WEEK 5 TO DO DISCUSSION A systematic review of the research suggests that there are ten steps to successful change. Most organizations seem to ignore this evidence, and this may contribute to the repo

Managing Organizational Change: A Multiple Perspectives Approach

Ian Palmer

REFERENCE OF THE BOOK

Palmer, I., Dunford, R., & Buchanan, D. A. (2017). Managing organizational change: A multiple perspectives approach(3rd ed.). McGraw-Hill Education.

CHAPTER 10 Change Management Perspectives

Change Management Perspectives

Learning Objectives

By the end of this chapter you should be able to:

LO 10.1 Understand and identify the factors that can cause change to fail.

LO 10.2 Assess the strengths and limitations of checklists for managing change effectively.

LO 10.3 Evaluate the advantages of stage models of change management.

LO 10.4 Assess the theoretical and practical value of the process perspective on change.

LO 10.5 Understand and apply contingency approaches to change management.

Ayn Rand, writer and philosopher

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Options for Managing Change

Change Is Disruptive—Live with It

A true transformation is disruptive. It doesn’t just work with the existing governance, the existing processes, the existing budgeting cycle, the existing ways of doing things. It is going to disrupt. And it’s going to create challenge and tension and friction in the organization. Because it is so disruptive, it’s also a top priority of the organization. This is not something that can be third or fourth down in the CEO’s list of things he or she must do. We view those characteristics as being necessary co-travellers to delivering a true transformation of the company. (Bucy et al., 2017a, pp. 2–3).

The perspectives discussed in this chapter include change management checklists, stage models, and process and contingency theories. They offer advice on managing change, but make no mention of the personal styles and preferences of individual change managers. Let us first fill this gap.

The Director and Navigator Images of Change Management

Two of our six images of change management are particularly relevant to the approaches explored in this chapter. The director image underpins the change management approaches associated with the work of large consulting companies, and also of academics who work as change consultants in this field. Those who adopt such approaches take a strategic view, adopting a pragmatic, managerialist approach to achieving lasting organizational change. The checklists and stage models that we explore fall into this category. They suggest that change can be managed and controlled in a predictable manner as long as the correct steps are taken, in more or less the correct sequence. However, given the number of different sets of recipes and frameworks that are available, it is not always clear which to adopt, or the criteria on which the choice should be made.

Contingency frameworks can also be seen as consistent with the director image. Rather than claiming to have discovered “the one best approach,” however, these frameworks argue that “it depends” on a number of context factors, such as the scale and urgency of the proposed changes. For example, one of these contingency frameworks, the change kaleidoscope (Balogun et al., 2016) does not offer prescriptive advice on how to implement change in particular contexts. That framework instead highlights for the change manager the contextual issues to consider when reaching an informed judgment with regard to change implementation design options. This approach is also consistent to some extent with the navigator image of change management. Change can be controlled in part, but external factors (contextual enablers and constraints, competing interests) can generate emergent and unintended outcomes over which the change manager has little or no influence.

The idea of establishing “fit” between change implementation and organizational context is not consistent with a processual view of change. Process theories see change unfolding over time in a messy and iterative way and thus rely on the image of change manager as navigator. Here, the change outcomes are shaped by a combination of factorsPage 321 including the past, present, and future context in which the organization functions; the substance of the change; the implementation process; political behavior, inside and outside the organization; and the interactions between these factors (Dawson and Andriopoulos, 2017). The role of the change manager is not to direct, but to identify options, accumulate resources, monitor progress, and to navigate a path through the complexity.

It is therefore important for change managers to be aware of, and perhaps on many occasions to put to one side, their preferred image of change management. It is also important that managers are comfortable with their actions, with regard to both personal capability and how actions are perceived to fit with the context. However, implementation design decisions should ideally be more heavily influenced by the context factors that we explore in this chapter than by personal considerations.

LO 10.1 Why Change Fails

Anyone who has never made a mistake has never tried anything new.  (Albert Einstein)

Trying is the first step towards failure.  (Homer Simpson)

In this chapter, we explore approaches to implementing organizational change effectively, drawing on a range of change management, processual, and contingency perspectives. First, however, we will explore why change fails. If we understand the common mistakes, perhaps we can avoid them.

Ask a group of managers to reflect on their experience and to identify what to do to make organizational change fail. Their response usually comes in two stages. First, they laugh. Second, they generate without difficulty a list of practical actions to guarantee that an initiative will not be successful. Table 10.1 illustrates the typical results of such a discussion. This suggests two conclusions. First, ensuring that change fails—should one wish to do that—is not difficult. There are many tools at one’s disposal, involving a combination of actions and inactions. Second, if we have such a good understanding of what can go wrong, then getting it right should be easy. Just turn the negatives around: clear vision,Page 322 commitment and leadership support, honest communication, simplicity, break down the silos, highlight successes and positives—and so on. Sadly, while this approach is helpful, “getting it right” is not this easy.

TABLE 10.1

How to Make Change Fail: A Management View

From his research into over 100 companies (most but not all American), John Kotter (2007; 2012a) argues that transformational changes often fail because of the mistakes that are identified in table 10.2. Understanding what not to do, Kotter turns these mistakes into a positive model of successful transformation. That involves careful planning, working through these issues more or less in sequence, and not missing or rushing any of them—which takes time. However, given the rapid pace of contemporary change, many organizations perhaps try to take too many shortcuts, to put change in place quickly, and get it wrong as a result.

TABLE 10.2

Why Transformation Efforts Fail*

*based on Kotter (2007 and 2012a)

Although it may be an oversimplification to claim that successful change just means avoiding these mistakes, they should be avoided nevertheless. It is also important to recognize that there are many of these mistakes, and that in any particular setting, several of those factors may be combining to ensure that the change program fails. Success or failure can rarely be explained with reference to only a single factor. What are the costs involved in avoiding these mistakes? Almost all the remedies are cost-neutral, involving changes in leadership and management style and in organizational policies and procedures. In short, while ensuring that change will fail involves little or no cost, most of the actions required to “get it right” are also free.

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LO 10.2 Change by Checklist

There is a certain relief in change even though it be from bad to worse; as I have found travelling in a stage-coach, it is often a comfort to shift one’s position and be bruised in new places.

(Washington Irving)

The landscape of practical advice for the change manager is dominated by simple checklists. These have also been described as “n-step recipes,” where n is the number of items on the list. This approach is open to the criticism that it oversimplifies a complex process. However simplified, it is probably accurate to claim that, in most cases, if the change manager does not follow most of the advice in these checklists, then the change program could run into trouble.

Checklist approaches to change management assume that the process is logical and linear and can therefore be controlled by planning and then following the correct set of steps. This “rational linear” model of change has been widely criticized, but it remains popular with professional bodies and management consultancies. This is probably because these checklists or recipes codify what is usually a messy and iterative process and thus offer the busy change manager straightforward advice on what to do to improve the chances of success. In this section, we will consider three typical checklists and consider how the change agent should choose between them.

The Boston Consulting Group’s DICE Model

Management consulting companies typically develop their own recipes, often with a memorable acronym. The DICE model developed by the Boston Consulting Group, for example, identifies four factors that determine whether a change program will “fly or die”: Duration, Integrity, Commitment, and Effort. These four factors are outlined in table 10.3 (Sirkin et al., 2005).

TABLE 10.3

DICE–Will Your Change Program Fly or Die?

Based on Sirkin et al., 2005

Change managers are advised to calculate scores for each of the DICE factors. For example, Duration scores highly if the overall project timescale is short with frequent reviews but gets a low score if reviews are more than eight months apart. Integrity scores well if a skilled and motivated project team has a capable and respected leader and scores badly if thosePage 324 features are absent. Are those who will be affected by the change enthusiastic and supportive (high Commitment score), or are they concerned and obstructive (low score)? Does the project require a small amount of additional work (high Effort score) or a lot of extra effort on top of an already heavy load (low score)? The combined scores reveal whether a project is in the win zone, the worry zone, or the woe zone. Knowing where the weaknesses are, management can develop an action plan to move the change into the win zone.

