount
of time making speeches to employee groups,
but most people still don’t get it (not surprising, since vision captures only 0.0005% of the
total yearly communication). In the third pattern, much more effort goes into newsletters
and speeches, but some very visible senior executives still behave in ways that are antithetical to the vision. The net result is that cynicism
among the troops goes up, while belief in the
communication goes down.
Transformation is impossible unless hundreds or thousands of people are willing to
help, often to the point of making short-term
sacrifices. Employees will not make sacrifices,
even if they are unhappy with the status quo,
unless they believe that useful change is possible. Without credible communication, and a
lot of it, the hearts and minds of the troops are
never captured.
This fourth phase is particularly challenging
if the short-term sacrifices include job losses.
Gaining understanding and support is tough
when downsizing is a part of the vision. For
this reason, successful visions usually include
new growth possibilities and the commitment
to treat fairly anyone who is laid off.
Executives who communicate well incorporate messages into their hour-by-hour activities. In a routine discussion about a business
problem, they talk about how proposed solutions fit (or don’t fit) into the bigger picture. In
a regular performance appraisal, they talk harvard business review • january 2007 about how the employee’s behavior helps or
undermines the vision. In a review of a division’s quarterly performance, they talk not
only about the numbers but also about how
the division’s executives are contributing to the
transformation. In a routine Q&A with employees at a company facility, they tie their answers back to renewal goals.
In more successful transformation efforts,
executives use all existing communication
channels to broadcast the vision. They turn
boring, unread company newsletters into lively
articles about the vision. They take ritualistic,
tedious quarterly management meetings and
turn them into exciting discussions of the
transformation. They throw out much of the
company’s generic management education
and replace it with courses that focus on business problems and the new vision. The guiding
principle is simple: Use every possible channel,
especially those that are being wasted on nonessential information.
Perhaps even more important, most of the
executives I have known in successful cases of
major change learn to “walk the talk.” They
consciously attempt to become a living symbol
of the new corporate culture. This is often not
easy. A 60-year-old plant manager who has
spent precious little time over 40 years thinking about customers will not suddenly behave
in a customer-oriented way. But I have witnessed just such a person change, and change a
great deal. In that case, a high level of urgency
helped. The fact that the man was a part of the
guiding coalition and the vision-creation team
also helped. So did all the communication,
which kept reminding him of the desired beha...

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Marie Jackson-Revitalizing.pdf

For the exclusive use of H. Nguyen, 2016. 9 -9 1 5 -5 5 5
JUNE 22, 2015 ANTHONY J. MAYO
HEATHER BECKHAM Marie Jackson: Revitalizing Renfield Farms
“Two steps forward, one step back” was how Marie Jackson characterized her effort to set a new
direction for Renfield Farms Corporation. In June 2013, Jackson had been hired to turn around Renfield.
The process of formulating a cohesive, compelling vision had been fraught with strife and uncertainty,
but Jackson and her team eventually began to chart a new course for Renfield. In December 2014,
Jackson reflected on her efforts, “The past eighteen months have been an epic journey: arduous and
frustrating at times, yet invigorating. We are at a critical inflection point. We are committed to reengaging with our consumers, delivering innovative products, and reclaiming our status as the leading
dairy pioneer. We have made progress, but there is still much to do. We can’t take our eye off the prize
yet.” The U.S. Dairy Industry
The U.S. dairy industry faced numerous challenges, including mature markets, volatile commodity
costs, low profit margins, and fragmentation. Demand fluctuations were affected by general economic
conditions, disposable income, demographics, and increased competition from alternative options.
Growth was driven by lifestyle trends (e.g., focus on health/wellness foods), premium products (e.g.,
organic), and product innovations (e.g., Greek yogurt and plant-based dairy alternatives).
Within the dairy industry, there were six general product segments: Cheese; Fluid Milk and Cream;
Other Dairy; Frozen Dairy; Yogurt; and Butter. Performance and growth projections varied between
segments. For example, forecasts showed substantial gains for yogurt,1 but fluid milk per-capita
consumption had been declining for several decades.2 (See Exhibit 1 for historical consumption data
and brief segment overviews.)
Dairy products generally followed broader trends for consumer packaged goods. Private-label
goods were prevalent, and the segment included several powerful brands with sales growth driven by 1 Kathleen Furore, “Yogurt,” Progressive Grocer, July 2013 92: 7
2 Roberto A. Ferdman, “The Mysterious Case of America’s Plummeting Milk Consumption,” The Washington Post, June 20, 2014. _______________________________________________________________________________________________________________
HBS Senior Lecturer Anthony J. Mayo and writer Heather Beckham prepared this case solely as a basis for class discussion and not as an
endorsement, a source of primary data, or an illustration of effective or ineffective management. Although based on real events and despite
occasional references to actual companies, this case is fictitious and any resemblance to actual persons or entities is coincidental.
