Report

Of
Change Management

Submitted to: Sir Sohail Saleem.

Submitted by:
Syed Hussain Zain ul Abiden L1f09mbam1138
Syed Ali Kamran
L1f09mbam1165
Khurram Jameel
L1f09mbam1188
Ali sher L1f09mbam1203
Akif Yaseen L1f09mbam
 UNIVERSITY OF CENTRAL PUNJAB LAHORE

Complacency:

“A feeling of contentment or self-satisfaction, especially when coupled with an

unawareness of danger, trouble, or controversy”.

Sources of Complacency:

1. No highly visible crisis existed. The firm was not losing money. No one had
threatened a big layoff. Bankruptcy was not an issue. Employees saw no tornado-
like threat.
2. The meeting was taking place in a room which screamed “success”. The
corporate HQ was the same way: marble, rich woods, deep carpets and oil
paintings. The subliminal message was clear: we are rich, we are winners, we
must be doing something right. So relax
3. The standards against which these managers measured themselves were far
from high. It was a common saying “ profits are up 10 percent over last year”.
What was not said was that profits were down 30 percent from five years before
and industry wide profits were nearly up 20 percent over previous one year
4. The organizational structure focused most people’s attention on narrow
functional goals instead of broad business performance. Marketing had its
indexes, manufacturing had a different set, personnel yet another. Only the CEO
was responsible for overall sales, net income and return on equity
5. Various internal planning and control systems were rigged to make it easy for
everyone to meet their functional goals
6. Whatever performance feedback people received came almost entirely from
faulty internal systems. Data from external stakeholders rarely went to anyone
7. When enterprising young employees went out of their way to collect external
performance feedback, they were often treated like lepers
8. Complacency was supported by the very human tendency to deny that which we
do not want to hear
 9. Those who were relatively unaffected by complacency sources mentioned above
went into a false sense of security by senior management’s “happy talk”.

Complacency A Killing Attitude:

Complacency creeps into everybody's life at least once or sometimes more than once. A
secured job, adequate salary and a comfortable work place often puts people into such a
situation where the learning curve stops. They start enjoying the other facets of life.
While it’s very important to have a good personal life we need to ensure that our careers
do not take a back seat in this process.

Often we find average people sticking to the job. This doesn't mean that company is
happy with their performance or they couldn't find an alternative. It’s often because
recruitment is a painful, time consuming and expensive process.
In Gulf countries to get a visa, driving license and ready-to-market time itself is 6 months
for every employee. Companies often ignore the lack of performance and give additional
time for their employees to avoid another recruitment process.
This may often send wrong signals to employees. They may assume that company is
happy with their performance or they couldn't find an alternative. This assumption is
wrong.

People working in HR department need to update themselves on organization behavior

and various HR trends. People in sales need to learn about global economics and
economic conditions of the countries where they do selling. Marketing people have to be
updated about global trends and innovative ways they can reach the market effectively.
Support engineers and consultants have to constantly update themselves with the latest
technologies, products and vendors and earn latest certifications. Project management
should learn from the successful projects implemented globally; how much time and
resources they were able to save? How efficiently the project was executed? Finance and
accounting should learn from the corporate success stories and methodologies by which
big companies maintain cash flow, execute projects with adequate funds, improve
collections and do efficient budget forecasting. Management also has to learn from the
success of companies in the same industry. Proper planning and execution has been a key
factor for growing companies.
So it’s constant learning for each and everybody in the organization. Complacency in any
part will affect the individual concerned as well as the organization.
Can we leave the stove on with the food in it? It will spoil the food. Can we let a child to
grow on his or her own without nurturing it with the knowledge and good habits?
You should deliver your top class performance as if your job is always under threat. We
should learn as if there is a project tomorrow. We should prepare as if there is always a
challenging assignment round the corner. We should sell as if everyday is a year end. We
should plan well in advance so that we don't suffer with surprises during the execution.
Many big organizations spend more time on planning and execution happens at the speed
of a blink of an eye lid. So if you get time, plan for your individual career, for your role
in the company and assist your department in planning. Never let complacency creep in
your life. This attitude will kill your growth and affect your future.

