Tampere
23 May, Thursday
24° C

The library of essays of Proakatemia

Leadership In Change



Kirjoittanut: Emil Makkula - tiimistä SYNTRE.

Esseen tyyppi: Akateeminen essee / 3 esseepistettä.
Esseen arvioitu lukuaika on 11 minuuttia.

Leadership in change 

 

Written by Emil Makkula, Donee Barendze, and Katrina Cirule

 

1 INTRODUCTION

 

Leaders are responsible for the success or failure of any enterprise they direct. One of the most difficult tasks a leader must perform is fostering unity among members of a team in a changing environment. Unity is essential when trying to change an organization’s policies or procedures, but it’s also necessary when the environment is stable and everyone is on the same page. Unity requires trust and mutual understanding- so it’s essential that leaders learn to foster it in their teams. We have seen some big changes during the last few decades. First came the dotcom bubble and the internet changed the whole world. In 2008 we saw a big market crash caused by the unstable housing bubble which bursted us into a recession, close to depression. The last few has been the pandemic when Covid-19 shut down the whole world for almost two years. We are also living in change at the very moment since spring 2022 when Russia started the war in Ukraine. In this essay we will discuss how these changes need to be tackled and how the leaders should act accordingly.

 

2 CORPORATE CHANGE 

 

“Change is the only constant.”  Although this seems to be just another cliché quote to throw around every once in a while, it holds immense truth when it comes to business. Corporate change is the only corporate constant. Nothing in business can ever be set in stone and without change, business cannot flourish. One simply cannot function without the other. But what exactly is corporate change? Corporate change refers to any type of change that affects a company as a whole. Big changes related to human resources, company objectives, handouts and operatives all fall under the umbrella of corporate change. (Gupta 2022)

 

Change is inevitable and therefore it is essential to have a proper managerial structure in place, ensuring that chaos does not occur when a company goes through seasons of uncertainty. Change management ensures (to a certain extent) a safety net toward any possible transformations and reduces the negative effect that change can have on a company’s operations. On an individual level, corporate change (both positive and negative changes) can naturally create resistance and lead corporate operations into the “uncomfortable zone”. This resistance is usually related to underlying humane factors such as impotence, reluctance, tiredness and other personal matters. Luckily all these resistant factors can be overcome with the correct change management structure. (Perkins 2018)

 

To break corporate change down in the era we are currently facing, we can classify it into six different categories.

 

2.1 Six categories of corporate change: 

 

2.1.1 Human-oriented corporate change

Although any corporate change either directly or indirectly affects the people around it, human-oriented change focuses on issues like maternal/paternal leave, hiring, firing, etc. With this type of change, a natural resistance occurs and a good leader needs to understand this in order to deal with it professionally. Skills like honesty, open communication and sympathy are all required from the leader.

 

2.1.2 Systemic change

This type of change relates mostly to the inner and outer aspects that affect the way in which a company is run. Quite many outer aspects affect a company’s inner systems. Things like investments, unions, market fluctuations and policy disruptions are all good examples of what can directly have an effect on a company’s inner hierarchical management, team structures and departments.

 

2.1.3 Digital change

In the era of constant digital evolution, we are continuously facing organizational changes directly related to technology. These changes are usually revolving around the idea of staying up to date with world trends by upgrading softwares or changing systems to better a company’s processes. These changes are essential to be communicated transparently, because    it can be very uncomfortable and in order for it to be properly adopted, everyone needs to be on the same page. “Digital strategies” are being used in companies to increase efficiency and profitability.

 

2.1.4 Calculated change 

This refers to planned and structured changes that companies execute to strategically create changes that will help a company achieve its goals, enhance its competitive upperhand in the market, or help a company react to possible challenges or opportunities. Calculated change is usually implemented by higher management levels and CEO’s of the company. Some examples include: bringing company’s mission statements up to date as the company expands, “innovation” and reorganizing.

 

2.1.5 Uncalculated change

These changes are categorized as emergency changes and cannot be prepared for too well, but a bad plan is better than no plan at all. A good example that we have faced in recent years is the challenge of instantaneous remote/hybrid working conditions.

