University of Leicester MBA Module 3 Implementing Strategies

University of Leicester MBA Module 3: Implementing Strategies Stafford Associates, Instructor: Peter Barlow Dubai, June 2003 Programme Scope Topics for the sessions 1. The need for innovation 2. Types of innovation 3. Change and change management 4. The manager as entrepreneur and innovator 5. Management and leadership Today’s session  Setting the scene: the organisational and strategic contexts A context for discussion: Case study “IKEA” Discussion and solutions   What is an organisation for? Value delivered ???????? ???????????????? Customers Money Source of value Needs and wants Find customers, create value Ideas Services Value delivered Needs and wants met People Processes Value Old Customers New Customers Money Technology Needs and wants found and met Where do they live? Industries and economies New entrants Substitutes Suppliers Firms Buyers GS $ GS $ Your industry 1. 2. 3. 4. 5. New demand? New products? New process technologies and systems? New materials? New relationships, strategies and models? ???????????????? Customers ???????? Money Task: IKEA case study Objective Method Time Evaluation Suggest innovations and changes Read and evaluate, with questions 20 minutes to prepare, 10 to present 1. 2. 3. 1. 2. 3. 4. 5. What demand did the founder satisfy? How did he do this? What innovations did IKEA and the founder make? How successful has the firm been? What threats and opportunities face the firm now? Where will the firm need to change next? What problems might it have in doing this? What kind of leadership does it need? Innovate and change Supplier Supply Utilisation Delivery Goods and services Customer Your industry 1. 2. 3. 4. 5. New demand? New products? New process technologies and systems? New materials? New relationships, strategies and models? ???????????????? Customers ???????? Money Your industry 1. 2. 3. 4. 5. Mature or growing? Changing or static? Profits growing or leveling off? Customers increasing or steady? Innovation rapid or incremental? ???????????????? Customers ???????? Money Entrepreneurship (1) New entrants Substitutes 1. Industry 2. Steady State 3. Demand steady 4. Satisfaction of demand steady 5. Money flow steady Suppliers Firms Buyers GS $ GS $ Entrepreneurship (2) 1. Demand changes 2. New value delivered 3. New products sold 4. New materials used Suppliers 5. New suppliers needed Substitutes New entrants Firms Buyers 6. New processes needed RM2 $2 GS2 $2 Entrepreneurship? An Activity or Process of Change … all the functions, activities, and action associated with the perceiving of opportunities and the creation of organizations to pursue them. (Bygrave & Hofer, 1991). Creative destruction: changing the way value is delivered to customers, by suppliers (sellers) (J Schumpeter). The entrepreneur shifts economic resources out of an area of lower, and into an area of higher productivity and yield. (JB Say, 1800) Entrepreneurship? Changing the economy Without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion. (Economist Joseph Schumpeter). An entrepreneur An Individual or Team Who: 1. Works for an existing organisation or alone; 2. Identifies:  New customers for an existing product;  New ways of meeting old demand;  New demand and for a new product or service; 3. Builds: Organisations or systems for finding new customers, making and delivering new value. Examples 1. Ingvar Kamprad (IKEA) 2. Bill Gates (Microsoft) 3. Steve Jobs and Steve Wozniyak (Apple) 4. Larry Ellison (Oracle) 5. Thomas Watson, Snr and Jr. (IBM) 6. Richard Branson (Virgin group) 7. Dubai government Innovation? 1. Finding opportunities for change 2. Sponsoring or driving change 3. Following changes 4. Radical changes 5. Incremental changes 6. Scanning the value chain 7. Commercialising ideas Your job 1. Do you work for an entrepreneurial company? 2. 3. 4. 5. What innovations have taken place from within your company (2000 to now)? Do you work for an entrepreneurial manager? What innovations has your manager pushed through the firm (2000 to now)? Are you an entrepreneur? What business changes have you made or managed? Innovation points Change these Change this Change this Resources Firm Yield or result from use Change these Customers Money This changes Change value delivered Entrepreneurial manager 1. Works for an existing organisation or alone; 2. Identifies or sponsors opportunities for:  New products and services;  Improvements in competitive position;  Improved internal processes; 3. Manages: Groups and individuals, technology, capital, systems and structures to deliver innovation. Sources of Innovation 1. Process need 2. Industry structure or market structure 3. Demographics 4. Changes in perception 5. New Knowledge Source: process need Gap exists in ability, efficiency, safety etc., of procedure to deliver value. Examples:      