how leaders mobilize for radical change · - established business models and ecosystems are...
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How leaders mobilize for
radical change
DNB NXT
September 27, 2017
Inger G. Stensaker, NHH
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Research on radical change
2
Radical change is difficult, costly and risky
Radical change alters the power balance
Radical change will trigger resistance
Radical change involves uncertainty
Yet, no change = death
75-90% of planned change intiatives
FAIL
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Model of how radical change happens #1
Punctuated equilibrium model
3
Long periods of incremental change
Punctuated by radical transformation
- Driven by external change esp. technological dvpmt
- Competence destroying
- Brings disorder, uncertainty and identity crisis
- Coexistence and competition between various
technological & organizational solutions
Outcome is unpredictable
- Not always the technologically superior that wins
- Social & political process
- Many established firms die in the process
Implications for leadership:
- Change needs to be driven from top
- Requires external resources and
perspectives
- Change involves tough decisions
- Need to keep change agents separate
from existing organization
Tushman & Anderson, 1986; Anderson & Tushman, 1990 Romanelli & Tushman, 1994
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Model of radical change happens #2
Disruptive innovation & the innovator’s dilemma
Competition from low-end - Technological development key driver - Initially inferior products/services replace
existing - Established business models and ecosystems
are replaced - Disruptive because it’s simpler - Starts in the low end of the market but then
expands - Game changers
Christensen, 1997
Implications for leadership
- Place your bets on the newcomers - Established firms – huge disadvantage!
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Million dollar question remains the same
How can an established firm innovate and develop new business that
potentially cannibalizes the existing business, while maintaining sufficient
focus on existing business?
5
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But, this time it’s different….
Greater uncertainty
Higher pace of change
Collective sense of urgency
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Leading radical change in established firms
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Designing an organization that
facilitates and supports change
“The design issue”
Mobilizing people in and
around the organization for
change
“The people issue”
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Mobilizing for radical change – 3 organizational solutions
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The
ambidextrous
solutions
The
decentralized
solution
The (speedy)
sequential
solution
Birkingshaw, Zimmermann & Raisch, 2016
CEO
Existing business
New opportunities
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The ambidextrous solution
CEO
Existing business
New opportunities
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Key features: • Maximum separation to avoid cross-
contamination
• New unit more entrepreneurial mindset
• Mobilizes people through specialization;
seeing is believing
Implications • CEO/leaders must have dual focus
• Alliances & collaborations target new unit
– provide solutions/opportunities
• Similar entrepreneurial mindset
Examples: Schibsted, BBC, Nestlé
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The decentralized solution
10
Key features: • Minimum separation
• High-competence employees who handle
both exploration & exploitation
• Mobilizes by empowering individuals
Implications • All employees must have dual focus
• Potential for alliances & collaborations
spread out in the organization
• New alliances must understand how
decentralized org’s function
Ex: GlaxoSmithKline, Schibsted?
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The (speedy) sequential solution
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Key features: • Sequential emphasis
• Consolidation – innovation - consolidation
• Mobilizes people by allowing full focus
Implications • Employees need ability to shift over time
• Timing is everything!
• Potential alliance partners must target
innovation period
Ex: BMW
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Which model is superior?
Depends on firm history, vision & culture
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The
ambidextrous
solutions
Unifying vision
Complementary unit goals
Dec.mak authority w/i units
Multiple career tracks
The
decentralized
solution
Allow contradictory goals
Entrepreneurial &
commercial orientation
Accountability
The
sequential
solution
Long-term orientation
Common identity
Tight alignment
Job rotation
Birkingshaw, Zimmermann & Raisch, 2016
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Thanks for your
attention!