Reducing the task to four dimensions provides reassurance that, in spite of the uncertainties and untidiness, change can be controlled and managed effectively in a more or less logical and predictable manner. Also, having to handle such a small number of issues appears to lessen the scale of the challenge that the change manager has to face. Success appears to be pretty much guaranteed.

Prosci’s ADKAR Model

The ADKAR change model was developed by the consulting company Prosci (Hiatt, 2004; 2006; Hiatt and Creasey, 2012). The acronym is based on five elements: Awareness, Desire, Knowledge, Ability, and Reinforcement. Many commentators have observed that organizations change by changing one person at a time (e.g., McFarland and Goldsworthy, 2013). Following that premise, the focus of the ADKAR model lies with the individuals who will be involved in and affected by change. In other words, the change manager is advised to concentrate on individual Awareness, individual Desire, individual Knowledge, individual Ability, and the extent to which Reinforcement is meaningful and relevant to the individual. The ADKAR elements are described in table 10.4.

TABLE 10.4

ADKAR–Five Elements Influencing Change Success

Source: Hiatt, J. 2006.

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As with DICE, the change manager can use ADKAR as a diagnostic and planning tool, to identify areas of potential resistance, to develop communication and staff development strategies, and to strengthen change implementation by addressing gaps and problems. Paying close attention to individual perceptions, strengths, and weaknesses is a strength of the ADKAR approach, particularly with regard to generating enthusiasm, overcoming resistance, and developing new skills. In addition, this is one of the few models that explicitly address the issue of sustaining change (which we will explore in chapter 11). However, ADKAR pays less attention to the nature and implications of the wider organizational context and the process of change—factors that are emphasized in other models.

Stouten’s Evidence-Based Approach

Noting that the failure rate of planned organizational change is high, Stouten et al. (2018) suggest that managers should not use the available research evidence when making decisions about proposed changes to organizational practices. They argue that an evidence-based approach is more appropriate. Their review of that evidence, focusing on practical guidelines and underlying theory, identifies 10 steps that the change manager is advised to follow:

Diagnosis (1): Gather the facts concerning the nature of the problem.

Diagnosis (2): Assess the organization’s readiness for change.

Identify solutions: Implement evidence-based change interventions.

Develop effective change leadership throughout the organization.

Develop and communicate a compelling change vision.

Work with social networks, and use their influence.

Use enabling practices—goal setting, learning, employee participation, and transitional structures—to support implementation that should also be fair and just.

Encourage small-scale initiatives and experimentation, to allow local adjustments to broad change plans.

Assess change progress and outcomes over time.

Institutionalize the change to sustain its effectiveness.

This general advice has to be adapted to specific local circumstances, but the researchers argue that an approach that follows the evidence carefully is more likely to succeed than one that does not. It is interesting to note that this approach is broadly consistent with other guidelines, such as, for example, those from Kotter (2012a): Establish the need and readiness for change, communicate a compelling vision, assess progress, institutionalize or embed the change.

Checking the Checklists

There are many “how to” checklists in circulation. How should the change manager choose between them? Their contents are similar, but they each highlight different issues. DICE (Sirkin et al., 2005) asks the change manager to calculate scores for the change timing, team, commitment, and demands on staff. ADKAR (Hiatt, 2006) focuses on individualPage 326 perceptions, motivations, and capabilities. Stouten et al. (2018) want the change manager to follow the research evidence across 10 steps.

One response concerns “fit”; some approaches are more appropriate than others to a given context. This depends on the size of the organization, the nature, scale and urgency of change, the problems to be solved, numbers affected, the organization’s history of change, and so on. If change timing and demands on staff are key concerns, and the organizational culture has a preference for quantified methods, the DICE model may be appropriate. The ADKAR approach may apply in situations where individual concerns are seen as central to the success of change. The evidence-based approach of Stouten et al. (2018) may contribute to the credibility of the change manager in organizational cultures where changes themselves have to be seen to be supported by evidence, such as engineering, research and development, and healthcare settings.

Resourcing Organizational Change

It may seem obvious to argue that changes need to be adequately resourced, with funds, people, and other appropriate support, if they are to have any chance of success. Research suggests the opposite.

Weidner et al. (2017) were interested in the support provided for organizational changes, as inadequate resourcing is often used to explain (or excuse) failure. Confidence in and commitment to change, and experimentation with different options, can be encouraged by having access to the right financial and human resources. Experience shows, however, that the success of major changes is not guaranteed even where significant resources are made available.

The researchers studied links between available resources and the success of change in three healthcare settings in the UK National Health Service (NHS). These involved hospital services, community care, and mental health services. The NHS had been under pressure to cut costs, while maintaining quality, at a time when demand for healthcare was rising. Changes to the hospital and community care practices were felt to be strategic priorities, so they were well resourced, and their change agents had a lot of freedom. In contrast, mental health services were not seen as a priority, and budget and administrative support resources for these services were cut. The researchers gathered information over four years, using a combination of observation, interviews, and a wide range of organizational documents.

Which services experienced the most profound changes, and why? Weidner et al. (2017) found:

Despite being very well resourced, hospital and community care services were largely unchanged over the period of this study.

Mental health services changed and improved to such a degree that they became a local and national showpiece for strategic change initiatives.

Those working in mental health benefitted from the lack of interest in what they were doing, as this allowed them to implement changes quickly, without becoming involved in lengthy debates and negotiations.

The initiatives that were prioritized and well resourced attracted the attention of a wide range of powerful stakeholders. As a result, these changes came under more intense scrutiny and challenge. Change agents had to devote more time to managing the needs and demands of all the interested parties and spent less time implementing the actual changes.

Contrary to most change management advice, this evidence suggests that, if you want a department, service, or unit to make dramatic changes, consider giving it inadequate resources to do so.

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Another answer to “how to choose?” may simply be—does it matter? As long as advice in this form is used as a structured starting point, then the details and issues that are relevant to a specific change in a particular organization should emerge in the discussion and the planning. A final response is—why choose? Why not work through more than one of these approaches and assess their value in use? Two or more approaches applied to the same change program may suggest similar—or widely different—implications for practice. The similarities can be reassuring. The differences may trigger further insights and investigation and contribute to better implementation planning.

These models are “high-level” guides, not detailed “best practice” road maps. They are useful as long as they are used in that way. Unlike a recipe in your kitchen cookbook, these guidelines list the ingredients without explaining how to make the dish. You have to work that out for yourself. This can be frustrating for change managers seeking concrete advice on “what works and what doesn’t.” Checklists just identify factors that need to be addressed; the challenge is to construct a change implementation process that fits the organizational context. That is the hard part. Change from this perspective is to some extent a technical exercise, understanding the issues to consider, but also requires a blend of local knowledge, informed judgment, and creative flair.

LO 10.3 Stage Models

Kanter’s Law: Welcome to the miserable middles of change. Everything looks like a failure in the middle. Everyone loves inspiring beginnings and happy endings; it is just the middles that involve hard work.   (Kanter, 2009)

Change can be seen, not just as a checklist of to-dos, but as a series of stages unfolding over time, from initiation, through implementation, to conclusion. This stage approach does not necessarily disqualify the checklists and recipes. However, stage models suggest the actions that the change manager is advised to take will vary over the implementation cycle. The steps necessary to initiate change thus will be different from those required during the implementation stage, and different actions again will be necessary to conclude and sustain the change. Stage models can thus complement the checklist approach by introducing this temporal dimension.

Lewin’s Three-Stage Model

One of the best-known models of change was developed by Kurt Lewin (1951), who argued for the need to unfreeze the current state of affairs, to move to a desired new state, and then to refreeze and stabilize those changes (Burnes, 2020; Cummings et al., 2016):

unfreeze Change attitudes by making people feel uncomfortable about the way things are because they could be improved, and so establish the motive to change.Page 328

move Implement the change to move to the desired new state.

refreeze Embed or institutionalize the new behaviors, to prevent people from drifting back to previous ways of doing things.

Each of these stages makes different demands on the change manager. First, convincing those who will be involved of the need to change. Second, putting the change in place. Third, redesigning roles, systems, and procedures to discourage a return to past practice. One important observation of this model is that, if people are happy with the way things are, they will be reluctant to change. The change manager’s first task in this approach, therefore, is to make people unhappy. But this is a “positive dissatisfaction,” which encourages people to believe that “we can do better.”