Copyright © 2015 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
915-555 | Marie Jackson: Revitalizing Renfield Farms marketing efforts and promotional campaigns. Brand-management strategy harnessed the power of
new media. In particular, social media campaigns had become critical to overall marketing strategies. Renfield Farms
Renfield Farms was founded by Donald Franklin in 1964 as an organic farm and dairy in Maine.
The farm originally produced and distributed organic milk and cream to retailers in the Northeast
under the brand name Nourish. Franklin founded Renfield Farms based on his conviction that food
should be simple and wholesome, with as few additives as possible.
Franklin was an idealistic farmer and an astute businessman. By the 1990s, Renfield had grown
through a series of regional dairy acquisitions and had become a leading producer of both conventional
and organic dairy products. In 1991, it became the first company to supply organic milk nationwide;
in 1993, it transformed the yogurt category with its Season’s Harvest all-natural yogurt line. It was
known for its strong brands and strong ideals. Employees were passionate about natural living and
sustainable environmental practices. Renfield’s brands reflected the company’s culture, which was
based on healthy living and honest nutrition. In his autobiography, Bottom Line Organics, Franklin
wrote, “There is no substitute for healthful foods; but when I started Renfield, natural foods were an
underdeveloped, niche market. Our products were more nutritious, tasted better, and were better for
the environment, but we needed to educate consumers about why our products warranted higher
prices. We were one of the first dairy companies to focus on brand and marketing.” Under his
leadership, Renfield grew from a regional dairy supplier to a highly profitable national company.
Renfield Farms utilized a decentralized organizational structure. Franklin promoted a culture of
accountability and authority at a local level and believed that competition among managers was a
valuable motivator. According to Franklin, “I don’t believe in forced cooperation within our business.
We have empowered our product line and production facility managers to operate as independent
business units. This encourages initiative, responsiveness, and profitability throughout the company.”
As the company grew, it retained Franklin’s decentralized philosophy.
After Franklin retired in 2002, the company had a difficult time finding a passionate and driven
leader. He had left an indelible imprint on the organization, and it was hard for successors to measure
up. Over the next 10 years, the company transitioned through two chief executive officers, each of
whom a former executive characterized as “bland” and “uninspiring.” Reflecting on that time, the
executive added, “It was a stagnant period in our history. We seemed to have lost our way. Renfield
lagged behind its competitors. We didn’t even launch a Greek yogurt product until others had
established the category. Franklin would have been very disappointed in our lack of innovation. In
some ways, we were even ceding our control over the organic market.” Since 2003, Renfield Farms had
steadily been losing market share to competitors. Farmer-owned cooperatives like Organic Valley were
growing share rapidly, and established traditional companies like Groupe Danone had developed
successful organic and all-natural product lines that were winning over Renfield customers.
In early 2012, the company faced a firestorm of criticism when a video of cows being abused at a
company-owned dairy in Belvidere, Illinois, went viral. The video showed cows jammed into pens and
beaten with pipes. The Society for Prevention of Cruelty to Animals quickly organized a boycott of
Renfield products. An independent investigation found the incident was isolated, but many consumers
felt the company did not respond quickly enough to punish these actions. Margaret Sparks, Renfield’s
community relations director, said she was shocked by the images but revealed she did not know the
video existed until it had been picked up by a national news agency. Conrad Lee, Renfield’s chief
executive officer at the time, later admitted, “We weren’t as proactive as we could have been with
2 BRIEFCASES | HARVARD BUSINESS SCHOOL This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Marie Jackson: Revitalizing Renfield Farms | 915-555 monitoring social media, which cost us dearly. The video demonstrated for us the power of social
networks and how quickly negative exposure can spread. We were wounded internally and externally.
We disappointed our consumers and suffered a lack of confidence in our ranks.” After the scandal, the
press referred to Renfield as “apathetic” and several long-time, senior employees left the company.
Morale at the company hit an all-time low.
In 2014, Renfield’s business comprised four product lines: Yogurt, Milk and Cream, Frozen Dairy,
and Plant-Based Beverages. The company’s yogurt division included conventional natural yogurt
products under six regional brands, an organic national brand, and a national Greek yogurt brand.
Milk and Cream was the largest, best-established business segment, consisting of eight regional brands
of conventional milk, one national organic milk brand, and one national coffee creamer brand. Frozen
Dairy was the smallest division, with one national frozen yogurt brand and four regional all-natural
ice cream brands. The plant-based beverages segment, which operated under the Bloom brand, was
the most recent addition to the company’s product portfolio. Renfield had acquired the Bloom business
in the spring of 2013. Each product line and production facility operated as a profit center, utilizing
market-based transfer pricing between production facilities and product lines. Variable bonuses
comprised a significant portion of overall management compensation, with annual cash incentives
determined by individual business unit profitability. (See Exhibit 2 for Renfield’s organizational chart.)
