Chapter 18 – Creating and Leading Change
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18
chapter
Creating and Leading
Change
Learning Objectives 2
Key Student Questions 3
Class Roadmap 4
Bottom Line 9
Social Enterprise 10
Lecturettes 11
CHAPTER CONTENTS
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1 Discuss what it takes to be world class.
LEARNING OBJECTIVES
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There is one question that students can be relied on to ask whenever the topic of change comes up. It is:
1. “Is change always good?”
The answer, of course, (and students are just waiting to hear you say this) is “No.” Coca-Cola wishes that
they had never heard of “The New Coke” and Time Warner wishes they had never heard of AOL. But
Teaching Tips
This is the point in class where students start to look back and say to themselves, “What have I
gotten from all this?” A “summing up” at the end of class helps students to put the whole class in
perspective. There are several ways to summarize the class, including:
• Putting key lessons into two or three PowerPoint slides. Every professor will have different
things that he or she emphasizes during the term, but below are some suggested points to
cover:
➢ Management theories build on each other as they evolve
➢ Environmental changes demand organizational changes
• Post the class expectations that you collected on the first day of class, and ask students how
well they have been met.
KEY STUDENT QUESTIONS
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Management in Action
Shell Oil’s Managers Face-off with Investors Over Climate Change
At Shell’s recent annual general meeting, investors fired a “hostile barrage of questions” at top
management regarding the sustainability of its business strategy and commitment to the envi-
ronment. Moreover, a group of 150 investors that control billions of dollars worth of shares filed
LO 1: Discuss what it takes to be world class.
A. Sustainable, Great Futures.
1. Core ideologies in Built-to-Last companies (Exhibit18.1)
E.G.
Use Example 18.1 – Being world class here
D. Achieving Sustained Gains (Exhibit 18.2)
1. Strategy focused on customers and fine-tuning that is clearly communicated to employees
2. Execution – good people with decision-making authority on the front lines doing quality
E. Organizational Development (OD) – a system wide application of behavioral science knowledge
to develop, improve, and reinforce the strategies, structures, and processes that lead to organiza-
tional effectiveness.
I. Becoming World Class
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1. Aims to:
a. increase organizational effectiveness
2. OD techniques (Exhibit 18.3)
a. strategic interventions
LO 2: Describe how to manage change effectively.
A. Shared leadership – encourages people to not only support change, but to implement it.
B. Change Agents – People who create change.
C. Motivating People to Change – reasons for resistance relate to the specific nature of a particular
change
1. General reasons for resistance (Exhibit 18.4)
a. Inertia
b. Timing
E.G.
Use Example 18.2 – Managing Change here
Multiple Generations at Work
Keep Aligning Your Skills With The Future of Work
A recent PricewaterhouseCoopers study about the changing nature of work stated: “Disruptive
innovations are creating new industries and business models, and destroying old ones. New tech-
II. Managing Change
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D. A General Model for Managing Resistance (Exhibit 18.5)
1. Unfreezing – realizing that current practices are inappropriate and that new behavior is nec-
essary.
E. Specific Approaches to Enlist Cooperation
Several effective approaches to managing resistance and enlisting cooperation are available:
(Exhibit 18.6)
1. Education and communication
2. Participation and involvement
Management in Action –
Progress Report
Powerful investors are attempting to unfreeze Shell’s current business practices in favor of moving the
company toward a more environmentally sustainable strategy. However, oil companies like Shell are
continuing to operate under the assumption that demand for oil and natural gas will remains strong for
Mr. van Beurden, Shell’s CEO, defends his company’s slow pace of change: “If there would be no further
investment in oil production ,the gap between supply and demand could be 70 million barrels per day by
2040.” “Energy demand will continue to grow and that will have to be by and large met by fossil fuels,”
he added.
If you were the CEO of Shell, how would you respond to pressures from shareholders to a become more
environmentally friendly company? What changes, if any, would you pursue short-term? Long-term?
