Technical Note - Leading and Managing Change

This document is an authorized copy for the course EMBA-MAD-2022 - Section Weekly - Strategic Leadership: Getting Things Done
- WK taught by prof. Elvira, Marta at IESE B.S.
9 -4 1 5 -0 4 0
REV: SEPTEMBER 21, 2015
RYAN RAFFAELLI
Leading and Managing Change

Managing change is consistently ranked as one of the most difficult and critical tasks that leaders
face.1 Thousands of books have been published on the topic of organizational change, yet studies find
that over 70% of change initiatives fail. 2 Why? If change is such an important aspect of organizational
life, shouldn’t we be getting better at it over time? 3 What is it about change that makes it so difficult?
We start with three key assumptions. First, organizations are systems, and if you alter one
component you will undoubtedly impact others. Second, change can be both a process and an outcome.
Third, there is no one right answer for managing “successful” change. Rather, leaders are encouraged
to consider questions that are important for navigating change within organizations.
While change can occur across all levels of the organization, this note focuses on those in positions
of leadership when they must initiate change. It outlines key choices leaders must make in engineering
change and the common traps that can cause a change effort to fail. The note is organized into four
sections, each building on the last to provide leaders with a roadmap to engineer effective change
related to their organization and the situation (see Exhibit 1 for a conceptual overview):
1) Diagnosis: Why is change needed?
2) Design: What sort of change is called for?
3) Delivery: How can change best be implemented? Who will most likely be affected? What skills
and support do leaders need?
4) Evaluation: How can the impact of the change be assessed and measured?
Diagnosing the Need for Change

Why is change needed?
Leaders regularly find themselves facing the prospect of initiating change. To determine if change
is warranted, or perhaps even necessary, leaders should consider a useful dichotomy for diagnosing
whether their organization, unit, or team faces a “performance gap” or an “opportunity gap.” 4 Change
driven by performance gaps attempts to improve current organizational routines and practices.
Change driven by opportunity gaps aims to create new routines and practices for the future.
Professor Ryan Raffaelli prepared this note as the basis for class discussion.
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This document is an authorized copy for the course EMBA-MAD-2022 - Section Weekly - Strategic Leadership: Getting Things Done - WK taught by prof. Elvira, Marta at IESE B.S.
415-040 Leading and Managing Change
Performance Gaps Performance gaps arise from a difference between expected performance and
actual performance. To gauge whether actual performance falls short of expected performance (based
on strategy, objectives, and vision), leaders and their teams must accurately assess the organization’s
performance in its current state. Performance gaps are often exposed when leaders realize that their
organization (or a specific business unit) is not as efficient as other business units, or their competitors.
As a diagnostic tool, leaders should evaluate the organization’s: 1) ability to perform and produce
output; 2) capacity to foster individual learning and satisfaction; and 3) potential to adapt. 5 A gap
requires the leader to formulate and execute a plan to resolve and close it.
Opportunity Gaps The impetus for change can also arise when leaders look outside their
organization and anticipate what they need to do to remain competitive in the future. Opportunity gaps
are defined as potential future problems or missed value-creating opportunities the organization will
face if it does not act today. Opportunity gaps arise in two ways:
1. from evolving shifts in customer preferences and demands, competitor offerings, labor and
capital market constraints, public expectations, regulations, or technologies that promise new
routes for generating value and threaten existing ones. 6
2. from successful organizations assuming that their track record and capabilities will sustain
them indefinitely.7 The leader may need to characterize the necessary change as an opportunity
in order to generate the urgency for moving away from existing behaviors, competencies, and
practices that appear to those inside the organization to be working well.
Knowing whether you are trying to solve for a performance or opportunity gap has significant
implications for how leaders design and deliver change.
Designing Change
What SORT of change is called for?
Leaders are architects and engineers—they are called upon to both design and build organizational
change. As such, they must make a series of choices to design a change that fits both the type of gap
the organization faces and the set of challenges the change effort may encounter. Together, those
decisions reveal the SORT of change that will be required—based on Scope, Origin, Rollout, and Timing,
which are the four critical elements of change design and implementation.
The first two fundamental design decisions are about the scope and origin of change (see Figure A).
These choices call upon leaders to assess the degree of change required and where it should originate
from within the organization.
Figure A Design Decisions: Scope & Origin
Scope
Incremental Radical
Origin
Bottom-Up Top-Down
Source: Casewriter.
2
Leading and Managing Change 415-040
Scope of change: radical vs. incremental Decisions about scope are largely about the
intended impact of the change on the organization’s core practices, norms, and member behaviors.
Radical change is intended to affect nearly every aspect of the organization: its structures, systems,
culture, critical tasks, core competencies, and assessment measures.8 Radical change also forces leaders
and members to reconsider the taken-for-granted assumptions they adhere to effortlessly, sometimes
without even thinking, every day. The basic notion underlying radical change is that the current
architecture is unsustainable and needs to be fundamentally re-tooled.
Conversely, incremental change is intended to make small adjustments to the existing organizational
systems, processes, and routines. It produces small, but often critical, adjustments to the existing
organization. Unlike radical change, incremental change targets specific components of the
organization with the goal of making modifications. The notion underlying incremental change is that
the current system is not entirely broken, but could benefit from fine-tuning.
The scope of change rarely plays out as purely radical or incremental, but as a blend of both with
leaders placing a greater emphasis on one. Questions to consider when deciding about scope are:
1. How broad and how deep does the change need to be?
2. How expansive does the change need to be across each facet of the organization?
Origin of change: top-down vs. bottom-up Leaders must decide whether change should be
orchestrated primarily from the top-down or percolate from the bottom-up. The origin of change refers
to whether the change is planned by the leader, or emerges from business units more organically.
Top-down change is typically planned, with clear directives, goals, communication plans, and
assessment models. Top-down change requires buy-in from the management team and is then
disseminated throughout the organization. Alternatively, bottom-up change emerges from within the
organization and can look different across multiple business units depending on how it gets started.
Top-down and bottom-up change have strengths and weaknesses. Top-down change often
provides greater certainty and control, but can stifle innovation or buy-in from those below. Bottom-
up change can lead to greater diversity of ideas and buy-in, but can be harder to coordinate and
implement reliably across the organization. Questions to consider when deciding about the origin of
change are:
1. Where do we expect the best ideas about change to generate from?
2. How clear and predetermined is the path forward?
3. How consistent do we need the resulting behaviors and practices to be?
*******
Leaders should consider each of the above dimensions as continua, rather than a set of separate
trade-offs. For instance, rarely is the origin of change strictly top-down or bottom-up, but rather it is
usually a combination of both.a
a As you plan change, place a hash mark on each of the continuum lines to demarcate the emphasis placed on the dimensions.
Leaders must account for how little or how much they want to rely on one or both elements of each dimension.
3
Types of Change
When designing a change initiative, leaders should anticipate how their decisions related to the
scope and origin of change will interact. Whereas scope focuses on the intended impact of the change,
the origin identifies where the change will emerge. Figure B outlines four typical types of change that
result from analysis of the various design choices.
Figure B Types of Change (based on Scope and Origin design decisions)

