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Leadership: Managing Change: From Leaders
Leadership: Managing Change: From Leaders
technologies, capital flows and alliances have CEOs have exploded almost as rapidly as the
created fundamental shifts in business inflated market valuations of the dot-com era.
operations. Where many popular leadership The exposure of instances of dubious ethical
models may provide formulae to help solve standards and corporate malfeasance,
some business problems, they are insufficient however, prompted a general questioning of
to deal with the pace and polyvalent character the prevailing assumptions regarding
of constant, rapid change. Managing change - leadership, and a reexamination of where
its impact on organizational structure, group responsibility for leadership decisions in
culture, and personal management styles - is corporations actually resides.
one of the most fundamental and enduring Paradoxically, while the relative value of
aspects of leadership. Paradoxically, while the once-celebrated individual leader is being
the relative value of the once-celebrated questioned, effective corporate leadership has
individual leader as superman or woman is never been more urgently in demand or,
being questioned, great leadership has never arguably, more difficult to achieve. Leonard
been more urgent or more difficult. Schaeffer, the CEO who transformed the once
bureaucratic, money-losing Blue Cross
The established order has invented various California into a thriving WellPoint Health
lightening rods. And it succeeded. Yes, it Networks, describes the elusiveness of
certainly did succeed; it succeeded in making effective leadership: its need for a concurrent
the next thunderstorm all the more serious. multiplicity of forms, and the way in which it
Soren Kierkegaard (1813-1855) pivots on the need for responsiveness to
external and internal change.
The increased visibility of business Leadership is more than heavy-handed
leaders in the modem economy has created a action at the top. Its defining
new form of social theater. In it, highly characteristics change according to the
publicized corporate leaders - a new cast of needs and vagaries of the individual, the
management celebrities - drive organizational organization, the industry, and the world
change, boldly and purposefully, either to at large...by thinking clearly about the
fame or (no less conspicuously) to failure. The roles I’ve needed to assume at different
business press has been complicit in this times, I’ve been better able to tailor the
process of dramatization, providing way I make decisions, communicate with
stereotyped roles and scenarios. Faced with people, and manage my time so that I can
daunting complexities and uncertainties, the address the most pressing needs of the
’heroic leader’ appears as the central actor in organization at the moment (Schaeffer,
the company’s success, the dynamic genius 2002).
guiding less far-sighted colleagues towards a However, change management itself
destination which, at the outset, they can only poses series of related dangers. Keeping to
a
imperfectly discern. Yet this highly an already set course often seems to be the
characterized style of leadership, in which easier and seemingly less risky decision. But
leaders appear as supermen or superwomen, the avoidance of change is the opposite of
leadership. Dante’s vision of hell as &dquo;the too vague and generalized to be actionable. On
miserable way taken by the sorry souls of the other hand, this &dquo;attribute approach&dquo; - in
those who lived without disgrace or without positing simple check-lists of &dquo;correct&dquo;
praise&dquo; provides a warning to the executive qualities - can create organizational myopia
who blindly maintains a course of spuriously through &dquo;Russian Doll&dquo; management: the
secure mediocrity. Change management takes phenomenon in which managers repeatedly
courage precisely because it can be a high-risk hire or promote miniature versions of
undertaking both for organizations and the themselves. Russian Doll management
careers of the decision-makers involved. In decreases diversity of thought processes and
consequence, many initiatives nominally perspectives, as well as induces a tendency
supposed to manage change are either towards organizational denial of competitive
ineffective in their original formulation or threats (Bartlett and Ghoshal, 1998).
rendered so by the process of implementation Arguably one of the most recent
-
central component of change management - that the critical mistake often made by
most effectively to be achieved? managers in change-related programs is to
focus on the abstract process of change rather
Managing Change: The than dealing with the practical problems
Centrality Of Corporate Culture entailed in helping people to assimilate the
changes that are required. The authors
Moran and Avergun’s definition (1997) conclude that resistance to change is
of change management provides a starting inevitable, that individuals express resistance
both covertly and overtly, and that an
point, defining it as &dquo;the process of continually
renewing the organization’s direction, emotional cycle of change resistance and
structure, and capabilities to serve the ever- acceptance should be expected and actively
changing needs of the marketplace, the managed. Preparedness for resistance is the
organization, and employees.&dquo; This does not first condition of its effective management, but
even so - only one element of several that
go far enough; for, as we have seen, successful
-
The ideal dynamic balance between focus strategic focus with structural alignment,
and coordination is found in the upper right organizations can maximize both operational
hand side of the quadrant. By balancing efficiencies and innovation.