Find on YouTube, “Unfreezing change as three steps: Rethinking Kurt Lewin’s legacy for change management” (2019, 7:36 minutes).

Lewin’s second stage—move—can invoke Kanter’s law (see the box “Kanter’s Law), which says that change often looks like a failure in the middle. Schneider and Goldwasser (1998), who plotted “the classic change curve,” captured this law (see Figure 10.1). In the middle of the curve sits the “valley of despair.” Those who are affected start to realize that this could mean loss and pain for them. Schneider and Goldwasser (1998, p. 42) argue that this is probably inevitable, but that it is useful to be aware of this and to weaken the impact if possible:

FIGURE 10.1

The Classic Change Curve

Source: Schneider, D. M., and Goldwasser, C. 1998.

A leader of change must anticipate employees’ reactions, another key factor in the process. As shown [Figure 10.1], these reactions occur along a “change curve.” The blue line represents what is, unfortunately, typical. Unrealistically high expectations at the outset of a programme lead to a relatively deep “valley of despair” when change doesn’t come as quickly or easily as anticipated. Over time, employees do see a “light at the end of the tunnel” and the change eventually produces some positive results. The red line illustrates what is possible with effective change management: a less traumatic visit to the valley and greater results as the programme reaches completion. Can you avoid the “valley of despair” altogether? Probably not. All change programmes involve some loss. The best approach is to acknowledge that employees will mourn the loss of business as usual, much as people experience stages of grieving when trauma invades their personal lives.

Kotter’s Eight-Stage Model

Probably the most widely cited, and widely applied, stage model of change is the one developed by John Kotter (2007; 2012a), mentioned earlier in this chapter. Kotter’s model is summarized in table 10.5. It is sometimes presented as another checklist, but this is a misrepresentation. Note how his eight-stage approach to transformational change opens with “create a sense of urgency” (unfreeze), passes through “empower people to act” (move), and ends with “institutionalize new approaches” (refreeze). Lewin’s echo can be heard in this model, too.

TABLE 10.5

Kotter’s Eight-Stage Model of Transformational Change

Source: Kotter (2007 and 2012a)

Kotter advises the change manager to work through those eight stages more or less in sequence. To rush or to miss out on any of the stages increases the chance of failure. However, Kotter also recognizes that this is an “ideal” perspective, as change is often untidy and iterative. As with the checklists, this model codifies the stages of change in a clear and easily understood manner. However, the change manager still has to combinePage 329 local knowledge with creative thinking to translate this advice into practical actions that are appropriate to the organizational context and to the nature of the changes that are being proposed. There are many ways, for example, in which to “create a sense of urgency” or to “communicate the vision” or to “institutionalize new approaches.” As with checklists, these stage models are also “high level” guides, rather than detailed “best practice” frameworks.

Appelbaum et al. (2012) reviewed the evidence relating to the effectiveness of Kotter’s model and found support for most of the individual steps. However, despite Kotter’s argument about integrating the eight stages, no studies had evaluated the framework as a whole. On the other hand, there was no evidence to challenge the practical value of the approach, which remains popular. The authors argue that “Kotter’s change management model appears to derive its popularity more from its direct and usable format than from any scientific consensus on the results” (Appelbaum et al., 2012, p. 764). They conclude, therefore, that Kotter’s model is useful in change implementation planning but should be complemented by other tools to adapt the change process to local conditions.

Kotter (2012b, p. 52) subsequently revised his framework, arguing that the components identified in table 10.5 should be seen as “change accelerators” to speed up change. The new argument has three aspects. First, Kotter argues that the accelerators must operate concurrently, rather than in sequence. Second, change must not rely on a small powerfulPage 330 core group but on many change agents from across the organization. Third, flexible and agile networks must complement traditional hierarchy. Kotter is not alone in advocating the use of multiple levers to pursue goals, adopting a “distributed” approach to change leadership, and strengthening organizational flexibility.

The McKinsey 5A Model

The stage approach to transformational change advocated by the management consultancy firm McKinsey focuses on “hard and soft” elements—the performance and health of the organization (Keller and Schaninger, 2019a; 2019b). Performance concerns what the organization does to improve its operational and financial results. Health concerns how well people work with each other. If large-scale change is to be successful, the change manager must emphasize performance and health equally.

Keller and Schaninger (2019a; 2019b) advocate a “5A” approach that divides change implementation into five manageable stages. At each stage, there is a key question. WhenPage 331 that question has been answered, the change can proceed to the next stage. The five stages are:

Aspire Where do we want to go?

Assess How ready are we to go there?

Architect What must we do to get there?

Act How do we manage the journey?

Advance How do we continue to improve?

This model offers guidelines for managing both the hard performance and soft health issues. The five guidelines for managing performance are:

Strategic objectives (aspire). Create a compelling long-term change vision, set midterm aspirations along the path, and guard against biases in the process.

Skill-set requirements (assess). Forecast demand for skills, and understand their supply dynamics; then decide how to close gaps.

Bankable plan (architect). Define the portfolio of initiatives that will realize your strategic objectives, and meet your skill requirements; then sequence your actions and reallocate resources accordingly.

Ownership model (act). Establish strong governance, decide how to scale your change initiatives, monitor their progress, and dynamically adjust them throughout implementation.

Learning infrastructure (advance). Institutionalize processes and expertise so that the organization shares knowledge, constantly improves, and continually learns how to do new things (Keller and Schaninger, 2019a, p. 8).

The five guidelines for managing health are:

Health goals (aspire). Objectively check your organization’s health, choose where to be exceptional, and target areas that need immediate improvement.

Mindset shifts (assess). Pinpoint helping and hindering behaviors for priority health areas, explore the underlying mindset drivers, and prioritize a critical few “from-to” mindset shifts.

Influence levers (architect). Use four levers to reshape the work environment: role modelling, understanding and conviction, reinforcement mechanisms, and confidence-building efforts. Then ensure that performance initiatives are engineered to promote the necessary mindset and behavioral shifts.

Generation of energy (act). Mobilize influence leaders, make the change personal for employees, and maintain high-impact, two-way communication.

Leadership placement (advance). Prioritize ongoing roles by their potential to create value, match the most important ones to the best talent, and make the talent-match process business as usual (Keller and Schaninger, 2019a, p. 8).

Even if this highly detailed prescription is followed carefully, transformation can still disappoint. According to McKinsey research, adopting a “pipeline” analogy, problems often arise through “leakage,” which may explain the 70 percent failure rate of planned change:

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It’s all about avoiding leakage. So at the aspiration stage, folks don’t go for their full potential. They go for seven out of ten of it. And then in the planning and execution, they let some things slide. They don’t see some things all the way through. And they do seven out of ten of it. Then, finally, they don’t build in the changes that are necessary for the initiative to be sustained. They get it seven out of ten right. Well, if you multiply that together, those sevens out of tens, you quickly get to about a 30 percent success rate. That’s what we’ve seen, again and again. You have to, at each step of the process, go for the 100 percent and be able to realize the full potential of the business in order for the transformation to be successful. (Bucy et al, 2017a, p. 3)

Bucy et al. (2017b) offer three pieces of advice for keeping the pipeline intact and transformational change on target. First, be relentless, assuming that most initiatives will deliver less than they promise at the start. And ensure that time is allocated to smaller initiatives. To reinforce this point, they use an interesting “boulders, pebbles, and sand” analogy. “Boulders” are initiatives that are each expected to contribute at least 5 percent of the program’s total value. “Pebbles” are expected to contribute between 0.5 and 5 percent. All initiatives expected to contribute less than 0.5 percent of the total value are “sand.” McKinsey research suggests that 50 percent of the total value of many transformation programs typically comes from sand. Focusing effort on the boulders—the large, high-profile initiatives—is therefore risky. In addition, it is usually quicker and easier to implement the “sand,” which may involve fewer layers of approval and less cumbersome coordination.

Second, focus resources, and do not expect your best change managers to run more than three initiatives at the same time. And control the number of metrics and milestones, many of which are never used and become unnecessary burdens. Third, plan and adapt; expect some projects to be delayed, and manage this with weekly actions for initiative owners.