 

2.1.6 Corrective change

Conventional or traditional changes both fall under this category and it refers to         problem-solution related change. Meaning, once a problem is pointed out,              a solution needs to be put into place. These changes are quite instant and     require urgent action. They are not the best but they cannot be avoided. The good thing about this type of change is the ease in which it is measured. The change is measured as successful if the problem had been solved.

 

Each of these categories require a dedicated and specified management approach depending on what side of the business it affects most. Changes are not necessarily a bad thing and it can push a company into a positive direction. Change needs to be well managed and used as a driving force instead of something to fear. Corporate change opens new doors and new opportunities for companies and therefore needs to be embraced and welcomed with a good approaching tactic. (Gupta 2022)

 

2.2 KÜBLER-ROSS CHANGE CURVE THEORY

According to the half Swiss half American psychiatrist Elisabeth Kübler-Ross, the Change Curve Theory was originally created to better understand the process of grief, but has soon after become applicable in many other aspects of life, including the change process in business. This model helps corporate change to be managed in a more subtle, more professional way. It follows the same idea as the grieving process, where there are 5 clear stages highlighted. These stages are: denial, anger, bargaining, depression and acceptance.

 

The first and the most obvious stage is denial. When any sudden or huge change occurs within a company, it is a natural response to deny it, purely out of shock. This is a defense mechanism that diverts the change from happening. This initial shock phase decreases productivity as individuals and teams hold on to previous systems.

 

After the initial shock is over, anger starts sinking in. It takes either the shape of fear or frustration. This is a fragile stage of the process and any type of change management has the potential to lose all its power at this point.

 

Next comes bargaining. After the anger and fear has started fading away, a natural individual response is to try and take the path of least resistance and by negotiating or trying to compromise, they try to fight this change subconsciously.

 

After all these stages have failed, depression lurks in. This is where individuals or teams lose all their hope. It can be identified by signs of clear discouragement, remorse and regret.

 

And finally, there is a light at the end of the tunnel, acceptance. In this stage employees accept the change that is happening. The discomfort eases and they start seeking out potential opportunities that have grown out of this change. Once the acceptance phase is reached, it is necessary for it to be steadfastly implemented into the company to avoid employees from falling back into old ways. (Malik 2022)

FIGURE 1. Kübler Ross 5 Stage Model. (Connelly 2020)

 

3 CHANGE LEADERSHIP 

As already discussed, change in organisations is inevitable and even necessary to not fall in the trap of stagnation or even extinction. It is not about if but when, therefore it is vital to understand the ways to not only survive, but also use the opportunities those conditions bring. There is no formula for leading or managing change, but what is the difference between the two?

 

3.1 Change leadership versus change management

 

Change management can be defined as a linear process with a goal and objectives, which requires an efficient execution. Managing change is more focused on stability and preventing the effects of unwanted change. However, it is rarely a that straightforward process and it can create feelings of unease between people in the organisation. (Anderson 2022) Major change is an iterative process that requires strong leadership and an input from all parts of the organisation. To achieve the best results, instead of management, a change leadership is needed.

 

Change leadership is proactive approach where change is seen as an opportunity for development. By using the power of vision, change leadership is more of an art than science. Change leaders use a people-centric approach: being considerate of potential risks and challenges and implementing new tools to better navigate through the process, seeking feedback and adjusting along the way, and, most of all, building trust and relationships to better lead through uncertainty.

 

Here are some practical points that leaders can implement during periods of change:

  1.     Inspiring with vision- this is a great way to encourage others to view change as a way for growth, rather than something to fear. Moreover, it will have a clear message of why the change is necessary and give a pathway for the team to feel like they are a part of the process, too;
  2.     Define a strategic plan- a clear plan on when, how, and by who the changes will be taken into practice create an understanding on how the new vision can directly affect the individual and the team.
  3.     Communicate effectively- even after sharing the vision and plan, the communication must continue with progress updates, adjustments, and milestones reached. Leaders should also ensure that there is space for feedback, questions, and ideas from other teammates or employees;
  4.     Consistent support- to maximize the chances of success, it is crucial to provide leaders at all levels of the organisations with the skills and information necessary to better assist the employees. By being consistent, one can better transform changes into tasks and collect suggestions for things to improve;
  5.     Keep up the energy- especially in long-term change, maintaining momentum after the start is a vital part of success. (Eagle’s Flight 2022)

 

3.2. Leadership roles during change

 

The same leadership roles that work in stable phases might not be as effective in transitional periods. Understanding where one stands as a change leader can be critical to lead the process successfully.  There are most commonly 3 different roles one can take on: agitator, innovator, and orchestrator.