than 7 years after it was discovered versus the tenuous at best. Anonymous feedback during a
industry average of 12 years (Grillo-L6pez, national sales force meeting posed an
2000). Five years after Rituxan was launched a apparently logical question: &dquo;why does
clinical review of NHL therapies concluded, [Genentech] management keep bringing in
&dquo;because of its activity, coupled with a senior management from big, mediocre
favourable toxicity profile, rituximab has pharmaceutical companies when we’ve been
become almost ubiquitous in the treatment of successful?&dquo;
most B-cell malignancies (Cheson, 2003).&dquo;
Rituxan’s commercial success reflects its The Need for Change: Changing
clinical efficacy of improving survival sales
-
company, with total revenues of $2.7 billion. urgent by the day. There were three key
strategic changes facing the company’s
Resistance to Change Hematology franchise as it entered 2002:
Amidst the success that greeted Rituxan, dramatic shifts in the sources of sales growth;
one of the authors was hired from a company an increasingly conservative regulatory
in the larger, traditional pharmaceutical environment; and new competition on the
industry as the Vice President to head the horizon.
newly formed Hematology business unit. Of these considerations, the shifts in the
Contemporaneous business-unit reorganization sources of sales growth were easily the most
combined sales, marketing, and medical affairs pressing. In 2002, 70% of the sales and 90% of
for therapeutic areas for the first time. Until Rituxan growth were projected to be beyond
then, all functional areas reported only to their the original FDA approved uses or indications.
respective section heads, in the process The company’s sales expectations were based
creating what amounted to organizational on simultaneous growth in multiple areas of
&dquo;silos&dquo;, with little lateral contact or use, and it was already evident that this would
communication. require the effective use of all the company’s
Flushed with their commercial and functions if it were to succeed in being
clinical success, however, the various elements successful in commercial operations while also
of the Hematology team felt confident about ensuring strict regulatory compliance. In other
the virtues of the status quo and fiercely words, cross-functional teamwork would be
defended their functional independence. The imperative to achieve the unit’s aggressive
organization was strongly resistant to the goals.
suggestion of change. Moreover, loyalty and The most obvious external threat was
commitment were strong within each from competition. There were eighteen
functional area, even if there existed little competitors in various stages of clinical trials
between the constituent areas. The fact that no with both complementary and ’cannibalizing’
person had transferred from sales to marketing products. Significant commercial rivals (such
or vice versa in the four-year history of the as Amgen and Aventis), with proven and
After a series of internal reviews, the accounted for only 2% of sales (something that
need for change within several areas of the was all the more anomalous as these were not
company became apparent to all concerned. expected to grow significantly). Resources
First, the marketing team’s structure was too were rationalized in a way that. after
general and with individual roles unspecified. reallocation, 100% of expenses were aligned
Ten marketing personnel worked on 31 towards initiatives that drove 98% of current
distinct activities and projects. All team sales and anticipated future sales growth.
members were equally responsible for these Next, multiple modes of communication
activities, hampering a sense of empowerment created transparency and initiated candid
and ownership, and effectively centralizing feedback. Monthly &dquo;town hall meetings&dquo;,
decision-making. In addition, the sales group quarterly sales-force advisory boards, and
was understaffed to the point that it was web-based communications through
unable to research and monitor its own newsletters and other media began to unite the
activities. As the new strategy emerged, it also business unit’s formerly disparate areas. It was
became clear that questions of accountability also made mandatory that the entire marketing
needed to be viewed from a variety of department spend at least one day per quarter
perspectives. For the first time, the sales in the field with a sales representative, the
organization would need to be accountable in better to understand customer behavior, to
areas other than revenue. foster teamwork, and enhance the
department’s credibility with the sales force.
Initial Change: Alignment, Focus, and The team then reorganized around key
Coordination competencies that the major customers had
The first step was to identify the need for identified as critically important: brand
change - and the urgency with which it was management, medical education, and key
required - by engaging the entire operation in customer management. Three team leaders,
dialogue. This had to operate at two levels: one for each competency, were established to
both cognitively and emotionally, each create ownership, accountability, and
member of the team needed to acknowledge responsibility for each competency area.
and internalize the fact that the business Team members and resources were allocated
landscape was altering as a result of to each team partly according to the relative
innovations in markets, competition, and importance attached to each by customers, and
regulation. One of the most effective ways of partly according to the impact of each on sales
making that case was by seeking the responses and growth. The goal for each competency
of a target group of customers: the key 30% of team-leader was to become number one in
the customer-base that generated 85% of all their area-brand management, medical
sales. These key customers were consulted as education, and key customer management-as
to their views on the process of developing an defined by the top 30% of customers who
overarching strategy; in particular, this comprise 85% of sales in a survey conducted
involved identifying Genentech Hematology’s by a third party on a biannual basis.