Automatic switchboard: need for capacity Steel industry – mini mills: need for efficiency Paper – based office systems: need for efficiency Extranet / B to B supply systems: need for speed Distance learning (class, e-learning): need for delivery mechanisms Source: Industry structure New buyers and customer needs: gap between existing and new markets (S and D) Examples:      Cheap easily – maintained cars: Ford Market – based car company: GM Military use for cars: Fiat Home computers: Apple, IBM Mass - market stock broking: Schwab Demographics Changes in customer groups: new needs/wants Examples:      Aging populations: medical, geriatric products Baby booms: children’s products Increased population: housing Increased leisure: Hotels, cruise ships Wealth balance: immigration, education New perceptions Changes in what people/organisations think about themselves Examples:      Health awareness: food products Middle – class values: education, savings Lady professionals: car design Info - literacy: Computers Knowledge: schools, colleges, courses New knowledge Changes in knowledge applied to technology, work and processes Examples:      Transistor: radios, computers, televisions HTML: internet, web Micro – processor: everything Scientific management: work, training Joint – stock company: investment, ownership Implications for management Technology Services Money Ideas People Assess market needs Initiate systems Find the money Plan for development Assign tasks Monitor progress “Sell” to other managers Who is going to do all this? New product/service Implications for managers 1. Entrepreneurship in an existing firm 2. Entrepreneurship in a new venture In an existing firm 1. 2. 3. 4. 5. What is innovation for us? Where should innovation take place? How can it be made systematic? What is management’s role? What kind of leadership will people need? What innovation? Adaptation ? Radical change ?  What are we trying to accomplish?  What benefits are we trying to achieve? Minimise weaknesses/solve problems? Build on strengths? Where to innovate? Supplier At the boundary? Supply Internal services? Managing money? Utilisation Managing people? Managing information? At the boundary? Delivery At the boundary? Goods and services Customer Make it systematic Generation of new ideas Screening them Marketing them internally Giving them programme status Making stop/go decisions Management’s role Acceptance of need for innovation Create a forum for new ideas Provide resources where useful Delegate existing people Champion new ideas with other managers Provide leadership Vision or direction: the purpose of the firm/SBU Develop people who can innovate Set objectives Use power and influence with followers and other leaders Be a guide and advocate for others Barriers to entrepreneurship 1. Success with current products/processes 2. High investments in current activity 3. Culture 4. Resistance to change 5. Inability to learn and manage In a new venture 1. What is our business for? 2. How are we going to compete? 3. What resources will we need? How will we get them? 4. How are we going to manage the firm? 5. What changes are we going to have to make during the next five years? What is our business for? What market need are we trying to meet? What will we do that our competitors don’t or can’t do? How long are we going to do this? What is our required return on capital? What is our exit strategy? How will we compete? Technology Services Money Ideas Manage money Manage people Manage processes People Customers What can go wrong? Can you pay for your supplies? Supplier Supply Can you buy, lease, contract out the technology, services, etc? Utilisation Will they supply you at the levels you need? Delivery Can you initiate and maintain customer service levels? Goods and services Customer Barriers to entrepreneurship 1. Lack of finance 2. Need to commandeer resources 3. Managerial skills 4. Network -- entrepreneur’s contacts 5. Success as employee, lack of need The people 1. Lack of challenge 2. Lack of success or alternative employment 3. Need to succeed, need for control 4. Time and place, with opportunity 5. Ability to learn, ability to bounce back Summary 1. Entrepreneurs drive the economy 2. Innovation drives competition 3. New value is delivered 4. New demand is satisfied 5. Overcome resistance Change Management 1. Change and the need for change; 2. The process of change; 3. Managing it Aspects of Change Shift People, organisation, activity, resources move from one system of relations to another. Destructive Something has to die, stop, come apart, get forgotten; Old paradigm, principle, process no longer wanted. Disturbing Activity is altered, energy redirected, goals shifted; People have to learn to do / think something new. Dimensions and components Type Objectives Depth, Scope and Impact Implications Types of change Opportunity