Leading Change. Hans Fritz at Novartis Thailand

Transcription

1 Leading Change Hans Fritz at Novartis Thailand

2 Maintaining Strategic Alignment Adapted from Mark Moore, Creating Public Value (Harvard University Press, 1995). Task Environment Public Value, Mission Authorizing Environment Legitimacy and Support Substantively valuable Strategic Alignment or Fit Resource Environment Operational Capacity Legitimate and politically sustainable Operationally & administratively feasible

3 Discussion Questions Given the situation he faced, how well has Hans Fritz been doing in leading Novartis Thailand during his first six months? What organizational problems, if any, do you think his efforts have either created or left unresolved?

4 What Hans Fritz Did in His First Six Months at Novartis Thailand (1) Eliminated 17 positions in marketing & sales and split the department in two. Changed sales force incentive scheme to motivate them to be more consistent over the year. Reorganized 3 rd party field force at distributor, cutting back jobs 31%. Focused sales efforts on Bangkok and on drugstore channel. Shipped excess inventory to other Novartis affiliates. Reallocated marketing expenditures to reflect market conditions (40.5% vs. budget). Put in place rudimentary controls. Enquired about missing assets, some of which then reappeared. Reformed the car policy smaller vehicles. From Hans Fritz (B).

5 What Hans Fritz Did in His First Six Months at Novartis Thailand (2) Eliminated the ex-pat policy. Modified travel policy economy class up to 5 hr trip. Competitively renegotiated medical insurance. Cancelled unnecessary memberships, subscriptions, services. Changed bank managing employee pension fund. Implemented project to review/renegotiate existing contracts and agreements. Reviewed product portfolio. Pruned product range of unprofitable products to focus on priority products. Found 3 rd party manufacturer to operate after factory closure. Managed closure one month ahead of schedule. Gained OTC status for several products from Thai FDA. Set up training program and bi-yearly performance reviews. Froze basic salary for 1999 but increased variable pay. From Hans Fritz (B).

6 Comments from Fritz s Staff. If you give him a good plan, he will tell you to go ahead. He believes in empowerment. I think for some people he is moving too fast. He does everything to improve our performance and challenges people who are not doing well. But Thai people do not like negative feedback; they are scared of losing face. He is very direct and not very concerned about local culture and says he has no time to learn. His management is definitely not Eastern. Some people felt de-motivated when he arrived. I would like him to change his opinion that people cannot change. He should try harder to understand Thai culture. Also, when I tell him I need money for training, he reminds me that the regional office is concerned about headcount. From Hans Fritz (B).

7 And a Few Words from Fritz Himself. While I feel strongly that training is essential, I am not prepared to spend money for training activities if I think that some current staff members are not trainable [and] will never be able to handle their job with or without training. Notes that he doesn t have time to attend a threeday cultural seminar, but says he might do so once our sales pick up and when our systems and processes are close to the standards of a multi-national company. From Hans Fritz (B).

8 Situational Types SITUA- TION Problem Definition Solution and Implementation Primary Locus of Responsibility for the Work Kind of Work Type 1 Clear Clear Physician Technical Type 2 Clear Requires Learning Type 3 Requires Learning Requires Learning Physician and Patient Patient >Physician Technical and Adaptive Adaptive From Ronald Heifetz, Leadership Without Easy Answers (1996), p. 76.

9 The Organizational Congruence Model Source: Michael Tushman and Charles O Reilly, Winning Through Innovation (Cambridge, MA: Harvard Business School Publishing, 1998)

10 Discussion Questions What specifically should Fritz do over the next 12 months to deal with the situation at Novartis Thailand? Why?