 

Agitator most commonly highlights others’ complaints. This person works as a disrupter and identifies challenges and adopts a solution-based attitude. Because agitator spends time listening to and learning from those around, communication is a key element in this role. Leaders identifying with this role usually unlock perspectives that had been previously unforeseen. However, it also brings drawbacks, such as, stalled progress due to the many complaints one hears or receives. That’s why it is crucial for an agitator to focus on the big picture while still keeping in mind the problematic parts.

 

While the agitator uncovers complaints and listens, the innovator makes actionable solutions and plans to address them. Innovators are bringing the communication about change to fruitation. They evaluate the solutions with a strategic problem-solving attitude. Innovators predict possible scenarios, therefore it is important for them to keep an open mind.

 

The orchestrator then adopts the innovator’s plan and coordinates it across the stakeholders, which is often the most visible part of the leadership. They usually have the skills and understanding of time management, goal achievement, as well as overcoming obstacles. Orchestrators strive for measurable results. An agile leadership style usually fits best for these kind of change leaders, since the process of change is also full of changes in its nature (it doesn’t go exactly as planned). Getting adrift from the track is one of the treats for orchestrators, therefore ensuring the power of vision is vital for their affective leadership.

 

All three roles are necessary for a successful change leadership. Competition among the leaders is not a socially sustainable practice, therefore a strong collaboration towards a common goal is they key part. “Successful change is the result of collective action”- the involvement of all those who wish to positively affect the situation now and in future. (Anderson 2022)

 

4 CASE STUDIES OF CHANGE 

 

4.1. How companies need to adjust during crisis

 

It is hard to imagine life without business. Business is the engine that drives the economy; without businesses, the economy would slow down considerably. Since the 19th century, the world has seen several major business crisis along with a number of adjustments they made as they persevered through difficult times. The latest one being Covid-19 virus which caused a global pandemic. These big businesses must be able to adjust to changing conditions to remain profitable and successful.

 

During the global pandemic in 2019, and still affecting some businesses today, many companies went bankrupt because of reduced consumer spending. One way businesses adjusted during this period was by cutting back on their own operating costs. This allowed them to stay afloat while they examined ways to increase their sales. Even though the Covid-19 pandemic has slowed down, we will still see years later as many companies need to make adjustments in order to survive and thrive.

 

Seasonally adjusted (2010=100)

FIGURE 2. Volume of world trade and industrial production. (OECD 2022)

 

As you can see from this graph about once in a ten-year period of time, a bigger dip appears. Sometimes the downfall is big enough to lead into a depression. During these times a lot of companies need to let go of their employees and even go out of business. The companies that know the right ways on how to adjust will survive and even grow during a crisis. (OECD 2022)

 

Everyone knows that Covid-19 had a huge impact in global business and shut down multiple companies, but we can see a huge increase in a certain field of business. What did these businesses need to do in order to keep up and even grow?

One industry over else that grew the most was e-commerce. This is a type of business where you use different platforms on the internet and benefit from those, creating multiple different income sources. The reason this grew to me the most popular business model during the pandemic is because the business can be run remotely. The graph under shows how E-commerce has grown during the past 20 years. You can see the .com bubble, 2008 housing market crash and then the biggest spike, the Covid-19 era. (Fenech 2021)

 

FIGURE 3. U.S. E-Commerce Growth Rate. (The Census Bureau of the Department of Commerce 2020)

 

4.2. Consumer behavior

 

According to a consumer insights survey by PwC, during the past 12 months, 75% of more than 8,600 consumers who answered the survey (online shoppers) have experimented with a new buying behavior, and 73% of consumers plan to keep up the trend. Another intriguing finding is that 36% of buyers have experimented with alternative brands, retailers, or websites to obtain their items.