The Dangers of Complacency:

The greatest threat hovering above an organization today is not the competition. Neither
is it the increasing demands placed by customers. Nor is the pace of change brought
about by globalization. The greatest threat to the survival of organizations today is
complacency of people inside organizations It is the number one enemy in large and
successful organizations today. When an organization is small and thriving, leaders are
up and about in addressing customer service issues, quality problems and productivity
challenges. They are committed to do everything to stay competitive and win market
share and grow the company. However, as the company started to grow in leaps and
bounds and achieve considerable success, people begin to get too comfortable for their
own good. They begin to lull into complacency in every area of work which they once
placed great importance to. And it is this sense of complacency that leads to the eventual
downfall of an organization.

There are six grave dangers of complacency:

1) Complacency Leads To Blind Spots

One of the greatest dangers of complacency is that it creates blind spots in people
towards the need for change and growth. Blind spots refer to those critical areas that need
to be addressed but are not as people are not aware of them or refuse to acknowledge
them. In fact, prior to the Asian Financial Crisis, due to a string of successes achieved by
organizations, many leaders began to develop blind spots towards the need for better risk
management. They begin to expose their companies to excessive risk to the extent that
one failed investment or venture can bring the whole organization down. Leaders in
successful companies develop blind spots in many areas because of their refusal to see
the changes around them and their impact they have on their companies. The strings of
achievements and successes they have achieved have "blinded" them towards areas of
potential dangers Often the success brings out the sense of arrogance and over confidence
in leaders. These elements cloud their thinking and block their understanding of the
actual issues that are happening. Blind spots developed because leaders are blinded by
past successes and thus have the vision of their future blocked.

2) Complacency Leads To Poor Quality

In a booming business environment, whereby demand exceeds supply, it is easy for
people in organizations to take the business for granted. In the rush to fulfill orders, the
rade off is quality for quantity and they justified the extra effort for quality need not
Count as they have a lot of customers. Many have taken the attitude that in view of the
good business, even if the company loses some customers that are fine as they still have
other customers. It is this sense of complacency that leads to poor quality of products
and service. In a booming business environment, this strategic flaw in products and
services are camouflaged by new customers as new customers are lost. The impact of
poor quality is often not discerned until it is too late.
The danger of poor quality is that its impact is strategic and long-term. Customers who
are not happy with a company's products or services will not only stop doing business but
will inform ten other people they know about their dissatisfaction. The tarnished image
from poor quality of products or services will undo millions and often billions of dollars
arising from the goodwill of advertisement and branding. It will cost five times more to
get a new customer than to retain an existing customer. Customers who are not happy
with the quality of products or services of a company give the business to the
competitors.

3) Complacency Leads To Excessiveness

One of the great ills that come from complacency is the tendency towards excessiveness.
Companies who are doing well become lax in their control of resources. Departments and
divisions become overstaff thus incurring unnecessary resources. Overtime and expenses
of staff claims shoot up. Companies acquire a lot of unnecessary and unproductive assets
such as excessive office renovations and décor.
Granted company image is important to keep up with the success a company has
achieved, but going overboard with luxurious head office, generous perks for top
executives such as huge executive rooms with expensive taste, expensive cars, big
expense allowances and unjustifiable fat bonuses will certainly increase the overall cost
of the organization.
Of course all these excessiveness affects the productivity and competitiveness of the
company. A good indicator to watch out for excessive costs is to look at where the
increase in cost is coming from. If the increased in cost is due to increase investment and
spending to increase revenue such as advertisement costs and additional staff to cope
with increasing workload, that is fine.
Increases in costs that have no direct or indirect impact on increasing the business have to
be curtailed as much as possible to prevent recurring.
4) Complacency Leads To Inaction And Status Quo
Success is often achieved as a result of taking the necessary actions. In fact one of the
hallmarks of successful companies is that they take a lot of actions. They undertake
customer satisfaction survey and take quick action to address any customer complaints.
They undertake market research and continuously improve their products and services to
meet the changing needs of customers. They innovate their products and services to fend
off competition and increase their market share. Leaders listen to staff and address their
needs to enable them to stay productive. They plan, train and develop their staff to
increase the overall competency level of the organization. They take great effort in
motivating and rewarding people based on performance. However, success breeds
complacency which eventually leads to inaction. There are many stories of successful
companies which eventually fall, because people in organizations fail to take to continue
to take those necessary actions which they had done before. The downfall begin when
they stop improving, changing and growing the organizations. Many leaders and staff
who are in successful companies reach a point which they feel they no longer need to
take those actions. They ride on their laurels. Instead of making things, happen, they are
immobilized by status quo. They become passive and wait for things to happen. They
hope that the momentum created by the success will move things forward on their own.
The truth is that things do not move on their own until people move them.

