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Three Forces Driving the New Economy

Knowledge - intellectual capital as a strategic factor Change - continuous, rapid and complex; generates uncertainty and reduces predictability Globalization - in R&D, technology, production, trade, finance, communication and information, which has resulted in opening of economies, global hypercompetition and interdependency of business

Understanding What's Going On in the Real World13

Tapping your resources of energy and imagination, look at your company from the perspective of your once and future customers and ask these questions relentlessly: What's happening in your marketplace? How are needs are changing? What's causing the changes? Where are the resulting opportunities?

Three Types of Business Managers7

Those who make things happen Those who watch things happen Those who wonder: "What in the hell just happen?" If you want to be among the first small group who makes things happen, you must learn how to recognize trends, and move with speed

Change and Leadership

Change or the need for change creates the need for leaders Leaders seek to create change whose time has come

Creating Change: Twin Strategies

increase or strengthen the forces for change reduce or weaken the restraining forces

Creating Change: Steps to Establishing a New Balance9

Identify the change you want to achieve Identify the forces that: will help you achieve that change will restrain that change Decide: which of these you're going to strengthen or weaken how you're going to do that when you're going to do it. Act.

Five Drivers of Change

Customer-led drivers - changes in the market make-up such as attitudinal moves in demand, income alterations, or demographic shifts that change definitions of value and convenience Technology-led drivers - incremental or radical innovation that occur in either the primary or enabler industries Capital-led drivers - changes brought on by institutional investors and the resultant alterations in standards of performance Competitor-led drivers - new challenges by existing competitors and new entrants Government-led drivers - legislative changes and policy initiatives that can impact business Keep your early warning system on to spot trends first. Whatever you see, hear or read, consciously remember to ask yourself: Will that eventually constitute a driver of change?

Beer's Formula for Leading Change - a Driving Force versus Barrier Equation4

Change = D x M x P > Cost D = Dissatisfaction "To function as a leader, you must create dissatisfaction with the status quo. Because change is inevitable, you are better off leading it than reacting to it"4 M = Business Organizational Model A business model that provides strategic direction for the change you create to achieve success now and in the future. "The model must be specific, addressing the kinds of people, policies, strategies, assets, structure, and shared values that are critical to achieving the mission."4 P = Process A process facilitates change and helps direct it towards targeted goals. It brings together various tangible assets of change - people, technology, and actions. Cost The cost is the barrier to change. "Dissatisfaction x Model x Process must be grater than the cost of change, with cost measured in terms of loss - loss of job security, loss of compensation, or loss of personal status... Unless the forces for change are powerful enough to overcome the loss that people feel as a result of this change, the change will not occur."4

Non-financial Barriers to Change

Human barriers Lack of leadership - when change fails to occur as planned, the cause if often to be found at a deeper level, rooted in the inappropriate behavior, beliefs, attitudes, and assumptions of would-be leaders6 Managers, who are confident that they are smart and in control, are often the biggest barriers to change Personal cost of change - threat to personal interests; loss felt by the people in the organization when change occurs "Not invented here" syndrome Corporate barriers Highly structured, established ways of working, depriving the organization of the sensitivity, agility and nuance An effective means of overcoming the resistance to change: Separate the human issues from the business issues.

Methods for Dealing with Resistance to Change
Approach	Commonly Used in Situations
Education & communication	Where there is lack of information or inaccurate information and analysis
Participation & involvement	Where initiators do not have all the information they need to design the change, and where others have considerable power to resist
Facilitation & support	Where people are resisting because of adjustment problems
Negotiation & agreement	Where someone, or some group, having a considerable power to resist will clearly loose out in a change
Manipulation & co-optation	Where other tactics will not work, or are too expensive
Explicit & implicit coercion	Where speed is essential, and the change initiators possess considerable power

Related Chapters of the Business e-Coach Starting Change with Yourself The Power of Attitude Be Different and Make a Difference! Resistance to Change Organizational Change The Wheel of Business Evolution Behavioral Change Opportunity-driven Business Development Moving With Speed Innovation System Innovation-Adept Culture Continuous Innovation Strategy

Change Defined

"Change is the window through which the future enters your life." It's all around you, in many types and shapes. You can bring it about yourself or it can come in ways

Why Change Management?