Renfield’s recent financial performance had been lackluster, with relatively flat sales and shrinking
profits over the past four years. Conrad Lee began his tenure as chief executive officer in 2009 by
promising to get lean and grow the business, but his cost-saving and growth initiatives fell short. Lee
attempted to consolidate product development at the corporate level, but business unit leaders resisted
and continued to develop independent product strategies. One former executive noted, “Conrad spent
a lot of time and money on traditional marketing campaigns aimed at building the Renfield brand, but
our return on investment was minimal. In addition, the business units continued to market the same
products in the same way we did 10 years ago. There was little progress made under Conrad’s
leadership.” In June 2013, Lee stepped down. To fill the role, Renfield Farms hired its first outside chief
executive officer, Marie Jackson. Marie Jackson
Jackson was born and raised in a small town in Georgia and began her career as a marketing analyst
at Procter and Gamble. After earning her MBA at University of Virginia’s Darden School of Business,
she became an assistant brand manager at Coca Cola and worked her way up to global brand manager,
then marketing director, and then senior vice president of integrated marketing communications and
capabilities. She was known for her exuberance and brilliant marketing strategies.
In 2006, Jackson was named chief executive officer of Crivelli, a multinational candy company.
During her tenure, Jackson took the company from the edge of bankruptcy to a thriving business. She
grew the business from $250 million in sales to $500 million by 2012 and added innovative new product
lines to the company’s portfolio. Crivelli won the 2009 Best New Product of the Year, the leading
consumer-voted CPG award program in North America, after Jackson led the launch of a wildly
successful line of candy-inspired baking products. Jackson earned a reputation for rapid responses to
market trends. She had developed strong relationships with trade partners. She also was an early
adopter of social media marketing, which helped to establish Crivelli as the most recognized candy
brand in the world. One former colleague recalled, “Marie’s passion for Crivelli products was
infectious. No one could energize a room like she could. She was truly a visionary.” HARVARD BUSINESS SCHOOL | BRIEFCASES 3 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
915-555 | Marie Jackson: Revitalizing Renfield Farms When Jackson was appointed chief executive officer of Renfield Farms in 2013, some insiders were
wary. Renfield prided itself on promoting from within. An outsider at the senior level was extremely
rare. Christina Garcia, the company’s chief financial officer, commented, “Renfield tends to snub
outsiders. We are intensely loyal to our own. Marie was not only from outside our ranks, but also came
from a processed food background. Those kinds of products are the antithesis of everything we stand
for at Renfield. On paper, she just didn’t look like a good fit to me.”
Jackson’s leadership style and actions quickly grabbed the attention of employees throughout
Renfield. In her first month, she organized a series of virtual town-hall meetings in order to reach
almost everyone in the organization. Jackson began each meeting by addressing the press’
characterization of the company as “apathetic.” She told employees, “It is my mission to restore the
reputation of Renfield and create a vibrant, prosperous path for the future. I am not yet sure what form
this effort will take, but I know that I will need your help. I will need your insight to chart that new
course. I will depend on each of you to foster positive change.”
Jackson followed up her words with actions. She met with several groups of executives and outlined
changes to the organizational structure and reporting lines. Jackson created a brand group to
coordinate product and brand strategies with product line units reporting directly to the chief
marketing officer. Within two months of joining the company, she dismissed a senior brand manager
who resisted the changes. One insider commented, “Marie hit the ground running. She inspired us
with her dreams for Renfield. We lost several talented colleagues after the Belvidere cow incident, and
it was exciting to see such positive energy back at the company.”
Jackson spent much of her first three months talking with, and gathering feedback from, trade
partners and consumer groups. She personally met with buyers from all of Renfield’s major retailers
and participated in dozens of consumer focus groups. She consistently heard that the company was
disconnected from its core customers and absent from the social media scene that was now considered
to be an integral component of building and cultivating a brand image. Furthermore, the brands scored
low on innovation and product distinctiveness. On the positive side, consumers were still passionate
about the ideals for the brand (organic, healthy, and nutritious) that Franklin had created, though this
passion was sorely tested by the Belvidere incident. It was clear that the company would need to
reestablish its credibility with some longtime consumers. At the same time, the company needed to
attract new, younger consumers especially as the market for organic products continued to soar and as
competitors entered the industry.
Jackson regularly gathered senior managers and their teams to share her findings and challenged
them to think about solutions. At one meeting, she remarked, “I want to be brutally honest with you.
The Renfield brands are considered boring and stale. We have also missed some great opportunities
for new products and digital marketing, but we can start to remedy those oversights.” Some insiders
bristled at her observations, but others found her candor enlightening. Changing Direction
Jackson needed to determine whom to involve in formulating Renfield’s new direction. She
observed the attitudes and actions of managers throughout the company. Recalling that time, Jackson
said, “I identified some serious weaknesses in the company, and I couldn’t fix them alone. We needed
a new vision for the company and a strategy to get there. I wanted people who weren’t afraid to shake
things up, who truly loved Renfield, and were excited about our future prospects.” 4 BRIEFCASES | HARVARD BUSINESS SCHOOL This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Marie Jackson: Revitalizing Renfield Farms | 915-555 In August 2013, Jackson sent an invitation to a select group of twelve managers, asking them to join
her planning team and attend a weekend retreat in Sea Island, Georgia. The team was culled from
different functions and business units in the organization. There was a dairy plant manager, a group
brand director, an account executive for wholesale clubs, the sales director for the Midwest region, the
EVP of sales and distribution, the chief information officer, the chief marketing officer, and several
product line managers. Jackson explained, “I was looking for change agents. I wanted those who
understood the need for change, those who were respected in the organization, and those who had
been vocal about their desire to revitalize our brands.”