Problem Crisis? Source? Benefit? Strategic - plan Tactical? Non-crisis? Strategic? Time-frame? Dimensions: Objectives Achieve Avoid Maintain Eliminate Depth, scope and impact Incremental? Radical Objectives? Strategy? Extension? Improvement? Breadth How many people? How many sections/functions? How long? Depth, scope and impact Attitudes? Human Behaviour? Mixed Objectives? Technical Processes? Strategy? Equipment? Resources? Implications Management Learning Coordination? Complexity? Side - effects Concepts? Tasks? Costs? Resistance and conflict? Technical implications? Change: the process Equilibrium Motion Equilibrium Change is motion, force and mass Change starts at an entry point Change: the process Equilibrium Unfreezing Changing Refreezing Entry Point? Situation prior to change The Force Field Analysis Driving forces Dissatisfaction Failure Markets Restraining forces Satisfaction Success Markets/customers Technology Culture Industry structure Change: the process Equilibrium Breaking up Changing Dissatisfaction Moving away New equilibrium Consolidation Moving forward Acceptance Why change can fail Before No dissatisfaction Too few driving forces No change agent Unfreezing No clear alternative Not enough adopters No clear gains No entry points Few internal drivers Not enough external force Why change can fail Changing No clear gains Lack of direction Lack of commitment Too many resistors Supporters not rewarded Refreezing Resistance Costs/resources Too difficult Market failure Float Return The change agent’s job Before Surface dissatisfaction Support driving forces Counter restraining forces Unfreezing Communicate need Clarify objective Sell benefits Help supporters Isolate resisters Find entry points “A Test Case” 1. Who is the leader? 2. What changes did he make? 3. What problems was he trying to solve? 4. What were his objectives? 5. Why is it not working very well? 6. What should he have done? 7. What can he do now? Summary 1. Planning for, and managing changes 2. What drives changes; 3. Why change can fail – what the agent has to do. Leadership? Answer the Following Questions …….. 1. 2. Why might leadership be an important issue? What do leaders do? 3. 4. 5. What kind of power do/can leaders use? What different approaches to leadership are there? How should leaders lead in different situations? Why leadership? Resources Firm Yield or result from use Customers Money 1. To set some direction or strategy? 2. To influence people, guide or change them? 3. To mastermind performance, innovation or change? Why leadership? Resources Firm Yield or result from use Customers Money 1. A human system; 2. Results from human effort, activity and output; 3. The system = contracts, job descriptions, incentives, structures and mechanisms for directing, guiding and influencing people. Logical conclusion Resources Firm Yield or result from use Customers Money 1. Leaders are irrelevant: performance is a function of contract, planning, organising and controlling; 2. Systems lead themselves: structure, behaviour and motivation is built in; 3. Leaders cannot add much value: the system is bigger than its individual members. Alternative possibility Resources Firm Yield or result from use Customers Money 1. The system cannot handle all events, needs, or variety; 2. Motivation systems support behaviour, but cannot initiate, direct or change it; 3. Without entrepreneurship, an economic system eventually runs down. Without leaders, organisational systems eventually run down. Necessary assumptions  An individual can increase the effectiveness of a group;  Leaders have an “entrepreneurial” function in organisational systems – they change the yield of the human – material resource mix;  Leading is “intervention” by an agent within an organisation;  Leading goes beyond standard system inputs such as motivation, contracts and job descriptions;  Leaders can increase the value of the outputs of people, materials, money and equipment. A leader ….  Must have followers (up, down or sideways);  May hold a management position, or may not;  Sets a direction for others (right or wrong) and persuades them to follow it ;  Must be able to influences people towards specific goals/tasks, usually a change;  Cannot influence everyone, all the time. A few definitions 1. The creative and directive force of morale. (Munson, 1921) 2. The process by which an agent induces a subordinate to behave in a desired manner. (Bennis, 1959) 3. The presence of a particular influence relationship between two or more persons. (Hollander & Julian, 1969) 4. Directing and coordinating the work of group members. (Fiedler, 1967) 5. The process of influencing an organised group toward accomplishing its goals. (Roach and Behling, 1984) Leaders = Managers? Managers Plan Organise Lead Control Influence a group Direct action Innovate Inspire Challenge the status quo Leadership is … A process Non-coercive influence Direct and coordinate group activities Toward goal accomplishment. A property Characteristics attributed to those who are perceived to use such influence successfully. Leadership theory Concerned with either traits or behaviour, from a universalist or contingency perspective. Leadership is …. 