Appraising the Stage Models

Stage models complement the checklist approach by highlighting the way in which change unfolds over time. This leads to the McKinsey observation that changes fail to deliver their promises due to “leakage in the pipeline” as change unfolds. As we have noted, change is likely to make different demands on the change manager—and on those who are affected by change—at each of the different stages. Although change is rarely tidy, knowing the probable sequence of events, and how that may be disrupted, allows the change manager to anticipate and prepare for potential difficulties.

Stage models are open to three criticisms. First, despite the emphasis on events unfolding over time, these models rarely refer to what has gone before the current intervention. What has happened in the past, however, with regard to previous change attempts, will influence responses to current proposals. Consider, for example, the change management actions that may be required to “create a sense of urgency” in an organization that has seen many previous unsuccessful changes that senior management drove with “a sense of urgency” and where top team credibility is now low. Contrast this with the organization where the opportunity or threat is clear to all staff members, who, on the basis of recent experience of change, place a high degree of trust in the top team. It may thus often be helpful to extend the timeline backward and to identify (and if necessary, to compensate for) previous events and outcomes that may influence today’s action plans.

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Second, it may also be helpful to extend the timeline forward, beyond “consolidate” and “institutionalize.” Even changes that are successful will eventually decay without appropriate maintenance. Paradoxically, successful changes can also inhibit the implementation of further innovation, which may be seen as novel, risky, and a threat to currently effective operations. The issues that arise in managing the sustainability of change are explored in chapter 11.

Finally, as with change checklists, stage models offer further “high level” guidance, leaving the change manager to determine how in practice to apply that advice in a given context. There is no clear, unambiguous statement of “this is what to do.” The contingency approaches to change management explored in the next section, however, seek to advise the change manager how to adjust implementation strategies effectively to different contexts and conditions.

LO 10.4 The Process Perspective

Change is a process, and not an event. This is a straightforward observation and is reflected in the stage models of change management discussed in the previous section. Process perspectives, however, highlight other significant aspects of organizational change and draw the attention of the change manager to issues not covered by either checklists or stage models. Although potentially making change appear to be more complex, process thinking encourages the change manager to adopt a more comprehensive approach to designing, planning, implementing, and reviewing change activities.

One of the architects of the processual perspective, Andrew Pettigrew (1985; 1987), cautioned against looking for single causes and simple explanations for change. Instead, he pointed to the many related factors—individual, group, organizational, social, political—that can affect the nature and outcomes of change. Pettigrew observed that change was a complex and “untidy cocktail” that included rational decisions, mixed with competing individual perceptions, often stimulated by visionary leadership, and spiced with “power plays” to recruit support and to build coalitions behind particular ideas.

In this view, the unit of analysis is not “the change”: a new organization structure, or new technology, or new working practices. The unit of analysis is “the process of change in context”: how a new structure will be implemented and developed in this particular organizational setting. This subtle shift in perspective has two related implications. First, this means paying attention to the flow of events and not thinking of change as either static or neatly time-bounded with defined beginning and end points. Second, this also means paying attention to the wider context in which change is taking place and not thinking in terms of a particular location in time and geography (this new machine in this factory bay). In short, process perspectives argue that, to understand organizational change, one has to understand how the substance, context, and process interact over time to produce the outcomes.

Patrick Dawson and Constantine Andriopoulos (2017) have further developed this processual perspective. They make it clear that to understand change we need to consider the following issues:

The context—past, present, and future—in which the organization functions, including external and internal factors, and the organization’s history as past events shape current responsesPage 334

The substance of the change and its scale and scope, which could be new technology, process redesign, a new payment system, or changes to structure and culture

The transition process, including tasks, activities, decisions, timing, and sequencing

Political activity, within and outside the organization, shaping decisions, securing support

The interactions between these factors, which shape both the change process and the outcomes

This perspective incorporates the role of power and politics in shaping organizational change. This is a feature that the perspectives we have examined so far either do not mention or deal with only briefly. As organizations are political systems, and as change is inevitably a politicized process, the process perspective argues that the change manager must be willing to intervene in the politics of the organization. In this respect, the key task is to legitimize change proposals in the face of competing ideas. The management of change can thus be described as “the management of meaning,” which involves symbolic attempts to establish the credibility of particular definitions of problems and solutions and to gain consent and compliance from other organization members. Part of this task, therefore, is to do with “the way you tell it,” or more accurately with “the way you sell it” to others.

Dawson and Andriopoulos (2017) identify eight lessons from a process perspective concerning change management practice:

There are no universal prescriptions or simple recipes for how best to manage change.

Change is a political process, and change leaders need to be politically sensitive and astute.

Time, planning, and flexibility are essential in changing attitudes and behaviors and in gaining commitment for change.

They advocate “critical reflection,” challenging taken-for-granted assumptions; for example, with regard to resistance, which may be desirable if it subverts a weak initiative.

It is important to learn from both positive and negative experiences.

Education, training, and development should be aligned with new operating procedures.

Communication is fundamentally important in steering processes in desired directions.

“Contradictions provide health food for critical reflection.” Change requires constant adaptation to contextual circumstances.

Most of this advice echoes the guidance from checklists and stage models. However, where the checklists say “do this,” process accounts advise, “be aware of this,” noting that there are no “best practice” recipes for change. The process perspective differs in the emphasis placed on the role of power and politics in shaping change outcomes. One implication of this emphasis is that the change manager must be politically skilled and be willing and able to use those skills. The capabilities of the change manager are explored in chapter 12.

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From Hot Breakfasts to Strategic Change How Did That Happen?

Process theory argues that the outcomes of change are produced by the interactions of several factors over time in a given context. What does this look like in practice? Donde Plowman and colleagues (2007) give a fascinating account of what they call “radical change accidentally.” They studied the turnaround of Mission Church, a failing organization in a large southwestern U.S. city.

The organizational context was unstable. The church was faced with a potentially terminal problem. Seen as a traditional “silk stockings” church, the organization was asset rich but cash poor. Attendance and membership were declining. There were ongoing conflicts involving a KKK plaque, the playing of jazz in the church, and whether gays and lesbians should be accepted as members. The purpose and identity of the church created further tensions, particularly with regard to including the homeless and others who were excluded. With several previous changes in leadership, there had been two pastors in three years, resulting in the controversial appointment of two co-pastors.

How did change begin? A group of youngsters, who did not like the traditional church school program, had the idea of providing hot breakfasts for homeless people on Sunday mornings. Some of those youngsters were not even church members; they were soon serving 500 people every Sunday. The hot breakfasts idea was never intended to produce radical change. However, Plowman and colleagues argue that small actions such as this were “amplified” by the unstable context.

What were the outcomes? Church membership recovered, involving a wider range of the local population including the homeless and minorities. Homeless individuals joined the church, sang in the choir, and served as ushers. The style of worship, formality of dress, and music changed as did the profile of the congregation; this was no longer a “silk stockings” church. The church got city funding to provide a day center for several thousand homeless and was soon serving over 20,000 meals a year. In addition to breakfasts and clinics, the church provided legal assistance, job training, laundry services, and shower facilities. The church motto changed to include “justice into action.”

Why did this happen? The “contextual configuration” that encouraged ongoing change included:

Dissatisfied youngsters came up with the hot breakfasts idea.

A doctor working as a volunteer offered to treat medical problems instead and soon recruited others, leading to full-scale medical, dental, and eye clinics as part of the Sunday activity.

The church removed the KKK plaque—a major symbolic act.

Leaders acted as “sense-givers,” providing meaning rather than directing changes, and chose the language labels: “purging,” “recovering,” “reaching out to the marginalized.”

Affluent members left as the church focused increasingly on the homeless, and new (less affluent) members were attracted by the message of inclusivity.

The features of the organizational context encouraged a series of small changes to emerge and amplified these into an unplanned, radical, and successful change process. There was no top-down transformation designed by senior leaders. This is a good example of a processual account of change unfolding over time, illustrating how factors at different levels of analysis interact to produce the outcomes. Plowman et al. (2007) offer the following advice for the change manager. First, be sensitive to context. Second, be prepared to be surprised; the emergence of small changes is not an orderly process. Third, view those small changes opportunistically, in terms of how they might be developed.

