Chapter 15: Leading Change
Your Leadership Challenge
After reading this chapter, you should be able to:
Recognize social and economic pressures for change in today’s organizations. •
Implement the eight-stage model of planned change.
Use appreciative inquiry to engage people in creating change by focusing on the positive and learning from success. •
Expand your own and others’ creativity and facilitate organizational innovation. •
Use techniques of communication, training, and participation to overcome resistance to change. •
Effectively and humanely address the negative impact of change. Chapter Outline
Change or Perish
A Framework for Leading Change
Leading for Innovation
In the Lead
Cathy Lanier, Washington, D.C., Metropolitan Police
Jim (Gus) Gustafson, U.S. Cellular
Raytheon Missile Systems
How Innovative Are You?
Are You a Change Leader?
Do You Have a Creative Personality?
The Game Changer: How You Can Drive Revenue and Profit Growth With Innovation Leadership at Work
Organizational Change Role Play
Leadership Development: Cases for Analysis
American Tool & Die
Riverside Pediatric Associates
including customers, strategic partners, suppliers, and other outsiders directly in the innovation process O
ver a recent two-year period, financial services companies laid off 400,000 employees in the United States, with nearly 150,000 of those being let go in the fourth quarter of 2008 alone, when the economic crisis hit its peak.1 Some banks, like IndyMac, were seized and restructured by the U.S. Federal Deposit Insurance Corporation (FDIC). Others, like the giant Citigroup, remained intact but received billions of dollars of bailout funds from the U.S. government—and the scrutiny and meddling that came with it. The long-term future of the firm that a decade ago rewrote the rules of finance by creating a global financial supermarket is uncertain. The one thing that is clear is that Citigroup has to change. After decades of expansion, Citi’s leaders are now trying to shrink the company to a manageable size. They are returning to the use of the name Citicorp, and going back to the core business of banking. “Citigroup . . . was put together in a random fashion that wasn’t market based,” said one banking expert. Citi’s executives, currently led by CEO Vikram Pandit (under pressure from the FDIC to step down), are struggling to cut costs, decrease the percentage of risky assets, get the right mix of leadership talent, and come up with a focused strategy to get the organization back on track.2 Citigroup is not alone. Most companies in the financial services industry are facing a need for dramatic change after the mortgage crisis and the Wall Street meltdown. Complicating the challenge for the big U.S. financial firms is that many expert managers and traders are turning away from these established firms to take their chances with innovative start-up companies or foreign banks that don’t face the tighter government regulations being imposed on the big institutions.3 This chapter explores how leaders in companies such as Citigroup facilitate change, creativity, and innovation. We first look briefly at the need for change in today’s organizations and examine a step-by-step framework for leading change. We explore the appreciative inquiry technique and how it can be used to lead both major changes and ongoing, everyday change. Next, the chapter examines how leaders facilitate innovation by fostering creative people and organizations. The final sections of the chapter consider why people resist change and how leaders can overcome resistance and help people cope with the potentially negative consequences of change. Change or Perish
Recall from our definition used throughout this book that leadership is about change rather than stability. In recent years,...
References: 1 Reported in Graham Bowley and Louise Story, “Crisis Reshaping Wall Street as Stars Begin to Scatter,” The New York Times (April 12, 2009), p. A1.
3 Bowley and Story, “Crisis Reshaping Wall Street.”
4 Steve Lohr, “How Crisis Shapes the Corporate Model,” The New York Times (March 29, 2009), p
5 Marlene Piturro, “The Transformation Officer,” Management Review (February 2000), pp. 21–25.
6 Greg Jaffe, “Next Chapter; As Iraq War Rages, Army Re-Examines Lessons of Vietnam,” The Wall Street Journal (March 20, 2006), p. A1.
7 Alain Vas, “Top Management Skills in a Context of Endemic Organizational Change: The Case of Belgacom,” Journal of General Management 27, no. 1 (Autumn 2001), pp. 71–89.
8 Judy Oppenheimer, “A Top Cop Who Gets It,” More (June 2009), pp. 86–91, 144.
9 The following discussion is based heavily on John P. Kotter, Leading Change (Boston: Harvard Business School Press, 1996), pp. 20–25; and “Leading Change: Why Transformation Efforts Fail,” Harvard Business Review (March–April 1995), pp. 59–67.
