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December 19,2018 Change Management

Rethinking Change Management

Rethinking Change Management

Abstract

The Problem: Organizations are not engaging their stakeholders in their change management approach or initiatives and are attempting to force change upon their teams

Why it Happens: Managers fear that by engaging those affected by change into the management process would cede too much control. This loss of control is perceived to lead to an increase in complexity and a lowered success rate

The Solution: Applying a new 9x change management approach that incorporates the best practices of previous models of engaging stakeholders while carefully guiding increased change complexity

Key Words: Change Management, Choice Architecture, Facilitation, and Nudge Theory

Daimler Chrysler Change Management Experience

Walter Chrysler built the Chrysler Corporation in 1925. Most noteworthy, he grew the company into one of Detroit’s big three automakers. For that reason, he became one of the founding fathers of the early automobile.

Gottlieb Daimler was one of the first pioneers of the internal combustible engine. He took that idea to market and began a car company in the 1890s. The Benz and Daimler’s companies merged into one in 1926. As a result, Daimler-Benz was the main German automaker and noted luxury car throughout the twentieth century.

In May of 1998 Chrysler and Daimler-Benz merged to become DaimlerChrysler AG. The merger design was to create a new giant automaker that could stretch across Europe and the Americas. With a projected annual sales of over $150 Billion, this aimed to be the dominant automaker. This combination would address the full consumer auto market. While capitalizing on economies of scale by maximizing German efficiency and American innovation.

Merger or Takeover

The merger kicked off with rough beginnings with significant cultural differences. Chrysler had a reputation as an agile, action-oriented Company with a flat management hierarchy. However, Daimler was renowned for being methodical, analytical, and a management structure that was vertically organized. Compounding these differences was that the merger was discovered to be a takeover. Chrysler didn’t have a board seat of the new corporation and had reduced influence on how to become one company. Quickly the push was to adopt Daimler’s management, standard operations, and culture instead of creating a new work model.

Change Disaster

Over the following years, organizational disaster ensued with leadership misalignment. Leadership infighting became the norm. The infighting led to multiple reorganizations and layoffs which led to industry declared poor designs and lagging manufacturing practices. Eventually, this led to the board to run the companies as separate entities as to not negatively degrade the brands.

By 2007 the gas crisis had swung into full effect and Chrysler could not survive. With a prime excuse, Daimler, sold Chrysler to Cerberus Capital Management to bring it back to life. This let Daimler wash its hands-free of one of the greatest change management failures. While on a massive scale, this takeover demonstrates the same behaviors of many change management failures: ignoring environmental differences, not engaging the stakeholders of who will be impacted, and forcing behavioral changes upon an embedded organizational culture. While this was a takeover the execution of their change management was the abject disaster for both parties.

History of Change Management

The roots of change management stretch back to World War II and the mass mobilization of soldiers. As a result, this led to the study of management and later the effects that change makes. In 1948 Lester Coach and John French studied the motivational issues centered around change initiatives identifying behavioral resistance. Their work also defined the three types of change: planned, continuous, and transitional.

In the 1950s Kurt Lewin developed one of the first change models. The model consisted of three stages: unfreeze, change, and refreeze. In 1969 Elizabeth Kubler-Ross published her five stages of grief and pointed to the correlation that was mirrored with employees during the change management process. The 1990s brought on the advancement of globalization and General Electric was able to leverage successful change approaches taking advantage of a slower transitioning market. Their approach was so successful that they were able to turn it into a new consulting business.

Failing Change Initiatives

With eighty years of practice, organizations continue to struggle with implementing change. Change theorist, John Kotter, projects that 70% of all change efforts fail. Because their failed efforts created environments of decreased morale, missed opportunities, and wasted resources. In retrospect, studies found that the model of reengineering the organization boom of the 1980s ignored people. The model actually made things worse. As practice and models have adjusted leaders know the change tools and theory but are failing to apply the tools or involve employees in the change process. This practice has led to poor communication channels, not rewarding quick wins or change wins, and making it harder to change ingrained behaviors.

Lewin’s Change Model

Kurt Lewin was an early organizational and leadership theorist known mostly for his work in behavioral change. His seminal work identified the formula that behavior is a function of the person in the environment.

B = f (P, E)

His work also initiated discussions on the change process which he referred to as the 3-step model. The model consisted of an organization unfreezing, changing, and refreezing. Later in his life, this model led to his research on analyzing change which he called a force field analysis. This consisted of analyzing the restraining or driving forces that affect transitions; assessing which are critical and taking mitigating and maximizing steps on those critical factors.