key competencies, and served the purpose of To reinforce this process of integration
creating an external focus that the most further, all support functions medical
-
change-resistant member of the team was affairs who conduct post-approval clinical
forced to acknowledge. Moreover, the trials, managed care who support
approach significantly enhanced customer- reimbursement, and nurse-educators who
relations,as those approached were ready to provide training to ensure safe and effective
help and flattered to have been asked (a product use- were aligned exactly with the
disposition that is often underestimated). competency areas. For example, before the
Newly instituted customer surveys revealed reforms, the managed-care team had dedicated
four areas of critical importance to this key 5% of the time of 40 people to supporting
customer group. These clinical
were access to Hematology. After refocusing the business
trials; unbiased and sophisticated medical unit’s structures, the hitherto dispersed
education programs; a responsive and organization changed
was to dedicate six team
knowledgeable sales force; and reimbursement members fulltime to Hematology. assigned
important step taken was a Gallup Q12 survey meant recognizing that there was no single
was implemented to monitor the level of1 answer. Rather, shaping a corporate culture
employee engagement and satisfaction. requires relentless nurturing through example
Management then made direct, immediate and and consistency.
transparent changes in response to low scoring Rewards and recognition were also re-
categories, in order to communicate its own aligned to serve the new strategy. A critical
commitment to responding to employee initiative, for example, was the
opinion and indicating the importance that implementation of a transparent, cross-
management attached to remedying areas of functional, all-personnel review process that
discontent. During each period between was conducted semi-annually. This moved the
surveys, the team’s reported scores increased review process from an essentially hierarchical
substantially from the 60th percentile in April and linear process - in which the employee
2002 to the 82nd percentile by November 2002, was dependent on his or her direct manager
and a further increase to the 86th percentile in and chain-of-command - to a broader and
October 2003: an externally assessed index of more lateral (and also more transparent)
high (and steadily improving) morale that process of assessing performance and talent.
materially contributed to the driving forward This new process involves managers
of the momentum for change. presenting their reports of performance results
Beyond these questions of morale and and promotional potential in conjunction with
personal fulfillment, a further study was peer-review input and feedback. It is these
instituted in an effort to identify the &dquo;cultural reviews that form the basis for promotions,
norms&dquo; - the workplace culture - that merit-related salary increases, and stock-
prevailed within the Hematology business option awards.
unit. The method employed for this was a The conceptual strategic framework of
series of confidential individual interviews, this change-management process can be
focus groups, and finally a survey of the entire summarized as a sequence of two phases: first
business unit to confirm findings. The survey focus, and then coordination. In the first phase,
showed a high degree of consensus as to in 2002, strategic focus was applied to provide
Hematology’s workplace culture including an external perspective on key customers’
these key themes: making a difference in attitudes and needs, to develop a clear and
patients’ lives; pride in being science-led; an consistent strategy, create competencies to
emphasis on speed of execution and position the Hematology business unit
performance; mutual respect and trust among uniquely in relation to its competitors, and to
co-workers; belief in individual align internal structures so that they reinforced
empowerment; and a tradition of collaborative efficiency and effectiveness. In the next phase,
decision-making. On the debit side, there was in 2003, a new agenda was defined in order to
extensive concern about the potential risk that consolidate the gains made in the previous
too much &dquo;process&dquo; or bureaucracy was an year. Here the focus was on coordination: the
almost unavoidable concomitant of major coordination of a bold and continuous program
organizational growth. Perhaps most of innovation designed to achieve strategic
importantly, addressing all of these issues ends, while simultaneously affirming the
importance of maintaining &dquo;individual
1
The Gallup Q12 questions that measure employee empowerment&dquo; - the antidote to centralizing
engagement follows: "I know what is expected of
are as
bureaucracy - as the primary means of
me at work. I have the materials and equipment I need to
do my work right. At work, I have the opportunity to do
achieving team efficiency and transactional
what I do best every day. In the last seven days, I have speed.