Jackson had hoped that the Sea Island meeting would generate spirited, constructive debate and
provide clear priorities for change. She asked Brent Cooper, executive vice president of sales and
distribution, to organize and facilitate the process. Cooper decided to use a SWOT framework to
structure the discussion.3 He said, “I wanted to start with a simple framework to get us all
collaborating. We were a wildly diverse group of personalities, and we needed some common ground
to get us on the same page.”
Strong opinions on the process and priorities for change immediately surfaced. Some thought
Cooper’s framework was too theoretical to generate meaningful output; others thought the SWOT
needed to be followed up with a more detailed framework, such as the McKinsey 7-S model.4 A handful
of team members wanted to jump right into areas that warranted immediate change and determine the
roots of the problems that Jackson had already identified. Stephen Sundal, Renfield’s chief information
officer, thought the first discussion should concentrate on the path to competitive advantage and to
determine the company’s distinctive capabilities. Jackson probed further into the insights and Cooper
recorded each priority for change, but there was no consensus or action plan. Cooper remembered, “By
the end of the weekend, most participants were inspired to chart a new course, but felt discouraged we
hadn’t made much progress.”
In November, the team reconvened in Lake Placid, New York. Jackson recalled, “We had proposed
too many priorities in Sea Island. After a couple of sleepless nights, I wound up revising the list by
focusing on what I consider to be the three most urgent concerns.” When the visionary planning team
arrived in Lake Placid, Jackson told them, “In order to right our course, we need to take immediate
action. We need to honor Renfield’s traditional values, but adapt them to the changing marketplace.
Therefore, we will have only three strategic priorities in 2014:
1. Win Back Consumers – We must focus our efforts and resources on our end-consumers.
Renfield owes its early success to the support and loyalty of passionate consumers. We need
to recapture and nurture those relationships through multiple networks, harnessing the
power of social media and other digital marketing platforms. 2. Keep Things Fresh – We need to reestablish a continuous product-development process.
We must capture and leverage customer insight to guide R&D and reduce time to market
for new products through internal cooperation. 3. Optimize Our Resources – We have talked too much about—and acted too little to correct
—the company’s deteriorating financial performance. We must leverage our cost structure
and allocate our resources more effectively. 3 A SWOT analysis identifies the strengths, weaknesses, threats, and opportunities of an organization or project.
4 The 7-S model analyzes seven related factors (strategy, structure, systems, shared values, skills, style, and staff) that influence an organization’s success. HARVARD BUSINESS SCHOOL | BRIEFCASES 5 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
915-555 | Marie Jackson: Revitalizing Renfield Farms Jackson also discussed the need to determine Renfield’s brand strategy to address consumer
dissatisfaction and growth opportunities. She felt consumers could and should help shape the brand’s
and the company’s direction. Jackson was adamant that Renfield partner with its consumers, listen to
them, and develop interactive relationships. She felt the current focus on print and television media
campaigns lacked any meaningful connection with consumers and was holding the company back. A
business unit leader was overheard saying, “I love Marie’s passion and ideas about connecting with
consumers again, but she doesn’t understand that my business is about more than getting press over
‘cool’ products. Just because you win an award for a marketing campaign doesn’t mean you are going
to improve profits. I have to balance the costs and risks of a new product or marketing campaign with
the potential value.”
Jackson’s brand strategy ideas also focused on growth opportunities. Specifically, she wanted to
ensure future growth of the company by expanding into more products outside the health foods
segment. Some in the group disagreed with Jackson’s ideas. One vocal critic accused her of “trying to
turn the company into a processed food wasteland.” Despite some resistance, most of the team
supported Jackson’s strategic priorities and agreed they would move ahead with them in the short
term, in order to provide a foundation for change. The team spent the weekend refining Jackson’s
priorities, turning them into what was called Renfield’s “Transformation Declaration.” From Theory to Practice
Over the next several months, the group concentrated on communicating the Transformation
Declaration throughout the company. The three strategic priorities were reinforced with small group
meetings, podcasts, and even a required company screen saver that recounted the principles. Jackson
spent her time speaking about brand strategy internally and reinforced the need to reconnect with
consumers and grow the business. Executing on her brand strategy ideas, Jackson and her team
overhauled the company’s website and Facebook page, introduced a Twitter presence with Farmer
Renfield, and created a corporate department for monitoring and analytics.
