Dr. Nehad El Leithy - Module 1 - Understanding Organizational Change.pptx

Change Management Course - Graduate Studies

1. Module 1 Understanding Organizational Change By Dr. Nehad El Leithy Change Management

2. Contents 1 2 3 4 Nature of Business Environment (VUCA) Types of Change Drivers to Change Introduction to Change Management 5 Change Management Tools & Conclusions from Environment Analysis 6 Models & Theories of Change

3. What is Change? Organizational change refers to significant shifts in a company’s structure , culture , technology , or internal processes . These changes can impact the entire organization and its team. The process of guiding organizational change to a successful resolution is known as  organizational change management . It typically involves three major phases:  preparation ,  implementation , and  follow-through 1 .

4. Change Management People Change Leadership

5. Two Sides of Change

6. Change Drivers External Drivers Internal Drivers 1 2

7. I nternal drivers of change management are factors within an organization that necessitate change. Here are some key internal drivers: Leadership Changes : New leaders often bring new visions, strategies, and priorities, driving organizational change 1 . Organizational Structure : Changes in the structure, such as mergers, acquisitions, or restructuring, can drive significant changes 1 . Employee Skills and Capabilities : The need to develop or enhance employee skills to meet new challenges or technologies can drive change 1 . Internal Change Drivers

8. 4. Company Culture : Shifts in organizational culture, such as moving towards a more collaborative or innovative environment, can necessitate change 1 . 5. Operational Inefficiencies : Identifying and addressing inefficiencies in processes or systems can drive change to improve productivity and performance 1 . 6. Internal Policies : Changes in internal policies or procedures can drive organizational change to ensure compliance and efficiency 1 . Understanding these internal drivers can help organizations proactively manage change. Understanding these internal drivers can help organizations proactively manage change. Internal Change Drivers

9. External Drivers Competition Natural Events Technology Economic Factors Government Rules & Regulations

10. External Drivers to Change External drivers of change management are factors outside an organization that necessitate change. Here are some key external drivers: Technological Advancements : Rapid technological changes can force organizations to adapt to new tools, systems, or processes to stay competitive 1 . Customer Preferences : Shifts in customer needs and preferences can drive changes in products, services, and customer service approaches 1 . Regulatory Changes : New laws and regulations can require organizations to alter their operations to comply with legal standards 1 . Competitive Pressure : Actions by competitors, such as new product launches or pricing strategies, can push organizations to innovate and improve 2 .

11. External Drivers to Change 5. Economic Conditions : Economic fluctuations, such as recessions or booms, can impact organizational strategies and operations 2 . 6. Globalization : The increasing interconnectedness of markets can lead to changes in supply chains, market strategies, and organizational structures 1 . 7. Natural Events : Events like natural disasters or pandemics can disrupt operations and necessitate significant changes 2 . Understanding these drivers can help organizations anticipate and effectively manage change.

12. 70% 49% 41% 42% 46% 39% Change leaders say organizational structure and systems are constraints to success Change leaders say employees are disengaged and exhausted from business transformation Of change programs fail due to resistance of employees Employees say their organizations were effective in inspiring them in business transformation CIOs say that the biggest barrier to successful digital transformation is culture change CEOs recognize the need for culture change to support a digital initiative

13. WHY - WIIFM ??? Adaptability : Organizations operate in dynamic environments. Change management equips leaders and employees with the skills to adapt to shifting circumstances, ensuring business continuity. Efficiency : Effective change management minimizes disruptions during transitions. It streamlines processes, reduces resistance, and enhances productivity. Employee Engagement: Understanding change fosters employee buy-in. Engaged employees are more likely to embrace change positively and contribute to its success. Leadership Skills: Change management enhances leadership abilities. Leaders learn to communicate, motivate, and guide teams through transformations. Competitive Advantage: Organizations that manage change well stay ahead of the curve. They innovate, respond to market shifts, and maintain a competitive edge.

14. Case Study 2 Your Turn Case Study 1 Nokia https://changemanagementinsight.com/nokia-change-management-case-study/

15. Nature of Business Environment The  business environment  refers to the combination of internal and external factors that influence a company’s operations, growth, and overall performance.

16. Nature of Business Environment

17. Nature of Business Environment The term  VUCA  is used to describe the unpredictable and challenging nature of the modern business environment. Here’s a breakdown of each component: Volatility : This refers to the speed and turbulence of change. In a volatile environment, changes happen rapidly and unpredictably, making it difficult for businesses to plan long-term.

