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