Business Case Studies, Executive Interviews, Michael Roberto on Change Management

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Executive Interviews: Interview with Michael Roberto on Change Management
June 2007 - By Dr. Nagendra V Chowdary

Prof. Michael Roberto
Trustee Professor of Management at Bryant University in Smithfield, RI.

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  • In all the turnaround efforts, the leaders invariably seem to focus on "denominator management" (CK Prahlad), including Paul Levy at BIDMC. Why not follow instead a '"sweet and sour" approach (Sumantra Ghoshal)?
    I think, in the near term, a leader can have much more immediate impact on costs than on the top line. If the firm is bleeding cash and in desperate need of performance Interview 4 improvement, then the right thing to do is to stop the bleeding. That means controlling what you have the power to affect most immediately typically costs.Having said that, all these leaders we mentioned also worked hard to build the

    revenue of their firms. Iacocca certainly did, with an astounding array of new products that were smash hits take the Minivan, for example. Gerstner built IBM's consulting and services business into a huge success story. Levy also began to expand the hospital's revenues once he had stabilized the organization.

  • Can you tell us the story of how Levy tilled the soil for change at Beth Israel Deaconess Medical Center (BIDMC) in Boston?
    The key idea here is that Levy didn't first announce his turnaround plan and then try to persuade everyone to commit to it. He spent the first two months building a foundation. He educated people on the source and scope of the hospital's problems. He built his own credibility and showed that he had a much more open and transparent leadership approach. Levy gathered inputs from employees and created a sense of ownership on the part of all employees i.e., a feeling that they were part of the solution and they had accountability for making it work. By the time he had done all of this, the work force was ready to accept a rather tough turnaround plan that called for sacrifice by many.

  • You have observed, "Levy identified a common yet insidiously destructive organizational dynamic that causes dedicated teams to operate in counterproductive ways." How difficult and important it is to identify destructive organizational dynamics at the beginning of a turnaround plan?
    It is critical to try to anticipate the sources of resistance in order to understand why a plan might fail. Then, a leader can develop strategies for dealing with those predictable obstacles. It is all about envisioning the future, seeing where the potholes are and then creating a plan to overcome those obstacles.

  • Which of these two leaders would you rate higher and why (a) A leader who brings about the change when the times are good (like Jack Welch did when he took over the reins from Reg Jones in 1981) and (b) A leader who brings about a change (successful, of course) in trying times?
    I think both are very impressive feats, given that we have noted how tough it is to enact a major transformation. Some would say Welch's feat was tougher in that people didn't have an obvious reason to change, since performance was quite good at the time. However, we must remember that Welch also had a tremendous organization and a set of resources with which to work. GE had been one of the most successful firms on the planet for 80 years and it had a history of transforming itself, even when times were good. Iacocca didn't have that luxury at Chrysler nor did Levy or Gerstner. They inherited quite troubled organizations. It was easy to convince people of the need for change, but they had less talent and resources on which to build.

  • In gaining the acceptance (of all the employees) for the impending changes (during a turnaround phase), what's the best foot forward?
    You have to create a sense of fair process, meaning that employees need to believe that their voices have been heard and their opinions genuinely considered. They have to feel that they have had an opportunity to influence the future course of action. It doesn't mean that they have to get their way. It means that they must feel a sense of ownership, of being part of the process of creating a plan for the future. If employees believe that the process is fair, they are more likely to commit to cooperate in the implementation of a change effort, even if they don't endorse all of the key decisions that are made.

1. Change Management Case Studies
2. ICMR Case Collection
3. Case Study Volumes

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