The process perspective on change thus appears to have three strengths:

It recognizes the complexity of change, drawing attention to the interaction between many factors at different levels, shaping the nature, direction, and consequences of change.Page 336

It recognizes change as a process with a past, a present, and a future, rather than as a static or time-bounded event or discrete series of events.

It highlights the political nature of organizations and change, emphasizing the importance of political skill to the change manager.

However, the process perspective has three limitations:

Change in this perspective is in danger of being presented as overcomplex and overwhelmingly confusing, and thus as unmanageable.

Those who are involved in the change process are sometimes portrayed as minor characters in the broad sweep of events, relegated to the role of sense-givers and interpreters controlled by social and contextual forces, rather than as proactive “movers and shakers.”

It does not lend itself readily to the identification of specific guidelines, focusing on awareness rather than prescription. Advice is thus limited to those issues to which change management should be sensitive: complexity, process, context, political influences, opportunity.

LO 10.5 Contingency Approaches

Dawson and Andriopoulos (2017) are not alone in noting that there are no universal “one best way” prescriptions for managing change. This has led to the development of contingency approaches, which argue that the best way to manage change depends on the context. We will explore four contingency approaches: Where to start?, the change leadership styles continuum, the Stace–Dunphy contingency matrix, and the Hope Hailey–Balogun change kaleidoscope.

Where to Start?

The problem has been diagnosed, and appropriate organizational changes have been agreed. What to do next? Where to begin? Hope Hailey and Balogun (2002, p. 158) discuss this briefly in their contingency model (explained below) arguing, “Change can start from top-down, bottom-up, or some combination of the two, or as another alternative, be developed from pockets of good practice. Should change be implemented throughout the organization simultaneously, or can it be delivered gradually through pilot sites?” The change manager is thus faced with a range of options.

Adopting a novel approach to the question of where to start, Marco Gardini et al. (2011) argue that change should begin with those staff whose contributions will have the most significant impact on the aspects of performance that need to change. Identifying those “pivotal roles” is vital, but this is not always obvious. They reached this “pivotal roles” conclusion from experience with a large European retail bank. This bank, with 6,000 branches, faced increasing competition from more “customer-friendly” local banks. To deal with this threat, management developed a new organizational model, which reduced central supervision and control and gave branch managers more autonomy to tailor their marketing, promotions, and offerings to their local areas. The new model wasPage 337 communicated quickly to all staff, and the way in which the new roles would work was explained. Top management did this through road shows, memos, intranet articles, and by publishing the new organization charts. Everyone received the same information, and the changes were all to happen at the same time.

Reviewing progress a few months later, however, most staff members had not changed their working practices. In particular, the branch managers were still using the previous structure and procedures because they were afraid of making mistakes or annoying more senior staff. The regional supervisors were meant to act as coaches to the branch managers, but many did not have coaching skills, and many branch managers did not have the skills to run their own branches and make their own decisions. Realizing that they had tried to change too much at the same time, top management decided to focus on those who could deliver the change the fastest. The regional managers, perhaps, or the branch supervisors? Neither of those groups qualified; they had no impact on daily branch activities, could therefore not affect results, and had little credibility with frontline staff. The branch managers themselves had the greatest influence on the outcomes of the planned changes because:

Their work had direct and significant impact on the revenue stream.

They were connected with many other groups across the organization.

They could decide how people got things done.

In other words, the branch managers combined managerial impact with local control, but they lacked the skills and attitudes to drive change quickly. The implementation plan was redesigned, focusing initially on the 6,000 branch managers. The training designed especially for them began with their role in the new organizational model and covered commercial skills, credit and asset management capabilities, quality and customer satisfaction principles, and other skills such as managing people, communications, and conflict resolution. Only when the branch managers were ready—six months later—did the bank start to work with other staff and supervisors, with different programs designed for different roles. This time the results were much better. Eighteen months later:

The number of products sold per branch had risen by 15 percent.

The time spent making credit decisions had fallen by 25 percent.

Branch relationship managers were spending 30 percent more time with customers due to the streamlined process.

Customer responses to marketing campaigns doubled, with a national survey showing a 20 percent improvement in customer satisfaction.

Knowledge sharing and mutual support increased, and the bank became more receptive to ideas from frontline staff.

Gardini et al. (2011) conclude that change is more likely to be successful if implementation has two key components. First, start with the “pivotal people,” whose work is closest to the activities that need to be improved. Second, design a comprehensive program with clear and meaningful goals, linking those in pivotal roles with thePage 338 changes that the rest of the organization has to make. This question of “where to start?” is not addressed explicitly by the checklists, stage models, or process approaches. This, of course, is not the only contingency affecting the appropriate mode of change implementation.

The Change Leadership Styles Continuum

One of the oldest contingency approaches addresses the question of change management style, which can range over a continuum from autocratic to democratic, or, as Tannenbaum and Schmidt (1958) described this, from leader-oriented to follower-oriented leadership (see Figure 10.2). The cultures—or, at least, the management textbooks—of developed western economies have endorsed participative approaches to change management, for which evidence has long established the benefits (e.g., Coch and French, 1948). Those who are involved in the design and implementation of change are more likely to contribute to its success than those on whom change has been imposed. However, the change manager should be aware of the range of options available with regard to style and of the disadvantages and advantages of these (see table 10.6). For example, “telling” people without participation is quick and decisive, but it may cause resentment and does not capture staff ideas. On the other hand, “inviting participation” increases commitment and access to useful information, but it is time consuming and involves a loss of management control. In a crisis where a rapid response is required, “inviting participation” can be damaging. In an organization that values the knowledge and commitment of its staff, the resentment caused by “telling” staff about planned changes can also be damaging. Choice of change management style thus needs to reflect the context.

FIGURE 10.2

Tannenbaum–Schmidt Leadership Continuum

TABLE 10.6

Change Management Styles—Disadvantages and Advantages

The Stace–Dunphy Contingency Matrix

Participative approaches to change management have also been challenged by the work of two Australian researchers, Doug Stace and Dexter Dunphy (Stace and Dunphy, 2001). Their approach begins by establishing a scale of change, from “fine tuning” to “corporate transformation” (see table 10.7 and Figure 1.1, “Assessing Depth of Change,” in chapter 1). They then identify four styles of change (see table 10.8).

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TABLE 10.7

Scale of Change

TABLE 10.8

Styles of Change

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Plotting scale of change against style of change produces the matrix in Figure 10.3. This identifies four strategies: participative evolution, charismatic transformation, forced evolution, and dictatorial transformation. Figure 10.3 also advocates the use of different change management styles depending on the attributes of the context. Stace and Dunphy (2001) thus argue that participative strategies are time consuming as they expose conflicting views that are difficult to reconcile. Where organizational survival depends on rapid and strategic change, dictatorial transformation is appropriate. Stace and Dunphy (2001, p. 185) cite the example of a police chief appointed to stamp out corruption and modernize a police department who, in his own words, initially adopted a management style that was “firm, hard and autocratic, and it had to be that because that is what the organization understood.”

FIGURE 10.3

The Stace–Dunphy Contingency Approach to Change Implementation

Source: Stace and Dunphy (2001).

Once again, we have a contingency perspective that argues that, while collaborative–consultative modes will work well under some conditions, there are circumstances where directive–coercive modes of change management are likely to be more appropriate and effective. In particular, where major changes are necessary for survival, time is short, and those affected cannot agree on the changes, then dictatorial transformation may be the necessary choice of style. Inviting participation under those conditions would take time and be unlikely to produce any agreement.

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The Hope Hailey–Balogun Change Kaleidoscope

Veronica Hope Hailey and Julia Balogun (2002; Balogun et al., 2016) also advocate a context-sensitive approach to the design and implementation of change. Their framework identifies the characteristics of the organizational context that should be taken into consideration when making change implementation design choices. They describe this framework as “The Change Kaleidoscope,” shown in Figure 10.4 (Hope Hailey and Balogun, 2002, p. 156).

FIGURE 10.4

The Change Kaleidoscope

The argument that change implementation should reflect the organizational context is not a novel one, but Hope Hailey and Balogun argue that other contingency models focus on too narrow a range of factors such as type of change, time frame, the power of the change manager, and the degree of organizational support for change. The eight context factors in the change kaleidoscope are:

Time Depending on urgency, what is the necessary speed of the change?

