Summary – Strategy Implementation
This summary covers the following papers in detail:
• John P. Kotter, 2007. Leading Change: Why Transformation Efforts Fail.
Harvard Business Review, January 2007.
• Ryan L. Raffaelli, 2017. Organizational Behavior Reading: Leading
Organizational Change
• Ethan Bernstein & Nitin Nohria. 2016. Note on Organization Structure.
• Robert L. Simons. 2005. Designing Organizations for Performance: The
Alignment of Design and Strategy.
• David Krackhardt & Jeffrey R. Hanson. 1993. Informal Networks: The
Company Behind the Chart. Harvard Business Review 71: 104-111.
• Steven Kerr. 1975. On the folly of Rewarding A, While Hoping for B, The
Academy of Management Journal, 18(4): 769: 783.
• Brian Hall. Incentives within organizations.
• Duncan Brown. Centralized Control or Decentralized Diversity: A Guide for
Matching Compensation with Company Strategy and Structure, Compensation
& Benefits Review,25(5).
• Simons, R. (1995). Control in an age of empowerment. Harvard Business
Review, 73(2), 80–88.
• Cammann, C., & Nadler, D. A. (1976). Fit control systems to your managerial
style. Harvard Business Review, 54(1), 65–65.
• From Strategy to Implementation: Seeking Alignment. Pocket mentor series.
• Simons 2017. Aligning Performance goals and incentives.
• Siggelkow, Nicolaj. Evolution toward fit. Administrative Science Quarterly,
2002, 47.1: 125-159.
• Mankins, M. C., & Steele, R. (2005). Turning great strategy into great
performance. Harvard Business Review, 83(7), 64–72.
• Measuring Performance. Books/Chapter. Pocket mentor series.
• Kaplan, R. S., & Norton, D. P. (1996). Using the balanced scorecard as a
strategic management system. Harvard Business Review, 74(1), 75–87.
• Kaplan, R. S., & Norton, D. P. (2004). Strategy maps: converting intangible
assets into tangible outcomes. Harvard Business School Press. (Chapter 2).
• Robert Kaplan and Bjorn Jorgenson. Borealis. HBS Case study.
• David W. Young. Note on Flexible Budgeting and Variance Analysis.
• Jeffrey Pfeffer. 2007. The Real Budget Crisis: Stop Rewarding Forecasting
and Negotiating Instead of Real Performance.
• Chatman, J. A., & Cha, S. E. (2003). Leading by leveraging culture. California
Management Review, 45(4), 20–34.
• Groysberg, B., Lee, J., Price, J., & Cheng, J. Y.-J. (2018). The Leader’s Guide
to Corporate Culture. (cover story). Harvard Business Review, 96(1), 44–52.
• Sorensen, J. Note on Organization Culture.
,CHANGE MANAGEMENT
Leading Organizational Change
3 assumptions:
1. Organizations are systems à If you alter one component you will affect others.
2. Change is both a process and an outcome.
3. There is no single correct formula for managing successful change.
DIAGNOSING THE NEED FOR CHANGE – Why is change needed?
First, leaders should understand whether their firm is facing a performance gap or an
opportunity gap.
Performance gap à requires change that improves current organizational routines and
practices.
When there is a difference between expected and actual performance. à evaluate the
organization’s ability to perform and produce output; capacity to foster individual learning;
and potential to adapt.
Opportunity gaps à require change that creates new routines and practices for the future.
Look outside the firm and anticipate what they need to do to remain competitive in the future.
= ‘potential future problems or missed value-creating opportunities the organization will face
if it does not act today’
Arise from:
1. Evolving shifts in customer preferences and demands, competitor offerings, etc.
2. Successful organizations assuming that their track records and capabilities will
sustain them indefinitely.
DESIGNING THE CHANGE PROCESS – what sort of change is called for?
SORT: 4 critical elements of change design and implementation:
1. Scope: radical vs incremental à scope = the intended impact of the change on the
org’s core practices norms, identity, and member behaviors.
How broad and how deep does the change need to be?
How expansive does the change need to be across each facet of the organization?
Radical change à will affect nearly all these aspects of the organization.
Incremental change à making small adjustments to the existing organizational
systems, processes, and routines. Targets specific components.
2. Origin of change: top-down vs bottom-up à where the change will emerge.
Most of the time a combination of both. Top-down requires ‘buy-in’ from the
management team.
3. Rollout à after – at implementation
, 4. Timing à
Types of change:
Types of change based on scope and origin design decisions:
• Tactical change à top-down and incremental change – to address a specific issue
within the org and to achieve a particular goal. It implies a shift in behaviors that can
be quickly implemented (they rarely result in an organization-wide change).
• Evolutionary change à bottom-up and incremental change – the ideas must
emerge from individuals and subunits within the org, so the leaders have to provide
resources, remove barriers, and offer guidance. Good to learn and test new ideas
without upending the entire system.
• Revolutionary change à bottom-up and radical change – it impacts the core beliefs
and behaviors, and the norms and structures that guide the org. it emerges from
within the organisation, and it will gain traction and reach across the entire firm. It can
occasionally lead to chaos.
• Transformational change à top-down and radical change – it starts with the
leaders’ goals in mind. A great deal of resources are needed to manage this change.
DELIVERING CHANGE – Choosing the best approach to implementation
Rollout and timing (from before) are the 2 decisions related to implementation.
• Rollout of change: systemwide vs localized à where to implement change across the
organization.
Systemwide à across multiple units or subunits simultaneously – it can be very
effective if the change needs to start immediately.
Localized à in a successive process: one by one, the change will be implemented in
each area – good to devote more resources and attention to each segment.
, • Timing of change: fast (competitor’s new product release, new regulation, etc.) vs
slow à slow à provide more opportunities for evaluation and learning but can lose
momentum.
2 implementation approaches:
a. Focus on piloting and experimentation à localized and slow à this approach is more
common; leaders can test ideas in a targeted manner.
b. Focus on assimilation and integration à systemwide and fast.
There is a trade-off between the 2, and it depends on how much stretching (of existing
organizational norms) and stress the leaders believe the org can endure.
So, assess how much the change will effectively stretch the current org’s norms, behaviors,
while balancing how much stress they can impose on the individuals experiencing the
change.
Finding the right balance depends on the type of change the leaders hope to guide (e.g.,
tactical, evolutionary, etc.), how they prioritize the change effort relative to other changes
and the tactics they plan to employ.
Implementation tactics:
• Bold strokes à they command attention, they
send a signal from the top to the rest of the org
(ex. buying another company, firing a subset of
employees…).
• Long marches à sustained programs, a
sequence of interventions significantly alters the
organization’s culture or structure, create
durable conditions.
John Kotter’s 8 steps to implement change:
1) Establish a sense of urgency.
2) Form a powerful guiding coalition.
3) Create a vision.
4) Communicate a vision.
5) Empower others to act on the vision (get rid of obstacles by changing
systems/structures).
6) Plan for and create short-term wins.
7) Consolidate improvements and produce still more change (use increased credibility
to change systems, structures and policies that don’t fit. Hire, promote or develop
employees who can implement the vision).
8) Institutionalize the new approaches.
