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Implementing a new Business Model

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Residential 4: Day 4 Implementing a new Business Model Geoff Eagleson * Re-engineering the Stock Exchange Restructuring a sales force Differentiating a hotel chain ... – PowerPoint PPT presentation

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Title: Implementing a new Business Model


1
Implementing a new Business Model
Residential 4 Day 4
  • Geoff Eagleson

2
Implementing a new Business Model
  • Roadmap
  • Technical versus Adaptive change
  • An overarching framework for the implementation
    of any changethe Change Value Chain
  • Illustrated by Woolworths repositioning
  • Case Repositioning Orica Mining Services
  • Resourcing the implementation of a new Business
    Model
  • Leading the implementation

3
A Toolkit for implementing a new Business Model
  • Implementation Value Chain
  • Benefits Realisation Map
  • Change Initiative Analysis
  • The Agreement Matrix of cooperation tools

4
Technical or Adaptive change? The fact is that
some business changes are more dramatic than
others
  • TEST Whom do you tell?
  • Subordinates
  • Peers
  • Boss/CEO/Executive Committee
  • Customers
  • Board
  • Market
  • The resources needed and the depth of the
    intervention mean that the change is more than
    technical, more than business as usual. At its
    deepest level the change becomes Adaptive
    requiring everyone to change their beliefs and
    behaviours. Implementing a new Business Model is
    an adaptive change.
  • Source Heifetx Laurie (1997) Reading 10

5
Technical or Adaptive change? The fact is that
some business changes are more dramatic than
others
  • Describe to your neighbour an adaptive change you
    have observed.
  • Who was responsible for the change?
  • What roles did the leader of the adaptive
    intervention fulfill? Illustrate how this was
    done or what opportunities were missed by giving
    examples of
  • the provision of a helicopter view
  • the framing of the challenge
  • the management of distress
  • the maintenance of a task focus
  • the involvement of the whole organisation in the
    change process (you will need to be clear about
    what is the relevant unit of analysis)
  • active listening to everyone at all levels of the
    organisation
  • Do you consider the adaptive change initiative
    you have described to have been successful? On
    what basis do you make your judgment?
  • What actions by the leader were particularly
    helpful or unhelpful in implementing the
    initiative you have described?

6
An overarching framework for dramatic change
The implementation Value Chain
  • Treat the implementation of the new Business
    Model can be framed as a business in and of
    itself. In which case it will have a value chain
    that will have to be managed

7
An example of a strategic turnaround there was
a time when Woolworths stumbled
  • Woolworths profit performance 1982-97
  • Source Turner Crawford, 1998

8
Woolworths The Change Value Chain Plan the
change First understand the economics of the
business
  • Source Livingstone Tigert (1987) Reading x
    in SM1

9
Plan the changeChange can be reframed as a
benefits realisation process.
  • There is lots of evidence that change initiatives
    do not always provide the results required,
    sometimes because they are not planned with a
    clear benefit in mind.
  • In the context of IT projects, DMR (now Fujitsu)
    developed a process to ensure benefits
    realization.
  • This process can be adapted to any change
    initiative to improve the planning and
    implementation of the change. In particular the
    DMR process can help in designing an effective
    change program.
  • The first step is to articulate the benefits
    sought for each of the stakeholders!

10
Plan the change as multiple initiatives
withoutcomes that lead to benefits
10
11
Assess the internal context for the change
program
  • The time available
  • Need for simplicity and clarity
  • Degree of understanding and commitment
  • Who are the key players? What is their attitude
    towards the change?
  • The political and power environment
  • The culture, both formal and informal
  • The degree of consensus
  • What would the internal context in Woolworths
    have been like?

12
Assess the internal context with a Change
Initiative Analysis
(Score High5, Moderate3, Low1.)
  • Initiative Woolworths repositioning to Fresh
    Food
  • Source www.implementer.com

13
Energize the organisation
  • For the example of adaptive change that you
    described earlier, provide examples of the
  • Promotion of dialogue
  • Creation of respect
  • Encouragement of collaboration
  • Support of initiative
  • If there were no examples of any of these
    activities, describe what you would have done to
    achieve them.
  • Source Kanter (2003) Reading 11

14
Engage the organisation by using the appropriate
toolsthe Agreement Matrix
Broad consensus
Leadership Tools
Culture Tools
Extent to which people agree on WHAT THEY WANT
Power Tools
Management Tools
No consensus
No consensus
Broad consensus
Extent to which people agree on CAUSE AND EFFECT
  • Source Christensen, Marx Stevenson (2006)
    Reading 13

15
Create an architecture for the change.
  • Behaviour f(Individual x ENVIRONMENT)
  • Create facilitating structures
  • A separate Project Office when the new business
    is operationally dissimilar to the current one,
    protected from interference as in an ambidextrous
    organisation (OReilly Tushman (2004) Reading
    x in SM 2).
  • Specific control systems (Simons (1994) Reading
    12).