5) Complacency Leads To Strategic Vulnerabilities

One of the greatest dangers of complacency is the building up of strategic
vulnerabilities. Strategic vulnerabilities refer to the weaknesses or flaws which expose
the company to risks of failure or collapse. Thus a company which do not undertake
market survey to understand the changing customer need, may continue to produce the
same products or services which customers may no longer need. This is a strategic flaw
which in time will lead to the collapse of the company. Likewise, a company which has
poor cash management may find it is not capable of paying debtors and become
insolvent. This can lead to the demise of the company altogether. The danger of this kind
of complacency is like cutting the wrist of the hand of a person and unless we stop the
bleeding, death is the certain outcome.
When leaders are complacent they no longer think strategically about the future of the
company. They become too comfortable with their past and current success. Their
thinking has become too short-term, inward looking and narrow. They no longer assess
the threats facing the organization. By not taking actions or addressing strategic issues
fast enough, they are exposing the company to grave dangers. Thus, not addressing the
entrance of a new competitor in the industry and not countering the threats posed by the
new products may create strategic vulnerabilities to the company. Complacency leads to
the underestimation of the danger posed by threats in the environment, leaving it
vulnerable. This often proves fatal to many organizations.

6) Complacency Leads To Deteriorating Bottom-line Performance

Complacency affects the bottom line performance of the company in many ways, both in
the short-term and long-term. Being complacent, people may not explore new products,
new services or new markets. The missed opportunities affect the potential revenue
growth of the company. Complacent organizations which no longer put emphasis on
addressing quality problems and customer complaints will lose customers and sales
revenue. Complacent organizations have operation staffs who chalk up production costs
and support staff that balloon up head office expenditures. This increases overall costs
and squeezes profit margin. Complacent organizations develop blind spots which
exposed the company to excessive risk and often lead to losses.
In a very competitive and fast changing environment, remaining status quo is the surest
path to losing market share. Organizations who become complacent who do not take fast
actions to change and grow the company will see their profits evaporate quickly.
Thus complacency brings a host of undesirable behavior of people which lead to the
deteriorating bottom line performance and eventually decimate the whole organization.

Complacency and False Urgency

We have a serious problem. It could grow more serious in the future if we don’t act now.
What many people often see as the solution is not the solution. It can actually make
matters worse. There is a real solution. You can find it in use today. It can produce the
achievements we all want for organizations, nations, and ourselves.

The problem is complacency. We have all seen it. Yet we underestimate its power and its
prevalence. Highly destructive complacency is, in fact, all around us.

With complacency, no matter what people say, if you look at what they do it is clear that
they are mostly content with the status quo. They pay insufficient attention to wonderful
new opportunities and frightening new hazards. They continue with what has been the
norm in the past, whether it’s short hours or long, suits or jeans, a focus on products or
systems or not much of anything.

As an outsider, you may correctly see that internal complacency is dangerous, that past
successes have created sluggishness or arrogance, but complacent insiders—even very
smart people—just don’t have that perspective. They may admit there are difficult
challenges, but the challenges are over there in that other person’s department. They
think they know what to do and they do it.

In a world that moves slowly and in which you have a strong position, this attitude
certainly is a problem, but no more so than a dozen other problems. In a fast-moving and
changing world, a sleepy or steadfast contentment with the status quo can create disaster
—literally, disaster.

