managing change group presentation
TRANSCRIPT
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Agenda
Changing the Smell of the place
The Company as a University
Building an Entrepreneurial Organization New Management Roles and Tasks
Building Shared Destiny Relationships
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Changing the Smell of the
Place
HDFC case study
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Ineffective Internal Structure
Traditional Structure-
Constraint
Control
Compliance
Contract
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Ineffective Internal Structure
Contemporary Structure-
Stretch
Support
Discipline
Trust
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The HDFC case
Premier housing finance company and themost competitive institutions
Provide efficient services and courteousemployees
Timely and quick services
People forego higher returns to deposit inHDFC
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Discouraged hiring stars-hired people
from next tier institutions-more subduedpersonality
Pioneered housing finance market-createdopportunity for middle class Indians to owna house
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HDFC-Behaviour
Commitment-Incident of fire in the main office
Discipline-Reduced the cycle time for loanapproval from four weeks to across the table
Passion-Motivated by a social cause-providehome to the middle class
Principles-Principle centric organization-formed
immutable and unchangeable core of action
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At HDFC
Informal atmosphere-No dress code. Anyonecan answer the phone etc.
Concern for people-Open door policy
Equity-Information was shared freely through aregular and active communication program
Ownership-Employees saw themselves asemployers and not as employees
Personal Development-Ample opportunitieswere present for personal development-twoprofessional qualifications were allowed
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Company As a University
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The Idea
Learning innate to human nature
Seeds for Creativity and innovation
Imperative for sustained, superior performance
Competitive Advantage accrues from Skill Enhancement Much beyond Classroom Learning
The challenge: To reshape Working Methods,Information Flows and Management Processes
Creating a Continuous Learning Environment
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Continuing Education
Training not a Luxury or a Diversion
Expense vs. Investment
A Symbol of Modernity?
Essential Aspects Should be a Continuous Process
Built around People, not Programmes
Pre-determined Objectives
Should cater to Individual as well as OrganizationalDevelopment
Courses designed around Business Situations
Off-the-shelf lectures should be an exception rather than rule
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Education as an Imperative: Case
ofI
ntel Corporation Intel corporation is the worlds largest and mostprofitable semiconductor company
Intel is usually the innovator in any chip technology
Without very large investments in education, thecompany cannot hope to succeed
The company has its own university with a variety ofcourses, has tie-ups with institutions and provides timeto employees for education continuance
Continuing education is a core competence for thecompany
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Continuing Education: Socializing
Process at HLL - PhaseI
Initial two-and-a-half weeks
course at IIMA
Shadowing asalesman for
a week
Working as asalesman for 4
weeks
Shadowing asales officer for
a week
Four weeks as
Field SalesOfficer
A week at a
Branch Office
A month on a
SpecialAssignmentSTAGE I
STAGE II
A Six Week stay at the Integrated Rural Development Center at Etah
Each trainee lives with a village elder and works on projects such asbuilding roads, developing smokeless cooking stoves, negotiating withgovernment on development assistance, and so on
Key Learnings exposing the trainees with urban background to rural life
in India and help developing a perspective on Product Development,
Project Execution, etc.
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Continuing Education: Socializing
Process at HLL - PhaseII
New recruits are moved into open positions in a specific functional areasuch as manufacturing, supply chain management, marketing or sales
They are given subordinate charge for a period 12 months
Closely counselled by Senior OfficerAt the end of this phase, subject to satisfactory performance in aconfirmation interview, they are absorbed in the ranks of HLLsmanagement
This is just the beginning. Once accepted, HLL executives receive regular
guidance from Seniors and are regularly nominated to attend relevantmanagement programmes in India and abroad as an integral part of their
careers in the company.
