"Nothing went according to plan.We were supposed to face a chain-link fance,but came accross a triple strand razor wire.The competition was not supposed to have 'night vision goggles' but they did,so our system was compromised even before we entered the battlefield.Our communications system was supposed to work ,it didnt..."
The above scenario is a simulation of a real battlefield situation similar to what happens in the real world of business.It is a contest between a well planned strategy,but trumped by a emergent situation;a situation managerial leaders confront time and time again but which they must respond to whether prepared or not.
Variagated scenarios such as these call into question the leadership skills of business managers;calling into action such elements as the case for change,the idea of where the organization is headed and how it will get there.Emergent scenarios have the habit of throwing well crafted strategic plans off their trajectories.It is therefore in the place of leaders to chart a new course based on their developed views of the four critical leadership precepts,namely ideas,values,edge and energy(Cohen&Tichy,"How Leaders develop leaders";HBR,2011)It is our assumption that leaders are supposed to possess the learning about these views,which we now consider below.
IDEAS: Cohen&Tichy argue that leaders must be able to communicate to stakeholders of the business the idea of the market they are serving and how it will be able to deliver value to customers as well as its owners-individuals and corporate.
VALUES: Values are the glue that hold the mission and vision of the organization together.The leader shapes these values,supports their internalization and articulation;and ultimately their operationalization.For instance,Jack Welch of GE,articulated the value of boundarylessness in order to facilitate speed to market of new products,the mgeneration of new product ideas and the sharing of best practices accross the length and breathe of GE.
Andy Grove propagated the values of constructive conflict to enable Intels achieve faster speed to market for its innovations due to the speed with which innovations in Intels market were changing the chips industry.
EDGE: Emergent battlefield situations abstracted in the opening paragraph of this article presents the environment for bold aggressive leadership.It is about making yes or no decisions in the face of imperfect data.Astute leaders when faced with reality make decisions about people,products,business categories,customers,suppliers,and shareholders.The quality of decisions about these important segments of its stakeholders determines whether it has the winning edge or not.
ENERGY: An energized leadership motivates others because it is motivated to impact the organization it leads.An energized leadership must teach its people about how to energize others through face to face contacts and organizational efforts.In 2002,when Sam Palmisano took over IBM as CEO,much had happened to the BIG BLUE as the company is called.Palmisano used the company's intranet to gather ideas about how its numerous employees viewed their employer.Over a three day period,approximately 50,000 employees of Big Blue including the CEO hinself,participated in the discussion jamboree tagged VALUEJAM;posting nearly 10,000 comments(Hemp&Stewart;'Leading Change When Business is Good';HBR,2011)
It was Palmisano's idea to invigorate the work force with a new set of corporate values after IBM was brought back from a near death situation by Lou Gsrstner in the 1990s'.The lesson learnt under the Palmisano leadership is that it is more rewarding through value-based management to energize people in the organization through the ideas of hope and aspiration than through fear of failure.It is about inspiring people to a common purpose based on values that they can help to shape company wide changes as Palmisano did at IBM.
As was discovered subsequently,value-based enabled vision empowers employees to respond more quickly and creatively to never ending streams of strategic challenges that have become the hallmark of the business environment of the 21st century.
CHANGE MANAGEMENT: Some theoritical considerations.
Value-based change management,it is suggested seeks to re-ecaluate,re-invigorate and re-establish the pyschological contract between the organization and its employees.While we acknowledge the contrarian view of change management which highlights the hypothesis that 'hard factors' rather than 'soft factors'(Sirkin,H;et al) should dominate the attention of the leader during organizational change it is argued that the soft factors materially drive the hard factors of change.The goals of hard factors are given,namely;financial results,shareholder value,stock price valuation,what (Beer & Nohria) call 'economic value' of change management.According to Sirkin,H;et al,change projects fail to get off the ground because companies neglect the hard factors.On the contrary,the literature emphasizes the need for the soft factors to be the focus of attention for the hard factors to achieve the economic value proposition of organizational change.Why?Although soft factors are less seen and measurable empirically by Wall Street,they lie at the core of change management-employee engagement.Beer&Nohria in their article,"Cracking the Code of Change",HBR,2011,theorize that economic value(also known as theory E) or hard factors and organizational capability(theory O) or soft factors constitute the value based axioms of change management.The authors highlight the merits and demerits of both theories,but state conclusively the ideal of deploying one theory or the other depending on the organizational situation warranting change.They also suggest the simultaneous sequencing of the two concepts if the situation augurs.