received recognition or praise for doing good work. My
supervisor, or someone at work, seems to care about me
as a person. There is someone at work who encourages
In this practical context, leadership has perspectives from which to solve specific
come a long way from the Romantic image of business problems (particularly the challenge
the imperious corporate chief imposing his of change within the contemporary business
will - some supposedly far-sighted and almost world). The task of discerning external
certainly flawed vision - on his submissive changeand translating that discernment into
followers. Rather it has become, in part, a strategies for internal corporate change - in
corporate, collegial relationship. In place of terms of evolving organizational structures,
linear, top-down management, there is group culture, and styles of personal
dialectic that enables a number of potentially interaction - stands as one of the most
conflicting interests to be maintained in a state enduring challenges of leadership.
of dynamic and creative tension. Yet the leader who believes that
By choosing and implementing this leadership is about the leader’s qualities alone
approach, the Hematology team is attempting looks almost certain to fail. As we have
to achieve a synthesis - or rather, a form of suggested here, even the task of discerning
carefully poised balance - between focus and what needs to be changed can - and arguably
coordination in order to create the strategic ought to be - a collegial endeavor. It requires
and tactical agility that is required to deal participants to analyze problems from multiple
nimbly and effectively with the challenges that viewpoints, to think imaginatively, and tease
will come with future external change. For that out the complexities of the problem. This
the future will bring various forms of approach may make the required action seem
exogenous change is almost the one item of more complicated and intractable rather than
certitude in a highly volatile and otherwise less. Ultimately, however, only by beginning
unpredictable environment. No single with (and facing up to) the complexities of the
leadership style - still less the particular vision challenge of change can we create any
of any single &dquo;leader&dquo; - will be self-sufficient practical and useful conclusions, as opposed to
in this world of unavoidable change. virtuous-sounding - but in the end, simplistic
and unhelpful - generalities about the nature
Conclusions of leadership qualities.
The case of the Genentech Hematology
The accelerating pace of globalization, business unit illustrates a successful instance
communications, and technological of discernment of the need for change and the
innovation; the changing patterns of cross- effective implementation of a response to that
border capital flows; the fluid state of need. The result of the transformation,
corporate mergers and partnerships; all these however, was not the creation of yet another
have created - and will continue to create for different, but - in time - equally inflexible,
the foreseeable future - fundamental shifts in series of structures. equally doomed to
the ways in which business is conducted. obsolescence. Instead, the cultural
Where many old-fashioned - and still widely transformation produced an environment in
current - leadership models may provide which the uncertainty of the future is taken as
a given, and new arrangements have been of external and internal analysis (with its
created that are inherently Protean: able to tendency to explode current expectations and
adapt and respond to new circumstances as assumptions), and the need to devise and
they arise. Instead of seeking a single, once- implement responses to those findings in such
for-all solution, the new structures foster and a way that both utilizes most effectively - and
manage a dynamic tension between &dquo;focus&dquo; also inspires the confidence and enthusiasm of
and &dquo;coordination&dquo;: between the ongoing tasks -
Three findings may be highlighted. First, where countervailing forces are counterpoised
on the &dquo;focus&dquo; side: becoming a customer-led most beneficially and creatively - there
organization raises the debate from turf battles remains a role, albeit a heavily modified one,
to teamwork; customers or markets are often for &dquo;heroic&dquo; leadership. Personal courage is
useful guides precisely because they transcend inevitably required to inaugurate (and
the corporation’s existing functional maintain) any process of change management,
boundaries and allow teams to analyze not least because a decision to retain the status
opportunities and allocate resources quo, or to resist calls to change course, often
objectively. Second, if the focus is correctly seems the easiest and least risky management
adjusted - through strategic simplicity, decision. While change for change’s sake can
relentless prioritization of the questions that often be a spurious substitute for properly
matter most, and the alignment of the focused leadership, the avoidance of change
organization’s resources to actual needs - then can be equally culpable: the result of either
the benefits aresubstantial. This internal timidity or complacency, and the very opposite
cultural change will in turn drive innovation, of effective leadership. However, once a
improve transactional speed, and produce properly informed decision has been made as
substantive results. Third, cultural change is to the need for change - usually a moment that
fundamentally a collective, collegial exercise requires individual leadership - the paradox is
in which sensitivity to the particularities of that, when it comes to implementation,
context is all-important. No single approach &dquo;leadership&dquo; is fundamentally a group
will be effective in all circumstances. exercise. Leaders are constantly asking the
Yet if success is a matter of shared seemingly unreasonable by requesting that
responsibility, it would be naive to suggest individual team members make a total
that responsibility is shared equally. In personal commitment to a particular program
instigating the process of re-assessment and of action in the context of a future that is
managing the dynamic tension that results predominantly uncertain.
from initiating reforms - determining the point
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extent to which the leader is responsible for doll management model: New personal
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