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Redesigning Work
Predictability and Control Economies of Specialization
Adam Smiths pinhead factory
Recognizing losses from deskilling
Essential prerequisites Management commitment andimagination
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Redesigning Work: Rockwell Golde
Gilfhorns Pathfinder System Rockwell Golde Gilfhorn is a supplier of 3000 sunroof systems a dayon a JIT basis to Volkswagen
The factory is an assembly line operation and the Challenge for hemanagement is to keep the employees motivated in thisenvironment
The solution: The Pathfinder System Purpose: to enhance the skill set of each worker and turn him into a
passionate collector of skills and qualifications, as a way to reducehis boredom and to enhance his employment security
The system lists the skills that are associated with different jobs inthe factory.
These skills are structured into a hierarchy On the days of high demand, workers work on their specialized area On the days of low demand, workers work on the next skill in their
hierarchy list
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Democratizing Information
Information as raw material for learning process To discuss subjects freely, it is necessary to
share information
Information Asymmetry stifles Creativity Trade-off between improved learning andcreativity and information leakages
Information equating power and influence Important prerequisites an environment of trust
and support An important point in revitalizing the company as
a learning institution
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Senior Managers As Faculty
Redesigning day-to-day tasks
Analytical andConceptual
Understanding
Reshaping StrategicAnd Administrative
Processes
Quality of Thinkingand Judgement
CreatingImplementors
CreatingLeaders
All-RoundDevelopment of
Employees
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Senior Managers As Faculty
Strategic thinking and qualitative judgment not preservesof top management
Formal, systems-driven Management Process has its
own limitations Constant interaction required to pass on capabilities to
junior employees
Creating opportunities for direct interaction can only flowthrough direct relationships
Personal mentoring and coaching imperative
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Senior Managers As Faculty: Caseof Kao Corporation
At Kao, No one owns an idea
Culture of Zoawase a common perspective or view
The top management floor the decision space - isessentially all open space, with one large conference table
and two smaller ones, with blackboards, chairs and OHPsstrewn around
Anyone passing, could sit down on an ongoing discussion andbe involved on any topic.
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Senior Managers As Faculty: Caseof Reliance Industries
Developing people as a necessity case of Hazira andJamnagar complexes
No tie-wallah golf culture forIndia. You need leaders thatdrive the company to be a strong knowledge-based achiever
Mukesh Ambani A host of Corporate and functional heads report to the
Ambanis
Decisions are taken through direct interaction between themanagers and the family entrepreneurs
This resulted into faster project execution and quick decisionmaking
Hardwaring of entrepreneurial orientation
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Building an EntrepreneurialOrganization
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Two views of the organization.
From top Chairman or MDsees order, symmetryand uniformity.
From bottom hapless front-line employees see acloud of controllers.
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The result, in colorful language of GEs Jack Welch, is acompany that has its face towards the chief executive and
its back toward the consumer.
With the end of twentieth century comes the end ofHierarchical and Bureaucratic organization.
The rise of Entrepreneurial organization like the rise of
hierarchical organization at the end of nineteenthcentury.
Westinghouse in 1989 sold a part of its troubled powertransmission and distribution business to ABB.
Under ABBs ownership by 1992 the activity haddeveloped through a radical restructuring and doubled itsoperating profits while export sales had increased from12 to 20% of revenues.
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The statement of Don Jans, the units general manager
I am a much broader manager today than I was in
westinghouse. Here we are constantly challenged to lookat the world as a market, as a source of expertise, andas a standard of performance. It is tough anddemanding, but it can also be invigorating and fun. Wefeel we are rediscovering management.
Two factors of difference
Attempted to find quick-fit solutions. Like kodak andcaterpillar created new venture units.
Create independent units to protect specific projects
from routine bureaucracy and corporate interventions.
Each of these claimed initial successes but in only fewcases they provide the broad-based long-term solutions.
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The new management roles which define theentrepreneurial model for managing large organization.
Building the entrepreneurial process. The threeorganizational characteristics shared by the companiessucceeded in developing an effective entrepreneurialprocess at the core of their operations.
They create small and disaggregated performance units
and make them the primary building blocks of theirorganization.
Performance in these are driven through a few simple,flexible but highly disciplined planning, control, and
resource allocation system. Their strategic mission and operations are very much
clear for each unit through unambiguous organizationalnorms and performance standards.
