Managing Change Scenario Planning and Other Tools Author

Managing Change: Scenario Planning and Other Tools Author: Steve Fitzgerald, Vice President -- HR, Fairlane Credit, Ford Motor Company

Building a Change. Ready Organization n Copyright 2000 - South-Western College Publishing Pace and scope of change Predicting change increasingly difficult Smart organizations focus on being good at changing 1

Building a Change. Ready Organization n Managing Change u Microsoft example u Other examples? Copyright 2000 - South-Western College Publishing 2

Building a Change. Ready Organization n Copyright 2000 - South-Western College Publishing Sustainable competitive advantage is no longer possible for firms that lack the ability to manage change. 3

Building a Change. Ready Organization Copyright 2000 - South-Western College Publishing 4

Building a Change. Ready Organization n n Copyright 2000 - South-Western College Publishing When asked about future roles for H. R. , operating managers rarely mentioned strategic thinking, strategist, or change agent. (Human Resources Institute) “There's a reason that more and more new H. R. executives come to the post with backgrounds in line management or consulting rather than from H. R. 's own ranks. . . (M)any people doing the work now can't cut it in the H. R. of the future. Clearly, companies need a place to think about the skills they need and will need, about executive development, about a way to focus on human capital. This is precisely why they should ask the do-or-die question of their human resource departments. The prospect of hanging, as Dr. Johnson said, is a sure way of concentrating the mind. ” (Stewart 1996) 5

Building a Change. Ready Organization n The barriers to achieving the HR partnership model include: · · · Copyright 2000 - South-Western College Publishing H. R. professionals who can differentiate the strategic from the more operational and reactive aspects of H. R. jobs. An understanding for, and role in, planning the growth of the business. The competencies that enable one to excel at contract negotiations or compensation and benefits administration do not necessarily prepare an H. R. professional to solve business problems. A shift in focus from reacting to problems to improving operational effectiveness in the business (H. R. I. 1998). 6

Building a Change. Ready Organization n Everyone’s calling for HR to be “more strategic” u What does that mean? u How can it be achieved? Copyright 2000 - South-Western College Publishing 7

H. R. ’s Role in the Execution of Strategy n Many well-conceived strategies are poorly executed u Southwest Airlines Vs. Western Pacific, Value. Jet, People’s Express Copyright 2000 - South-Western College Publishing 8

Copyright 2000 - South-Western College Publishing 9

H. R. ’s Role in the Execution of Strategy n n n Copyright 2000 - South-Western College Publishing A large part of reason why organizations struggle to effectively execute their strategies is because of the failure to align their people processes with strategic intent. Too often, H. R. leaders don’t know the “why”, just the “what. ” This is a systemic "disconnect" that causes many firms to struggle to implement their strategies. 10

H. R. ’s Role in the Execution of Strategy n n Copyright 2000 - South-Western College Publishing In order to align H. R. tools and processes with organizational objectives, H. R. professionals need to understand the strategic intent of the organization. Accomplishing this objective will require greater involvement in the process of strategic planning. 11

H. R. ’s Role in the Execution of Strategy n n Copyright 2000 - South-Western College Publishing In order to align H. R. tools and processes with organizational objectives, H. R. professionals need to understand the strategic intent of the organization. Accomplishing this objective will require greater involvement in the process of strategic planning. 12

H. R. ’s Role in the Execution of Strategy · · Copyright 2000 - South-Western College Publishing “First, H. R. should become a partner with senior and line managers in strategy execution, helping to move planning from the conference room to the marketplace. “Second, it should become an expert in the way work is organized and executed, delivering administrative efficiency to ensure that costs are reduced while quality is maintained. “Third, it should become a champion for employees. … “And finally, H. R. should become an agent of continuous transformation, shaping processes and a culture that together improve an organization's capacity for change. ” (Ulrich 1998) 13

Making Better Strategies n Copyright 2000 - South-Western College Publishing The discipline of scenario planning 14

