Drucker School-Organizational Change Leadership

Learn Drucker’s Approach to Change

Explain why organizations need to continuously change. Describe Peter Drucker’s approach to change. Summarize a best practice approach for managing in two time periods.
  • Predict the Future By Creating It
    • “The best way to predict the future is to create it.” - Peter Drucker
    • Change is constant in business, even more so with technology
  • Develop an Appetite for Creative Destruction
    • Creative destruction” - incessant process of industrial mutation and transformation where successful organizations are replaced by more innovative ones
    • Drucker’s solution was to develop our organizations into “change leaders” that:
      • Recognize the opportunity for change
      • Develop a vision of the future
      • Innovate around products and services to create customers
      • Innovate around how they deliver solutions to customers
  • Manage with Ambidexterity
    • To manage change, you need to be working on both the present and the future at the same time. Drucker called this “managing in two time periods.”
    • Managing in the present is vital - not uncommon for day-to-day activities to become overwhelming. Managers can find more than 95% of their time being spent on the here and now, which means there’s not enough time spent on the future.
    • Drucker recommended that at least 10-20% of an executives time/resources be spent on the future
      • Kodak focused too much on the present, avoiding cannibalizing their profitable photographic film business with new digital cameras
      • Amazon focused on the future, developing Amazon Web Services even though investors wanted more returns from online retailing

  • Concept of creative destruction implies success organizations can eventually be replaced by more innovative ones
  • Peter Drucker recommended organizations deal with change by developing into change leaders that create the future
  • Managing with ambidexterity means executives should manage the business today and work to create the future

Become a Change Leading Organization

Describe the best practices of change leading organizations. Use a diagnostic tool to identify the strengths and weakness of your organization’s change leadership best practices.
  • Adopt Best Practices of Change-Leading Organizations
    • 6 best practices that can help guide efforts to transform organizations into change leaders:
      1. Develop a compelling vision - a well-crafted vision statement can galvanize and inspire the workforce to create the future
      2. Commit to innovation - this can be in the core products/services as well as operational processes and business models
      3. Focus on Customers and the Market - by generating intelligence, analyzing it, and acting on it. This enables detections of early signs of change, predicting it, and even driving it.
      4. Dynamically manage organizational capabilities and resources - innovation and organizational performance is linked to the organizations ability to create, extend, modify, and utilize resources to generate competitive advantage. Resources include capital, materials, equipment, data, information, people and knowledge.
      5. Practice abandonment - this is a process of freeing up resources to lead change, instead of focusing on activities that no longer contribute to organizational success
      6. Create a culture of change - develop a high-performance culture that encourages collaboration, seeks out, and embraces change through transformation. This can involve the acquisition of talent.
  • DIY Time! Assess Your Organization’s Change Leadership
    • Reference the Trailhead module these notes are based on for a diagnostic test.

  • A well-crafted vision statement helps by inspiring the workforce
  • Change-leading organizations focus on creating transformative innovations as well as executing incremental improvements that can lead to big gains

Manage Organizational Change

Recognize the human element as critical to organizational change. Describe a best-practice approach for leading organizational change.
  • Focus on the Human Element
    • Successfully changing an organization involves more than identifying changes to products, org chart, operational processes, etc. It involves helping the people themselves transition.
    • Energize them to facilitate the changes by:
      • Managing the process of making the changes
      • Helping people transition to the new model
  • Climb Eight Steps to Organizational Change
    • Step 1: Establish a Sense of Urgency
      • Paint a picture of a major opportunity or looming crisis in a way that gets people moving.
    • Step 2: Form a Powerful Guiding Coalition
      • Set up teams willing to implement the changes by working across departments and layers to improve cross-silo communications
    • Step 3: Create a Vision
      • Should be understandable and accompanied with strategies and plans to show how it will be achieved
    • Step 4: Communicate the Vision
      • Ensure everyone’s fully aware of the changes, get everyone on onboard, and let them know the change isn’t going away
    • Step 5: Empower Others to Act on the Vision
      • Find and remove obstacles - these could be compensation plans or metrics that reward wrong behaviors, cumbersome approval processes, controlling managers, restrictive job descriptions
    • Step 6: Plan for and Create Short-Term Wins
      • Break the change into smaller parts - pick and execute one part early on to establish a quick win celebrate it.
    • Step 7: Build on the Change
      • Expand changes as appropriate, coordinate with stakeholders to find out what went right and what didn’t. Recalibration may be necessary. After each milestone, have a postmortem meeting to discuss what worked and what didn’t.
    • Step 8: Institutionalize New Approaches
      • Embed the changes and make the new strategies, processes, and policies part of the daily fabric of the organization
      • Use a system to help you align the vision and mission of the organization with objectives.
      • Develop processes and procedures for making sure the changes stick over time - for example, create refresher training and other resources.