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Thermaxs boiler business was supported by its knowledge of heattransfer processes.
Its R&D team adapted husk as the fuel of boiler after a small
investment. The profit generated from the sale of these boiler wereused to adapt the technology so that coal can be used as the fuel.
And further the team slowly built a sophisticated and broadcapability in the area of fluidized bed combustion systems.
Over a period of fifteen years Thermax has lead to the business
evolution which was led by the entrepreneurial instincts of its R&Dteam.
A profound shift of social values.
The closing year of twentieth century have triggered a fundamental shift
in social values. The basic ideologies that underlie these twoorganizational forms are swapping places. The idea bureaucracyhas lost its claim and entrepreneur is emerging as the hero in thedrama of creative destruction.
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New Management Roles andTasks
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New Management Roles and Tasks.
Primarily dealing with organisations with anentrepreneurial orientation.
The roles and tasks to be performed by managers
at different levels in such an organisation.Contrast between traditional structure and systemsand a radically different way of managing largecomplex organisations.
Ultimately concentrating on what managers actuallydo which actually drives action in companies.
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The contrast
Top level managersacting as grandstartegists
Front line managers
playing the role ofimplementers
Senior managersplaying the role of
administrativecontrollers
They ensure that theirorganisations areadequately directed.
Builders of the
companys business. Akin to coaches who
build on the strength ofa players skills with the
authority to changeplayers.
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Transformation at ABB
The need to organise in clear profit centreswith individual accountability
Structured as separate legal entities
responsible for profits/lossess, B/S. Each company retains 1/3rd of profits
Only one level of management between
corporate exec. Committee and heads of1200 companies.
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ABACUS
Connects computers in 4500 centres in120 countries.
Gathers and monitors performance datawith regard to
1. Orders received , revenues , grossmargins,period costs,net earnings andheadcount.
Helps in generating standard reports The only reporting channel
On a deadline and in a format.
People do not report twice.
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Building Shared DestinyRelationships
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Power-based Relationships: Case of
General MotorsJose Ignacio Lopez saved around $4billion -$10 million for GM in 10 months
Centralization of purchaseDemanded price cuts of up to 50 per cent
Win-lose game
Transactional negotiationsProblems with supplier relationships
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The Shared Destiny Relationship WithSuppliers: Case of Unipart Group
A heavily unionized workforce crossed with atraditional and autocratic management at thetime of its founding
CEO John Neill saw the need for shared destinyrelationships as not altruism, but essential forcommercial self- interest.
Ten(d)-to Zero programme- measurement ofjoint Unipart-supplier performance across ten
criteria ranging from transaction costs and leadtime to defect rates and delivery errors Relationship with Tungstone
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Power-based Relationships vs Shareddestiny Relationships
Win-lose Win-Win
Transactional Relationship based
Short-term Long term
Your problem Our problem
My Benefit Our benefit
Maximize Maximize
autonomy interdependence
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The Shared Destiny Relationship WithEmployees: Case of Hastings Jute Mill
Frequent Conflicts between unions andmanagement.
Kajaria brothers acquisition of Mill in 1994
Cooperation with labor to increase productivity.
Regularization of 700 Ghost workers.
Regular monthly meeting.
Solution to other problems like gratuity cost atretirement.
Mutual benefit to both Mill as well as to workers.
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The Shared Destiny Relationship WithCompetitors: Case of Komatsu and HDFC
Komatsus narrow objective initially,concentrated only on competitor Caterpillar.
Less focus on Customers, opportunities and
having more innovative ways. HDFCs mission: Contribute in solving the
housing problems in India by providing housingloans.
As market is huge, so helping new entrants byproviding training and strategies.
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Hero Honda Motors
Hondas Strategic Alliances with Firodia andHero group
Success story of Hero Honda
- joint benefits of two partners- links beyond commercial needs- affinity across generational barriers- support as well as checks and balances for
dealers- educating dealers- appointing family and friends as vendors e.g.
Sunbeam Castings