Personally,I would argue that where change involving the hard factors(economic incentives,drastic layoffs,downsizing,rightsizing or restructuring have high attrition rates employee wise, it often leads to distrust of managerial leaders who pursue these goals to the exclusion of organizational capability(corporate culture development,human capability through individual and organizational learning).It is also argued that the pay off from hard factor driven organizational change efforts tends to be huge given the length of time it takes for the hard effects to wear off even though pay back times may tend to be short.Advisedly,a cautionary note must be sounded that managerial leaders in change situations need to weigh the trade off between the two concepts situating the course of action to take place within the historicity,values and organizational culture of the firm.
COMING FACE TO FACE WITH HARD AND SOFT FACTORS:General Dynamics,Scott Paper and Champion- a case study.
To maximise economic value,Williams A Anders was brought in from outside the firm as CEO of General Dynamics in 1991.Over the next three years,Anders shed 71,000 jobs from the GD payroll ;44,000 of which was through the harvesting of seven businesses and the rest 27,000 through direct lay-offs and natural management attrition.Most American change leaders prefer the economic value strategies of theory E;the downside however in human and organizational cost in the long-run is difficult to quantify.
SCOTT PAPER: Al Dunlap in 1994 upon resumption immediately chopped off 11,000 employees,selling off several businesses in the process.His constituency was the shareholders and he made no bones about it.Just to prove it,Dunlap nick-named "chain-saw Al" trippled shareholder value.Scott Paper's share value on Wall street rose from $3billion in 1994 to $9billion in 1995.Wall strret applauded his transformation of Scott Paper but employees did.The cost was high.
CHAMPION: In Champion we observe a clash of culture in that Andrew Sigler ,CEO of Champion saw transformation through the lens of theory O or soft factors;that of restructuring through the development of corporate culture around the mantra of the CHAMPION WAY;which sought to get employees committed to doing things differently.Teamwork and open communication lie at the core of this strategy.Hewlett-Packard used this strategy in the 1980s when its performance flagged.But through the strategy of theory O,strongly held values drove performance and commitment to the psychological contract between the organization and its employees ;was responsible for HP's strong rebound to profitability.Human cost was minimal however it took longer for the turn around to mature.Champion's turn around took a decade to achieve,no employees were laid off.Examining the two archtypes or theories of change,we are able to discern certain streams:goals,focus,leadership and process and reward;and on these we comment briefly.
GOALS: hard factors or theory E,dwells on the hard measurable goals of shareholder value,profitability and stock value.Turn arounds are built to restructure through layoffs and downsizing.Soft factors on the other hand,use the indirect approach of organizational capability;building this to reach the goals of profitability and shareholder value.Whereas hard factors inspired change can be drastic and painful,soft factor driven change is evolutionary and adaptive,according to Meyerson,D.E.
FOCUS: E type inspired organizational change confront the hardware of the organization striving to change the structures and systems.These elements are easy to alter as change seeks to improve financial results through changes at the top echelon,down to the bottom.On the other hand,O type inspired changes wring the course of an organization through its software-culture,behaviour and attitude of the workforce.
LEADERSHIP: Leadership typology under theory E is exemplified by the setting of corporate goals from the top without the imput of managers and their subordinates who are going to be affected by the restructuring exercise.Such leaders are seen as commanders-in-chief whose authority brooks no challenge or opinion.Al Dunlap and Jack Welch are prototypes.
By contrast,theory O involves the participation of all from top to bottom.The democratic ethos is the hallmark of this approach.An adjunct concept under our review is that of distributed leadership.It is about how authority is dispersed in the organization.Does distributed leadership empower employees to perform better?It is argued that given the proclivity for theory E change leaders to authoritarianism,distributed leadership is less likely to be practiced than under theory O leaders who tend to subscribe to democratic means of changing the course of an organization for the better.Theory O change leaders are more likely to enthrone distributed leadership in organizational change situations .
REWARD:A financial incentive tied to clear goals achievement lies at the heart of theory E.Stock options remain the most favourable of financial incentives to reward performance and behavioural change.Conversely,the achievement of what i call 'psychic compensation' hallmarks the goals of theory O inspired change management.Financial incentives are used as supplement to gains sharing and merit based reward system.Compensation usually occured at the evolutionary end of the change process as opposed to those of Theory E which is immediate and tied rigidly to performance outcomes.
The above scenario is a simulation of a real battlefield situation similar to what happens in the real world of business.It is a contest between a well planned strategy,but trumped by a emergent situation;a situation managerial leaders confront time and time again but which they must respond to whether prepared or not.