Top-Down
Tactical Transformational
Change Change
Origin
Bottom-Up
Evolutionary Revolutionary
Change Change
Incremental Scope Radical
Source: Casewriter.
 Tactical Change: when change is top-down and incremental, it is typically experienced as tactical.
Tactical change is designed to address a specific issue within the organization and to achieve a
particular goal. This type of change implies a shift in behaviors or routines that are targeted and
quickly implemented with little or no repercussions outside the business unit. Tactical changes
rarely result in organization-wide change, and are often implemented when the leader is confident
there will be little resistance or larger repercussions.
 Evolutionary Change: when change is bottom-up and incremental, it is typically experienced as

evolutionary. Under such conditions, leaders rely on ideas to emerge from individuals and subunits
within the organization. The leader’s role, in turn, is to provide resources, remove barriers, and
offer guidance. Such changes are gradual, and may not always be appropriate to roll out across the
entire organization since they may be only applicable to a specific business unit. Evolutionary
change can be an important way for organizations to learn and test new ideas without upending
the entire system.
 Revolutionary Change: when change is bottom-up and radical, it is typically experienced as

revolutionary. This type of change impacts the core beliefs and behaviors and the norms and
structures that guide the organization.9 Revolutionary change emerges from within the
4
organization, and often starts with a movement or an idea from those within the rank-and-file or a
single business unit. If the change has merit, it will gain traction and reach across the entire
organization.10,11 Members are often highly committed to the change because they helped spur and
shape it. However, in organizations (and in countries) revolutions can occasionally lead to chaos
and collateral damage, especially if the leader or others disagree with the direction.
 Transformational Change: when change is top-down and radical it is experienced as

transformational. Transformational change starts with the leader's goals in mind. The intended
impact of a transformational change is significant. Leaders regularly devote a great deal of
resources toward managing transformational changes since such initiatives are often directly tied
to the leader’s strategic goals or vision. After such a change, rarely does the organization go back
to the old way of doing things. Since transformational change is driven from the top-down, it is
especially important for the leader to consider how to solicit buy-in and acceptance at all levels.
Without buy-in, transformational change will fail to get off the ground or stall midstream.
Each of the above types of change is associated with a unique set of assumptions and philosophies
about how change should emerge. Before embarking on any change process, leaders must consider
the ramifications of their design decisions and make certain those decisions align with the type of
change leaders hope to generate. Eventually, however, a leader’s focus must shift from designing
change to building an implementation strategy, to which we now turn.
Delivering Change
After deciding on the type of change most appropriate to address a performance or opportunity
gap, leaders must consider how and what to implement. The leaders of a transformational change
effort, for instance, will need to consider if it is possible to pilot the change in one business unit before
rolling it out across the entire organization. If so, should the changes occur in short bursts or over an
extended period of time? Or should they pilot the concept in one or more business units before rolling
it out across the broader organization? And how much change is possible before members experience
fatigue? To answer such questions, the following section outlines the components of delivering change.
How can change best be implemented?

