Models of Change tasks at Tata Motors

Tata Motors Limited is Indias largest automobile company, with consolidated revenues of US$20.5 billion in 2009-10. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer. The company’s 25,000 employees are guided by the vision to be “Best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.”

Established in 1945, Tata Motors’ presence indeed cuts across the length and breadth of India. Over 5.9 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles to produce both Fiat and Tata cars and Fiat powertrains. The company’s dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India.

Tata Motors, the first company from India’s engineering sector to be listed in the NewYork Stock Exchange (September 2004), has also emerged as an international

automobile company. Through subsidiaries and associate companies, Tata Motors has

operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land

Rover, a business comprising the two iconic British brands that was acquired in 2008.

In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea’s

second largest truck maker.

Task 1: a)

Kurt Lewin’s change management model

The concept of “change management” is a familiar one in most businesses today. But, how businesses manage change (and how successful they are at it) varies enormously depending on the nature of the business, the change and the people involved. And a key part of this depends on how far people within it understand the change process.

One of the cornerstone models for understanding organizational change was developed by Kurt Lewin, a physicist as well as social scientist, Back in the 1950s, and still holds true today. His model is known as Unfreeze – Change – Refreeze, refers to the three-stage process of change he describes.

Unfreeze

This first stage of change involves preparing the organization to accept that change is necessary, which involves break down the existing status quo before you can build up new way of operating.

To prepare the organization successfully, you need to start at its core – you need to challenge the beliefs, values, attitudes, and behaviours that currently define it. Using the analogy of a building, you must examine and be prepared to change the existing foundations as they might not support add-on storeys; unless this is done, the whole building may risk collapse.

This first part of the change process is usually the most difficult and stressful. When you start cutting down the “way things are done”, you put everyone and everything off balance. You may evoke strong reactions in people, and that’s exactly what needs to done.

By forcing the organization to re-examine its core, you effectively create a (controlled) crisis, which in turn can build a strong motivation to seek out a new equilibrium. Without this motivation, you won’t get the buy-in and participation necessary to effect any meaningful change.

Change

After the uncertainty created in the unfreeze stage, the change stage is where people begin to resolve their uncertainty and look for new ways to do things. People start to believe and act in ways that support the new direction.

The transition from unfreeze to change does not happen overnight: People take time to embrace the new direction and participate proactively in the change. A related change model, the Change Curve, focuses on the specific issue of personal transitions in a changing environment and is useful for understanding this specific aspect in more detail.

In order to accept the change and contribute to making the change successful, people need to understand how the changes will benefit them. Not everyone will fall in line just because the change is necessary and will benefit the company. This is a common assumption and pitfall that should be avoided.

Time and communication are the two keys to success for the changes to occur. People need time to understand the changes and they also need to feel highly connected to the organization throughout the transition period. When you are managing change, this can require a great deal of time and effort and hands-on management is usually the best approach.

Unfortunately, some people will genuinely be harmed by change, particularly those who benefit strongly from the status quo. Others may take a long time to recognize the benefits that change brings. You need to foresee and manage these situations.

Refreeze

When the changes are taking shape and people have embraced the new ways of working, the organization is ready to refreeze. The outward signs of the refreeze are a stable organization chart, consistent job descriptions, and so on. The refreeze stage also needs to help people and the organization internalize or institutionalize the changes. This means making sure that the changes are used all the time; and that they are incorporated into everyday business. With a new sense of stability, employees feel confident and comfortable with the new ways of working.

The rationale for creating a new sense of stability in our every changing world is often questioned. Even though change is a constant in many organizations, this refreezing stage is still important. Without it, employees get caught in a transition trap where they aren’t sure how things should be done, so nothing ever gets done to full capacity. In the absence of a new frozen state, it is very difficult to tackle the next change initiative effectively. How do you go about convincing people that something needs changing if you haven’t allowed the most recent changes to sink in? Change will be perceived as change for change’s sake, and the motivation required to implement new changes simply won’t be there.

As part of the Refreezing process, make sure that you celebrate the success of the change – this helps people to find closure, thanks them for enduring a painful time, and helps them believe that future change will be successful.

McKinsey 7S framework

The McKinsey 7S model involves seven interdependent factors which are categorized as either “hard” or “soft” elements:

Hard Elements

Soft Elements

Strategy

Structure

Systems

Shared Values

Skills

Style

Staff

“Hard” elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems.