Scope How narrow or broad is the scope of the change agenda?

Preservation Is there a need to maintain a degree of continuity on some dimensions, in some areas?

Diversity Are the attitudes and values of those affected similar or are there diverse subcultures?

Capability Do the individuals involved have the necessary skills and knowledge?

Capacity Does the organization have the resources to implement more change?

Readiness What degree of acceptance of or resistance to change is there?

Power What is the power of the change manager relative to other stakeholders?

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These eight context factors can be either constraints (e.g., shortage of time, low capability) or enablers (e.g., broad agreement on need for change, powerful change manager). The point is that the design of the change implementation process should be influenced by the nature of those context factors. Hope Hailey and Balogun (2002, p. 161) identify the six design options summarized in table 10.9.

TABLE 10.9

Change Kaleidoscope Implementation Options

As well as offering a diagnostic approach to understanding context and identifying the range of options, Hope Hailey and Balogun (2002, p. 154) also argue that the kaleidoscope “encourages an awareness of one’s own preferences about change and how this limits the options considered.” In other words, the change manager who adopts a director image may use the kaleidoscope in a manner quite different from the manager adopting the navigator image.

The aim of this framework, therefore, is to trigger a questioning approach to the context and an informed approach to choosing design options. There is no mechanistic way to “read” a particular configuration of design choices from the results of an analysis of the context. As with all the approaches in this chapter, the change manager’s local knowledge and informed judgment are key to choosing the contextually appropriate change design from the wide range of options available, as Hope Hailey and Balogun (2002, p. 163) explain:

Understanding the contextual constraints and enablers is key to understanding the type of change an organization is able to undertake as opposed to the type of change it needs to undertake, and therefore what sort of change path is required. Similarly, understanding the contextual constraints and enablers is central to making choices about startpoint and style. More participative change approaches require greater skills in facilitation, a greater readiness for change from those participating, more time, and therefore, often, more funds. Choices about the change target and interventions may obviously be affected by the scope of change, but also by, for example, capacity. Management development interventions can be expensive and may not be accessible to organizations with limited funds. In reality choosing the right options is about asking the right questions and exercising change judgement.

The argument that “the best approach” depends on context is an appealing one. Contingency approaches, however, are not beyond criticism. First, the idea of “fitting” change implementation to a particular type of change in a given context may be easier to explainPage 343 in theory than to put into practice. As the change kaleidoscope implies, the change manager needs considerable depth and breadth of understanding of the change context to make informed judgments. Second, contingency approaches are more ambiguous and difficult to explain than the simpler “off the shelf” competition from checklists and stage models. Third, contingency approaches require a degree of behavioral flexibility, especially with regard to style, with which some senior managers may be uncomfortable if they lack the necessary capabilities. Fourth, if managers adopt different approaches at different times and in different conditions, will this weaken their credibility with staff? Finally, is everything contingent? Are there no “universals” when it comes to organizational change?

EXERCISE 10.1

Develop Your Own Change Model

LO 10.2-10.5

In this chapter, we have explored three change checklists, three stage models of implementation, the process approach to change, and four contingency frameworks. These approaches are similar in some respects and different in others. Can they be combined? Try the following experiment:

Bring the advice from these different models into a single list, omitting the overlaps.

Reflecting on your own experience and knowledge of organizational change, consider what issues and steps are missing from these guidelines; add these to your master list. Now create your own composite change management model; if possible, do this as a group activity.

Can you prioritize this advice? What items are more important, and which are less important? Taking a contingency approach, in which organization contexts do particular items become more or less significant?

Can you identify a preferred sequence of change implementation steps? And can you explain and justify this recommendation?

Looking at your composite change management model, identify three management skills associated with each of the elements. Use this as the basis of a personal assessment; what are your strongest and your weakest change management skills?

Looking at the elements in your composite change management model, and reflecting on your own experience of organizational change, which elements are usually handled well, and which are often handled badly? Why do you think this is the case?

EXERCISE 10.2

Getting Boeing Back in the Air

LO 10.2-10.5

As you read this case, consider the following questions:

Can organizational culture be blamed for plane crashes? Will those crashes prompt Boeing to change its culture, or could they be a barrier to culture change?

With hindsight, moving the top-management team to Chicago looks like a mistake. But how do you assess the reasoning behind that move? Was the explanation a good one?

To get Boeing “back in the air,” what will be the priorities of David Calhoun, the new chief executive? What steps do you think he will need to take to implement “deep culture redesign”?Page 344

Check your online news sources and bring this case history up to date. Has David Calhoun been able to change the culture at Boeing? Have there been any more accidents? What is your assessment of David Calhoun’s change leadership?

The American company Boeing makes airplanes, rockets, satellites, telecommunications equipment, and missiles. Defense production is based in St. Louis, Missouri, and the aerospace business is in Long Beach, California. Passenger jets are made in Seattle, Washington, on the northwest coast, where the company’s 40,000 engineers are based. Boeing is one of America’s biggest exporters. A million people work either for Boeing or for one of its suppliers, and it has been described as “too important to fail” (McNulty and Marcus, 2019, p. 2). Boeing’s main competitor in the passenger jet market is Airbus; other competitors include Lockheed Martin, Northrop Grumman, Raytheon, General Dynamics, SpaceX, BAE Systems, Bombardier, Embraer, and Loral Space & Communications.

Boeing’s new 737 Max aircraft was introduced in 2017. In October 2018, a Lion Air Boeing 737 Max crashed, killing 189 people. Five months later, in March 2019, an Ethiopian Airlines 737 Max crashed, killing 157 people. Investigators found that the plane’s new Maneuvering Characteristics Augmentation System (MCAS) automatically forced the aircraft to stall and nosedive. This system had been omitted from flight manuals and crew training. The U.S. Federal Aviation Authority (FAA) grounded the 737 Max. Boeing’s reputation was damaged. But chief executive Dennis Muilenburg decided to keep making the 737 Max, to demonstrate confidence in the plane, even though they could not be sold. Boeing fired Muilenburg at the end of 2019, and David Calhoun took over as CEO.

To understand how this could have happened, we have to go back to 1997, when Boeing acquired McDonnell Douglas, a competitor with a “finance first ethos.” Boeing took on many McDonnell Douglas executives including their chief executive, Harry Stonecipher, who was known for his aggressive cost cutting. In 2001, Boeing’s chief executive and then president, Phil Condit and Harry Stonecipher, decided to put some distance between the company’s 500 senior management and staff and the plane-makers and moved the headquarters to Chicago—2,000 miles from Seattle. They explained that senior management was being drawn into day-to-day operational decisions when they were so close to the manufacturing base. In a large, modern, multinational company, they felt that senior executives should not have such contact with engineers. Stonecipher said, “When people say I changed the culture of Boeing, that was the intent, so that it’s run like a business rather than a great engineering firm. It is a great engineering firm, but people invest in a company because they want to make money” (Useem, 2019). Stonecipher became chief executive of Boeing in 2003 (but was forced to resign in 2005 following an improper relationship with a female executive).

The previous close proximity of managers and engineers meant, however, that senior executives had a good understanding of engineering issues. They “spoke the language of engineering and safety as a mother tongue,” and they could see for themselves what was happening. As Useem (2019) points out, “The present 737 Max disaster can be traced back two decades—to the moment Boeing’s leadership decided to divorce itself from the firm’s own culture.” With Stonecipher as president, the new slogans became “a passion for affordability” and “less family, more team.” One aerospace analyst said that “You had this weird combination of a distant building with a few hundred people in it and a non-engineer with no technical skills whatsoever at the helm.” In other words, “a company once driven by engineers became driven by finance” (Useem, 2019).

Signalling the shift to a “shareholder-first culture,” between 2014 and 2019, Boeing spent $43.4 billion on stock buybacks, and only $15.7 billion on research andPage 345 development for commercial airplanes (Catchpole, 2020, p. 56). This culture placed short-term rewards to shareholders ahead of engineering decisions and longer-term strategy. Boeing’s board even approved a further $20 billion buyback in December 2018, two months after the first 737 Max crash (but that decision was later reversed).