10 Paul Ingrassia, “GM Gets a Second Chance,” The Wall Street Journal Europe (July 10, 2009), p. 13; and “Ford to Seek Same No-Strike Vow from UAW as GM and Chrysler Obtained,” National Post (June 18, 2009), p. FP3.
11 Patrick Lencioni, “Find a Rallying Cry,” Leader to Leader (Summer 2006), pp. 41–44.
12 Patrick Flanagan, “The ABCs of Changing Corporate Culture,” Management Review (July 1995), pp. 57–61.
14 Chuck Salter, “On the Road Again,” Fast Company (January 2002), pp. 50–58.
15 Anna Muoio, “Mint Condition,” Fast Company (December 1999), pp. 330–348.
16 John P. Kotter, The Heart of Change: Real-Life Stories of How People Change Their Organizations (Boston, MA: Harvard Business School Press, 2002), pp. 143–159.
19 Quoted in Dave Kovaleski, “Appreciating Appreciative Inquiry,” Corporate Meetings & Incentives (August 2008), pp. 10–11.
21 See http://appreciativeinquiry.case.edu/practice/bibAiStories.cfm (accessed July 16, 2009) for examples of the uses of appreciative inquiry.
23 Debra Meyerson, Tempered Radicals: How People Use Difference to Inspire Change at Work (Boston: Harvard Business School Press, 2001).
26 Stanley S. Gryskiewicz, “Cashing In on Creativity at Work,” Psychology Today (September–October 2000), pp. 63–66.
27 Reena Jana, “Do Ideas Cost Too Much?” part of the section, “Inside Innovation: The 25 Most Innovative Companies,” BusinessWeek (April 20, 2009), pp. 45–48.
28 Dorothy A. Leonard and Walter C. Swap, When Sparks Fly: Igniting Creativity in Groups (Boston: Harvard Business School Press, 1999), pp. 6–8.
29 The elements of creative organizations come from Alan G. Robinson and Sam Stern, Corporate Creativity: How Innovation and Improvement Actually Happen (San Francisco: Berrett-Koehler, 1997).
30 Sherry Eng, “Hatching Schemes,” The Industry Standard (November 27–December 4, 2000), pp. 174–175.
31 Reena Jana, “Brickhouse: Yahoo’s Hot Little Incubator,” Innovation & Design section, BusinessWeek (November 26, 2007), p. 14.
32 Alan Deutschman, “The Fabric of Creativity,” Fast Company (December 2004), p. 54.
34 Gail Dutton, “Enhancing Creativity,” Management Review (November 1996), pp. 44–46.
35 Robert D. Hof, “How Google Fuels Its Idea Factory,” BusinessWeek (May 12, 2008), p. 54; and “Inside Innovation: The 25 Most Innovative Companies,” BusinessWeek (April 20, 2009), pp. 45–48.
36 Reported in Teresa M. Amabile and Mukti Khaire, “Creativity and the Role of the Leader,” Harvard Business Review (October 2008), pp. 100–109.
37 Robert D. Austin, Lee Devin, and Erin Sullivan, “Oops! Accidents Lead to Innovations. So, How Do You Create More Accidents?” The Wall Street Journal (July 7, 2008), p. R6.
38 Examples from Phred Dvorak, “Businesses Take a Page from Design Firms; Sloan-Kettering Taps Industry for Innovative Ideas on Management,” The Wall Street Journal (November 10, 2008), p. B4.
41 Gary P. Pisano and Roberto Verganti, “Which Kind of Collaboration Is Right For You?” Harvard Business Review (December 2008), pp. 78–86.
43 John Bessant, Kathrin MÖslein, and Bettina Von Stamm, “Business Insight (A Special Report): In Search of Innovation,” The Wall Street Journal (June 22, 2009), p. R4.
44 These tips are based on Leigh Thompson, “Improving the Creativity of Organizational Work Groups,” Academy of Management Executive 17 (2003), pp. 96–109; and Bruce Nussbaum, “The Power of Design,” BusinessWeek (May 17, 2004), pp. 86–94.