18. Nature of Business Environment 2. Uncertainty : This involves the lack of predictability and the difficulty in understanding what is happening or what the future holds. It means that even if we have information, it might not be enough to predict outcomes accurately.

19. Nature of Business Environment 3. Complexity : This denotes the multiple, interconnected factors that businesses must consider. The more variables and interdependencies there are, the more complex the environment becomes, making it harder to analyze and make decisions.

20. Nature of Business Environment 4.Ambiguity : This is the lack of clarity about the meaning of an event. Even if we have information, it might be unclear how to interpret it or what actions to take.

21. These changes have a larger scale and scope.  They often involve simultaneous shifts in mission, strategy, team structure, and organizational performance 1 . Transformational Changes Revolutionary Change Types of Organizational Change These are small, incremental modifications that address evolving needs over time. Examples include upgrading computer operating systems or fine-tuning processes. Adaptive Changes Evolutionary Change

22. Organizational change management can take various forms, each addressing different aspects of a business. Here are some common types: Transformational Change : This involves significant, fundamental shifts in how an organization operates, often requiring new strategies, processes, systems, and structures 1 . Incremental Change : These are small, gradual adjustments made to improve existing processes, systems, or structures 1 . Types of Organizational Change

23. 3.Developmental Change : This type focuses on enhancing or improving existing processes, structures, and capabilities to increase efficiency and effectiveness 1 . 4.Remedial Change : This involves making corrections or improvements to address inefficiencies or problems within the organization 1 . 5.Strategic Change : Changes that align the organization with its strategic goals, often involving shifts in business models, market strategies, or product lines 2 . Types of Organizational Change

24. 6.Structural Change : Changes in the organizational hierarchy, roles, or team structures to improve efficiency and communication 2 . 7.Technological or Process -Oriented Change : Implementing new technologies or processes to improve productivity and performance 2 . 8.People-Oriented Change : Changes focused on the workforce, such as training, development, or changes in leadership 2 . Understanding these types can guide you through the complexities of change management. Types of Organizational Change

25. Change Management Tools SWOT Analysis This stands for Political, Economic, Social, Technological, Legal, and Environmental analysis. It helps organizations understand the external factors that could impact their operations and strategies.  By examining these factors, businesses can anticipate changes in the external environment and develop strategies to respond effectively 1 2 . PESTLE Analysis This tool assesses an organization’s internal strengths and weaknesses, as well as external opportunities and threats.  It provides a comprehensive view of the organization’s current position and helps in formulating strategies to leverage strengths, address weaknesses, capitalize on opportunities, and mitigate threats 3 4 . This tool helps organizations understand the potential effects of a change. It involves identifying and evaluating the consequences of a proposed change, both positive and negative, on various aspects of the organization. This analysis is crucial for planning and mitigating risks associated with change. Impact Analysis 1 2 3

26. These tools are often used together to provide a holistic view of the internal and external factors affecting an organization, enabling better decision-making and strategic planning.

27. Porter’s 5 Forces Porter’s Five Forces Model  is a strategic tool developed by Michael E. Porter to analyze the competitive forces shaping an industry. It helps businesses understand the dynamics of their industry and develop strategies to enhance their competitive position. Here are the five forces:

28. Porter’s 5 Forces Competitive Rivalry : This force examines the intensity of competition among existing firms in the industry. High rivalry can limit profitability as companies may engage in price wars, advertising battles, and product innovations to gain market share.

29. Porter’s 5 Forces 2. Threat of New Entrants : This force looks at how easy or difficult it is for new competitors to enter the industry. Barriers to entry, such as high capital requirements, strong brand loyalty, and regulatory hurdles, can protect existing companies from new competitors.

30. Porter’s 5 Forces 3. Bargaining Power of Suppliers : This force analyzes the power suppliers have over the industry. If there are few suppliers or if they offer unique products, they can exert significant influence on prices and terms, affecting the profitability of businesses in the industry.

31. Porter’s 5 Forces 4. Bargaining Power of Buyers : This force assesses the power customers have to influence prices and quality. When buyers are few and large, or when they can easily switch to competitors, they have more power to demand lower prices or higher quality.

32. Porter’s 5 Forces 5. Threat of Substitutes : This force considers the availability of alternative products or services that can perform the same function. The presence of substitutes can limit the potential returns of an industry by placing a ceiling on prices.

33. Porter’s 5 Forces By analyzing these forces, businesses can identify opportunities and threats in their industry and develop strategies to improve their competitive position 1 2 3 .