1. The power to influence, its nature and sources; 2. The nature of followers and followership; 3. The traits, behaviour or interpersonal styles necessary to having power and practicing influence. The leadership triangle Your personal identity Your power over your followers Leader (you) Followers Tasks (results) Your capability in your job Their personal identities Their structure as a group/groups Their willingness to be influenced The behaviour required The teamwork/effort required The results you need Information Reports What kind of followers did John have? What strengths did John have? Leader What were their strengths and weaknesses? What was his relationship with them? What resources does he have for leading? Followers Tasks What power did he have? What kind of behaviour was needed? Did they need a leader? Could a leader provide something useful? Conclusion so far … Motivated towards certain behaviours, some of the time Cannot Followers always drive themselves Sometimes need direction Might … Leader Articulate wishes of followers Sponsor and assist Tasks New Need guidance Change focus or objectives Will allow leader to influence them Need different approach Conclusion so far … Will not always allow themselves to be influenced May resist leader’s direction Might … Fail to influence Leader Fail to provide direction Fail to provide protection or support Followers Tasks May be influenced by other forces New Need guidance/different approach Do you have a leader? Are you … Influenced by someone? Can influence you and others? Your leader Given new direction? Assisted, guided, changed? Articulates your interests? Helps you change focus or objectives? You Tasks Provides direction? Different because of the “leader”? Improved because of the “leader”? More interesting or satisfying? Is your work … Are you a leader? Are they … Influenced by you? Can you influence them? You Given new direction? Assisted, guided, changed? Do you understand and articulate their interests? They Tasks Help them change focus or objectives? Provide direction? Is their work … Different because of your input? Improved because of your impact? More interesting or satisfying? Components Tasks Resources required Understanding Able to get results Turn vision into action by …. Suitable results Followers’ experience Power to influence Vision Followers’ ability Followers’ wishes Clear focus Long and short term scheme Power and influence? French and Raven’s Taxonomy of Social Power 1. Expert Power 2. Referent Power 3. Legitimate Power 4. Reward Power 5. Information Power Task Followers Leader 6. Connection Power 7. Coercive Power Power and influence? Satisfiers Legal requirements Work to contract HR systems Followers Paper contracts Industry standards Know tasks Are satisfied Need direction and influencing Outcome HR systems do not provide direction Followers are not influenced toward specific tasks by HR systems Expert power Has some relevant expertise or known track record Can communicate this Believed to have solutions to followers’ problems/needs Has no competitors Leader Followers Recognise need for competence Want/need to accomplish task Will trust an expert Believe they can trust this leader May transfer trust to other situations Task Requires specialist competence Task is relevant to followers Referent power Seems to articulate what followers want, and believe important. Understands followers and can communicate ideas that followers identify with. Believed trustworthy and capable of positive impact on lives of followers. Has no competitors. Leader Followers Want/need to accomplish task. Think they need a guide. Find that this leader best articulates their wishes/needs. Believe this leader can make their lives better. Task Relevant to followers. Goals need clarification. Results require learning, change or innovation. Legitimate power Holds an office regarded as important Assumed to be more capable than others Assumed to hold office either on merit or seniority Leader Followers Believe office validates holder Trust office holders because of the office Can be influenced by office holder Task Relevant to followers Requires assistance or intervention by leader Reward power Holds a position with authority to grant rewards, or has access to those with authority Assumed to be trustworthy Believed to be fair to followers Leader Followers Are influenced by chance of reward Believe leader holds key to rewards Are not naturally influenced toward the task itself Task Relevant to followers Information power