Variagated scenarios such as these call into question the leadership skills of business managers;calling into action such elements as the case for change,the idea of where the organization is headed and how it will get there.Emergent scenarios have the habit of throwing well crafted strategic plans off their trajectories.It is therefore in the place of leaders to chart a new course based on their developed views of the four critical leadership precepts,namely ideas,values,edge and energy(Cohen&Tichy,"How Leaders develop leaders";HBR,2011)It is our assumption that leaders are supposed to possess the learning about these views,which we now consider below.
IDEAS: Cohen&Tichy argue that leaders must be able to communicate to stakeholders of the business the idea of the market they are serving and how it will be able to deliver value to customers as well as its owners-individuals and corporate.
VALUES: Values are the glue that hold the mission and vision of the organization together.The leader shapes these values,supports their internalization and articulation;and ultimately their operationalization.For instance,Jack Welch of GE,articulated the value of boundarylessness in order to facilitate speed to market of new products,the mgeneration of new product ideas and the sharing of best practices accross the length and breathe of GE.
Andy Grove propagated the values of constructive conflict to enable Intels achieve faster speed to market for its innovations due to the speed with which innovations in Intels market were changing the chips industry.
EDGE: Emergent battlefield situations abstracted in the opening paragraph of this article presents the environment for bold aggressive leadership.It is about making yes or no decisions in the face of imperfect data.Astute leaders when faced with reality make decisions about people,products,business categories,customers,suppliers,and shareholders.The quality of decisions about these important segments of its stakeholders determines whether it has the winning edge or not.
ENERGY: An energized leadership motivates others because it is motivated to impact the organization it leads.An energized leadership must teach its people about how to energize others through face to face contacts and organizational efforts.In 2002,when Sam Palmisano took over IBM as CEO,much had happened to the BIG BLUE as the company is called.Palmisano used the company's intranet to gather ideas about how its numerous employees viewed their employer.Over a three day period,approximately 50,000 employees of Big Blue including the CEO hinself,participated in the discussion jamboree tagged VALUEJAM;posting nearly 10,000 comments(Hemp&Stewart;'Leading Change When Business is Good';HBR,2011)
It was Palmisano's idea to invigorate the work force with a new set of corporate values after IBM was brought back from a near death situation by Lou Gsrstner in the 1990s'.The lesson learnt under the Palmisano leadership is that it is more rewarding through value-based management to energize people in the organization through the ideas of hope and aspiration than through fear of failure.It is about inspiring people to a common purpose based on values that they can help to shape company wide changes as Palmisano did at IBM.
As was discovered subsequently,value-based enabled vision empowers employees to respond more quickly and creatively to never ending streams of strategic challenges that have become the hallmark of the business environment of the 21st century.
CHANGE MANAGEMENT: Some theoritical considerations.
Value-based change management,it is suggested seeks to re-ecaluate,re-invigorate and re-establish the pyschological contract between the organization and its employees.While we acknowledge the contrarian view of change management which highlights the hypothesis that 'hard factors' rather than 'soft factors'(Sirkin,H;et al) should dominate the attention of the leader during organizational change it is argued that the soft factors materially drive the hard factors of change.The goals of hard factors are given,namely;financial results,shareholder value,stock price valuation,what (Beer & Nohria) call 'economic value' of change management.According to Sirkin,H;et al,change projects fail to get off the ground because companies neglect the hard factors.On the contrary,the literature emphasizes the need for the soft factors to be the focus of attention for the hard factors to achieve the economic value proposition of organizational change.Why?Although soft factors are less seen and measurable empirically by Wall Street,they lie at the core of change management-employee engagement.Beer&Nohria in their article,"Cracking the Code of Change",HBR,2011,theorize that economic value(also known as theory E) or hard factors and organizational capability(theory O) or soft factors constitute the value based axioms of change management.The authors highlight the merits and demerits of both theories,but state conclusively the ideal of deploying one theory or the other depending on the organizational situation warranting change.They also suggest the simultaneous sequencing of the two concepts if the situation augurs.
Personally,I would argue that where change involving the hard factors(economic incentives,drastic layoffs,downsizing,rightsizing or restructuring have high attrition rates employee wise, it often leads to distrust of managerial leaders who pursue these goals to the exclusion of organizational capability(corporate culture development,human capability through individual and organizational learning).It is also argued that the pay off from hard factor driven organizational change efforts tends to be huge given the length of time it takes for the hard effects to wear off even though pay back times may tend to be short.Advisedly,a cautionary note must be sounded that managerial leaders in change situations need to weigh the trade off between the two concepts situating the course of action to take place within the historicity,values and organizational culture of the firm.
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