CHANGES FOR CHANGES SAKE

By Freek Vermeulen, Phanish Puranam, And Ranjay Gulati

Group Members :

Ashish Mittal Kunal Nagrani Mayur Chatwani Prakash Sahu Rohit Rajpurohit Tarak Chauhan

Group :- 11

Table of Contents :

Introduction When and How to change? The Formation of silos The Deadening Impact of Routine A REGIMEN FOR CHANGE The Emergence of Entrenched interests Knowing When to change? Bibliography

Introduction:

Why There is need to change? Competitive Landscape External and Internal Environment Human Dynamics Forming new Network Creativity, Innovation and Adaptability Resource allocation

When and How to change?

Foster Communic ation

Use informal networks to compensate for limits of the formal structure Be prepared for Repeatedly process Expose people for new aspect of tasks and opportunity Be prepared to accept a constant state of mild disruption Change the dimension along which resources are allocated Be prepared for disenfranchise and even lose certain people

Building Agility problem

Breaking up entrenche d interest

The Formation of silos :

Companies are organized around a single criterion : Product, Geography, Function or Market Drawback to Organize as a matrix is blur accountability and slow down decision making. Periodically reorient is the best solution around a different criterion. Functional example of CISCO Three lines of business : Marketing, Sales and R&D. Separate unit and customer focus. Centralization in R&D. Cost effective technical innovation. Exchange idea and Collaborate.

Contd

Foster economies of scale and streamline product offering. Possibility of losing touch with customers, so formal structure and informal networks and culture eventually realign. In 2004, creation of three Business Councils : Crossfunctional and Cross-technology solutions. Feedback on strategy, products and services.

The Deadening Impact of Routine :

Exploitation drives out Exploration. Product example of HEWLETT-PACKARD Centralization of function of sales, marketing and product development and their subsequent decentralization into product groups. Companys performance suffered due to exchange. Changes to be taken place : Emphasize individual performance. Rearrange office space. Grouped by function instead of customer segment.

A REGIMEN FOR CHANGE

Structure, Reward and Process

STRUCTURE : How is your business organized? Function, Geography, Customer type, Product REWARDS : What is emphasized in performance reviews and compensation? Individual, team, or companywide incentives Open versus confidential appraisals Short-term performance versus long-term development Revenues versus value-added PROCESS : How do you carry out your work? Decision rights (Who decides what, reporting lines) Distribution (Centralized or Decentralized) Location (Which process sit next to each other) Focus (Customer or Product)

Geography example of GE HEALTHCARE :

Increased focus on services and customer Three geographic centers, move towards combined equipment and services Forward looking performance system management and incentive system Two position : Enterprise General manager to look after major account Enterprise development Executives for building customer partnership

The Emergence of Entrenched interests

Inefficient at allocating resources, so assigning larger proportion of its resources and power Centralized corporate fund to subsidize cross-unit collaborative project, so its opportunity to strengthen the weaker unit. MARKET Example of JLS, jones lang laSalle(global commercial real estate company): In the business of leasing, commercial property management and provision of services related to development of new buildings Company was unit measured, three departmental head made decision

Contd

Organized into Three division: Tenant representation Group Corporate property services Project and development services

Problem was units were not equally strong in specific geographic market, so collaborate to develop fast growing and profitable market for the provision of integrated services to large multinational firm is necessary. Replace the three units with new structure organized around client for relationship with clients and market for transaction in large metropolitan areas. Effect was share price was tripled and grown at 25% rate. The changes are Time consuming With high cost

Knowing When to change?

A CORPORATE CHOLESTEROLE TEST 1. The quality of communication and collaboration Do employees interact only with people from their own group? Y/N Are there strong subcultures that align with business groups or divisions? Y/N Are there breakdowns in communication caused by the formation of silos? Y/N Has collaboration between groups decreased over the past five years? Y/N Total Yes Answers ___

Contd
2. The capacity to adapt Are many people uncomfortable with change? Y/N Do people and groups operate according to well-established routines? Y/N Has it been a long time since your firm developed a significant new revenue stream? Y/N Has the percentage of revenue from new streams decreased over the past five years? Y/N Total Yes Answers ___

Contd
3. The balance of power among groups Do influential groups or individuals use most of the companys resources? Y/N Is it difficult for people outside the companys central group to obtain resources? Y/N Do influential groups or individuals impede decision making? Y/N Have the groups or individuals that were influential five years ago extended their influence? Y/N Total Yes Answers ___

Contd

Final Score 02 yes answers Theres no need for change just yet. 37 yes answers Its the perfect time for a change. 812 yes answers Youre late already; your company needs substantial change.

change is not easy, [but] you cant dodge it. it is with you. and youd better embrace it. Alfred West