Assumed to have information that followers want or need Assumed to be trustworthy Believed to be willing to trade Leader Followers Want/need information Believe leader holds essential information Will exchange right to influence for information Task Relevant to followers Requires information which leader has Connection power Holds a position with access to powerful people Assumed to have this access Assumed to be ready to use this access Leader Followers Believe leader can leverage power of others Believe leader can use access for followers’ benefit Task Relevant to followers Requires assistance or intervention by leader Power and Influence Power source 1. Expert Power 2. Referent Power 3. Legitimate Power 4. Reward Power 5. Information Power Follower behaviour Commitment, if expertise needed or valued Commitment, if trusted Compliance, possibly resistance Commitment, if reward is valued and fair Compliance, if not resistance 6. Connection Power 7. Coercive Power Compliance, if power shared visibly Compliance, if not resistance Limitations Chester Barnard’s Acceptancy Theory and Zone of Indifference: 1. You will accept influence from some people, some of the time, for some things; 2. You will give other people the right to lead you some of the time, for some things; 3. You will draw a line around the what you let leaders tell you to do (power of leaders). The zone of indifference You may not have the ability, or the resources Already committed to this Want to do Your zone of indifference You have the ability, and the resources Don’t mind doing Resist this, if requested by the leader Will do only if you have to You may have the ability, and the resources Results 1. Decide which tasks will have ready commitment from followers 2. Decide where you will not get commitment 3. Decide what kinds of directions/requests will meet resistance 4. Know the followers’ zones of indifference, relative to you 5. Aim directions and requests at the zones Work on enlarging the zones Contingencies Situation History What is your position? What power do you have? How highly valued is that power? Leader Followers Zone of indifference Ability to carry out instructions Task Relevant to followers? Require assistance or intervention by leader? Two methods of leading 1. Exchanging rewards, power, and other value with followers. A kind of psychological contract 2. Changing people’s minds, and making them want to pursue a goal: Modal values: perceived honesty and integrity End values: the aims and objectives Positive impact: the effect on followers (real or perceived) James McGregor Burns Transactional leaders 1. Use Position Power: Legitimacy, Expertise, etc. 2. Create Leader/Follower Exchange 3. Use Reward System in Organisation 4. Use Work Objectives/Goals, and Align with Personal Goals 5. Clarify Roles, Make Resources Available, Act as spokesman 6. Need a System/Organisation 7. Not Very Effective Where Roles/Objectives are vague Transformation leaders Envision: Form, communicate and reinforce plan or direction Communicate: Help others understand and share vision; Build: One – to – one relationships with followers; Develop trust and image: Example, visible self – sacrifice; Use power to: get attention, raise dissatisfaction, build relationships Transactional leaders 1. Maintain status quo, stability, levels of efficiency 2. Achieve Incremental changes and improvements 3. Identify with organisation’s stated goals, industry standards, officially - accepted practices 4. Avoid high – risk decisions and changes 5. Assist consolidation, systematic procedures, settling in, bringing order to relationships and tasks. Transformational leaders 1. Challenge and criticise status quo, accepted best practice and common assumptions 2. Surface followers’ dissatisfaction with current situation 3. Can achieve radical change in behaviour, perceptions and culture 4. Prefer high – risk decisions and changes 5. Often ignore details, costs, interpersonal problems, conflict, task issues, custom and practice. Summary Aims Methods Constraints Change something or maintain something Transactional or transformational Followers’ ability, expectations, background and zones of indifference Business needs and competitive situation Which results do you need? Which methods can you use? What does the triangle tell you? Demands Choices Summary The environment Dynamics? Impact on firm and people? The firm Position in market/industry? Strategy, structure, technology? Needs change or stability? Stage in entrepreneurial cycle? Relationship Transactional? Transformational? Leader Power? Influence? Personal ? Position? Followers Task Maintain or innovate? Perceptions of leader’s power? Zone of indifference? Change required? Learning required? University of Leicester MBA Module 3: Implementing Strategies Stafford Associates, Dubai Instructor: Peter Barlow January 2003 Programme Scope Topics to be covered during the three days: 1. Managers as leaders, entrepreneurs and change agents 2. Entrepreneurship and innovation in organisations 3. The need for, and role of, leaders in business organisations 4. Change management 5. Organisational learning and learning organisations Leadership? Answer the Following Questions …….. 