By January, Renfield had launched Hale Refresh, a Greek yogurt drink, which fit perfectly with
consumer trends but had languished in R&D because it lacked a champion. Jackson led the launch,
initiating a breakfast challenge and snack challenge on social media sites to find fast, fun serving ideas
for Hale Refresh that provided complete balanced nutrition. There was an associated app with which
users could drag different toppings to find the right combination of nutrients based on their daily
activities. A new company blog that shared ideas for easy, portable, healthy breakfast and snack ideas
for school-aged kids became an instant hit. The grand prize winner of the snack challenge created a
Hale Refresh drink topped with raspberries, avocado, dark chocolate, and chia seeds, providing a mix
of protein, calcium, healthy fats, and antioxidants. The recipe became the favorite of a celebrity, who
posted on Instagram pictures of her concoction. Sales for the first three months after the product launch
were five times above forecast. Even Jackson’s strongest critics admitted this was a big win for the
company.
Jackson thought this success would inspire support for her ideas and refocus the organization on
innovation, but it had not. Brent Cooper noted, “Following the Transformation Declaration, there was
renewed enthusiasm and confidence. We had great success with the Hale Refresh launch, but then
stalled again. There was still some confusion and wariness among employees. Good ideas were floating
around, but none seemed to get off the ground. Each brand had initiatives it wanted to pursue, each
region had its own ideas, and product development seemed to be in a world all its own in thinking up
big new ideas that had no champions. It was a bit of a mess.” One regional manager discussed his
reluctance to engage in significant product development initiatives, “Groundbreaking new product
6 BRIEFCASES | HARVARD BUSINESS SCHOOL This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra,...

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For the exclusive use of H. Nguyen, 2016. www.hbrreprints.org Effective corporate renewal
starts at the bottom, through
informal efforts to solve
business problems. Why Change Programs
Don’t Produce Change
by Michael Beer, Russell A. Eisenstat, and
Bert Spector Included with this full-text Harvard Business Review article:
1 Article Summary
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
2 Why Change Programs Don’t Produce Change
12 Further Reading
A list of related materials, with annotations to guide further
exploration of the article’s ideas and applications Reprint 90601 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016. Why Change Programs Don’t Produce Change The Idea in Brief The Idea in Practice Two years after launching a change program to counter competitive threats, a
bank CEO realized his effort had produced...no change. Surprising, since he and
his top executives had reviewed the company’s purpose and culture, published a
mission statement, and launched programs
(e.g., pay-for-performance compensation)
designed to push change throughout the
organization. Successful change requires commitment, coordination, and competency. who couldn’t function in the new organization. Change accelerated. 1. Mobilize commitment to change through
joint diagnosis of problems. 4. Spread revitalization to all departments—
without pushing from the top. Example:
Navigation Devices had never made a profit
or high-quality, cost-competitive product—because top-down decisions ignored
cross-functional coordination.To change
this,a new general manager had his entire
team broadly assess the business. Then, his
task force of engineers, production workers,
managers, and union officials visited successful manufacturing organizations to
identify improvement ideas. One plant’s
team approach impressed them, illuminated their own problem, and suggested a
solution. Commitment to change intensified. Example:
Navigation’s new team structure required
engineers to collaborate with production
workers. Encouraged to develop their own
approach to teamwork and coordination,
the engineers selected matrix management. People willingly learned needed skills
and attitudes, because the new structure
was their choice. COPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. But revitalization doesn’t come from the
top. It starts at an organization’s periphery,
led by unit managers creating ad hoc arrangements to solve concrete problems.
Through task alignment—directing employees’ responsibilities and relationships
toward the company’s central competitive
task—these managers focus energy on
work, not abstractions like “empowerment”
or “culture.”
Senior managers’ role in this process? Specify the company’s desired general direction,
without dictating solutions. Then spread
the lessons of revitalized units throughout
the company. 2. Develop a shared vision of how to organize for competitiveness. Remove functional
and hierarchical barriers to information sharing and problem solving—by changing roles
and responsibilities, not titles or compensation.
Example:
Navigation’s task force proposed developing products through cross-functional
teams. A larger team refined this model and
presented it to all employees—who supported it because it stemmed from their
own analysis of their business problems.
3. Foster consensus for the new vision, competence to enact it, and cohesion to advance it. This requires the general manager’s
strong leadership. 5. Institutionalize revitalization through formal policies, systems, and structures—only
after your new approach is up and running.
Example:
Navigation boosted its profits—without
changing reporting relationships, evaluation procedures, or compensation. Only
then did the general manager alter formal
structures; e.g., eliminating a VP so that engineering and manufacturing reported directly to him.
