A. THEORY CONCEPT
A.1 What is Change??
Change is any improvement, replacement, and development from the old one to the new one, it can be make the old one is lost and replace with the really new one or can be that old one become the new one but still refers to the old one in order to increase skill and performance within the organisation and deal with the current situation.
Basicly, every aspect in the world are changing and we must be able to deal with it, if not we will lost in the competition.
There some views toward the change, such as:
· Change need a process, can’t fully implemented at the first time of changing process.
· Changing process require money (cost) or investment
· In doing a change, we need concern about the change of behavior too, its so important.
· Change must be conducted by the need and also must be comprehensif.
· So, in doing change we must consider every aspect in order to make our change become successfull.
A.2 Type of Change
There are three major types of change which often applied by an organisation, these are:
1. Developmental Change
This type of change something like an internal oriented improvement which tends to improve ability, changing or modify the latest method, do the better efforts than before. For example: changing procedure that done by bank in term of giving the best servicing to their customers in order to gain customer’s satisfaction.
2. Transitional Change (AàB)
Replacement the old method system, and procedure to the new one. So, the organisation really move on the old one to the new one. For example: reorganizes, merger, new system, process.
3. Transformational Change
Also called as discontinues change, that is the basic change and we doesn’t know what will happen later and also the end of change. For example: change of corporate culture or leadership.
A.3 Driver of Change
There are two majors driver of change, that are:
1. External Change
That is the power which come from outside of the organisation, such as: demographic characteristics, technological developments, change on the market, social pressure, politics, etc.
2. Internal Strength
That is the power that come from within the company, such as: Human Resources, the job satisfaction, productivity, motivation, etc.
A.4 Resistance to Change
· According to Greenberg & Baron, resistance to change in terms of two views, that are:
1. Individual barriers
è Economic insecurity, fear of the unkown, threats to social relationship, habit, failure to recognize the need for change.
2. Organizational barriers
è Structural inertia, work group inertia, threats to existing balance of power, proviously unsuccessful efforts, etc.
· Generally, there are several types of resistance to change:
1. Cognitive
è Maybe will appear the questions like that: I don’t understand!! what should change?? why it should change?? or how to change??
2. Emotional
è Maybe will appear the questions like that: Can I do this?? Will I like it?? Will I look foolish?? Do I feel threatened?? Why didn’tthey ask me??
3. Behavioral
è Maybe will appear the statement like that: I will stop this change!!
How The Manager Resist The Change???
· Kotter and Schlesinger set out the following six (6) change approaches to deal with this resistance to change:
1. Education and Communication
Where there is a lack of information or inaccurate information and analysis. One of the best ways to overcome resistance to change is to educate people about the change effort beforehand. Up-front communication and education helps employees see the logic in the change effort. this reduces unfounded and incorrect rumors concerning the effects of change in the organization.
2. Participation and Involvement
Where the initiators do not have all the information they need to design the change and where others have considerable power to resist. When employees are involved in the change effort they are more likely to buy into change rather than resist it. This approach is likely to lower resistance and those who merely acquiesce to change.
3. Facilitation and Support
Where people are resisting change due to adjustment problems. Managers can head-off potential resistance by being supportive of employees during difficult times. Managerial support helps employees deal with fear and anxiety during a transition period. The basis of resistance to change is likely to be the perception that there some form of detrimental effect occasioned by the change in the organization. This approach is concerned with provision of special training, counseling, time off work.
4. Negotiation and Agreement
Where someone or some group may lose out in a change and where that individual or group has considerable power to resist. Managers can combat resistance by offering incentives to employees not to resist change. This can be done by allowing change resistors to veto elements of change that are threatening, or change resistors can be offered incentives to leave the company through early buyouts or retirements in order to avoid having to experience the change effort. This approach will be appropriate where those resisting change are in a position of power.
5. Manipulation and Co-option
Where other tactics will not work or are too expensive. Kotter and Schlesinger suggest that an effective manipulation technique is to co-opt with resisters. Co-option involves the patronizing gesture in bringing a person into a change management planning group for the sake of appearances rather than their substantive contribution. This often involves selecting leaders of the resisters to participate in the change effort. These leaders can be given a symbolic role in decision making without threatening the change effort. Still, if these leaders feel they are being tricked they are likely to push resistance even further than if they were never included in the change effort leadership.