You can bring the change about yourself or it can come in ways that give you little choice about its what, when, and how. Fighting against change can slow it down or divert it, but it won't stop it however. If you wish to succeed in this rapidly changing new world "you must learn to look on change as a friend - one who presents you with an opportunity for growth and improvement."⁹

The rate of change in today's world is constantly increasing. Everything that exists is getting old, wearing out and should be replaced. "Revolutionary technologies, consolidation, well-funded new competition, unpredictable customers, and a quickening in the pace of change hurled unfamiliar conditions at management."⁷

New Realities and New Survival Strategies

In today's tidal wave of global economic, technological, and social change, that name of the game for you and your organization is survival. If you are going to withstand relentless and constantly growing global competition, you need to be different and radically change the way of doing business. You have to give up the old hierarchical, adversarial approach which wastes individual talents and saps energy in unproductive conflict. Instead you need to create a new management model, switch from management to leadership, manage change, build trust, drive out fear of failure and and create productive partnerships in which everyone can offer their unique knowledge and talents. If you know how to help your organization to do this, you can make a decisive difference.

Strategic Change Management

True success and long-term prosperity in the new world depends on your ability to adapt to different and constantly changing conditions. The strategic selection of the best strategic positioning in the playing field, or the Business Space, your firm must take is complicated by the fact that the characteristics of the Business Space change over time. Today, the world is a different place than it was yesterday. "At certain points, the difference becomes material. Successful firms recognize change. Very successful ones anticipate it."⁸

Harnessing the Power of Change

One of the keys to dealing with change is understanding that change in never over. "Change brings opportunity to those who can grasp it, and the discontinuities of the new economy offer unlimited opportunities."¹³

Real Time Business Development

Real time development brings about change and learning simultaneously - not separating the two. This approach is about "how to transform the development so that it means transforming the business whilst learning at the same time - continuously improving and learning and getting a business pay-off as an integral part of it. This means embedding development into how we do business and seeing it as part of doing business."¹⁴...More

Evolutionary Change versus Revolutionary Action

How you change a business unit to adapt to shifting economy and markets is a matter of management style. Evolutionary change, that involves setting direction, allocating responsibilities, and establishing reasonable timelines for achieving objectives, is relatively painless. However, it is rarely fast enough or comprehensive enough to move ahead of the curve in an evolving world where stakes are high, and the response time is short. When faced with market-driven urgency, abrupt and sometimes disruptive change, such as dramatic downsizing or reengineering, may be required to keep the company competitive. In situations when timing is critical to success, and companies must get more efficient and productive rapidly, revolutionary change is demanded.

When choosing between evolutionary change and revolutionary action, a leader must pursue a balanced and pragmatic approach. Swinging too far to revolutionary extreme may create "an organizational culture that is so impatient, and so focused on change, that it fails to give new initiatives and new personnel time to take root, stabilize, and grow. What's more, it creates a high-tension environment that intimidates rather than nurtures people, leaving them with little or no emotional investment in the company."⁴

Resistance to Change

Most people don't like change because they don't like being changed. "If you want to make enemies, try to change something", advised Woodrow Wilson. When seeking to change an organization, it's strategy or processes, leaders run into Newton's law that a body at rest tends to stay at rest. Advocates for change are greeted with suspicion, anger, resistance, and even sabotage.⁴ "Not invented here" syndrome also keeps many sound ideas from gaining the objective assessment they deserve...More

Today's World Realities

The magnitude of today's environmental, competitive, and global market change is unprecedented. It's a very interesting and exciting world, but it's also volatile and chaotic:

• Volatility describes the economy's rate of change: extremely fast, with explosive upsurges and sudden downturns.