Far too often, managers think they have found the solution to this problem when they see
lots of energetic activity: where people sometimes run from meeting to meeting,
preparing endless PowerPoint presentations; where people have agendas containing a
long list of activities; where people seem willing to abandon the status quo; where people
seem to have a great sense of urgency.

Lets see how ants teach us at least five strategies for dealing with complacency:

1. Ants never, ever give up

Put something in front of them, and they will get around it, over it, under it or through it.
If one way doesn't work, they will try another. If that way does not work, they will try
still another way. And so on until they find a way around the obstacle. There's nothing
wrong with feeling content. It's something that we all strive for in life.

2. Ants are always getting ready for what's next

They don't ever rest on their laurels. In the summer, they are thinking about the winter
and getting ready for it.

3. Ants are creatively industrious and resourceful

Ants don't complain about not having the right tools to do what needs to be done. They
take what is available right in front of them and find a way to make it work.

4. Ants are always hopeful

In the winter, when they are holed up in their little ant mound, they are using what they
stored up all summer and know that as cold as it is, summer is coming, and they are
getting ready for it.

5. Ants don't seem to believe in the concept of enough

They store up all that they can for the winter. You have seen the acronym on restaurant
signs AYCE. I used to think that must be some kind of special brand of food. It took me
forever to figure out that it stands for All You Can Eat.

Instead of focusing on All You Can Eat, I think we would do better to focus on what the
ants do, AYCD, which stands for All You Can Do.

If you constantly follow these five tips, you will consistently beat complacency. Think of
it as being content and always hungry to make things better.
Sense of Urgency:

“The quality or condition of being urgent; pressing importance: the urgency of the call
for help; pleading with urgency.”

Pushing up the Urgency Level:

1. Create a crisis by allowing a financial loss, exposing managers to major

weaknesses vis-à-vis competitors, or allowing errors to blow up instead of
correcting at the last minute
2. Eliminate obvious examples of excess
3. Set revenue, income, productivity, customer satisfaction, and cycle-time targets
so high that they cannot be reached by conducting business as usual
4. Stop measuring subunit performance based only on narrow functional goals.
Insist that more people be held accountable for broader measures of business
performance
5. Send more data about customers satisfaction and financial performance to more
employees, especially that demonstrates weaknesses vis-à-vis the competition
6. Insist that people talk regularly to unsatisfied customers, unhappy suppliers, and
disgruntled shareholders
7. Use consultants and other means to force more relevant data and honest
discussion into management meetings
8. Put more honest discussions of the firms problems in company newspapers and
senior management speeches
9. Bombard people with information on future opportunities

Creating Sense of Urgency:

1. Set a challenging goal with a deadline

A challenging goal creates a sense of urgency that inspires us to work harder to achieve
it. A good example is John F. Kennedy’s goal of landing people on the moon before the
end of the decade. The goal was challenging, and it had a clear deadline. That goal
inspired a whole generation of scientist to emerge and boost the productivity of the space
program to a whole new level.

You can set a challenging goal for yourself. Maybe you want to reach a certain level of
income or write a book. Whatever it is, your goal should be specific so that you know for
sure whether or not you have accomplished it. Besides, your goal should have a clear
deadline.

2. Set a challenging deadline for a goal

In the previous tip, the goal is challenging, but the deadline is normal (that is, there is
enough time for you to achieve the goal). You can also do it the other way: the goal is
normal, but the deadline is challenging. Since we usually deal with normal goals in our
daily life, this trick can be used on many occasions.

Suppose you have to write an article. That’s a normal goal – there’s nothing too big or
challenging about it. But you can create a sense of urgency by setting a challenging
deadline. This way you will be motivated to work harder and be more productive.

3. Set a minimum time to work on something

Deadlines give you a sense of urgency by setting a maximum amount of time to finish
something. But sometimes it’s difficult to even get started. The task feels uncomfortable
and we try to avoid it.

In such case, we can create a sense of urgency in a different way: by setting a minimum
amount of time to work on it. Before the time is up, you may not stop working. This way,
there is pressure to keep yourself going until you meet the minimum time limit, and you
trick yourself to start working on an uncomfortable task.