6. Explicit and Implicit Coercion
Where speed is essential and to be used only as last resort. Managers can explicitly or implicitly force employees into accepting change by making clear that resisting to change can lead to losing jobs, firing, transferring or not promoting employees.
A.5 Diagnosing Change
Means that analyse the data to find the main problem that have been occured and find the appropriatte change which can be done to solve it. In diagnosing change, investigation is a part of its process.
Diagnosing change can be reduce the resistance of change, because we do a change based on need and we will know whether we need change or not from diagnosing change.
When we talk about diagnosing change, its mean we also talk about the problem and gap because third of them havestrong relationship. Problem can said as the outcome of gap appearing (the differences implemented between actual with the ideal one) and through diagnosing change we can find thae gap and then the main problem. In doing diagnosing of change, we need data information first in order to know current situation within organisation then data collection and data analysis.
There are some approaches to data collection and analysis, such as:
· Questionaires
· Direct observation
· Selected individu
· Workshop
· Document and company record, etc.
A.6 Process in Do a Change
Thare are eight steps of change process:
1. Establish a sense of urgency
· Examine external realities
· Identify and discuss crises, potential crises or major opportunities
2. Form a powerful guiding coalition
· Assemble a group with enough power to lead the change effort
· Encourage the group to work as a team
3. Create a vision
· Create a vision to help direct the change effort
· Develop strategies for achieving that vision
4. Communicate the vision
· Use everything possible to communicate the new vision and strategies
· Teach new behaviors by the example of the guiding coalition
5. Empower others to act on the vision
· Plan for visible performance
· Create those improvements
· Recognize and reward employees involved in the improvements
6. Plan for and create short term wins
· Plan for visible performance
· Create those improvement
· Recognize and reward employees involved in the improvement
7. Consolidate improvement and produce still more change
· Use increased credibility to change systems, structures, and policies that don’t fit the vision
· Hire, promote, and develop employees who can implement the vision
· Reinvigorate the process with new project, themes, and change agents
8. Institutionalize new approaches
· Articulate the connections between the new behaviors and organizational success
· Develop the means to ensure leadership development and succession.
A.7 Why some Change Efforts are Failure???
There are some common reason that become the driving of changes are fail, such as:
1. Writing a memo instead of lighting a fire
Just plan, say, and write such kind of program or strategies but there is no action of it, we never do anything.
2. Talking too much and saying little
There are too much talking, but there is no implication of it.
3. Declaring victory before the war is over
Don’t declare our change are success before its fully implemented and the result are come up.
4. Looking for villians in all the wrong place
This look like underestimated to others, not trusting people to do a change because we only looking for their weaknesses and we don’t believe at all they will be able to do a change.
B. A glance background of Oticon company
Oticon is a Danish company which founded in 1904 as the first hearing instrument company in the world. In the 1970s, it was the world’s number one manufacturer of ‘behind the ear’ hearing aids.
B.1 The problem that face bay Oticon company
Company facing some problem such as:
a. Market for ‘in the ear’ products grew in the 1970s and 1980s. The bad impact for Oticon are it going to be plummeted, lost money and also market share.
b. In 1987, Oticon lost half of it’s equity.
But the basic problem was that Oticon was a very traditional, departmentalized and slow-moving company.
B.2 The weakness of Oticon
a. It had the wrong product. Oticon nanufactured the standard “behind the ear’ hearing aids but costumer increasingly preffered the ‘in the ear’ variety.
b. Oticon was strong in analogue technology, whilst the market and its costumers were moving toward digital technology.
c. In addition, though the company was strong in the state-subsidised markets of Scandinavia and Northern Europe, it was weak in the more buoyant market of America and the Far East.
Change began since appointment of Lars Kolind as President of the company in 1988. The next 2 years, he worked hard to turn the situation round through cost-cutting measures by: Pared the company down, cut staff and increase efficiency, and reduced the price of a hearing aid by 20 per cent. It success, and make profit for the company and market was growing. But, Kolind think that the company do not have future because there was nothing they could do better than the competitors. It is difficult to see how a small Danish company could against the world’s leading electronics companies. So, Kolind resolved to think the unthinkable. And on the New Year’s day 1990, he got the solution.