• Chaos describes the direction of the economy's changes: we're not sure exactly where we're headed, but we are swinging between the various alternatives at a very high speed.⁶

To cope with an unpredictable world you must build an enormous amount of flexibility into your organization. While you cannot predict the future, you can get a handle on trends, which is a way to take advantage of change and convert risks into opportunities.

Creating Change for Improvement and Competitive Advantage

Change creates opportunities, but only for those who recognize and seize it. "Seeing is the first step, seizing the second, and continuously innovating is the third."⁵ Innovation redefines growth opportunities. As current products are becoming obsolete faster than ever, in order to survive and prosper, organizations continually need to improve, innovate and modify their products and services. The Silicon Valley slogan "Eat lunch and you are lunch" is more than a reflection of increasingly intense work ethic. Riding the wave of change is becoming the most important part of the business. While the economy is shifting and innovation is rampant, "doing it the same way" is a recipe for corporate extinction.¹

Successful change efforts are those where the choices both are internally consistent and fit key external and situational variables. "You have to find subtle ways to introduce change, new concepts, and give feedback to people so that they can accept and grow with it."⁴

Change Management Is Not Problem Solving

Research shows that solving problems requires ten times more resources than preventing them. Business people are divided into three types: those who make things happen, those who watch things happen, and those who wonder: "What in the hell just happen?"⁷ The first group of business people are those who rather prevent than solve problems, the last group is constantly busy with just the opposite.

Change Before Your Have To

Deal with change in a proactive manner. Success in business doesn't come from feeling comfortable. In today's technology-driven world, business life cycles have accelerated exponentially. The challenge is to keep a step ahead of changing market conditions, new technologies and human resources issues.

"The wisdom may lie in changing the institution while it is still winning - reinvigorating a business, in fact, while it's making more money than anyone ever dreamed it could make" advised Jack Welch.¹²

Anticipating Change

There is big difference between anticipating and guessing. Anticipation means expecting, being aware of something in advance, to regard it as possible. The ability to anticipate is one of the key ingredients of efficient speed and change management. "Being able to anticipate that which is likely to occur in the next few months and the next few years is enough to give you an edge over 99% of the population who simply go along with whatever happens."⁷

How can you see the future? Actually, anticipation is natural - everyone does it every day. Unfortunately, most people limit exercising their anticipatory skills to daily routine matters. All you really need to start applying these skills for your business is a small head start...More

Starting with Yourself

The best place to start change is with yourself. If whatever you do doesn't work, you must be flexible - you must change your action plan if the current one does not produce the required results. If you want other people to change, you must be prepared to make the first step yourself. If you cannot change your environment, you should change your attitude.

The formulation and use of the personal balanced scorecard could be the first step in change management. The NLP Technology of Achievement will also help you achieve effective personal change. It was specially developed to discover how people can excel, and most particularly when managing change - how to create the 'difference that makes the difference'...More

Leading Change

The old ways of management no longer work and will never work again. Successful change requires leadership. When change fails to occur as planned, the cause if often to be found at a deeper level, rooted in the inappropriate behavior, beliefs, attitudes, and assumptions of would-be leaders.⁶ Leadership is all about the process of change: how to stay ahead of it, master it, benefit from the opportunities it brings. The best leaders strike first by taking the offensive against economic cycles, market trends, and competitors. They discover the most effective ways for achieving significant change - "a change that identifies the realities of the business environment and reorders them so that a new force is able to leverage, rather than resist, those realities in order to achieve a competitive advantage."⁴

The following system will help you to unleash the power of your organization and reshape it into a more competitive enterprise:

• Develop a vision. To create a seamless bridge from the vision to action, start with your top management team - they should understand and embrace your vision.

• Deal with change in a proactive manner. Face reality and know that change is here for good. Tell your managers to do the same.

• Align all your people against the endgame. Invite their opinion regarding critical issues such as the direction you should be headed, the changes you have to make, and the resources you have to acquire.

• Using the employee feedback, develop a strategic plan. Stay laser-focused on the methods that will drive your business unit towards its stated objectives.