6. Monitor the revitalization process, adjusting in response to problems.
Example:
At Navigation, an oversight team of managers, a union leader, an engineer, and a financial analyst kept watch over the change
process—continually learning, adapting,
and strengthening the commitment to
change. Example:
Navigation’s general manager fostered consensus by supporting those who were committed to change and offering outplacement and counseling to those who weren’t;
competence by providing requested training; and cohesion by redeploying managers
page 1 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016. Effective corporate renewal starts at the bottom, through informal
efforts to solve business problems. Why Change Programs
Don’t Produce Change COPYRIGHT © 1990 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. by Michael Beer, Russell A. Eisenstat, and
Bert Spector In the mid-1980s, the new CEO of a major international bank—call it U.S. Financial—announced a companywide change effort. Deregulation was posing serious competitive
challenges—challenges to which the bank’s
traditional hierarchical organization was illsuited to respond. The only solution was to
change fundamentally how the company operated. And the place to begin was at the top.
The CEO held a retreat with his top 15 executives where they painstakingly reviewed the
bank’s purpose and culture. He published a
mission statement and hired a new vice president for human resources from a company
well-known for its excellence in managing
people. And in a quick succession of moves,
he established companywide programs to
push change down through the organization:
a new organizational structure, a performance
appraisal system, a pay-for-performance compensation plan, training programs to turn
managers into “change agents,” and quarterly
attitude surveys to chart the progress of the
change effort. harvard business review • november–december 1990 As much as these steps sound like a textbook
case in organizational transformation, there
was one big problem: two years after the CEO
launched the change program, virtually nothing in the way of actual changes in organizational behavior had occurred. What had gone
wrong?
The answer is “everything.” Every one of the
assumptions the CEO made—about who
should lead the change effort, what needed
changing, and how to go about doing it—was
wrong.
U.S. Financial’s story reflects a common
problem. Faced with changing markets and increased competition, more and more companies are struggling to reestablish their dominance, regain market share, and in some cases,
ensure their survival. Many have come to understand that the key to competitive success is
to transform the way they function. They are
reducing reliance on managerial authority, formal rules and procedures, and narrow divisions
of work. And they are creating teams, sharing
information, and delegating responsibility and page 2 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Why Change Programs Don’t Produce Change Michael Beer and Russell A. Eisenstat
are, respectively, professor and assistant
professor of organizational behavior and
human resource management at the
Harvard Business School. Bert Spector
is associate professor of organizational
behavior and human resource management at Northeastern University’s College of Business Administration. Their
book, The Critical Path to Corporate
Renewal, was recently published by the
Harvard Business School Press. accountability far down the hierarchy. In effect,
companies are moving from the hierarchical
and bureaucratic model of organization that
has characterized corporations since World War
II to what we call the task-driven organization
where what has to be done governs who works
with whom and who leads.
But while senior managers understand the
necessity of change to cope with new competitive realities, they often misunderstand what it
takes to bring it about. They tend to share two
assumptions with the CEO of U.S. Financial:
that promulgating companywide programs—
mission statements, “corporate culture” programs, training courses, quality circles, and
new pay-for-performance systems—will transform organizations, and that employee behavior is changed by altering a company’s formal
structure and systems.
In a four-year study of organizational change
at six large corporations (see the insert, “Tracking Corporate Change”; the names are fictitious), we found that exactly the opposite is
true: the greatest obstacle to revitalization is
the idea that it comes about through companywide change programs, particularly when a
corporate staff group such as human resources
sponsors them. We call this “the fallacy of programmatic change.” Just as important, formal
organization structure and systems cannot lead
a corporate renewal process.
While in some companies, wave after wave
of programs rolled across the landscape with
little positive impact, in others, more successful transformations did take place. They usually started at the periphery of the corporation in a few plants and divisions far from
corporate headquarters. And they were led by
the general managers of those units, not by
the CEO or corporate staff people.
The general managers did not focus on formal structures and systems; they created ad
hoc organizational arrangements to solve
concrete business problems. By aligning employee roles, responsibilities, and relationships to address the organization’s most important competitive task—a process we call
“task alignment”—they focused energy for
change on the work itself, not on abstractions
such as “participation” or “culture.” Unlike the
CEO at U.S. Financial, they didn’t employ
massive training programs or rely on speeches
and mission statements. Instead, we saw that
general managers carefully developed the harvard business review • november–december 1990 change process through a sequence of six
basic managerial interventions.
Once general managers understand the logic
of this sequence, they don’t have to wait for senior management to start a process of organizational revitalization. There is a lot they can
do even without support from the top. Of
course, having a CEO or other senior managers
who are committed to change does make a difference—and when it comes to changing an
entire organization, such support is essential.
But top management’s role in the change process is very different from that which the CEO
played at U.S. Financial.
Grass-roots change presents senior managers with a paradox: directing a “nondirective”
change process. The most effective senior managers in our study recognized their limited
power to mandate corporate renewal from the
top. Instead, they defined their roles as creating a climate for change, then spreading the
lessons of both successes and failures. Put another way, they specified the general direction
in which the company should move without
insisting on specific solutions.
In the early phases of a companywide
change process, any senior manager can play
this role. Once grass-roots change reaches a
critical mass, however, the CEO has to be ready
to transform his or her own work unit as
well—the top team composed of key business
heads and corporate staff heads. At this point,
the company’s structure and systems must be
put into alignment with the new management
practices that have developed at the periphery.