“design a new way of running a business that could be significantly more creative, faster, and more cost-effective than the big players. It could compensate the lack of technological excellence, lack of capital, and lack of resources.”
C. Analysis of that company
C.1 Driver of change
After understanding the problem faced by Oticon company, we can see that the driver of change for that company is from:
External forces
External forces is there is a power from the outside of the company that force the company to do a change. It can be demographic characteristics, such as: age, education, skill level, gender, immigration, technological developments, change in market, social pressures and politics.
So, for Oticon company, the driver is because :
- they are defeated in technological developments. It is prove by statement that :
Oticon was strong in analogue technology, whilst the market and its costumers were moving toward digital technology. For example: Oticon could not desaign a better microcip for digital sound processing than Sony.
- Change in market demand. It is prove because Oticon had the wrong product. Oticon manufactured the standard “behind the ear’ hearing aids but costumer increasingly preffered the ‘in the ear’ variety. So, that’s why Oticon lost in market.
C.2 Diagnosing change
Change external environment will respon by internal organization to do change, by create new decision. To create decision, we have to diagnosing change at first. Diagnosing change mean process to determine the main root or the causes of the problem. Company have to see back to find the problem and the change will be the solution of that problem.
Company have to find why there is a gap which makes difference between the ideal and the actual happen in that company. Gap Analysis is important in order to maintain that condition. How to do that Gap Analysis is by finding the valid data and information about financial, marketing, HRD, and etc. See the problem, can be from training, salary, recruitment process, service, quality, etc. then we have to change it.
Oticon is going to lost the market.
So, we have to diagnosing it. See the cause that make it happen.
The basic problem that make Oticon company plummeted and lost in market is that Oticon was a very traditional, departmentalized and slow-moving company. The company look sleep in long time and do not consider that environment has been change. Other company going to develop faster with high technology. They move toward using digital technology while Oticon strong in analogue technology. Grew of ‘in the ear’ product while oticon still in their ‘behind the ear’ hearing aids. Oticon is a small company that operating in a global market. It is make that small company difficult to against the world’s leading electronics company.
It is mean that Oticon lose in technological excellence, also lack in capital and resources. Company willhave no future if it is still hold in that bad condition. To solve that problem, Kolind try to create design a new way of running business that more creative, faster, and more cost-effective.
C.3 Change Process
To understand why some organizations are leaping into the future more successfully than others, you need first to see the flowof effective large-scale change efforts. In almost all cases, there is a flow, a set of eight steps that few people handle well.
The eight step for successful large-scale change
Step 1 Increase urgency
Those who are most successful at significant change begin their work by creating a sense of urgency among relevant people. Raise a feeling of urgency so people will say “let’s go”, making change effort well positioned for launch.
- Showing others the need for change with a compelling object that they can actually see, touch, and feel.
- Showing people valid and dramatic evidence from outside the organization
- Look constantly for cheap and and easy way to reduce complacency
So, Oticon company has to begin looking for the problems, listening to the customers what they are expected, listening to management when they talk about the need for change. By doing that, they can get the valid data about what makes the company going to be plummeted, and try to find the best alternative using the effective way.
Step 2 Build the guiding team
A feeling of urgency helps greatly in putting together the right group to guide change and in creating essensial teamwork within the group. When there is urgency, more people want to help provide leadership, even if there are personal risks.
The company would fragment and collapse into a disoriented mass of individuals if there is no clear direction which everyone understood and believe in, so teamwork is important to crate the strategy. Oticon’s management and staff openly and at length disscussed and debated that new strategy for the company and the implications for how Oticon would be structure and operate.
Step 3 Get the vision right
In successful large-scale change, a well functionaring guiding team answer the question required to produces a clear a sense of direction. What change is needed? What is the vision of the new organisation? What should not be altered? What is the best way to make the vision a reality? What change strategies are unacceptably? Good answer to these question position and organisation to leap into a beter future.