  • Why are people critical to organizational change management since people ultimately control how hard and well they work
  • A key element of the Bridges model is that external changes require people to make internal transitions
  • A good way to overcome complacency and get people moving is to paint a picture of a major opportunity or looming crisis

Learn Best Practices from American Express

Describe how American Express used organizational change leadership principles to analyze their need for business transformation. Summarize how American Express put organizational change management principles into practice.
  • American Express’s Challenge
    • Increased competition for customers
    • Pressure on fees merchants pay
    • Competition for co-branding opportunities
  • American Express’s Opportunities - use analysis and systems to help:
    • Attract new card members and merchants
    • Broaden relationships with existing customers
    • Improve operating efficiencies
    • Identify and create additional value for existing customers/partners
  • To accomplish their plan, they needed to:
    • Focus their resources on achieving their vision and mission
    • Abandon aspects of their operations that were not helping them achieve their mission
  • American Express’s Solution
    • American Express turned to information systems as a strategic enabler-helping them understand what’s happening in each of their markets, products, services, and customer bases.
    • Before the change, silos of information across departments and systems prevented salespeople from understanding how customers were interacting with the brand, products, and services.
    • After implementing Salesforce, American Express sales team can sit down with customers and discuss clear, relevant information, making the relationship less transactional and more relational.
    • After implementing Salesforce for Sales, American Express rolled the platform into Service, Marketing, and the Product teams to improve internal collaboration and coordination.

  • American Express realized that facing the combination of challenges it faced required transformational change
  • The change process at American Express was guided by focusing on helping customers and people succeed
  • Establishing Salesforce first for the Sales team was a quick win that American Express could build upon

Do These Five Things to Drive Organizational Change

Recognize ways to contribute to successful organizational change. Summarize best practices for managing systems changes and user adoption to support organizational change.
  • Top Five Things You Can Do to Drive Change
    1. Understand How Salesforce Enables Organizational Change
      • Being deeply involved with Salesforce at a business level and systems implementation level means admins/business analysts are well-positioned to identify opportunities to drive business results and inform your organization what’s possible
    2. Develop a Systems Development Plan for Your Organization
      • To keep from simply reacting to changes, it’s helpful to have a 3- to 5-year systems development plan that enables the organization to execute its strategy and pursue its vision.
      • Process of compiling this will help think through potential changes and align development plans with customer/business needs
      • Best practice is to sit with managers to check on their needs and observe users several times per year - some enhancement requests may not be documented
    3. Adopt Best Practices for Systems Change Management
      • As organizations change, you will face systems change management
      • Best thing to do is create a governance team or steering committee to help with all aspects of systems change management
        • Team should be made up of representatives from different stakeholders, such as sales, IT, and service.
      • High-level, the steps to effective change management are:
        1. Get a strategy
        2. Engage an executive sponsor
        3. Collect input from end-users
        4. Define scope and impact
        5. Prioritize
        6. Configure and test
        7. Communicate and train
        8. Deploy
        9. Follow up and support
    4. Drive User Adoption
      • When it comes to user adoption, best to start with executive management team, then middle managers.
      • “Technology Acceptance Model,” TAM: If users perceive the system to be:
        • Easy to use, and
        • Valuable, IE useful to their own needs
        • Then, users are likely to adopt and use the system
    5. Be Relentlessly Positive, Helpful, and Determined
      • Organizational change management is an opportunity to help your organization succeed and show what you’re capable of
      • Exuding patience, relentless positivity, and determination can help you win people over
      • Racking up wins and developing a track record of success and treating people fairly will mean people will be more willing to trust you to roll out future changes.

  • To help executives understand how information systems can enable change, describe how the system can enable business innovation and help customers
  • A best practice for handling a large volume of system change requests is to assemble a governance team to help prioritize requests
  • Based on the TAM, you can increase the potential for user adoption by making sure users perceive the changes to be both useful and easy to use