Making Better Strategies n n Copyright 2000 - South-Western College Publishing The discipline of scenario planning “Those who pretend to know the future lie, even if they accidentally speak truth. ” (Arabian proverb) 15

Making Better Strategies n n n Copyright 2000 - South-Western College Publishing The discipline of scenario planning “Those who pretend to know the future lie, even if they accidentally speak truth. ” (Arabian proverb) Planning for change 16

Making Better Strategies n n Copyright 2000 - South-Western College Publishing The discipline of scenario planning “Those who pretend to know the future lie, even if they accidentally speak truth. ” (Arabian proverb) Planning for change Building the organizational capability to change 17

To prepare for the future, imagine it.

SCENARIOS ARE. . . n n n Stories about the future that are never completely right or wrong. A way to learn what we should do if a given future occurs. Intended to challenge paradigms (mental models) and prepare us for action -- not predict the future. F Challenge the conventional wisdom Copyright 2000 - South-Western College Publishing 19

For Example. . . n Royal Dutch/Shell in early 1970’s. u Price of oil steady since WWII, however: n n n U. S. oil reserves almost gone Western demand steadily increasing OPEC maturing politically • n Copyright 2000 - South-Western College Publishing Mostly Islamic states Western support of Israel during Six-Day War (1967) 20

Where Scenarios Come in. . . n RD/S: “Even though we don’t really think it will happen, what if the price of oil exploded? ” u What would our world look like? u What would we do? u What things would we do regardless of the price of oil? Copyright 2000 - South-Western College Publishing 21

Did RD/Shell avoid the punch delivered by OPEC? n No -- But RD/Shell was prepared for it. F Responded F Improved swiftly competitive position in a sustainable way Copyright 2000 - South-Western College Publishing 22

Scenarios: A Context for Exploring Combinations of Trends & Issues Trend/Issue Forecast Implication Action SOURCE: The Futures Group Copyright 2000 - South-Western College Publishing 23

Scenarios: A Context for Exploring Combinations of Trends & Issues Trend/Issue Forecast Implication Trend Implication Issue Implication Trend Scenarios Implication Issue Implication Trend Implication Issue Implication Action SOURCE: The Futures Group Copyright 2000 - South-Western College Publishing 24

WHY DO IT? n Develop Change-Readiness u Develop and re-assess business strategies u Lead into the future Copyright 2000 - South-Western College Publishing 25

Scenarios: “Not a tool for helping managers predict what will happen, but a means to explore what we should do if it happens. ” RD/Shell Copyright 2000 - South-Western College Publishing -- Brian Marsh, 26

SCENARIOS WILL IDENTIFY: n Risks u Consider solutions before need arises n Opportunities u Move n Copyright 2000 - South-Western College Publishing to take advantage Shape the future 27

INTANGIBLE PRODUCTS n n n “Change-Readiness” Broader mental models Daily decisions reflect u Strategic direction u Awareness of future possibilities Copyright 2000 - South-Western College Publishing 28

“The last buffalo to the pond has to drink muddy -- Vietnamese proverb Copyright 2000 - South-Western College Publishing 29

Bottom Line: n n Be first to the pond Increase Change-readiness u To meet business objectives F Anticipate/respond n Shape the future u Copyright 2000 - South-Western College Publishing to change Generate desirable change 30

Class Project n n This is not a research project, it’s an “imagination project” Read the scenario -- carefully u Imagine n Brainstorm implications u Best Copyright 2000 - South-Western College Publishing living in that world if done collectively 31

Class Project n n Analyze people-management implications of the scenario. What should the HR function do about them? u What are threats and opportunities? n Copyright 2000 - South-Western College Publishing What should the strategy be? 32

Class Project n Bring groups together. What strategies make sense in most or all of the scenarios? u These are the robust strategies we want to pursue. u These are the strategies that “transcend” scenarios. Copyright 2000 - South-Western College Publishing 33