34. Scenario Planning In change management, a  scenario  is a detailed description of a potential future situation. It outlines how a situation might develop, what events could occur, and how these events might impact the organization.  Scenario planning is a method used to explore and prepare for various possible futures based on different factors and assumptions 1 2 .

35. Key Aspects of Scenario Planning Collaboration 2. Exploration of Possibilities : The goal is not to predict the future accurately but to identify and prepare for a range of possible futures. This helps organizations remain flexible and responsive to changes. Exploration 3 .Collaboration and Involvement : Developing scenarios often involves input from various stakeholders. This collaborative approach ensures diverse perspectives and ideas are considered. Description of Situations : Scenarios provide narratives about how specific situations might unfold. They include details about the starting conditions, key events, and potential outcomes. Description 1 2 3

36. Benefits of Scenario Planning Scenario planning is a valuable tool in change management as it helps organizations navigate uncertainty and complexity by preparing for a range of possible outcomes 2 . Benefits of Scenario Planning -Enhanced preparedness -Improved decision making -Increased flexibility 4.Challenging Assumptions : Scenarios encourage organizations to question existing assumptions and explore alternative possibilities, which can lead to more robust strategies. Assumptions 4 Benefits of Scenario Planning

37. Risk Mitigation Strategic Planning Identification of Opportunities & Threats Resource Allocation Enhanced Decision Making Adaptability & Flexibility Environmental analysis helps businesses identify potential opportunities for growth and expansion, as well as threats that could hinder their progress 1 2 By understanding the external environment, businesses can develop strategies that align with market trends and regulatory changes.  This helps in making informed decisions and staying competitive3 . Recognizing potential risks allows businesses to develop contingency plans and mitigate the impact of adverse events.  This proactive approach can safeguard the organization against unexpected challenges 2 . Businesses can become more adaptable and flexible by anticipating changes in the environment.  This helps them respond quickly to new opportunities and challenges 1 . With a clear understanding of the business environment, leaders can make more informed and effective decisions.  This leads to better outcomes and improved organizational performance 3 . Environmental analysis provides insights into where resources should be allocated for maximum impact.  This ensures that investments are made in areas that offer the best returns4 . Conclusions from Environment Analysis

38. Change Management Models 1- Lewin, Kurt John Kotter

39. Kotter’s 8 Steps for Leading Change ADKAR Change Management Model Lewin’s Change Management Model McKinsey 7-S Framework Bridges Transition Model Nudge Theory Kubler Ross Change Curve

40. Developed by Kurt Lewin in the 1950s, this model divides the change process into three steps: Unfreeze : Prepare for change by analyzing the current state and communicating expectations. Change : Implement the change, provide support, and maintain communication. Refreeze : Ensure the new processes stick and measure progress 1 . Lewin’s Change Management Model

41. Quasi – Static Equilibrium Restraining Force Driving Force Kurt Lewin Force Field Analysis Uses three terms : driving force , restraining force & quasi (almost) – static equilibrium. Driving force: factors which pushes for change Restraining force : Forces that maintain the present equilibrium state. Which opposes the change to happen. Both the forces are equal in opposite directions then it achieves the quasi – static equilibrium. Eg : The management course under the semester system is switching over to trimester pattern. It will have two types of forces one which will appreciate it (DF) & other which will criticize it (RF) If the two forces are equal in strength then the change will not occur.(quasi – static equilibrium) r.

42. Quasi – Static Equilibrium Restraining Force Driving Force Kurt Lewin Force Field Analysis

43. forces acting to restrain or decrease the driving forces. lack of interest, opposition, and poor maintenance of equipment may be examples of restraining forces against increased production . Current Equilibrium is maintained when the sum of the driving forces equals the sum of the restraining forces. Driving Forces forces affecting a situation that are pushing in a particular direction. They tend to initiate a change and keep it going. In terms of improving productivity in a work group, pressure from a supervisor, incentive earnings, and competition may be examples of driving forces. Restraining Forces Current Equilibrium

44. If driving forces are stronger than restraining force , driving force will help in bringing about the change. If restraining forces are stronger than driving force than desired change can be achieved by reducing the restraining force & increasing the driving force to introduce the changes.

45. John Kotter’s model emphasizes leadership and communication throughout the change process.   It includes steps like creating a sense of urgency, forming a guiding coalition, and celebrating short-term wins 2 . Kotter’s 8 Steps for Leading Change

46. Take Aways: In a change process, you have to win the hearts and minds of the people Conclusion

47. Thank You! Nothing is permanent in this world but CHANGE Dr. Nehad El Leithy