4. Make yourself accountable

Another way to give yourself a sense of urgency is by telling other people about your
goal. By letting them know about your goal, you will feel the pressure to achieve it and
meet their expectations. This is one reason why I like to share my goals and visions with
the people I meet. They keep me stay motivated and on track.

5. See yourself to be in the losing side

This attitude – which is used by Bill Gates in the example above – is important to avoid
comfort zone. If we feel that we are already winning, there’s a danger that we will feel
comfortable and slow down. So look around and find someone who is better than you in
an area. Then put yourself on the losing side and creates a sense of urgency to keep the
momentum going.

6. Be aware of potential danger

One reason we have no sense of urgency is we are not aware of the danger that is
threatening us. If we can’t even feel the danger, how can we feel the urgency? So widen
your perspective and see what’s going on in this world along with its potential danger.

Now that I’m aware of the danger, I have a sense of urgency to keep myself growing.

Increasing a True Sense of Urgency:

The Strategy
“Create action that is exceptionally alert, externally oriented, relentlessly aimed at
winning, making some progress each and every day, and constantly purging low value-
added activities – all by always focusing on the heart and not just the mind.”

The Tactics
1. Bring the Outside In
• Reconnect internal reality with external opportunities and hazards
• Bring in emotionally compelling data, people, video, sites and sounds

2. Behave with Urgency Every Day

• Never act content, anxious or angry
• Demonstrate your own sense of urgency always in meetings, one-on-one
interactions, memos and e-mail and do so as visibly as possible to as many
people as possible
 3. Find Opportunities in Crises
• Always be alert to see if crises can be a friend, not just a dreadful enemy,
in order to destroy complacency
• Proceed with caution, and never be naïve, since crises can be deadly

4. Deal with the NoNos

• Remove, or neutralize, all the relentless urgency-killers, people who are
not skeptics but are determined to keep a group complacent or, if needed,
to create destructive urgency.
Cases of Complacency:
1) TOYOTA COMPLACENCY

That crashing sound you hear is not an accident caused by sudden acceleration of your
hybrid car; it is the continuing toppling of idols, such as hybrid car companies, off their
pedestals. Listen hard, lest you be next.

Toyota, the world's leading auto company, faces a series of product problems causing
a $2 billion recall, an investigation by the National Highway Traffic Safety
Administration, and a galling loss of face for a company from face-conscious Japan. This
follows its first annual financial loss in 50 years, with profitability regained partly
through cost-cutting.

Sayonara for a while to Toyota's reputation for quality control and invincibility. But in
Dearborn, Michigan, there are no smug smiles. Ford announced that it is also fixing
electronic brakes in its hybrid cars after a damaging review by Consumer Reports and
more generalized concerns about electronics in cars.

2) IBM COMPLACENCY

In Thinking Managers I have discussed the allied sickness of executive inertia, when
managers know what to do, and how to do it, but fail to act on their knowledge. In a
company that's blind to its failings, however, management may be energetic enough - but
its energies will be misdirected. IBM, for example, poured tremendous effort into trying
to maintain its proprietary dominance, based on mainframes and once brilliantly
successful: but the company smugly missed the seismic shift to open systems and
microprocessor-based technology.

The trouble was partly that, inside IBM, almost everybody believed that they were
working for the best of all possible companies, executing the best of all possible
strategies in the best of all possible ways. The evidence in my book, The Fate of IBM,
made it clear that this comforting and complacent inner view had been dangerously
untrue for many years. For almost as long, a quite different and far less flattering
perception had been held by well-placed observers outside the company - including some
important customers. The reality eventually appeared in still less flattering results.

Yet only a few weeks ago, a former IBMer wrote me a pleasant letter about the book,
extolling his previous employer - apparently quite oblivious of its follies and failures,
including its lapse into heavy loss and massive lay-offs. Rather, he was impressed by
how IBM had 'survived so successfully' despite missing 'many golden opportunities',
having turned down 'just about every major business innovation' - including xerography.
'The only conclusion I and any other IBMer can come to is that to put the customers first
and solve their problems is the soul of real marketing, and that is what being an IBMer is
all about.'