The immediate causes of the 737 Max crashes were technical—faulty software. But other factors had played a role. In the interests of cost and time to market, Boeing had decided to modify the 737 rather than design a new aircraft from scratch. To avoid regulatory delays, Boeing maintained that no additional pilot training was required for the 737 Max. Boeing engineers were surprised when some software development tasks (not specific to MCAS) were outsourced to college graduates employed by an Indian subcontractor in Seattle earning $9 an hour. Ed Pierson, a former Boeing manager, claimed that, before the fatal crashes, the 737 Max had experienced more than a dozen other safety incidents. Pierson said, “Something happened in the translation from, ‘let’s build a high-quality safe product’ to ‘let’s get it done on time’” (Diss, 2020). There was pressure on 737 engineers and test pilots and also a lot of pressure on production employees. Pierson saw tired workers doing jobs for which they were not trained, and making mistakes. He asked management to shut down the 737 factory, but they refused. The software failures were thus symptoms of a wider management problem.

In March 2020, the House Transportation Committee, of the U.S. Congress, released its preliminary findings following a year of investigation into the 737 Max crashes. Concluding that these tragic accidents were due to multiple factors, the Committee’s report focused on five issues:

The implementation of aggressive cost cutting and excessive pressure on employees to maintain the production pressure, due to competition from Airbus.

Boeing’s faulty assumptions about critical technologies, and the MCAS system in particular, which relied on a single sensor and was not classed as a safety-critical system.

Boeing’s culture of concealment, withholding critical information from the FAA, customers, and pilots.

Conflicts of interest among Boeing employees who were authorized to carry out aviation safety certification work on behalf of the FAA.

Boeing’s influence on the FAA’s oversight; FAA management rejected safety concerns raised by their own experts.

The House Transportation Committee (2020, p. 13) concluded, “These preliminary investigative findings make clear that Boeing must create and maintain an effective and vigorous safety culture and the FAA must develop a more aggressive certification and oversight structure to ensure safe aircraft designs and to regain the confidence of the flying public.” The focus on finance had changed the relationships between Boeing management and engineers: “It was the ability to comfortably interact with an engineer who in turn feels comfortable telling you their reservations, versus calling a manager 2,000 miles away who you know has a reputation for wanting to take your pension away. It’s a very different dynamic. As a recipe for disempowering engineers in particular, you couldn’t come up with a better format” (Useem, 2019). Boeing’s “moral compass” was broken, and the focus on “making the numbers” put quality and safety at risk. McNulty and Marcus (2019, p. 4) claim that “Boeing should engage in a deep culture redesign process.” Edmondson (2019) argues, “What’s required is more than operational fixes. It is nothing less than a full organizational culture change.”

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Find on YouTube, “New Boeing CEO David Calhoun takes the reins by developing fresh strategy” (2020, 3:21 minutes).

Case Sources

Catchpole, D. 2020. Boeing’s long descent. Fortune 181(2):56–58.

Diss, K. 2020. Troubled 737 Max Boeing airplane had at least 13 other safety incidents, ex-employee says. ABC News, February 14, https://www.abc.net.au/news/2020-02-15/ex-boeing-manager-says-one-in-25-737-max-had-safety-incident/11957634.

Edmondson, A. C. 2019. Boeing and the importance of encouraging employees to speak up. Harvard Business Review, May 4, https://hbr.org/2019/05/boeing-and-the-importance-of-encouraging-employees-to-speak-up.

McNulty, E. J., and Marcus, L. J. 2019. Flying safe: Boeing’s values and culture need to change. EHS Today, October 7, https://www.ehstoday.com/safety-technology/article/21920393/flying-safe-boeings-values-and-culture-need-to-change.

Stacey, K. 2019. Senators castigate Boeing over anti-stall system. Financial Times (October 30):12 (U.S. edition).

The Economist. 2019. Boeing’s misplaced strategy on the 737 MAX. The Economist, December 18, https://www.economist.com/leaders/2019/12/18/boeings-misplaced-strategy-on-the-737-max.

The House Committee on Transportation and Infrastructure. 2020. The Boeing 737 MAX aircraft: Costs, consequences, and lessons from its design, development, and certification. Washington.

Useem, J. 2019. The long-forgotten flight that sent Boeing off course. Ideas, November 20, https://www.theatlantic.com/ideas/archive/2019/11/how-boeing-lost-its-bearings.

EXERCISE 10.3

Did Heinz Choke on the 3G Recipe?

LO 10.5

As you read this case, consider the following questions:

What is your assessment of the strengths and limitations of the 3G approach to change?

If you were advising the board of Kraft Heinz on how to “invigorate” the company today, what changes would you recommend, and why? Use the dimensions of the change kaleidoscope to frame your advice concerning timing, scope, need for continuity, diversity of attitudes, capability of those involved, capacity of the organization, readiness for change, and power of the change manager.

What mistakes would you advise the board to avoid when implementing the changes that you are recommending (refer to tables 10.1 and 10.2)?

In 2013, Heinz, the iconic food company with an annual revenue of $11.6 billion, was bought for $29 billion by Warren Buffett’s Berkshire Hathaway and the Brazilian private equity firm 3G Capital. The new owners wasted no time making changes. Eleven of the twelve most senior executives were replaced, 600 staff were laid off, the corporate planes were sold, individual offices were dispensed with, executives when travelling were to stay at a Holiday Inn hotel and not at the Ritz-Carlton, and much longer working hours were expected. Micro-management limited each staff member to 200 copies a month; printer usage was tracked. Executives were allowed only 100 business cards a year.

Heinz employees referred to “an insular management style in which only a small inner circle knows what is really going on.” One said, “It’s a bit like God—you feel there’s aPage 347 grand plan, but you aren’t sure what it is” (Reingold and Roberts, 2013, p. 189). On the other hand, 3G had a young team of mostly Brazilian executives, who moved as directed from company to company across countries and industries, loyal to 3G, not Heinz, and driven to work hard to receive bonuses or stock options.

The driving force behind these changes was “The 3G Way”—which 3G had used to manage change in previous acquisitions such as Burger King. Efficiency was key, everything was measured, and costs were slashed. In this perspective, “leanest and meanest” wins, and human capital was not seen as a key component of corporate success. The assumption was that employees were motivated by the economic returns that came from owning company shares rather than by any sense of purpose or mission.

Those likely to be affected by a 3G deal often saw a “how to” guide written by consultant Bob Fifer as a “must read,” because it had been popular with the partners at 3G (as it had been with Jack Welch, the iconic chief executive at GE). The guide was titled, “Double Your Profits: 78 Ways to Cut Costs, Increase Sales, and Dramatically Improve Your Bottom Line in 6 Months or Less.” Chapter titles included “Cut Costs First, Ask Questions Later” and “Don’t Be Afraid to Use a Shotgun.”

However, in the minds of many food industry experts, while some of 3G’s previous acquisitions would have been prime candidates for a cost-cutting regimen, Heinz was not an obvious target for that “hack and slash” approach. The company had been through several years of efficiency improvements (“slimming and trimming”), and it was already a relatively lean and efficient operation.

Summing up the situation, business journalists Jennifer Reingold and Daniel Roberts (2013, p. 186) speculated that “the experiment now under way will determine whether Heinz will become a newly invigorated embodiment of efficiency—or whether 3G will take the cult of cost cutting so far that it chokes off Heinz’s ability to innovate and make the products that have made it a market leader for almost a century and a half.”

In 2015, Heinz and the food industry giant Kraft announced a merger that would create an entity with an annual revenue of $28 billion, the third largest food company in the United States and the fifth largest in the world. Annual cost savings of $1.5 billion were expected.

The merger was followed by more cost cutting. However, less attention was paid to changing customer preferences, such as for healthy organic food instead of processed cheese and lunch meat. Margins were also cut by supermarket purchasing strategies (La Monica, 2019). In an attempt to grow further, Kraft Heinz made an offer of $143 billion for Unilever in 2017—but the offer was rejected. Further cost cutting at Kraft Heinz failed, leading to falling sales, falling operating income, and a falling share price. Unilever, in contrast, was comparatively successful. Cox (2019) said, “How the tables have turned. The Cheez Whiz giant has melted down since offering to buy Unilever: its US$40 billion market value is now just a quarter of its erstwhile prey. Unilever, meanwhile, has blossomed into a US$155 billion behemoth.” By 2018, Kraft Heinz was making losses, the share price had fallen by 60 percent in over two years, and the Securities and Exchange Commission was investigating its accounting practices.