In the same vein that leaders have a set of design choices about the type of change, they also have
choices about its delivery and implementation. Two decisions related to implementation are
introduced here: rollout and timing (Figure C).
Figure C Implementation Decisions: Rollout & Timing
Rollout
Localized System-Wide
Timing
Continuous Episodic
Source: Casewriter.
5
Rollout of change: system-wide vs. localized Where to implement change across the
organization is a decision about rollout. System-wide changes are rolled out across multiple units or
subunits simultaneously. A system-wide rollout can be very effective if the leader needs the change to
occur immediately. It can send a strong signal to the organization that it is both critical and necessary
to all aspects of the business. Since this type of change is implemented across the organization all at
once, or across all components, it can require significant resources and coordination. One of the risks
of system-wide change is that there are fewer opportunities to learn and evaluate before implementing
the change in other areas.
Localized change is rolled out in a successive process. This approach involves implementing the
change in specific units of the organization, one-by-one, until it reaches all areas, or altering
components of an organization in serial fashion (e.g., first changing the compensation system, then the
hiring process, and finally the organizational structure). The benefit of this type of rollout strategy is
that leaders can devote more resources and attention to each segment of the organization as change
gets implemented. Questions to consider when deciding about rollout are:
1. Can the change be rolled out in each unit separately, or is cross-unit collaboration necessary?
2. Does the organization have the resources to coordinate a roll out across multiple units?
3. How will the change impact productivity during implementation and while the business unit
attempts to adapt?
While leaders may attempt to rollout change by placing a primary focus on system-wide or
localized change, many efforts include combinations of both—each employed to a greater or lesser
extent.
Timing of change: episodic vs. continuous A leader’s decision about the timing of change
determines the pace of the implementation effort. Episodic changes are implemented within a finite
time period. The goal of episodic change is to enact change and then return to a “new normal” that
leads the organization to adopt an updated status quo. It is often conceptualized as a process that begins
with the leader: 1) “unfreezing” the existing organizational routines; 2) “enacting” the change; and; 3)
“re-freezing” the organization around a new set of organizational standards, practices, and norms. 12
Episodic changes often follow a jolt 13 that triggers a re-evaluation of the organization’s taken-for-
granted assumptions and routines. Such trigger events can include the induction of a new leader, a
competitor releasing a new product or technology, a regulatory change issued by the government, or
an unforeseen crisis such as a natural disaster or a product recall. The goal of an episodic change effort
is to break the existing routines and redefine them.
Continuous change efforts, on the other hand, are implemented over an extended period of time. In
Japan this notion is referred to as kaizen, or continual improvement. Toyota, for example, is known for
its model of continuous change where factory workers engage with management to discuss ways to
improve the existing production systems daily. 14 Rather than “unfreezing” the assembly line to retool
and make changes at specific intervals, continuous changes are made throughout the production
process. The goal of continuous change is to build the concept of gradual change into the organization’s
culture and daily routines.
Questions to consider when deciding about timing are:
1. Has some unexpected event or external factor created an opportunity for change?
2. How long will it take to roll out the change?
6
3. How closely tied is the change to the organization’s pre-existing culture and routines?
Implementation Approaches: Tools, Tactics, and Tradeoffs

Once the leaders have considered the rollout and timing, they must also evaluate how these
implementation decisions are related and may interact. The type of rollout and timing decisions a
leader makes will ultimately impact the extent to which the change stretches and extends the
organization's existing operations, and how much stress the effort will place on individuals. Typically,
two implementation approaches emerge. See Figure D.
Figure D Implementation Approaches (based on rollout and timing decisions)

Episodic
Piloting &
Experimenting
Timing
Assimilating
& Integrating
Continuous
Localized System-wide
Rollout
Source: Casewriter.
 Focus on Piloting & Experimentation: If the change is mostly continuous and localized, more
opportunities for piloting and experimentation will exist. Under this approach, the timing of
change is prolonged over an extended period, and rollout is focused on one specific business unit
or organizational practice. The leader can test ideas in a targeted fashion, gather data and feedback
from members, and then make adjustments before implementing the change across additional
business units over time.
 Focus on Assimilation and Integration: If the change is more episodic and system-wide, it will be
assimilated and integrated throughout the organization more readily. Under this approach, change
is implemented during a specified window of time and rolled-out simultaneously throughout the
organization. Such change is more likely to have an immediate impact on the core systems,
structures, and culture of the organization because it occurs all at once. After the changes are
implemented, the organization will likely return to a state of equilibrium where incremental
changes become the norm.15 The downside of this approach is that the leader sacrifices some ability
to learn from past successes or failures before implementing the change in other units.
7
The Trade-off between Stretching and Stress The dotted line that runs through the middle
of Figure D illustrates a critical implementation design trade-off. Leaders must consider how much
the change will effectively stretch the existing organizational norms, behaviors and routines in the
necessary direction, while in turn balancing how much stress they can impose on the individuals
experiencing change.
On one extreme, a change that is mostly continuous and localized will induce less stress on the
organization as a whole. Such change is implemented in isolated pockets over time. The risk, however,
of adopting this type of implementation approach is that it may take too long to roll out, and it may
not evolve in the manner that was originally intended by the leader. Alternatively, if the leader adopts
an episodic and system-wide implementation strategy, the change will permeate the organization more
rapidly. However, the downside of this approach is that it can place significant pressure on the
organization to immediately adopt and adapt. Without some intermediary breaks to refocus and
evaluate, individuals may experience fatigue and stress (discussed in more detail in the following
sections).16
Thus, leaders typically choose an implementation strategy that combines elements of both the
piloting and assimilation approaches. Finding the right balance depends on the type of change the
leader hopes to guide (e.g., tactical, evolutionary, revolutionary, transformation), and the tactics they
plan to employ.
Implementation Tactics: What actions can I take to roll out a change?