1. 2. Why might leadership be an important issue? What do leaders do? 3. 4. 5. What kind of power do/can leaders use? What different approaches to leadership are there? How should leaders lead in different situations? The leadership triangle Your personal identity Your power over your followers Leader (you) Followers Tasks (results) Your capability in your job Their personal identities Their structure as a group/groups Their willingness to be influenced The behaviour required The teamwork/effort required The results you need The zone of indifference You may not have the ability, or the resources Already committed to this Want to do Your zone of indifference You have the ability, and the resources Don’t mind doing Resist this, if requested by the leader Will do only if you have to You may have the ability, and the resources Results 1. Decide which tasks will have ready commitment from followers 2. Decide where you will not get commitment 3. Decide what kinds of directions/requests will meet resistance 4. Know the followers’ zones of indifference, relative to you 5. Aim directions and requests at the zones Work on enlarging the zones Contingencies Situation History What is your position? What power do you have? How highly valued is that power? Leader Followers Zone of indifference Ability to carry out instructions Task Relevant to followers? Require assistance or intervention by leader? Two methods of leading 1. Exchanging rewards, power, and other value with followers. A kind of psychological contract 2. Changing people’s minds, and making them want to pursue a goal: Modal values: perceived honesty and integrity End values: the aims and objectives Positive impact: the effect on followers (real or perceived) James McGregor Burns Transactional leaders 1. Use Position Power: Legitimacy, Expertise, etc. 2. Create Leader/Follower Exchange 3. Use Reward System in Organisation 4. Use Work Objectives/Goals, and Align with Personal Goals 5. Clarify Roles, Make Resources Available, Act as spokesman 6. Need a System/Organisation 7. Not Very Effective Where Roles/Objectives are vague Transformation leaders Envision: Form, communicate and reinforce plan or direction Communicate: Help others understand and share vision; Build: One – to – one relationships with followers; Develop trust and image: Example, visible self – sacrifice; Use power to: get attention, raise dissatisfaction, build relationships Transactional leaders 1. Maintain status quo, stability, levels of efficiency 2. Achieve Incremental changes and improvements 3. Identify with organisation’s stated goals, industry standards, officially - accepted practices 4. Avoid high – risk decisions and changes 5. Assist consolidation, systematic procedures, settling in, bringing order to relationships and tasks. Transformational leaders 1. Challenge and criticise status quo, accepted best practice and common assumptions 2. Surface followers’ dissatisfaction with current situation 3. Can achieve radical change in behaviour, perceptions and culture 4. Prefer high – risk decisions and changes 5. Often ignore details, costs, interpersonal problems, conflict, task issues, custom and practice. Summary Aims Methods Constraints Change something or maintain something Transactional or transformational Followers’ ability, expectations, background and zones of indifference Business needs and competitive situation Which results do you need? Which methods can you use? What does the triangle tell you? Demands Choices Summary The environment Dynamics? Impact on firm and people? The firm Position in market/industry? Strategy, structure, technology? Needs change or stability? Stage in entrepreneurial cycle? Relationship Transactional? Transformational? Leader Power? Influence? Personal ? Position? Followers Task Maintain or innovate? Perceptions of leader’s power? Zone of indifference? Change required? Learning required? “A Test Case” 1. Who is the leader? 2. What changes did he make? 3. What problems was he trying to solve? 4. What were his objectives? 5. Why is it not working very well? 6. What should he have done? 7. What can he do now? Apply the framework What is their general ability level? The leader’s position power? What do they think of their work? What do they think of the leader? Leader His personal power? Which type of leadership is he using? Which type is needed? Followers Tasks Will they “buy into” his vision? What do they want? What kind of results does the leader need from followers? (technical, social (cultural)?