11 Stages of Organizational Change Organizational Dyanamics Inadequate or no change Organizational Decline or Project Failure Trigger Events or Trends Perceived Need for change by key leaders Individual Dyanamics Endings Resistant Forces: Critical Tasks Formal Organiz Cultural-Political Leadership Creation of a vision of a new, desired state: Critical Tasks Formal Organiz Cultural-Political Neutral-zone transition state Mobilization of Commitment: Critical Tasks Formal Organiz Cultural-Political Institutionalization of Change: Critical Tasks Formal Organiz Cultural-Political New beginnings; Revitalization Disengagement Disidentification Disenchantment Disorientation Disintegration and reintegration Perspectives on both endings and new beginnings Find inner alignment & release new energy New scripts, not replay of old ones Adapted from: W. Bridges, Making Sense of Life s Transitions (New York: Addison-Wesley, 1980

12 The Psychology of Turnarounds Kanter notes that organizations in serious trouble often experience a downward spiral of Secrecy and denial Blame and scorn Avoidance and turf protection Passivity and helplessness She advocates attacking that negativity among top managers and other personnel by Promoting open, fact-based dialogue Engendering respectful relationships that supports both truth-telling and reconciliation Sparking collaboration See Rosabeth Moss Kanter, Leadership and the Psychology of Turnarounds, Harvard Business Review (June 2003).

13 How Does Kotter Map onto the Stages of Change Model? A vision of the future: Establishing a sense of urgency. Creating the guiding coalition. Developing a vision and strategy. Mobilizing commitment: Communicating the change vision. Empowering broadbased action. Generating short-term wins. Institutionalizing change: Consolidating gains and producing more changes. Anchoring new approaches in the organization s culture.

14 Eight-Stage Process of Creating Major Change (1) Establishing a sense of urgency. Examining competition Identifying and discussing crises and opportunities Creating the guiding coalition. Putting together a group with enough power to create change Getting the group to work together as a team Developing a vision and strategies for achieving it. Communicating the change vision. Using every vehicle available for communicating Having the guiding coalition model the behavior expected of employees From John P. Kotter, Leading Change (1996).

15 Eight-Stage Process of Creating Major Change (2) Empowering broadbased action. Getting rid of obstacles Changing systems and structures that obstruct Encouraging risk-taking and non-traditional action Generating short-term wins. Planning and creating short-term wins Visibly recognizing and rewarding people who create them Consolidating gains and producing more change. Using credibility to transform systems not congruent with new vision Developing or hiring people to implement the vision Anchoring new approaches in the organization s culture. From John P. Kotter, Leading Change (1996).

16 Surviving Adaptive Change Heifetz and Linsky s tactics for weathering the storms of adaptive change: Operate in and above the fray simultaneously. Preserve capacity to see the whole field, not getting bogged down exclusively in one s own role. Court the uncommitted. Recruit partners who can provide protection and friendly critical advice. Manage the conflict by Providing a secure place for conflict to bubble up Control the temperature to prevent yourself from getting burned Place the work where it belongs. Resist the impulse to provide all the answers. Make people wrestle with and solve problems. See Ronald A. Heifetz and Marty Linsky, A Survival Guide for Leaders, Harvard Business Review (June 2002).

17 Change Through Persuasion Like Kotter, Garvin and Roberto emphasize the importance of persuasion They see several distinct phases of a persuasion campaign: Convincing employees that radical change is imperative. Positioning and framing the provisional plan, followed by getting feedback and revision. Managing employees mood by constant communication. Reinforcing behavioral guidelines to prevent backsliding. See David A. Garvin and Michael A. Roberto, Change Through Persuasion, Harvard Business Review (February 2005).

18 Choosing a Leadership Style Are alternative leadership styles sometimes desirable? How should one choose a particular leadership style? Does a leadership style have to fit the conditions in which it will be implemented? Are there organizational conditions that make a given leadership style more or less likely to succeed in a particular setting?

19 Alternative Leadership Styles Transformational Leadership: Perception of a need for change, Creation of a widely accepted vision of desired future state, Mobilization of commitment, Institutionalization of change. Incremental Leadership: Goal setting evolves flexibly, not by grand design, Complex pattern of transactions to reinforce or frustrate internal coalitions, Resolution of conflicts over power and resources, Management of personal contracts with organization.