Implementation tactics are the tools a leader has at his or her disposal to manage the rollout of
change. Tactics help define what the leader must do. And knowing when to use a specific tactic over
another is just as important as knowing how.
Implementation Tactics & Sequence John Kotter outlines eight steps that leaders can take to
implement change.17 He argues that successful change initiatives follow a sequence of action:
1. Establish a sense of urgency: identify and communicate performance or opportunity gaps.
2. Form a powerful guiding coalition: assemble a group powerful enough to lead the change effort.
Encourage the group to work as a team.
3. Create a vision: create a vision powerful enough to help direct the change effort.
4. Communicate a vision: use every vehicle possible to communicate the new vision.
5. Empower others to act on the vision: get rid of obstacles by changing systems or structures that
seriously undermine the vision.
6. Plan for and create short-term wins: plan for visible performance improvements and recognize
employees involved in the improvements.
7. Consolidate improvements and produce still more change: use increased credibility to change the
systems, structures, and policies that don’t fit. Hire, promote, or develop employees who can
implement the vision. Reinvigorate the process with new projects, themes, and change agents.
8. Institutionalize the new approaches: articulate the connections between the new behaviors and
corporate success. Develop the means to ensure leadership development and succession.
8
Bold Strokes and Long Marches18 With the preceding actions in mind, leaders must also
determine how they will implement them. Rosabeth Moss Kanter, Barry Stein, and Todd Jick outline
two ways leaders can implement change:
 Bold strokes aim to send a signal to the rest organization from the top. They command attention.
Leaders often frame bold strokes as big strategic decisions or major economic initiatives. Examples
include buying another company, firing a subset of employees, or allocating critical resources to
the development of a new product or technology.
 Long marches are sustained programs or packages of change that alter the organization’s hardware
and software. They constitute a sequence of interventions layered on top of one another. Long
marches create durable conditions to support changes in behavior and help employees see how a
change will eventually become the new taken-for-granted way of doing things. Culture change, for
example, cannot be mandated, and therefore leaders often communicate how a package of
programs will introduce and reinforce new routines and behaviors over time.
As separate tools for implementing change, bold strokes and long marches are useful ways to
consider the actions a leader might take. For instance, a bold stroke can help set a new strategy or
vision, and might be followed by a series of long march decisions that align the strategy with a new set
of intended behaviors across the entire organization.
Creating Buy-In and Getting Others On Board: Who will be affected?

Why do some individuals make a decision to embrace and support a change effort, whereas others
choose to resist or reject it? Creating buy-in is often the most difficult aspect of implementing any
change initiative, and the most important.
Assessment of readiness Leaders have to think carefully about who to engage, when and how
to engage them, and how much effort to expend on each group. Leaders must also be highly attuned to
the ways in which they can foster buy-in. To do so, leaders need to have an eye on four measures of
readiness and commitment:19
• Discrepancy: do individuals in the organization believe that the change is needed and that there is
a significant gap between the current state of the organization and what it should be?
• Appropriateness: do organization members believe that a specific change designed to address a

discrepancy is the correct one for the situation?
• Efficacy: do members of the organization believe that they personally, and the organization as a
whole, can successfully implement a change?
• Principal support: do individuals in the organization believe that their leaders are committed to the
success of a change and that it is not going to be another passing fad or program of the month?
Mobilizing buy-in Leaders can use a series of steps to foster readiness and commitment among
organization members through the typical stages of buy-in. In general, giving individuals
opportunities to shape the change effort increases the odds of acceptance. The more opportunities
individuals have to participate in a change effort, the more likely they will buy in.20 In order to build
commitment for change, the leaders must help individuals progress through several stages of
acceptance and adoption (see Figure E):
9
Figure E Creating Buy-In and Acceptance for Change
Champion
Acceptance
Buy-In
Hands-On
Trial
Mental
Tryout
Self Concern
Awareness
Time
Source: Developed by casewriter from multiple sources: The Price Waterhouse Change Integration Team. Better change : best
practices for transforming your organization. Burr Ridge, Ill.: Irwin, 1995; Ray, James & Stanley Sword, “Reengineering and
Human Performance,” Performance and Instruction, 1993: 29-35; Dormant, Diane & Kathy Byers. 1981. Facilitating Educational
Change. Training Workshop. “Initiating Change Through Inservice Education: A Topical Instructional Modules Series.”
National Inservice Network, Bloomington, Ind. Office of Special Education and Rehabilitative Services (ED), Washington, DC.
Div. of Personnel Preparation.
1. Awareness: the first thing leaders must do is determine who should be aware of the change. For
some groups, knowing that a change is underway may be enough. Stakeholder analyses provide
useful information about what groups require more or less attention (see Appendix A).
2. Self-Concern: the second stage asks individuals to associate some self-concern with the change.
Leaders should help others understand how the change matters to them personally.
3. Mental Tryout: the third stage gives individuals an opportunity to imagine what the change might
be like before it happens. This is a low risk way of helping people experience what lies ahead,
without having to change their existing behaviors.
4. Hands-On Trial: the fourth stage asks individuals to experience the change in a low risk
environment. Leaders can create pilots for people to experience the change for a short period of
time, and without significant time or resource commitments.
5. Acceptance: the fifth stage marks an individual's acceptance of the change. The individual has
weighed the costs and benefits and decided to adopt the new practice, technology, or behavior. For
some, however, this stage marks an individual’s decision to reject the change.
6. Champion: finally, certain individuals who accept the change may ultimately become champions of
the idea for others. At this stage, individuals have not only bought in, but are eager to communicate
the benefits to others.
Since leaders have limited resources and time to fully engage all stakeholders in a change effort at
the same level of intensity, having a specific plan to engage different individuals and groups is
important. Buy-in may not follow a linear process for all people. While all stakeholders should be aware
of the change, only some will progress through one or more of the subsequent stages. Others will jump
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between stages 2, 3, and 4 several times before they finally reach a point of acceptance. And not all
people who accept will become champions.
Use of self During each stage of buy-in, the leader’s use of self is important. In fact, the most
important skill a leader can develop is his or her ability to effectively manage change. 21 Rosabeth Moss
Kanter proposes that leaders successfully do so by mastering three skills that form the “MEs” of
leadership: messages espoused, models exemplified, and mechanisms established. 22
 Messages Espoused: Especially during the early stages of buy-in (e.g., awareness and self-
concern), leaders must have the ability to articulate standards, values, and visions. Messages can
incite individuals to action when appropriate, or they can calm and soothe people to prevent them
from panicking. Pep talks are empty without evidence, so positive expectations should be based
on specific facts that justify optimism. In strong cultures, leaders’ messages are internalized and
echo throughout the system. Messages provide practical information, inspiration, and a feeling of
inclusion. They provide a common vocabulary and a starting point for discussion. Leaders should
rely of various forms of persuasion, including ethos (an appeal to character or values), logos (an
appeal to logic), and pathos (an appeal to emotion). 23
 Models Exemplified: As individuals move beyond the ‘awareness’ stage to ‘mental try-out’ and
‘hands-on trial,’ it is important that they see their leaders as role models, leading through the power
of personal example. Leaders must exemplify the kinds of accountable, collaborative behavior they
seek in others. During change, modeling future behaviors is even more important because the leader
serves as a de facto “template” of the future desired state. Effective leaders learn to reinforce their
message through actions. When leaders visibly tackle new challenges outside their comfort zone, it
can serve as model for others to jump on board and experiment as well. 24
 Mechanisms Established: Finally, as individuals approach the stage where they must decide
whether or not to ‘accept’ the change, formal processes need to be in place to support them.
Therefore, leaders must have the ability to analyze and establish new processes, routines, and
structures. They must embed desired behaviors in the culture not just through person-to-person
and generation-to-generation transfers of norms, but also through the formal mechanisms that
ensure that behaviors become part of team and organizational routines. Successful leaders build
their own capacity to know which formal mechanisms in the organization are most likely to
influence behavioral change. For instance, a savvy change leader is attuned to the formal and
informal channels that facilitate information flows through the organization, how incentives are
distributed and are most valued, and if certain policies are more likely to be adhered to than others.
To enlist buy-in, leaders need to develop all three skills. Most excel in one or two, but rarely master
all three without coaching and support. Effective leaders ask others to help them truthfully evaluate
their ability to deliver key messages, role model important behaviors, and stay in tune with the
organization’s formal mechanisms. And as others in the organization move through the stages of buy-
in, leaders need to avoid a natural tendency to isolate themselves from the rest of the organization.25
Successful change leaders surround themselves with colleagues who can keep them abreast of how the
change is rolling out, but also warn them when things get off track. 26
For illustrative purposes, Table A provides examples of how a leader’s messages, modeling, and
mechanisms are important for helping others buy-in and adopt a change.
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Table A Leadership Skills Needed During the Stages of Buy-in
Stage of Buy-In Messages Espoused Models Exemplified Mechanisms Established