• Build a diverse leadership group representing all the key constituencies of your organization. They will share responsibility for plan management.

• Share detail information about the company and the change progress - people have to understand where you are and where you are going in order to contribute effectively to your mission.

Managing Organizational Change

Success in business doesn't come from feeling comfortable. In today's technology-driven world, business life cycles have accelerated exponentially. The challenge is to keep a step ahead of changing market conditions, new technologies and human resources issues.

The wheel of business evolution is a framework and set of tools which enables you to manage the complex process of organizational change and transformation more effectively. The sequence of the eight segments -  business environment, business ecosystem, business design, leadership style, organizational values, management process, knowledge management systems, and performance measures - reflects the learning cycle that occurs when outside-in or bottom-up learning takes place...More

A Clue to Successful Change Management

If you wish to manage change effectively, you need to understand that the way people behave is a balancing act - they balance the forces that act upon them. Some of these forces are trying to get people to change their behavior and others are trying to restrain or limit that change. Look at you own experience: at times you've fought against change and there have been circumstances where you've accepted it willingly and with enthusiasm. "When you've accepted change it was usually because you believed that what was to come was more attractive and interesting than what you had. This gives you a clue to how you can manage change successfully."⁹

Behavioral Change

The challenge and the shape of an organization's behavioral change program depends on the corporate culture and the targeted behaviors that need to be changed. Your change program needs to be explicitly built around these challenges. "Very often, these programs involve the creation of incentives which elegantly reinforce the desired behavior (and therein reinforce the change loop in the learning dynamic)."⁸...More

Motivating Employees to Embrace Change

You have a choice of instruments to motivate your people to embrace change. Performance-incentive levers are especially useful in driving those who lack direction or initiative. You may also encourage employee feedback on where and how the company can take corrective action and reward employees for their contribution. In any case, "once you open the gates and encourage employees to serve as agents of change, you must demonstrate that their input will have a real-world impact on the way your company does business."⁴

On the other side, you have to be rather aggressive when dealing with people who view change as a threat and create roadblocks that stall progress. Anyone who thinks that it's harmless to make exceptions for a few people and shift resources to accommodate poor performers is missing an important point. "It's not a few people who are at stake, it's the corporate culture", says Miles Greer, of Savannah Electric. "By permitting those who resist or retaliate against change to remain in the company, you broadcast a message that suggests supporting the company's mission statement is optional. Even worse, you permit the least-committed employees to taint and influence the attitude and performance of their peers."

Moving with Speed

In the new economy where everything is moving faster and it's only going to get faster, the new mantra is, "Do it more with less and do it faster."¹ To be able to move with speed, companies need to establish a change-friendly environment and develop four major competencies: fast thinking, fast decision making, fast acting, and sustaining speed...More

Making Quick Decisions through Establishing Guiding Principles

Fast companies that have demonstrated the ability to sustain surge and velocity all have established sets of guiding principles to help them make quick decisions. Abandoning theoretical and politically correct 'values' and bureaucratic procedures in favor of a practical, down-to-earth list of guiding principles will help your company make the decision-making process much faster. Only one question will need to be asked of any proposed course of action: Does it fit our guiding principles?¹...More

Managing Change through Projects

Change means projects. Projects are the means by which organizations adapt to changing conditions and innovations are effected. The greater the change, the more innovation, and thus projects, are required. This emphasis on change increases the importance of project management.

Case Study: General Electric (GE)

In most organizations, change efforts come and go - and rarely make a difference. But at GE, one of the largest companies in the world, one particular change process helped spark a complete transformation - Work-Out. With Work-Out as part of its DNA, GE has become one of the most innovative, profitable, and admired companies on earth.

Today, General Electric succeeds in dozens of diverse businesses, and is continuously at the vanguard of change. Jack Welch, the Former CEO, did a good job of illustrating the need for proactive change management and constant reassessment when he said, "If the rate of change inside an organization is less that the rate of change outside... their end is in sight"... More

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