Otherwise, the tension between dynamic units
and static top management will cause the
change process to break down.
We believe that an approach to change
based on task alignment, starting at the periphery and moving steadily toward the corporate
core, is the most effective way to achieve enduring organizational change. This is not to say
that change can never start at the top, but it is
uncommon and too risky as a deliberate strategy. Change is about learning. It is a rare CEO
who knows in advance the fine-grained details
of organizational change that the many diverse units of a large corporation demand.
Moreover, most of today’s senior executives developed in an era in which top-down hierarchy
was the primary means for organizing and
managing. They must learn from innovative
approaches coming from younger unit manag- page 3 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Why Change Programs Don’t Produce Change ers closer to the action. The Fallacy of Programmatic
Change
Most change programs don’t work because
they are guided by a theory of change that is
fundamentally flawed. The common belief is
that the place to begin is with the knowledge
and attitudes of individuals. Changes in attitudes, the theory goes, lead to changes in individual behavior. And changes in individual behavior, repeated by many people, will result in
organizational change. According to this
model, change is like a conversion experience.
Once people “get religion,” changes in their behavior will surely follow.
This theory gets the change process exactly
backward. In fact, individual behavior is powerfully shaped by the organizational roles that
people play. The most effective way to change
behavior, therefore, is to put people into a new
organizational context, which imposes new roles, responsibilities, and relationships on
them. This creates a situation that, in a sense,
“forces” new attitudes and behaviors on people. (See the table, “Contrasting Assumptions
About Change.”)
One way to think about this challenge is in
terms of three interrelated factors required for
corporate revitalization. Coordination or teamwork is especially important if an organization
is to discover and act on cost, quality, and product development opportunities. The production and sale of innovative, high-quality, lowcost products (or services) depend on close coordination among marketing, product design,
and manufacturing departments, as well as between labor and management. High levels of
commitment are essential for the effort, initiative, and cooperation that coordinated action
demands. New competencies such as knowledge of the business as a whole, analytical
skills, and interpersonal skills are necessary if
people are to identify and solve problems as a Tracking Corporate Change
Which strategies for corporate change work,
and which do not? We sought the answers in
a comprehensive study of 12 large companies
where top management was attempting to
revitalize the corporation. Based on preliminary research, we identified 6 for in-depth
analysis: 5 manufacturing companies and 1
large international bank. All had revenues between $4 billion and $10 billion. We studied
26 plants and divisions in these 6 companies
and conducted hundreds of interviews with
human resource managers; line managers
engaged in change efforts at plants,
branches, or business units; workers and
union leaders; and, finally, top management.
Based on this material, we ranked the 6
companies according to the success with
which they had managed the revitalization effort. Were there significant improvements in
interfunctional coordination, decision making, work organizations, and concern for people? Research has shown that in the long term,
the quality of these 4 factors will influence performance. We did not define success in terms
of improved financial performance because,
in the short run, corporate financial performance is influenced by many situational fac- tors unrelated to the change process.
To corroborate our rankings of the companies, we also administered a standardized
questionnaire in each company to understand
how employers viewed the unfolding change
process. Respondents rated their companies
on a scale of 1 to 5. A score of 3 meant that no
change had taken place; a score below 3
meant that, in the employee’s judgment, the
organization had actually gotten worse. As the harvard business review • november–december 1990 table suggests, with one exception—the company we call Livingston Electronics—employees’ perceptions of how much their companies
had changed were identical to ours. And Livingston’s relatively high standard of deviation
(which measures the degree of consensus
among employees about the outcome of the
change effort) indicates that within the company there was considerable disagreement as
to just how successful revitalization had been. Researchers and Employees—Similar Conclusions
Extent of Revitalization Company Ranked by
Researchers Rated by Employees
Average Standard
Deviation General Products 1 4.04 .35 Fairweather 2 3.58 .45 Livingston Electronics 3 3.61 .76 Scranton Steel 4 3.30 .65 Continental Glass 5 2.96 .83 U.S. Financial 6 2.78 1.07 page 4 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Why Change Programs Don’t Produce Change team. If any of these elements are missing, the
change process will break down.
The problem with most companywide
change programs is that they address only
one or, at best, two of these factors. Just because a company issues a philosophy statement about teamwork doesn’t mean its employees necessarily know what teams to form
or how to function within them to improve
coordination. A corporate reorganization may
change the boxes on a formal organization
chart but not provide the necessary attitudes
and skills to make the new structure work. A
pay-for-performance system may force managers to differentiate better performers from
poorer ones, but it doesn’t help them internalize new standards by which to judge subordinates’ performances. Nor does it teach
them how to deal effectively with performance problems. Such programs cannot provide the cultural context (role models from
whom to learn) that people need to develop
new competencies, so ultimately they fail to
create organizational change.