1. Awareness - Issue reports, hold town- - Model behaviors of the - Devote resources to the
hall meetings, post desired state early in the change effort. Develop a
information to the process. team of senior team
company website, write supporters.
blogs, post daily
reflections on the
company intranet, or use
social media.
2. Self-Concern - Engage front-line - Allow others to see the

managers and employees leader attempting to
from the organization to adopt the change. Be
explain how a change will willing to show
have a specific impact on vulnerability.
those in their respective
business units.
3. Mental Try Out - Share success stories - Bring in outsiders to

from both in and outside help others explore what
the organization. the change might be like.
4. Hands-On Trial - Provide opportunities for - Create pilots so people

others to see the leader experience the change for
attempting to adopt the a short period of time,
change. and without significant
investment.
5. Acceptance - Find ways to have - Create policies and

honest conversations with procedures to give people
individuals about why who do not accept a way
they have or have not out (e.g., provide the
adopted the change. option to leave gracefully;
transfer to another unit).
6. Champion - Publically acknowledge - Continue to champion

and congratulate the change.
individuals who have - Create opportunities for
successfully adopted the others to share their
change. Share their experiences, provide
stories with others. feedback, and engage
those less familiar with
the change.
Source: Casewriter.
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Overcoming Obstacles
Given the challenges associated with creating buy in, missteps and obstacles can impede the
progress of change. It is the leader’s responsibility to manage expectations associated with each:
 Declaring victory or admitting defeat too soon: It is sometimes possible to interpret a “quick
win” as “mission accomplished.” Leaders need to be careful not to declare victory or celebrate
success too soon. Alternatively, the inverse is also possible. If the organization faces a
substantial setback, leaders must not fall into the trap of assuming the effort is doomed to fail.
 Reducing change fatigue: While change offers new possibilities, fatigue can also set in over
time. The relationship between the “time and effort” invested in managing change and the
“extent of the change” does not follow a linear slope. See Figure F.
Figure F Evaluating & Assessing Change: Change Adoption Lags Effort
100%
Extent of Change
Typically
Effort/Results Gap experienced
0%
Time & Effort
Source: Casewriter.
After the initial excitement that often follows the kick-off of a change initiative wears off, it is
common for organizational members to experience some “change fatigue.”27 This period is usually
marked by performance decline and increased levels of resistance.28 Individuals struggle to reprioritize
their prior relationships, resources, behaviors, and ways of thinking. 29 It is the role of the leader to help
close the “Effort/Results Gap.” Leaders are called on to enlist middle management support, 30 check
their vision, examine progress and promises, create small wins, seek new relationships, and search for
innovative ideas across different groups.31
Evaluating Change
How can the impact of change be accessed and measured?
Measuring the impact of change can be an elusive task, especially since is it often difficult to
determine a specific start and end to a change, or how to define its long-term impact. While one change
effort may appear complete, rarely does change itself ever end. In fact, as explained at the beginning of
this note, global executives report that they devote an average of six months per year to change and
transformation initiatives.
13
It is impossible to measure all aspects of any change initiative, but knowing which metrics to follow
is extremely important. Leaders who carefully select a handful of critical indicators to track progress
will increase the likelihood that change will achieve their intended goals. These metrics should be tied
to the specific performance or opportunity gap the change intended to address. Leaders should focus
on two aspects of measurement:
1. The proximity to the desired outcomes.
2. Progress toward achieving buy-in among individuals in the organization.
Evaluation should occur throughout the process, not just at the beginning and end. Evaluating each
measure can be done in a variety of ways, including employee surveys, focus groups, or interviews.
While some measures may only provide partial clarity about the success of the change effort, the act of
measurement can also signal to employees that their voice is important. Finally, successful change
leaders create processes that promote significant feedback and foster opportunities for continuous
learning.
Embracing the Inevitability of Change