Answers will vary, but the CEO will have to be responsive to shareholders demands, as they elect the
Do you agree with Shell’s CEO that fossil fuels will be needed to meet energy demand for several more
decades?
Answers will vary, but with the rapid changes worldwide, this assessment may be a bit too enthusiastic.
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F. Harmonizing Multiple Changes
1. Total organization change involves introducing and sustaining multiple policies, practices,
and procedures across multiple units and levels.
G. Leading Change (Exhibit 18.7)
1. Establishing a sense of urgency means getting people to understand why change has to hap-
pen now.
2. To create a guiding coalition means putting together a group with enough power to lead the
change.
H. Sources of Complacency (Exhibit 18.8)
LO 3: List tactics for creating a successful future.
B. Reactive change is a change effort that occurs under pressure; problem-driven change.
C. Proactive change is a change effort that is initiated before a performance gap has occurred.
1. Exercising foresight
D. Thinking about the Future
E. Creating the Future (Exhibit 18.9)
F. Shaping Your Own Future
a. Look for positions that stretch you and for bosses who develop their protégés
F. Learning and Leading
1. Continuous learning (Exhibit 18.10): Constantly explore, discover, and take action in order
to learn, grow on a personal level, and to help your organization be more effective.
III. Shaping the Future
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E.G.
Use Example 18.3 – Continuous learning here
2. Commit to lifelong learning.
G. A Collaborative, Sustainable Future?
1. Bear in mind the long run in addition to immediate demands
Management in Action –
Onward
Since its founding in 1907, Shell has adapted successfully to a myriad of external pressures. Today’s chal-
lenges may be different. Many believe that current social, environmental, and political forces are combin-
ing in a way that will force disruptive change within Shell and the rest of the energy industry. Jeremy
Leggett of the Carbon Tracker Initiative, a group that advises energy company investors, argues that “en-
vironmentally friendly policies and economic growth are not mutually exclusive.” Time will tell if
Shell’s approach of delaying its shift toward greener energy was the correct one for investors and other
stakeholders around the globe.
How much influence do external stakeholders like the ones mentioned above exert on Shell’s top man-
agement?
The stakeholders mentioned in the example have tremendous influence over public opinion, which in turn
Do you think Shell should maintain its current pace of change or move faster toward greener energy
technologies? Elaborate.
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p. 602: What does it mean to be “world class” at a goal such as quality or sustainability?
Being world class requires applying the best knowledge and ideas and being able to meet the highest
p. 610: What showed Jerry Rhoads of Fox Valley Nursing Center the difference between what is and what
could be?
This question applies the principles to the Change Agent story on this page. A severe snowstorm closed
p. 621: What are the three phases in the process of continuous learning?
The three phases are exploring current reality, discovering issues and choices, and acting (testing solu-
BOTTOM LINE
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Using Co
‐
creation to Build a Better Future
1. Can you think of additional examples in which diverse organizations have joined forces
to address social or environmental problems?
2. Do you believe this co-creation movement is sustainable or a passing fad? Explain.
The co-creation movement is advantageous for the organizations participating in it. It al-
SOCIAL ENTERPRISE
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LECTURETTE 18.1: Using Organization Development
ORGANIZATION DEVELOPMENT
1. In general terms, organization development (OD) is a major long-range program of planned
THE PROCESS OF ORGANIZATION DEVELOPMENT
OD may be viewed as a managed (planned, coordinated, systematic) process (methodology, system,
OBJECTIVES OF ORGANIZATION DEVELOPMENT
OD is often customized to meet the unique needs of complex organizations, but OD programs usually
count the following among their objectives:
Each OD intervention program should attempt to increase the level of trust and support among, indi-
viduals and groups throughout the organization.
➢ OD programs should result in more open communications.
A MODEL OF ORGANIZATION DEVELOPMENT
The overall OD intervention program may be viewed as a five-step procedure:
STEP 1 Organizational audit.
STEP 2 Identification of potential interventions.