So, for Oticon, after observe the problem happen and create a functioaring guiding team, then company should create a change. Kolind resolved to ‘think the unthinkable’. He decide to design a new way of running a business that could be significantly more creative, faster, and more cost effective than big company do. After finding the new idea, he create new vision for the company, that is:
“A knowledge-based organisation”
Means that the company do not totally in technology-focused. He believed Oticon is not the hearing-aid business per se, they were in the business of “Making people smile”, restoring the enjoyment of life that hearing impairment can destroy. Making people smile, he reasoned means not only giving them a wonderful piece of technology, but actually changing people lives for the better. To this end the company adopted the new mission statement “to help the people with hearing difficulties to live life as they wish with the hearing they have”
To achieve this requires a knowledge of people’s lifestyle and how hearing impairment affect this, and understanding of the social stigma associated with hearing impairment and the use of hearing aids. He saw that what would allow Oticon to compete and thrive was not selling hearing aids, but providing a new holistic approach to customer care- a system that would allow a hearing clinic to assess hearing loss, to discuss the lifestyle needs of the person concerned, to sellect the appropriate hearing aid to programme it and to interprete the feedback from the user in order to fine-tune the hearing aids. The intent would be to allow people with hearing difficulties to lead the sort of life they wanted in their situation, whether they prefferd classical music or rock music, wheater they would worked in a noisy environment or a quiet one, wheater the sound was central to their work or peripheral.
Step 4 Communicate for buy-in
The vission and strategy are not locked in room with a guiding team. The direction of change is widely communicated, and communicate for both understanding and gut-level buy-in. So the main goal of this step is to get as many people as possible acting to make vision reality.
Step 5 Empower action
When people begin to understand and act on a change vision, you remove barrier in their paths. You take a way the tattered sails and give them better on. You take a wind in their faces and create a wind at their backs. You take a way a pessimistic skipper and give the crew and optimistic bosses. The word empowerment comes with so much bagage, you might be tempted to abandon it. We won’t as we use the term, empowerment is not about giving people new authority and new responsibilities and then walking away. It’s about removing barriers.
· To empower action about the new vision, Kolind decided to abandon the consept of formal organisation, instead he wanted to created a ‘disorganised organisation’.
formal structures, job description, and policies were seen as creating barriers to co-operation, innovation and teamwork rather than facilitating it. Kolind’s new disorganised organisation would be founded on 4 principles:
- Department and job titles would dissapeared and all activities would become project initated and pursued informally by grouping of interst people.
- Job would be redesign into fluid and unique combination of functions to suit each employees needs and capabilities.
- All vestiges of the formal office would be eradicated and replaced by open space filled with workstation which any one could use.
- Informal, face-to-face dialogue would replace memos as the acceptable mode of communication.
· Therefore, Oticon got rid of department, departmental head and other managerial and suporvisory position. Job description and titles and anything else that created barrier were eliminated. The intent to see what happen when staff were liberated to do what they thought best. They want everyone in the organisation, from secretaries to technical experts, to work much more closely together to make things hapen more creatively, faster and more cost-effectively.
· So, the action start at 8 am on 8 August 1991. Oticon now operate on a project basis. Anyone can start a project, provided they have the permission of one of five senior managers. Whomsoever the idea comes from, the main criteron for acceptance is that a project is costumer-focused. Anyone can join a project, provided they have the agreement of the project leader.
· Communication is at the centre of this new approach. Parhly this is facilitated by computer.
· Usually team leader will try and recruit the skill he or she need, but individual are also expected to see out opportunities as well.
· Oticon is also genuinely ‘paperless office’.
· Oticon emphasis in face to face and informal communication by stand up coffee bar to encourage small, informal meeting.
· Oticon tries to be transparant about all aspect of the business, wheater it be new product, staff salaries, or finance in general.
Step 6 Create short-term wins
In successful chang eeffort, empowered people create short term win-victories that nourish faith in the change effort, emotionally reward the hard workers, keep the critics at bay, and build momentum. Without sufficient wins that are visible, timely, unambiguous, and meaningful to other, change effort inevitably run into serius problem.
Actually at the bigining of 1990, before they jump to create new vision, Kolind had been do a begining effort to save the company from plummeted and collapse, such as:
- He pared the company down
- Cut staffs and increase efficiency
- Reduce the price of a hearing aids by 20 percent.