3) HINDUSTAN MOTORS IS A CASE STUDY OF COMPLACENCY:

In October 1998, Hindustan Motors (HM), makers of one of India's best known cars - the
Ambassador - launched a new car, the Mitsubishi Lancer (Lancer). The launch of Lancer,
a new car from the HM stable after nearly two decades, was reported to be very
important for the company, whose market share was on the decliHM was reportedly
banking heavily on the Lancer's success to fight competition from other car companies.
Lancer was positioned in the mid-size luxury car segment, which was dominated by
Maruti Udyog's (MUL) Maruti Esteem and Honda's Honda City.
Lancer was received very well by automobile experts throughout the country, largely due
to its technical finesse. The car's sales reached 2,866 units by the end of the fiscal 1998-
99. Much to HM's delight, Lancer was even ranked as the top vehicle in India for the
three consecutive years (1999, 2000 and 2001) by J. D. Powers1 for the least number of
defects and high customer satisfaction in a countrywide survey of car ownersne.

However, the company's euphoria was short-lived as Lancer's sales failed to pick up as
expected. While 7,621 cars were sold in 1999, HM managed to sell only 7,635 cars in
2000-01 against a forecast of 8,000.2 On the other hand, sales of Honda City increased to
10,011 in 2001 from 9631 in 1999 (Refer Exhibit I for the sales comparison).
Meanwhile, HM's other offerings Ambassador and Contessa were also faring badly.
In 1999, Ambassador's sales were down to 15,374 from 18,312 in 1998 and Contessa's to
285 from 575 in 1998. This poor performance took a heavy toll on the company's
bottomline and HM reported a net loss of Rs 615.8 million for the fiscal 1999-00. (Refer
Table I). The company had reportedly accumulated losses worth Rs 1.1 billion during
1999-2001.3 In late 2001, HM announced its plans to launch another car, the Mitsubishi
Pajero. The company planned to import fully assembled cars and sell them by early 2002.
Analysts remarked that the Pajero could do little to revive the company's fortunes as
despite many efforts to turn itself around, HM had failed to regain its 4-decade long
leadership in the Indian passenger car market. Its 3.3% market share in the half-year
ending September 2001, proved beyond doubt that the company was struggling to stay
afloat.

Hindustan Motors' Struggle for Survival

Background Note

HM was incorporated in 1942 by the GP-CK Birla Group of companies in collaboration

with General Motors (GM), USA. The CK Birla group was one of the well known
family-owned business houses in India, with 17 companies in businesses such as
automobiles, engineering, paper, and auto-components

Some of them were Hyderabad Industries Ltd., Oriented Papers & Industries Ltd.,
National Engineering Industries Ltd., Gujarat Instruments Ltd., Hindustan Powerplus
Ltd., India Gypsum Ltd., Malabar Building Products Ltd., Birla Horizons International
Ltd., and Birla Techneftegas Ltd. HM's manufacturing facilities were located at Uttarpara
in West Bengal, Pithampur in Madhya Pradesh, Thiruvallur and Hosur in Tamil Nadu,
and Pondicherry. Over the years, HM built up a vast dealer network comprising 115
dealers, 50 service and parts dealers and 60 additional exclusive parts dealers. Initially,
the company concentrated on its auto components business, producing its first car only in
1949. In 1954, HM started production of the Landmaster in technical collaboration with
UK-based Morris Motors Ltd. (Morris)
The company upgraded the Oxford model of Morris and launched it as the Ambassador
in 1957 - the car went on to become the flagship brand of the company in the years to
come
In 1963, HM commenced the production of Ambassador Mark 2, made available in two
variants - diesel and Ambassador ISZ. HM entered the earth moving equipment business
in 1971 and the power products business in 1983 (Refer Exhibit II for the sales break up
of HM from various units). Until the 1980s, HM's Ambassador and Premier Automobiles
Ltd's (PAL) Padmini were the only two cars available in the Indian market. Ambassador
was the vehicle of choice, Government of India, and the official car for almost every
Indian Prime Minister after independence. Though there was no executive order that said
that the government departments have to buy only Ambassador cars HM derived a major
part of its sales from senior politicians, top civil servants, bank managers and defence
personnel...