LECTURETTES
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ORGANIZATION DEVELOPMENT INTERVENTION TECNIQUES
➢ Planned meetings – used for such conventional purposes as the collection and dissemina-
tion of information.
➢ Management by Objectives – an integrative technique for establishing goals, planning,
and controlling.
➢ Team Building – a process that helps groups develop a team approach.
➢ Conflict Resolution – processes that help resolve conflicts.
➢ Force Field Analysis – study of change situations, examining forces for and against
change.
➢ Feedback – interpersonal communication designed to help people become more aware of
their feelings
LECTURETTE 18.2: The Issue of Stress
STRESS DEFINED
1. Stress may be defined as an individual’s adaptive response to a stimulus that brings excessive physical
or psychological pressure on her or him.
2. Hans Seyle, known as the father of stress research, suggests that people are born with a certain limited
amount of adaptive energy with which to cope with environmental pressures over a lifetime. When an
individual is exposed to a number of critical life changes, traumatic events, and illness, the body is
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TYPES OF STRESS
1. Seyle further theorized that there were two kinds of stress: (1) eustress and (2) distress.
➢ Eustress – positive stress resulting from a positive, even exhilarating experience, such as mar-
LEVELS OF STRESS
➢ Too little stress – when a person is not sufficiently motivated and becomes bored and apathetic on
the job, that person might suffer from too little stress on the job.
STRESSORS
1. A stressor is any condition or change in the work environment that is perceived as potentially
Job Factors – those stressors over which the employer has most control, as follows:
➢ Organizational policies – employee rights, affirmative action, promotions, transfers, etc.
➢ Organizational structure – degree of centralization, employee participation, normalization, etc.
Career Factors – those stressors dealing with the workers career development, career cycle, and ca-
reer path.
➢ Under-promotion – being in a job below one’s perceived ability, preparation, and expectations.
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Extra-Organizational Factors – those stressors from outside the organization.
➢ Societal Change – the disorientation and isolation caused by too much change in one’s socio-
cultural environment.
2 Adapted from J. Greenberg, Comprehensive Stress Management (Dubuque: William C. Brown Company, 1983); H. Seyle, The
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1. Why do some people resist the goal of becoming world class? How can this resistance be over-
come?
The reasons for resistance are many. Some people don’t see their organization as competing in the
global marketplace or as having the need to do so (“we’re doing all right as it is”), while others feel
that forces (such as the local workforce, the lack of money or staff, or top management’s lack of fore-
There are also a number of change-specific reasons for resistance:
This resistance can be overcome by:
➢ Education and communication – to make sure that employees understand the nature of the change.
➢ Participation and involvement – resistance can be overcome by involving the employees in the
2. Generate specific examples of world-class business that you have seen as a customer. Also gen-
erate examples of poor business practice. Why and how do some companies inspire world-class
service, while others fail?
As the text points out, there are seven elements of world-class service:
➢ Provide basic service – emphasize fundamentals over fanciness.
DISCUSSION QUESTIONS
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➢ Be fair – ask yourself, “Is it fair to the customer?”
Ask students to think back to jobs they have held and decide how they would rate their former com-
pany on each of these elements.
Most companies have accepted the fact that quality customer service is important to them. They rec-
ognize that good service keeps customers while poor service drives customers away. Companies
should know that retaining an existing customer is far less expensive than obtaining a new one. So
why don’t all companies aspire to world-class service?
Students may suggest some of the following reasons:
➢ Although top management appreciates the importance of world-class service, it has never com-
3. How might blogging affect the process of managing change? What are the professional and ca-
reer implications of blogging for you, personally?
Blogging increases the speed of change, since it provides a format to disseminate instantaneous in-
formation about change and the business environment. Blogging can also be useful in the change
4. Generate and discuss examples of problems and opportunities that have inspired change, both
in business and in you, personally.
Students should have no trouble identifying numerous business examples of problems and opportuni-
ties that have inspired change. The changes in the U.S. automobile industry in recent years resulted,