The Lewin change model focuses on the three stages of how the organization evolves. First, unfreezing which is altering the present state stable equilibrium. Secondly, the change introduces new responses to stimuli. Lastly, the change effort is stabilized and refrozen within the organization.

Lewin Change

Lewin Change

This revolution was the spark that led to an entirely new field of study. The model was well-received because it was easy to understand conceptually and to apply in practice. Additionally, the model forces the change agent to think past the quantitative side of change management to incorporate the qualitative side. However, the main detractor from this change approach is that it is rudimentary in nature and does not address how to deal with detractors that can derail the change efforts.

Kotter’s Change Model

Harvard Business School Professor, John Kotter, in 1995 published his lifetime work “Leading Change” which codified the Kotter change model. He created a model that could handle greater complexity than Lewin’s Change model and address change resistance. Kotter designed his model as an 8-step process to follow consisting of step by step instructions on how to implement change. Starting with creating a sense of urgency to spark the movement. Then the goal is to form a powerful coalition to build political support. Next, create a vision to establish a clear goal and then communicate the vision to align the organization. Following, remove obstacles to empower the change and create short-term wins to build momentum. Lastly, sustain acceleration to demonstrate the success of the change, and institute the change so that it becomes part of the culture.

Kotter Change

Kotter Change

The introduction of Kotter’s change model represented the next era of change management. Furthermore, it created an opportunity to engage hard to sway employees. Using a coalition-based team that influences formal and informal leaders to enact the change. Lastly, it provides the user with a robust checklist that any manager can apply. Conversely, the Kotter model is a top-down model. The model fails to engage all levels of the organization that are impacted by the change. It can also be used as a fear-based model by attempting to create a sense of urgency. In addition, the process gives the impression of being mechanical and robotic that doesn’t come across as authentic.

Hiatt’s ADKAR Change Model

In 1998, Jeff Hiatt developed a practical change tool focused on the people element of change. Most noteworthy, the model was intended to be a coaching and mentoring tool. Above all, the tool would help employees through the change process and determine if activities were having the desired response. The overarching belief is that change begins at the personal level. Hence, the ADKAR model came forward as a bottom-up change management model.

The ADKAR model is based on five key phases that the employee transverses with the first being the awareness of the need for change. Secondly, it is key to understand people’s desire to participate and support the change. Next is the team’s ability to gather knowledge of the change event and their subsequent ability to learn new skills and while managing behavior. The final phase is the reinforcement to sustain the change.

AKAR Change

ADKAR Change

The ADKAR change model has numerous positives starting with the model focuses on leaders helping employees understand, interact with, and carry out changes. The model directs attention to goal accomplishment, and it can be adaptable to any corporate structure. On the negative side, the ADKAR model struggles with managing a highly complex change and the model are built for incremental changes and with a narrow focus.

Nudge Theory

Developed by Richard Thaler and Cass Sunstein, Nudge Theory was made popular in the self-named book that capitalized on their works Nobel prize in economics. The theory focuses on how our brains have built-in cognitive biases that prevent us from making the right decisions. For example, numerous people continue to drink soft drinks knowing full well that it is bad for them.

Humans display systematic deviations from 100% rational decision making and these deviations prevent a person from making decisions in their best interest. Because of these hardwired biases, it is difficult to make rational decisions. Due to looking deeper at the why of human behavior it becomes clear that environments influence your choices. Thaler’s Nudging Theory is based on influencing peoples’ environments to make the decisions that they would want to make.

Nudge Change Model

While there is a multitude of variations of Nudge Theory in policymaking and social science, the philosophy aligns closely with change management as well. Offered in a step by step approach that resembles Kotter’s change model, the Nudge Change Model begins with clearly defining the change. Secondly, to consider the change from the employees’ point of view and then using evidence to show the employees the best option. Next is to present the change as a choice and to listen to feedback. Lastly, the role of the change agent is to limit obstacles and to keep the momentum going by delivering short-term wins.

Nudge Change

Nudge Change

Nudge Theory has numerous positives as its intent is to put people in positive environments and people-centric cultures. Hence, it has empirically demonstrated effectiveness at behavioral changes and incorporates autonomy and individual decisions. Conversely, it can also come across as manipulation to the team, especially if used inappropriately. In addition, it brings to light the question of if the change is ideal for the individual or for the organization.