16
Summary of Control Lever Usage by Newly Appointed
Top Managers
  • Source Simons (1994) Reading 12

17
Manage and measure like a start-up. Test
assumptions at milestones and be willing to be
flexible.
  • Monitor interactively as a feed forward process
    to inform the development of an emergent
    strategy.
  • Focus on a few critical drivers even if they have
    to be assessed qualitatively rather than
    quantitatively.
  • Assess performance against trends that are
    compared with historical data rather than
    targets.
  • Use the logic of the business to generate
    hypotheses that can be tested at milestones,
    coupled with a continual assessment of the
    deal-breaking assumptions that lie behind the
    plan.
  • Sources McGrath MacMillan (1995), and
    Govindarajan Trimble (2004)

18
What would you advise a CEO about to begin
implementing a new Business Model?
  • Orica Mining Services case

19
Resourcing the implementation of a new Business
Model
  • Read the case and individually record
  • your ranking of the three most important
    selection criteria
  • then your choice of candidate and
  • finally the reasons for your choice
  • In your syndicate group first choose a General
    Manager and then a secretary. Discuss your
    individual decisions and come to group agreement
    about
  • the ranking of the three most important selection
    criteria
  • the choice of candidate
  • the reasons for the choice

20
Results ofResourcing the implementation of a
new Business Model
21
Once the organisation is engaged and energized,
the twomost relevant leadership activities are
those focused on Task and Relations.
  • Relations Leadership
  • Building Trust
  • Motivating
  • Supporting People
  • Task Leadership
  • Setting Goals
  • Initiating Structure
  • Maintaining Standards

22
Leading to the demand for theHeroic (9, 9)
leader
  • Source Blake, R.R. Mouton, J.S. (1985)

23
Which is supported by experience
success rates of project managers
52
26
16
6
Low T Low R (n 220)
Low T High R (n 220)
High T High R (n 271)
High T Low R (n 192)
  • Source Misumi, J. (1985)

24
BUT what happened when a hotel chain decided to
reposition itself around customer service?
  • The new Business Model was based on the ideas of
    Albrecht (1990). Though never explicitly
    defined, through archival research and interviews
    it was found that hotels had been asked to
    implement ten components.
  • Establish a quality mission
  • Involve middle management
  • Improve communication
  • Gain employee commitment
  • Reward employees for goodcustomer service
  • Establish a steering committee
  • Organise service circles
  • Train front-line staff in problemsolving
  • Identify customer needs

25
Outcomes sought from the transformation
  • The top management team takes responsibility in
    an active way for the service levels
  • There is a clear focus on customer service which
    is based on hard information about customer needs
  • The service levels provided are obtained through
    commitment to formalised problem solving at the
    front-line
  • Management consciously rewards employees for
    service provision

26
Association between program components and
outcomes

Number of hotels
Sample size 42
20
9
15
15
Components Score
13
5
0
6
8
0
Outcomes Score
  • Source Waldersee Eagleson (2002)

27
Impact of leader behaviour observed in the
steering committee
of sample achieving
Good Components
14
40
63
83
69
None
R
T
RT
R T
(n7)
(n5)
(n8)
(n6)
(n16)
Good Outcomes
0
0
25
33
100
None
R
T
RT
R T
(n7)
(n5)
(n8)
(n6)
(n16)
28
Managerial implications of the hotel study
  • The two leadership functions focus on different
    resultsbut both are needed.
  • Very few of us can provide both leadership
    functions at the same time yet we typically
    operate within a team.
  • So why not encourage Shared Leadership?

29
The leadership team Why think that one person
has to do everything?
  • Complementary areas
  • Responsibilities
  • Expertise
  • Cognitive (Sensate vs. Intuitive)
  • Role (Task vs. Relations)
  • Made effective by
  • Common vision
  • Common incentives
  • Communication
  • Trust
  • Source Miles Watkins, (2007)

30
Takeaways from Implementing a new Business Model
31
References
  • Blake, R.R. Mouton, J.S. (1985). The Key to
    Leadership Excellence.Gulf Publishing Company,
    Houston.
  • Govindarajan, V. and Trimble, C. 2004,
    Strategic innovation and the science of
    learning,Sloan Management Review, Winter, Vol.
    45, No. 2, pp.67-75.
  • McGrath, R. and MacMillan, I. 1995,
    Discovery-driven planning, Harvard Business
    Review, Jul/Aug,Vol. 73, No. 4, pp.4-12.
  • Miles, S. A. and Watkins, M. D. 2007, The
    leadership team complementary strengths or
    conflicting agendas?, Harvard Business Review,
    April, vol. 85, no. 4, pp. 90-98.
  • Misumi, J. (1985) The behavioural science of
    leadership An interdisciplinary Japanese
    research program. University of Michigan Press,
    Ann Arbor.
  • Turner, D. and Crawford, M. 1998, Change Power
    capabilities that drive corporate renewal,
    Business and Professional Publishing, Warriewood,
    NSW.
  • Waldersee, R. and Eagleson, G. 2002, Shared
    leadership in the implementation of
    re-orientations, Leadership and Organizational
    Development Journal, vol. 23, no. 7, pp. 400-407.
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