“Nothing endures but change.” – Heraclitus
When scholars first studied the concept of change, the organizations they described were, for the
most part, Fortune 500 firms or military institutions.32 They were closed systems led by command-
and-control leaders. Today, organizations operate more like open systems, where organizational
structures, dependencies, resources, and technologies are interwoven across multiple stakeholders in
and outside the firm.33 Crowdsourcing, open innovation, and social media campaigns prove that
change is no longer defined by what happens within the four walls of an organization. As a result,
leaders are obligated to consider new and creative ways of involving stakeholders, enlisting backers,
and building support.
Today’s faster-moving global competitive environment adds additional complexity to the process
of managing change. In many industries, for example, technology cycles often last weeks rather than
years. Kotter argues that today’s organizations need both stability and also a fast, nimble, and creative
approach to change.34 To achieve such dual purposes, companies must build a twofold operating
system: one system, based on the best traditional structures, for ongoing operations and incremental
improvements, and a second fluid and agile system designed to identify and respond to big
opportunities and big threats as (or before) they emerge. 35
Learning from Failure (and from Other’s Successes)

The world is full of stories about change efforts gone wrong—and also about huge, transformative
successes. You will undoubtedly encounter both types of change. However big or small, all change
efforts hold lessons for leaders to consider: What was the impetus for change? What design and
implementation decisions did the leaders make? Did they take into account the stages of buy-in and
use the appropriate leadership skills at each stage? Did they evaluate and learn from the results?
Ultimately, leading real and substantive change will not only come from familiarity with the
frameworks and diagnostic tools presented here. As a leader of change, you must also actively seek
opportunities to learn from other’s successes and failures—and simultaneously cultivate an ability to
improvise.
14
415-040 -15-
Exhibit 1 Steps for Managing a Change Initiative
1 Diagnose 2 Design 3 Deliver
How can change best

be implemented?
Roll-Out
Localized System-wide
Why is change needed? What SORT of change is called for?

Timing
Performance Continuous Episodic
Who will be affected?
Scope
Gap?
Incremental Radical
Creating
Buy-In
What actions can I take?
Origin
Opportunity • Implementation Tactics
Gap? Bottom-up • Bold Strokes & Long Marches
Top-down
What skills will I need?

• Espousing messages
• Exemplifying models
• Establishing mechanisms
4 Evaluate
How do I measure the impact of change?
Source: Casewriter.
Appendix A: Stakeholder Analysis

Careful diagnosis of an organization’s stakeholders can shed light on how a leader’s decisions about
a change will impact internal and external groups. 36 Figure G provides a tool to diagnose stakeholders
with varying degrees of power and interests, and how they should be managed.
Figure G Stakeholder Map
Keep Manage
High
Satisfied Closely
Power
Monitor with Keep

Low
Minimum Effort Informed
Low Interest High
Sources: Compiled from Johnson, G, Whittington, R., and Scholes, K., Exploring Strategy, Ninth Edition. London: Financial
Times/Prentice Hall, 2001; Mendelow, A. (1991) Proceedings of the Second International Conference on Information
Systems, Cambridge, MA.
Change leaders should raise several questions when conducting a stakeholder analysis, 37 including:
Who are our stakeholders? Can we articulate the core mission and purpose of each stakeholder? How
will each be affected by the change program? In what ways, if any, does the change impact the core
interests of the stakeholder? How can each can help or hurt us?
With possible answers to these questions in mind, stakeholders can then be plotted on the map:
 Manage closely (high power, high interest): these stakeholders are critical to the success of the change
program. It will be important to involve them early, and seek their feedback throughout the
process.
 Keep Satisfied (high power, less interest): these stakeholders may not have an immediate interest in
the change, but it is important to recognize their power so they do not derail the project if their
interests change.
 Keep Informed (low power, high interest): these stakeholders should be adequately informed. Given
their high interest, they can be valuable resources to help build support or provide feedback.
16
 Monitor (low power, less interest): These stakeholders do not need immediate attention, but
nonetheless, it is still important to monitor their reactions throughout a change. Be careful not to
overinvest time or resources in this group.
It is helpful to remember that stakeholders can move between quadrants. Some stakeholders may
develop new or different interests, while others may become more or less powerful over time.
Measuring the impact of change requires constant assessment (and re-assessment) of stakeholder
expectations.
17
Appendix B: Resources for Additional Detail