Find on YouTube, “Warren Buffett on what he plans to do with his Kraft Heinz shares and 3G Capital” (2019, 8:31 minutes).

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Case Sources

Carey, D., Dumaine, B., and Useem, M. 2019. CEOs are suddenly having a change of heart about what their companies should stand for—and the diverging fates of 2 major corporations show why. Business Insider, September 6, https://www.businessinsider.com.au/kraft-heinz-unilever-ceo-investments-economy.

Cox, R. 2019. Unilever can’t help but mull a Kraft pounce. Reuters, March 8, https://www.reuters.com/article/us-kraft-heinz-unilever-breakingview.

Kell, J. 2017. Big food is going to get even bigger. Fortune, March 15, 175(4):11–12.

La Monica, P. R. 2019. What went wrong at Kraft Heinz? CNN Business, February 22, https://edition.cnn.com/2019/02/22/investing/kraft-heinz-stock-strategy/index.html.

Reingold, J., and Roberts, D. 2013. Squeezing Heinz. Fortune (October 28):184–92, https://www.forbes.com/sites/greatspeculation/2015/03/30/analysis-of-the-kraft-heinz-merger.

Additional Reading

Balogun, J., Hope Hailey, V., and Gustafsson, S. 2016. Exploring strategic change. 4th ed. Harlow, Essex: Pearson. Wide-ranging theoretical and practical text on change management, advocating a contingent approach that tailors change implementation to the context, based on the “change kaleidoscope” tool.

Dawson, P., and Andriopoulos, C. 2017. Managing change, creativity and innovation. 3rd ed. London: Sage Publications. A comprehensive and clearly explained account of a processual perspective on change and innovation, theoretical and practical.

Kotter, J. P. 2012. Accelerate! Harvard Business Review 90(11):44–52. Explains how to drive strategic, transformational change without disrupting daily operations. This is a development of Kotter’s original eight-stage model of transformational change.

Roundup

Reflections for the Practicing Change Manager

Do you work with a “one size fits all” approach to change management? To what extent do you adapt your approach to the scale and timing of the change, staff readiness, your own relative power, and other context features identified in this chapter?

How capable are you in adopting more than one change image? Are you more comfortable with a top-down or a bottom-up approach—or somewhere in between? Do you need to develop any particular skills to achieve greater flexibility (assuming you believe that flexibility will give you an advantage)?

Is there a dominant change approach in your organization? If so, how appropriate is it? What would you need to do to modify or replace that dominant approach?

How do you handle the many different change initiatives that are unfolding in our organization or business unit at a given time—when these are all at different stages? Is this a problem? If not, why not? If it is, what is your preferred solution? If possible, share and discuss your responses to this question and the others in this “reflection” with colleagues.

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Here is a short summary of the key points that we would like you to take from this chapter, in relation to each of the learning outcomes:

LO 10.1

* Understand and identify the factors that can cause change to fail.

Making change fail is relatively easy; there are many things that one can do, and not do, to achieve that result. John Kotter identifies eight main failure factors: lack of urgency, no supportive coalition, no vision, poor communication, obstacles to change not removed, no “wins” or achievements to celebrate, declaring victory too soon, and not anchoring or embedding the changes. Lack of communication is a particularly significant cause of change failure.

LO 10.2

* Assess the strengths and limitations of checklists for managing change effectively.

We introduced three checklists or “recipes” for managing change:

Boston Consulting Group’s DICE model

Prosci’s ADKAR model

Stouten’s evidence-based model

One strength of these approaches is that they provide clarity and simplicity in an area that can be complex and untidy. Another strength is that different checklists tend to offer much the same advice, which is reassuring. One limitation is that these checklists tend to lack any theoretical underpinning, relying often on an argument that sounds like, “This worked for us, so it should work for you.” From a practitioner perspective, another limitation is that these are generic “high-level guides” and not detailed “best practice” road maps. The change manager is left with the challenging task of translating this guidance into a change implementation plan that will fit the organizational circumstances. These checklists do not substitute for local knowledge, informed judgment, and creativity.

We discussed the question concerning when to use each of these checklists. As they tend to offer broadly similar advice, it may not matter. However, they encourage different emphases—DICE on taking action based on scoring the issues, ADKAR on individual perceptions, and Stouten on following the research evidence base. A more appropriate question, perhaps, is how to use these checklists. They should be seen as high-level guides and not detailed road maps, and they will be helpful as long as they are not used in a tightly prescriptive manner, but to trigger discussion, diagnosis, and planning. It may be useful in some settings to apply more than one model to the same change program. These comments concerning when and how to use change management guidelines apply to all the models and frameworks in this chapter.

LO 10.3

* Evaluate the advantages of stage models of change management.

We introduced three stage models of change management:

Lewin’s three-stage model

Kotter’s eight-stage model

McKinsey 5A model

Stage models complement a checklist approach by emphasizing how change unfolds and develops over time, making changing demands on the change manager and on those who are affected, at each stage. Although change rarely develops in a neat and tidy manner, approaching the process in this way encourages the change manager toPage 350 anticipate and prepare for possible future problems. It also encourages a focus on the “pipeline” of change benefits and on how “leakage” during the process can lead to disappointing outcomes. It may also be helpful to consider a more extended time line, considering how past events could influence current proposals, and how changes will be sustained, and eventually decay, into the future.

LO 10.4

* Assess the theoretical and practical value of the process perspective on change.

The process perspective argues that the outcomes of change are shaped by the combination and interaction of a number of factors over time in a given context. Those factors include the context and substance of the change, the implementation process, and also the internal and external organization politics. One strength of the process perspective is that it emphasizes the role of organizational politics, which is often overlooked or regarded as marginal by other approaches. The practical advice flowing from this perspective is similar to that provided by checklists and stage models: plan, train, communicate, learn from mistakes, adapt to circumstances. However, where some change management advice recommends “do this,” the process perspective says, “be aware of this,” leaving the change manager with the task of reaching informed judgments with regard to appropriate action.

The process perspective highlights the complexity and politicized nature of change and sees change as a process with a past, present, and future, rather than as a static or time-bounded event. However, there are dangers in this perspective, in presenting change as overcomplex and unmanageable, in placing the focus on context at the expense of individual and team contributions, and in the focus on awareness rather than clear direction.

LO 10.5

* Understand and apply contingency approaches to change management.

We presented four contingency approaches:

Where to start?

Change leadership styles continuum

Stace–Dunphy contingency matrix

Change kaleidoscope

Contingency approaches argue that change implementation should take into account the attributes of the organizational context concerned. However, these approaches differ with regard to the contingencies—the key factors—that the change manager needs to consider. For example, “where to start?” argues that change should begin with the “pivotal roles,” where changes will have the biggest impact on the behavior and performance that is of concern. Those “pivotal roles” will vary from one change initiative to another. The styles continuum suggests choosing a change leadership style based on considerations of available time, use of available expertise, and staff commitment. A dictatorial approach to management in general, and to change management in particular, probably runs counter to most management beliefs. However, the Stace–Dunphy contingency framework suggests that where change is vital, time is short, and consensus is unlikely, a dictatorial approach is more likely to be effective in achieving management outcomes. The most complex of these models, the change kaleidoscope, identifies eight sets of context factors and six sets of change implementation design options. The design options, this approach argues, need to reflect the context diagnosis.

It may seem obvious to argue that “the best approach” depends on the context. However, this idea of “fitting” change to the setting is easier to explain in theory thanPage 351 to put into practice. Detailed diagnosis of the context takes time and requires considerable local knowledge and insight. A contingency approach also demands flexibility in style from change leaders and managers who may in some instances be required to move out of their “comfort zones,” and inconsistent behavior may weaken management credibility. Our two final questions are: Is everything contingent in this area? Are there no universals in organizational change?

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Source of opening quote from Ayn Rand: https://blog.hubspot.com/sales/great-female-leader-quotes

Chapter opening silhouette credit: FunKey Factory/Shutterstock