9x Organizational Change Management (OCM) Approach

The 9x organizational change management approach takes the positive attributes of each of the previously mentioned change theories.  Similarly, Lewin’s “Freeze Model” this approach goes beyond the quantitative aspects to place focus on the people impacted by the change. The approach resembles Kotter’s Model by incorporating a checklist approach and addressing change detractors. Linked with the ADKAR Model it is based on bottom-up planning to engage those affected by the change. Lastly, it adopts the Nudge Theory’s choice architecture practice to influence positive behaviors to enact the change.

Change Management Approach: Alignment

Beginning, leadership alignment is the goal of the change manager is to ensure that there are a clear vision and strategy in place that can ensure that everyone in leadership can understand, discuss, and support. This also helps guide the team to define what success looks like. Therefore, this definition can range from project completion to a complete culture change. Associated with the change’s vision and measurable success is understanding what the importance is to the organization and what the urgency is behind it. Importance and urgency play an interconnected role with the mind in terms of behavioral change. For example, a doctor can tell a patient during numerous physical exams that they need to eat healthier and to quit smoking with no corrective actions taken. Yet, if this advice comes after a heart attack which is important and urgent, the behavior change has a better chance of being adopted.

Change Management Approach: Roadmap

As the leadership team achieves alignment, the next step is to review the event milestones. Because this will help to understand flashpoints that may occur. Each change has a catalyst event that causes disruption. Being able to understand at a granular level will enable the ability to predict reactions by those affected. For example, imagine that an organization facing a financial crisis will have to conduct a workforce reduction to stay in business. That event will then cause change in the entire workforce of being either laid off or having to incorporate a new working model with fewer people to support ongoing operations.

Change Management Approach: Flashpoints

With a timeline of future events, a change leader can then identify the flashpoints of where major and minor issues will occur. At those spots is where a stakeholder impact analysis will take place that will help understand from an empathetic point of view of what the issues will be. Upon understanding the issues during the hazard analysis, mitigation plans can be developed to lessen the impact the change will have on the affected. This is the creation of the change roadmap where the change leader can incorporate into the timeline various change strategies or mitigation actions in line with the project timeline. This is also the point of where to apply choice architecture into the timeline and to what decisions the workforce will be nudged into.

Change Management Approach: Communications

With the timeline mapped out, communication planning begins by identifying the timing for the key messages, their content, and the medium. Hence, all change plans will have a change announcement, good change plans will have multiple messages, and a great change plan will have multiple feedback sessions incorporated into the process. During communication planning, the key to adoption and acceptance is having carefully structured messages that are highly intentional. These do not end of the day messages that are typical tasks, but messages that will be analyzed and dissected. The most important action a manager can take during a change event is having a clear and concise message that expresses authentic empathy.

Change Management Approach: Upward Feedback Sessions

During the planned feedback sessions, this is the engagement of the entire organization. Ideally, the facilitator will present the goal of the change while the workforce decides how to make the change happen. This is the transition planning process. This step provides the most risk of the change event being successful or not and it also provides engagement and change acceptance.

Change Management Approach: Planning

As Peter Senge stated, “people don’t resist change, they resist being changed.” During these sessions, numerous actions will be identified and developed to help make this change successful. The role of the change facilitator is to capture all these items and to build the change action plan. Therefore, this action plan will then become the living document and reference for moving forward. It should also include a section on quick wins of actions to drive momentum and feedback loops. These periodical check-ins to measure what is working, what isn’t, and how should the change plan continue to evolve during the process.

Change Management Approach

9X Change Management Approach

Change Team

Being a competent leader in change management helps the process. However, the use of a specialized team to focus on change execution increase the odds of the initiative being successful. Key to the 9x approach is the application of four distinct roles. These can be performed by one person or each role can have a team. The first role is the change manager who will be the lead and point person for all things change related.

The change initiator or change owner will organizationally be the head of the change effort. Above all, the change manager will be the face of the initiative to the workforce.  They are the interface between the leadership team, the change team, and the rest of the organization. While also being the project manager for the entire event. This provides a central source for the change which aligns the organization to one truth. While also ensuring that each step to the change approach is expertly followed.

Change Communicator

Next, on the team is the communications and marketing lead. This individual carefully crafts each change message. This is disseminated to ensure that the organization understands why the change is happening, who is affected, what impacts it will have. They also perform the role of providing consistent and authentic messages. A secondary role is how these individuals market the change to the organization. With the goal to help the organization understand the necessity of the change.