Beer, M. (2009). High commitment high performance: How to build a resilient organization for
sustained advantage. John Wiley & Sons.
Beer, Michael, and Nitin Norhia. "Cracking the Code of Change." Harvard Business Review (2000):
78.3, 133-141.
Bennis, W. G. (2000). Managing the dream: Reflections on leadership and change. Da Capo Press.
Burke, W. W. (2013). Organization change: Theory and practice. Sage Publications.
Hoffman, Bryce G. American Icon: Alan Mulally and the Fight to Save Ford Motor Company. Crown
Pub, 2012.
Kanter, Rosabeth Moss. 1984. The change masters: Innovation and entrepreneurship in the American
corporation: Free Press.
Kanter, Rosabeth Moss, Barry A. Stein, and Todd D. Jick. "The challenge of organizational change: How
companies experience it and leaders guide it." New York (1992).
Kanter, R. M. (2006). Confidence: How winning streaks and losing streaks begin and end. Random House.
Kotter, J. P. (1995). Leading change: Why transformation efforts fail. Harvard Business Review, 73(2), 59-
67.
Kotter, J. P. (2012). Leading Change. Harvard Business Press.
Kouzes, J. M., & Posner, B. Z. (2006). The leadership challenge (Vol. 3). John Wiley & Sons.
Tushman, M. L., & O'Reilly, C. A. (2013). Winning through innovation: A practical guide to leading
organizational change and renewal. Harvard Business Press.
Wheatley, M. (2011). Leadership and the new science: Discovering order in a chaotic world.
18
Endnotes
1 Kanter, Rosabeth M., Barry Stein, and Todd D. Jick. The Challenge of Organizational Change: How Companies Experience It and
Leaders Guide It. New York: Free Press, 1992; Kotter John P. Leading Change. Boston: Harvard Business School Press, 1996.
2 Kotter, John P. Leading change. Harvard Business Press, 1996; Higgs, Malcolm and Deborah Rowland, “All Changes Great and
Small: Approaches to Change and its Leadership, Journal of Change Management 5 no.2 (June 2005): 121-151.
3 Keller, Scott & Carolyn Dewar, "The inconvenient truth about change management." McKinsey& Company, 2008: 1-18.
4 For more information about performance and opportunity gaps, see Tushman, Michael J. and Charles A. O’Reilly III. Winning
Through Innovation: A Practical Guide to Leading Organizational Change and Renewal. Boston: Harvard Business School Press, 2002.
5 The three dimensions of effectiveness are based on Hackman, J. R. “The Design of Work Teams.” In Lorsch, J. (Ed.), Handbook
of Organizational Behavior. Englewood Cliffs, NJ: Prentice Hall, 1987; also see Bernstein, E. “Leadership and Teaming Note,”
HBS No. 9-414-033. Boston: Harvard Business School Press, 2014.
6 Hill, C. W. L., & Frank T. Rothaermel. “The Performance of Incumbent Firms in the Face of Radical Technological
Innovation,” The Academy of Management Review, 28(2) (2003): 257-274.; Tushman, Michael, & Philip Anderson, “Technological
discontinuities and organizational environments,” Administrative Science Quarterly 31 no. 3 (1986): 439-465.
7 Christensen, Clayton M. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston, Mass: Harvard
Business Press, 1997; Foster, R. N. Innovation: The Attacker's Advantage. New York: Summit Books, 1986.
8 Tushman, M., & Nadler, D., “Organizing for innovation,” California Management Review, 28 no. 3 (1986): 74-92.
9 Gersick, C. J. G., “Revolutionary Change Theories: A Multilevel Exploration of the Punctuated Equilibrium Paradigm,”
Academy of Management Review 16 no.1 (Jan 1991): 10-36.
10 Kanter, Rosabeth Moss. When Giants Learn to Dance. New York: Simon and Schuster, 1990.
11 Ryan Raffaelli describes this type of change in the context of reemergence; Raffaelli, R. 2013. "Mechanisms of technology re-
emergence and identity change in a mature field: Swiss watchmaking." Harvard Business School Working Paper, No. 14-048.;
Also see Jennings, Jason. The Reinventors: How Extraordinary Companies Pursue Radical Continuous Change. New York: Portfolio
Hardcovers, 2012.
12 Lewin, Kurt, ”Group decision and social change,” Readings in Social Psychology 3 (1947): 197-211.
13 Romanelli, Elaine & Michael Tushman, “Organizational Transformation as Punctuated Equilibrium: An Empirical Test,”
Academy of Management Journal, 37 no.5 (Oct 1994): 1141-1166.
14 Monden, Yasuhiro. Toyota Production System: An Integrated Approach to Just-in-Time. Boca Raton, FL: CRC Press, 2011.
15 Romanelli, Elaine, & Michael Tushman, “Organizational Transformation as Punctuated Equilibrium: An Empirical Test,”
Academy of Management Journal, 37 no. 5 (1994): 1141-1666.; Gersick, C. J. G., “Revolutionary change theories: A multilevel
exploration of the punctuated equilibrium paradigm,” Academy of Management Review 16 no.1 (Jan 1991): 10-36.
16 Huy, Quy Nguyen, "Emotional balancing of organizational continuity and radical change: The contribution of middle
managers," Administrative Science Quarterly 47.1 (2002): 31-69.
17 Kotter, John, “Why Transformation Efforts Fail,” Harvard Business Review (Jan 2007): 61; Kotter, John P. Leading Change
Boston, Mass: Harvard Business Press, 2012.
18 Kanter, Rosabeth M., Barry Stein, and Todd D. Jick. The Challenge of Organizational Change: How Companies Experience It and
Leaders Guide It. New York: Free Press, 1992 p 492-495.
19 For a thorough review of the research related to this question, see Armenakis, Achilles & Stanley G. Harris, “Reflections: our
Journey in Organizational Change Research and Practice,” Journal of Change Management 9 no.2 (2009): 127-142.
20 Armenakis, Achilles A., and Robert W. Zmud. “Interpreting the Measurement of Change in Organizational Research,”
Personnel Psychology, 32 no. 4 (1979): 709-723; Kanter, Rosebeth M. The Change Masters. New York: Simon & Schuster, 1983;
Kotter John P. Leading Change. Boston: Harvard Business School Press, 1996.
21 Higgs, M., & Rowland, D., “Building change leadership capability: ‘The quest for change competence’” Journal of Change
Management, 1 no.2 (2000): 116-130; Carnall, Colin A. Managing change in organizations. Boston, Mass: Pearson Education, 2007.
19
22 Kanter, Rosabeth. Confidence: How Winning Streaks and Losing Streaks Begin and End. New York: Random House, 2006.
23 Aristotle, and George Alexander Kennedy. On Rhetoric: A Theory of Civic Discourse. New York: Oxford UP, 1991.
24 Nadler, David A., and Michael L. Tushman. "Beyond the charismatic leader: Leadership and organizational change." The
training and development sourcebook (1994): 278-292.; Gardner, William L., et al. ‘”Can you see the real me?” A self-based model
of authentic leader and follower development.’" The Leadership Quarterly 16 no. 3 (2005): 343-372.
25 Kaplan, Robert S, What You’re Really Meant to Do: A Road Map for Reaching Your Unique Potential. Harvard Business
Review, 2013.
26 Bennis, Warren. Why Leaders Can’t Lead. San Francisco: Jossey-Bass, 1989.
27 Kanter’s Law states that “everything can looks like a failure in the middle.” She argues that successful leaders create ways to
“master the messy and miserable middles” by persisting and persevering. See Kanter, Rosabeth. Confidence: How Winning
Streaks and Losing Streaks Begin and End. New York; Random House, 2006.
28 Collins, David. Organizational change: Sociological perspectives. Psychology Press, 1998.
29 Huy, Quy Nguyen. "Emotional balancing of organizational continuity and radical change: The contribution of middle
managers." Administrative Science Quarterly 47.1 (2002): 31-69.
30 Ibid (Huy, ASQ, 2002) finds that middle managers are especially important to helping employees adapt when they are
personally involved in championing the change project, and when given time and resources to attend to employee emotions.
31 Kanter, Rosabeth, “Change Is Hardest in the Middle”, Harvard Business Review Blog, August 12, 2009,
http://blogs.hbr.org/2009/08/change-is-hardest-in-the-middl/, accessed October 2014.
32 Taylor, F. W. The Principles of Scientific Management. Harper, 1914.
33 Scott, W. Richard, and Gerald F. Davis. Organizations and organizing. New Jersey; Pearson Prentice Hall, 2007.
34 Kotter, John P. Accelerate: building strategic agility for a faster-moving world. Harvard Business Review Press, 2014.
35 Ibid. Also see O'Reilly, C. A., and M. L. Tushman 2004 "The ambidextrous organization." Harvard Business Review, 82: 74-
81.
36 Donaldson, T., & Preston, L. E. “The stakeholder theory of the corporation: Concepts, evidence, and implications.” Academy
of Management Review, 20 no. 1 (1995), 65-91.
37 Freeman, R. E. Strategic management: A stakeholder approach. Cambridge University Press, 2010: 287.
20