Amazon, the world’s largest e-commerce brand, has achieved remarkable growth, suggesting that this new consumer behavior is here to stay. (PWC 2021)

 

4.3 Current situation

 

The last time Europe and Finland, maybe the whole world has been in war like the war in Ukraine is was in 1900’s. The economy has changed a lot in the last couple of decades. When a war or another crisis comes, inflation usually steps into play. Inflation was not really that bad during Covid-19 pandemic, but now due to the war and the energy restrictions affected by Russia, it has really gone through the roof. (Cohen & Eddy 2022)

 

FIGURE 4. Inflation in the Eurozone. (Eurostat 2022)

 

5 CONCLUSION

The fact remains that change is inevitable. Whether it is external or internal change, it cannot be avoided and therefore we need to adapt our ways of thinking, doing and leading in business. Corporate change is the core change aspect in business but it is just one aspect in a much larger picture. We have established good methods and tools to deal with change and it is ready to be implemented once the occasion rises. With the right leadership, roles can be diligently delegated to the right leadership types: the agitator, innovator and orchastrator. This means hopefully leading to a successful and smooth transition period. In recent years we can observe quite many big changes that have had a direct impact on the way we work corporately. Through these observations we can use our learnings and implement it even further into any future changes yet to come. Businesses can use change positively with the right approach and strategy in place. The clichè remains true: change is the only constant.

 

References:

 

Anderson, K. 2022. What is change leadership? Read on 04.12.2022. https://online.hbs.edu/blog/post/what-is-change-leadership

 

Cohen, P. & Eddy, M. 2022. Eurozone inflation sets another record, hitting 10 percent in September. Read on 04.12.2022. https://www.nytimes.com/2022/09/30/business/eurozone-inflation.html

 

Connelly, M. 2020. Kubler Ross Five stage model. Read on 4 December 2022. Link: https://www.change-management-coach.com/kubler-ross.html

 

Eagle’s Flight. 2022. The Difference Between Change Management and Change Leadership. Read on 04.12.2022. https://www.eaglesflight.com/resource/the-difference-between-change-management-and-change-leadership/

 

Fenech, M. 2021. The industry that grew during Covid, and why you should consider starting a business in IT. Read on 04.12.2022. https://www.entrepreneur.com/growing-a-business/the-industry-that-grew-during-covid-and-why-you-should/401114

 

Gupta, D. 2022. 6 Types of Organizational change. Read on 02.12.2022. 6 Types of Organizational Change, Explained | Whatfix

 

Malik, P. 2022. The Kubler Ross Change Curve in the workplace. 04.12.2022. https://whatfix.com/blog/kubler-ross-change-curve/#:~:text=The%20Change%20Curve%2C%20or%20K%C3%BCbler,bargaining%2C%20depression%2C%20and%20acceptance.

 

Marketplace Pulse. 2020. U.S. E-commerce growth rate 2001-2022. Read on 4.12.2022. https://www.marketplacepulse.com/stats/us-ecommerce/us-e-commerce-growth-rate-55

 

OECD. 2022. International trade during the COVID-19 pandemic: Big shifts and uncertainty. Read on 04.12.2022. https://www.oecd.org/coronavirus/policy-responses/international-trade-during-the-covid-19-pandemic-big-shifts-and-uncertainty-d1131663/

 

Perkins, B. 2018. What is Change management? A guide to organizational transformation. Read on 02.12.2022. https://www.cio.com/article/272222/change-management-change-management-definitio

n-and-solutions.html

 

PWC. 2021. Global Consumer Insights Survey. Read on 04.12.2022. https://www.pwc.com/gx/en/industries/consumer-markets/consumer-insights-survey/archive/consumer-insights-survey-2021.html

 

Umar, T. 2019. Kubler Ross Change curve model. Read on 03.12.2022. https://changemanagementinsight.com/kubler-ross-change-curve-model/

Post a Comment