As the result of that effort were:
- By 1990, Oticon made a profit of some 16 million on a turnover of 400 million
- Sales growing at 2 percent per annum
- The market was growing at 6 percent
After success with the begining effort above, Kollind think that company do not have future if the company still stand in that situation. That’s why, Kolind create new vision for the company. There are several achievement during 3 years of the company operation after the vision and strategies had been created, such as:
- 15 new product had been launched
- New product lead time had been halved
- The company’s salea were growing at 20 percent per year, after a period of 10 years without real growth and at a time when the market had begun shringking by 5 percent per year.
- Oticon’s market share increase from 8 percent in 1990 to 12 percent in 1993.
Step 7 Don’t let up
After the first set of short term wins, a change effort will in successful situation, people build on this momentum to make a vision a reallity by keeping urgency up and a feeling of false pride down, by eleminating unnecessary, exhausting, and demoralizing work, by not declaring victory prematurely.
The achievement of the Oticon don’t stop there. In 1995, Oticon launched the world’s first Digital Hearing Aid, the DigiFocus. This is, in effect, a four-gram computer which fits in the ear but has the processing power of a desktop machine. Not only was a technological break through for which Oticon has won a number of major innovation awards, but it also allowed Oticon to regain it position as one of the world’s top three Hearing Aid producer. Also, by 1995 turnover had increased by 100 percent on 1990 and profits had increased tenfold. The launched of DigiFocus had dominated in 1995 and the long standing project teams craeted to develop and launch the product had taken on an air of permanency.
Step 8 Make change stick
Tradition is a powerful force. Leaps into the future can slide back into the past. We keep a change in place by helping to create a new, supportive, and suffeciently strong organizational culture. A supportive culture provides roots for the new way of operating. It keeps revolutionary technology, the globalize organization, the innovative strategy, or the more efficient process working to make you a winner.
By 1997, all of its major subsidiaries in Europe, the USA and the Pasific Rim had moved into purpose build offices design to replicate the arrangement in its Danish HQ. The intention was to:
“set the standard for the knowledge based salescompany of the future (triugh the) concept of a flat organization, which stimulates openness, flexibility and informal communication.”
In 1998, after 10 years at the head of Oticon, Lars Kolind decided if was time to move on. He left the company in a far, far stronger position than it had been when he first arrived. In almost every sense, whether financial, technological, structural, and most of all philosophical, he transformed the company. His leaving was very amicable. As he said:
“I am quiting Oticon now because I feel that both the company and I will benefit from a change. There is a whole new generation of young people who are ready to run with the ball, and why shouldn’t I let them?”.
C.3 Resistance to Change
The main of resistance which faced by Oticon during running its changing process was “individual resist”, such as:
- Staff did not take to this radically new way of working overnight.
Staff were not originally recruited for their teamworking and project management skills, and some found it hard to come to terms with these new arrangements.
- Some employees not really able to moving on to the new organization policies.
Some groups of staff found the difficulties to find a role in the project team environment, for some time, receptionist, for instance, still answered the telephone. It was also some years before this new approach was adopted outside the Head Office, though the Danish manufacturing operation, which is on different site, did show some interest quite early.
C.4 Overcome the Resistance
Kolind anticipated resistance and sought to overcome this by:
- Involving staff in planning the transformation of the company
- Small group of staff were selected to handle such project as designing the new electronic infrastructure
- Locating a site for the new Head Office and selecting an arsitect
- All staff were given IT skill training
- The staff were all given a home PC and encouraged to identify their own training need. One result of this was that staff formed their own PC club to work together to develop their skill
- Despite this, prior to the move to the new building Kolind found it necessary to issued an ultimatum to staff: ‘accept the new arrangement or leave’.
Kinds of overcome that provided by Oticon was based on ”Facilitation and Support and also Education and Communication”
C.5 Type of Change
- Type of change based on their scope and deep of the change that applied by Oticon:
Transformational change, because Oticon change in believe an awareness about what is possible and necessary for the organization. Transformational change does require a lead of faith of the organization, although often it is innitiated when other option appear to have failed. It is typified by a radical reconceptualization of the irganization’s mission, culture, criticl success factors, form, leadership, and the like.
- Based of the size of change
Oticon applied second order change or radical change
- Based on planned or unplanned
Oticon applied planned change because it is occur as a result of specific effort that Kolind done to the company.
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