Similarly, training programs may target competence, but rarely do they change a company’s patterns of coordination. Indeed, the excitement engendered in a good corporate
training program frequently leads to increased Contrasting Assumptions About
Change
Programmatic Change Task Alignment Problems in behavior are
a function of individual
knowledge, attitudes and
beliefs. Individual knowledge,
attitudes and beliefs are
shaped by recurring
patterns of behavioral
interactions. The primary target of
renewal should be the
content of attitudes and
ideas; actual behavior
should be secondary. The primary target of
renewal should be
behavior; attitudes and
ideas should be secondary. Behavior can be isolated
and changed individually Problems in behavior
come from a circular pattern,
but the effects of the organizational system on the individual are
greater than those of the individual
on the system. The target for renewal
should be at the
individual level. harvard business review • november–december 1990 The target for renewal
should be at the level of
roles, responsibilities, and
relationships. frustration when employees get back on the
job only to see their new skills go unused in an
organization in which nothing else has
changed. People end up seeing training as a
waste of time, which undermines whatever
commitment to change a program may have
roused in the first place.
When one program doesn’t work, senior
managers, like the CEO at U.S. Financial, often
try another, instituting a rapid progression of
programs. But this only exacerbates the problem. Because they are designed to cover everyone and everything, programs end up covering
nobody and nothing particularly well. They
are so general and standardized that they don’t
speak to the day-to-day realities of particular
units. Buzzwords like “quality,” “participation,”
“excellence,” “empowerment,” and “leadership”
become a substitute for a detailed understanding of the business.
And all these change programs also undermine the credibility of the change effort. Even
when managers accept the potential value of a
particular program for others—quality circles,
for example, to solve a manufacturing problem—they may be confronted with another,
more pressing business problem such as new
product development. One-size-fits-all change
programs take energy away from efforts to
solve key business problems—which explains
why so many general managers don’t support
programs, even when they acknowledge that
their underlying principles may be useful.
This is not to state that training, changes in
pay systems or organizational structure, or a
new corporate philosophy are always inappropriate. All can play valuable roles in supporting
an integrated change effort. The problems
come when such programs are used in isolation as a kind of “magic bullet” to spread organizational change rapidly through the entire
corporation. At their best, change programs of
this sort are irrelevant. At their worst, they actually inhibit change. By promoting skepticism
and cynicism, programmatic change can inoculate companies against the real thing. Six Steps to Effective Change
Companies avoid the shortcomings of programmatic change by concentrating on “task
alignment”—reorganizing employee roles, responsibilities, and relationships to solve specific business problems. Task alignment is easiest in small units—a plant, department, or page 5 This document is authorized for use only by Harry Nguyen in Managing Org Change On-campus spring 2016 taught by Diane Vacarra, University of Massachusetts - Lowell from January 2016
to April 2016. For the exclusive use of H. Nguyen, 2016.
Why Change Programs Don’t Produce Change Successful change efforts
focus on the work itself,
not on abstractions like
“participation” or
“culture.” business unit—where goals and tasks are
clearly defined. Thus the chief problem for
corporate change is how to promote taskaligned change across many diverse units.
We saw that general managers at the business unit or plant level can achieve task alignment through a sequence of six overlapping
but distinctive steps, which we call the critical
path. This path develops a self-reinforcing cycle
of commitment, coordination, and competence. The sequence of steps is important because activities appropriate at one time are
often counterproductive if started too early.
Timing is everything in the management of
change.
1. Mobilize commitment to change through
joint diagnosis of business problems. As the term
task alignment suggests, the starting point of
any effective change effort is a clearly defined
business problem. By helping people develop
a shared diagnosis of what is wrong in an organization and what can and must be improved, a general manager mobilizes the initial commitment that is necessary to begin
the change process.
Consider the case of a division we call Navigation Devices, a business unit of about 600
people set up by a large corporation to commercialize a product originally designed for
the military market. When the new general
manager took over, the division had been in
operation for several years without ever making a profit. It had never been able to design
and produce a high-quality, cost-competitive
product. This was due largely to an organization in which decisions were made at the top,
without proper involvement of or coordination with other functions.
The first step the new general manager took
was to initiate a broad review of the business.
Where the previous general manager had set
strategy with the unit’s marketing director
alone, the new general manager included his
entire management team. He also brought in
outside consultants to help him and his managers function more effectively as a group.
Next, he formed a 20-person task force representing all the stakeholders in the organization—managers, engineers, production workers, and union officials. The group visited a
number of successful manufacturing organizations in an attempt to identify what Navigation Devices might do to organize more effectively. One high-performance manufacturing harvard business review • november–december 1990 plant in the task force’s own company made a
particularly strong impression. Not only did it
highlight the problems at Navigation Devices
but it also offered an alternative organizational model, based on teams, that captured
the group’s imagination. Seeing a different
way of working helped strengthen the group’s
commitment to change.
The Navigation Devices task force didn’t
learn n...

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1. Leading change from the middle
This article talks of how power can be used to initiate change in an organization
without abusing it. This is from the fact that power comes with...

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