business ROBERTA ELENA LIE | JULY 10-13
• Dramatic change- reaction to external environment • Radical • Over done with quickly • Needs coercion STEP CHANGE
INCREMENTAL CHANGE
• Slow change • Ongoing BARCLAY’S BANK • Change the way people sell things • Risk investments- sell Payment protection insurance (lose job, loan paid for them)
LEWIN’S FORCE FIELD MODEL Example: Royal Mail
Forces for change • Technological & social change • Preparing for privatization
Forces resisting change • Large workforce- many with long service • Heavily unionized and record of industrial disputes
Driving forces • New CEO = new leadership • Greater competition from deregulation
Restraining forces • Providing postal services is highly complex • Finance- heavy losses and negative cash flow
Internal forces
External forces
Desire to increase profitability
Customer demand
Reorganization to increase efficiency
Competition
Conflict between departments
Cost of inputs
To change organizational culture
Legislation & taxes Political Ethics Ethics & social values Technological change
How to implement change • Cross-functional teams • Stronger internal communication • Negotiation • Action planning • Change agents or champions of change • And a certain amount of compulsion, manipulation
Helping people accept change • Act decisively- demonstrate momentum • Consider how they will be affected • Involve them in the change • Consult and inform frequently • Be firm but flexible • Monitor the change
WORK CLOSELY WITH EMPLOYEES- MAKE SURE THEY ARE UPDATED AND INVOLVED THROUGHOUT ALL STAGES HAVE A CONVINCING ARGUMENT TO WHY YOU SHOULD CHANGE
WHAT FACTORS DOES A PERSUADER OF CHANGE USE?
MANIPULATE THEM USING SCARE TACTICS (WHAT WOULD HAPPEN IF IT STAYS THE SAME)
GIVE REWARDS ALONG THE WAY BE CONFIDENT AND FIRM ABOUT YOUR PLAN (MAKE SURE IT’S CLEAR AND FEASIBLE) GORDON RAMSAY USE FEAR, SWEARS A LOT
GET THEM TO VISUALIZE THE IMPACT OF THE CHANGE
Merges & Acquisitions (Take Overs) Make a presentation with groups of Mid-term test! 5-10 minutes (ideally six minutes)- 2 mins each History B1 History B2 What happens since the merger B3 Six slides
STATIC CULTURE Culture that doesn’t change (evolved or deliberate) in response to the changing external environment
DYNAMIC CULTURE Evolves in response to changes in the external environment and/or a different business strategy/ model
TOXIC CULTURE BONUS CULTURE Importance of financial rewards is emphasized and celebrated
Workplace culture evolves on its own with little attention given to relationships and employees are not held accountable for actions such as rudeness or disrespect
Companies who don’t make change & Substantial organizational change Have to change because of Merges & Acquisitions Kodak Too late to embrace the rapid shift from film to digital photography
Royal Mail Regulatory change & potential privatization force a substantial change program
Santander UK Restructuring & rebranding, integrate 3 separate financial services takeovers
Sony Silo mentality rising from market leadership reduced the incentive & energy to innovate
National Health Service Political pressure for modernization & high profile care scandals
Nokia Long-time dominant market leader in mobile phones Failed to spot fast-moving challengers (iPhone, android) RBS Significant retrenchment (reducing cost) following nationalization, inappropriate acquisitions
British Airways bought Iberia (Spain) Deal type: merger Integration: horizontal Value: disclosed Year: 2010 Geography: cross-border Key quotes: “This will create a stronger business...� Willie Walsh Success or Failure?
PRIMARY Raw Materials SECONDARY Manufacturing TERTIARY/SERVICE (RETAIL) Service/retail, don’t include raw or manufacturing
TATA - Corus Deal type: takeover Integration: horizontal Value: 5.8 billion Year: 2007 Geography: cross-border Conglomerate- buys businesses to make more money, not really involved in management
Ebay - Paypal Deal type: takeover Value: 1.5 billion Year: 2002 Integration: Diversification
Horizontal merger = same sector (e.g. both airlines (service)
Vertical merger: different sector, (e.g. Retailer buying manufacturer) a.k.a. diversification (having your finger in more than one pie- different markets) benefit: if something goes wrong within that market, you still have the other one.
Kraft Foods - Cadbury Deal type: takeover Value: 1.96 billion Year: 2010 Integration: Horizontal (both food markets) Geography: Cross border (US and UK) Key quote: “...global powerhouse in snacks...” Irene Rosenfeld Success/failure?: Stable, no job losses except one factory close
Depends on factors Organizational culture evolves naturally but pace, nature of change depend evolving circumstances of organization Managing cultural evolution is primary task of leadership. Leader expert?
Change of LEADERSHIP Barclays CEO change to Antony Jenkins PROJECT TRANSFORM: 514 million pounds, restore bank’s reputation
Evaluation points OC is not entity or thing. Independent from business strategy. Culture of society changes Change OC derive from clear shortfall/ change in strategy
Why change? To improve: • Declining profits and sales • Inadequate returns on investment • Low quality products/ poor standard of customer service
Classic Symptoms • Internal fighting • High levels of staff turnover (voluntary) • Greater absenteeism • Processes become more bureaucratic • Innovation no longer valued • Declining customer service • Leadership shows double standards/ decision-making becomes inconsistent • Communicated closed, restricted
Why change? To respond to: • Market changes (growth, competitor’s action) • Political & legal environment • Change in societal views • Change of ownership • Change of management • Economic conditions (downturn)
Main causes of cycle Level of business & consumer confidence Value of spending & investment Gov policy
• High levels spending • Business confidence • Profits • Investments • Prices up • Unemployment low
GDP Growth
Boom
Recession • Low consumer spending • Lower profits • Cut back investment • Rising unemployment
Slump/ depression
Recovery
• Increase spending • More confident • Start investment • Unemployment growth takes time
• Weak spending & investment • Business failure • Rapid raise unemployment • Prices fall