Change Facilitator

Pertinent to the 9x change approach is the heavy influence of change planning developed by those being affected by the change. Due to this factor, their role in this process is the guidance provided by an unbiased facilitator. The facilitator’s role is the reinforcement of the change message. They also play therapist letting the affected vent their frustrations over the unsettling news. Through these discussions and workshops though, they will also be able to guide the workforce. Hence, they move the team forward and empowering them on how they will implement the change. Ultimately, the team will decide what their new lives will look like. These facilitated sessions will then produce an ample amount of actions to move the change forward. Which will then be fed into the change leader’s comprehensive project plan.

Choice Architect

The last role is the most unique role, the choice architect. The 9x change approach is the interweaving of nudge theory to help influence the change. Change events are successful once those that are affected subconsciously agree with the change and start to support the movement. This approach calls for engaging the organization. With the goal to help plan and drive the change by being an active participant in the event. This also cedes control to the organization to decide key aspects of the change. The role of the choice architect is to identify and clarify what those choices are. Then how to frame those choices that will be in the best interest of the entire ecosystem.

Conclusion

Change management approach has been the main topic in the lexicon of management study for the past seventy years. Bringing to light the theories of Lewin, Kotter, and Hiatt to name a few has led to the advancement of how change is theorized, conceptualized, and executed. Issues with change management are still experienced today as managers know the change models but continue to execute them poorly.

Compounding this issue is that organizations are not engaging their stakeholders into the change process and are trying instead to force change upon their people. Much of this fear is rooted in that to engage stakeholders into the change process would be to cede some control which would greatly increase the complexity of the change initiative. Proposed is the 9x change management approach which incorporates the best aspects of the available change theories and provides a methodology of engaging the workforce into the change while controlling complexity.

References

ADKAR Change Management: creating change in Individuals. (2018, November 6). Retrieved from Educational Business Articles: https://www.educational-business-articles.com/adkar-change-management/

Beotra, N. (2016, October 16). Daimler-Chrysler (DCX) Merger: A Cultural Mismatch. Retrieved from Medium: https://medium.com/@beotra.nehaa/daimler-chrysler-dcx-merger-a-cultural-mismatch-2cbb3a05321d

Brisson-Banks, C. (2009). Managing Change and Transitions: A Comparison of Different Models and Their Commonalities. Emerald insights, 241-252.

Burke, W. W. (2002). Organizational Change: Theory and Practice. New York: Sage.

Cohen, A. a. (2004). Daimler Chrysler Merger: The Quest to Create ‘One Company’. Babson College, 1-26.

Kotter, J. (2005). Why Transformation Efforts Fail. Harvard Management Update, 5.

Kotter, J. P. (1996). Leading change. Boston, MA: Harvard Business School Press.

References II

Ledbetter, S. a. (2018, November 6). The Nagging Issues of Nudging. Retrieved from Habitry: https://medium.com/practical-motivation-science/the-nagging-issues-of-nudging-f0af3a8f8b5

Levine, S. (2016, April 18). What can we learn from the history of change management? Retrieved from CUInsights: https://www.cuinsight.com/can-learn-history-change-management.html

Lewin, K. (1951). Field Theory in Social Science. New York, NY: Harper and Row.

Lewis, R. D. (2016, April 27). Cross-cultural issues relating to the Daimler Chrysler Merge – Case Study. Retrieved from CrossCulture: https://www.crossculture.com/cross-cultural-issues-at-the-daimlerchrysler-merge-case-study/

Organizational Change Models and Their Applications. (2018, November 6). Retrieved from USC Annenberg: https://communicationmgmt.usc.edu/blog/3-organizational-change-models-and-their-applications/

Stadler, C. a. (2005). Shell, Siemens, and Daimler Chrysler: Leading Change in Companies with Strong Values. Long Range Planning, 1-37.

Suddaby, R. a. (2017). History and Organizational Change. Journal of Management, 19-37.

Syed, B. (2015, November 25). The Evolution of Organizational Change Management. Retrieved from LinkedIn: https://www.linkedin.com/pulse/evolution-change-management-burhan-syed-pmp/

Thaler, R. H. (2008). Nudge: Improving decisions about health, wealth, and happiness. New Haven, CN: Yale University Press.

Watkins, M. (2007). Why Daimler Chrysler Never Got Into Gear. Harvard Business Review.

What is the ADKAR Model. (2018, November 6). Retrieved from PROSCI: https://www.prosci.com/adkar/adkar-model

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