Technical Note - Leading and Managing Change

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This document is an authorized copy for the course EMBA-MAD-2022 - Section Weekly - Strategic Leadership: Getting Things Done

- WK taught by prof. Elvira, Marta at IESE B.S.

Leading and Managing Change

1) Diagnosis: Why is change needed?

2) Design: What sort of change is called for?

Diagnosing the Need for Change

415-040 Leading and Managing Change

Figure A Design Decisions: Scope & Origin

Leading and Managing Change 415-040

1. Where do we expect the best ideas about change to generate from?

2. How clear and predetermined is the path forward?

3. How consistent do we need the resulting behaviors and practices to be?

415-040 Leading and Managing Change

Figure B Types of Change (based on Scope and Origin design decisions)

Incremental Scope Radical

 Evolutionary Change: when change is bottom-up and incremental, it is typically experienced as

 Revolutionary Change: when change is bottom-up and radical, it is typically experienced as

Leading and Managing Change 415-040

 Transformational Change: when change is top-down and radical it is experienced as

How can change best be implemented?

Figure C Implementation Decisions: Rollout & Timing

415-040 Leading and Managing Change

Questions to consider when deciding about timing are:

2. How long will it take to roll out the change?

Leading and Managing Change 415-040

Implementation Approaches: Tools, Tactics, and Tradeoffs

Figure D Implementation Approaches (based on rollout and timing decisions)

415-040 Leading and Managing Change

Implementation Tactics: What actions can I take to roll out a change?

1. Establish a sense of urgency: identify and communicate performance or opportunity gaps.

Leading and Managing Change 415-040

Creating Buy-In and Getting Others On Board: Who will be affected?

• Appropriateness: do organization members believe that a specific change designed to address a

415-040 Leading and Managing Change

Figure E Creating Buy-In and Acceptance for Change

Leading and Managing Change 415-040

415-040 Leading and Managing Change

Table A Leadership Skills Needed During the Stages of Buy-in

Stage of Buy-In Messages Espoused Models Exemplified Mechanisms Established

2. Self-Concern - Engage front-line - Allow others to see the

3. Mental Try Out - Share success stories - Bring in outsiders to

4. Hands-On Trial - Provide opportunities for - Create pilots so people

5. Acceptance - Find ways to have - Create policies and

6. Champion - Publically acknowledge - Continue to champion

Leading and Managing Change 415-040

Figure F Evaluating & Assessing Change: Change Adoption Lags Effort

415-040 Leading and Managing Change

1. The proximity to the desired outcomes.

2. Progress toward achieving buy-in among individuals in the organization.

Embracing the Inevitability of Change

Learning from Failure (and from Other’s Successes)

Exhibit 1 Steps for Managing a Change Initiative

1 Diagnose 2 Design 3 Deliver

How can change best

Why is change needed? What SORT of change is called for?

What skills will I need?

How do I measure the impact of change?

415-040 Leading and Managing Change

Appendix A: Stakeholder Analysis

Figure G Stakeholder Map

Monitor with Keep

Minimum Effort Informed

Low Interest High

Leading and Managing Change 415-040