45 David Kirkpatrick, “Throw It at the Wall and See if It Sticks,” Fortune (December 12, 2005), pp. 142–150.
46 Jared Sandberg, “Brainstorming Works Best if People Scramble for Ideas on Their Own,” The Wall Street Journal (January 13, 2006), p. B1.
47 Reena Jana, “Real Life Imitates Real World,” BusinessWeek (March 23–30, 2009), p. 42.
49 Burt Helm, “Wal-Mart, Please Don’t Leave Me,” BusinessWeek (October 9, 2006), pp. 84–89.
50 Wellner, “A Perfect Brainstorm”; Gallupe and Cooper, “Brainstorming Electronically.”
51 Helm, “Wal-Mart, Please Don’t Leave Me”; and GSD&M Idea City, http://www.ideacity.com (accessed July 20, 2009).
52 Edward DeBono, Serious Creativity: Using the Power of Lateral Thinking to Create New Ideas (New York: HarperBusiness, 1992).
53 Dave Waller, “The Gospel According to Edward DeBono,” Management Today (August 2007), http://www.managementtoday .co.uk (accessed July 27, 2009).
54 Francine Russo, “The Hidden Secrets of the Creative Mind,” Time (January 16, 2006), pp. 89–90.
55 Ronald T. Kadish, “Mix People Up,” Harvard Business Review (August 2002), pp. 39–49.
57 Derm Barrett, The Paradox Process: Creative Business Solutions . . .Where You Least Expect to Find Them (New York: American Management Association, 1997).
59 Alison Stein Wellner, “Creative Control; Even Bosses Need Time to Dream,” Inc. (July 2007), pp. 40–42.
60 Richard A. Lovett, “Jog Your Brain,” Psychology Today (May/June 2006), pp. 55–56; and Mary Carmichael, “Stronger, Faster, Smarter,” Newsweek (March 26, 2007), pp. 38–46.
62 This question and the answer given later are from Tahl Raz, “How Would You Design Bill Gates’ Bathroom?” Inc. (May, 2003), p. 35.
63 These match puzzles are from Michael Michalko, Thinkertoys, 2nd ed. (Berkeley, CA: Ten Speed Press, 2006).
64 Based on Paul Stebel, “Why Do Employees Resist Change?” Harvard Business Review (May–June 1996), pp. 86–92.
65 Michael A. Roberto and Lynne C. Levesque, “The Art of Making Changes Stick,” MIT Sloan Management Review (Summer 2005), pp. 53–60.
66 Shaul Fox and Yair Amichai-Hamburger, “The Power of Emotional Appeals in Promoting Organizational Change Programs,” Academy of Management Executive 15, no. 4 (2001), pp. 84–95.
67 Peter Richardson and D. Keith Denton, “Communicating Change,” Human Resource Management 35, no. 2 (Summer 1996), pp. 203–216.
68 Dan S. Cohen, “Why Change Is an Affair of the Heart,” CIO (December 1, 2005), pp. 48–52.
69 T. J. Larkin and Sandar Larkin, “Reaching and Changing Frontline Employees,” Harvard Business Review (May–June 1996), pp. 95–104; and Rob Muller, “Training for Change,” Canadian Business Review (Spring 1995), pp. 16–19.
70 Phillip H. Mirvis, Amy L. Sales, and Edward J. Hackett, “The Implementation and Adoption of New Technology in Organizations: The Impact of Work, People, and Culture,” Human Resource Management 30 (Spring 1991), pp. 113–139.
71 Dean Foust with Gerry Khermouch, “Repairing the Coke Machine,” BusinessWeek (March 19, 2001), pp. 86–88.
72 Mark Jepperson, “Focused Journey of Change,” Industrial Management (July–August 2005), pp. 8–13.
73 Reported in Catherine Rampell, with Jack Healy, “Layoffs Spread to More Sectors of the Economy,” The New York Times (January 27, 2009), p. A1.
76 Kate O’Sullivan, “Plan B: For Both Altruistic and Business Reasons, Some Companies Are Seeking Alternatives to Layoffs,” CFO (February 2009), p. 51.
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