“Soft” elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful.

The way the model is presented in Figure 1 below depicts the interdependency of the elements and indicates how a change in one affects all the others.

http://www.mindtools.com/media/Diagrams/mckinsey.jpg

Let’s look at each of the elements specifically:

Strategy: the plan devised to maintain and build competitive advantage over the competition.

Structure: the way the organization is structured and who reports to whom.

Systems: the daily activities and procedures that staff members engage in to get the job done.

Shared Values: called “superordinate goals” when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the company.

Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all the other critical elements. The company’s structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for. The original vision of the company was formed from the values of the creators. As the values change, so do all the other elements.

The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change.

Whatever the type of change – restructuring, new processes, organizational merger, new systems, change of leadership, and so on – the model can be used to understand how the organizational elements are interrelated, and so ensure that the wider impact of changes made in one area is taken into consideration.

You can use the 7S model to help analyze the current situation (Point A), a proposed future situation (Point B) and to identify gaps and inconsistencies between them. It’s then a question of adjusting and tuning the elements of the 7S model to ensure that your organization works effectively and well once you reach the desired endpoint.

John P Kotter’s ‘eight steps to successful change’

American John P Kotter (b 1947) is a Harvard Business School professor and leading thinker and author on organizational change management. Kotter’s highly regarded books ‘Leading Change’ (1995) and the follow-up ‘The Heart Of Change’ (2002) describe a helpful model for understanding and managing change. Each stage acknowledges a key principle identified by Kotter relating to people’s response and approach to change, in which people see, feel and then change.

Kotter’s eight step change model can be summarised as:

Increase urgency – inspire people to move, make objectives real and relevant.

Build the guiding team – get the right people in place with the right emotional commitment, and the right mix of skills and levels.

Get the vision right – get the team to establish a simple vision and strategy, focus on emotional and creative aspects necessary to drive service and efficiency.

Communicate for buy-in – Involve as many people as possible, communicate the essentials, simply, and to appeal and respond to people’s needs. De-clutter communications – make technology work for you rather than against.

Empower action – Remove obstacles, enable constructive feedback and lots of support from leaders – reward and recognise progress and achievements.

Create short-term wins – Set aims that are easy to achieve – in bite-size chunks. Manageable numbers of initiatives. Finish current stages before starting new ones.

Don’t let up – Foster and encourage determination and persistence – ongoing change – encourage ongoing progress reporting – highlight achieved and future milestones.

Make change stick – Reinforce the value of successful change via recruitment, promotion, new change leaders. Weave change into culture.

Task 1: b)

Change should not be done for the sake of change — it’s a strategy to accomplish someoverall goal. Usually organizational change is provoked by some major outside

driving force, e.g., substantial cuts in funding, address major new markets/clients,

need for dramatic increases in productivity/services, etc. Typically, organizations

must undertake organization-wide change to evolve to a different level in their life

cycle, e.g., going from a highly reactive, entrepreneurial organization to more stable

and planned development. Transition to a new chief executive can provoke organization-wide change when his or her new and unique personality pervades the

entire organization.

Tata Motors was predominantly a manufacturer of commercial vehicles, and that is a very cyclical business. The commercial-vehicle market in India shrank by more than 40 percent, with massive consequences for both the top and, more particularly, the bottom lines of the company. The 110 million US$ loss was the first time something on this scale had happened in the company’s history, and it really shook everybody within the organization. They tried to understand what had gone wrong and wanted to create a path for the future to ensure that they never got into such a situation again. So they decided on a recovery strategy that had three distinct phases, each of which was intended to last for around one and half years and 5 years in all.

Phase one was intended to stem the bleeding. Costs had to be reduced in a big way, and that was going to be a huge challenge for a company that was not only the market leader but had been used to operating in a seller’s market and employing a cost-plus approach to pricing. Phase two was to be about consolidating their position in India, and phase three was to involve going outside India and expanding operations internationally.

Task 1: c)

To be an effective leader of an organization requires you to do five things:

Understand and interpret the environment in which he operate

Develop winning strategies

Execute them brilliantly;

Measure the impact of your strategies followers. If you get results, people will support you, systematically, adjusting strategies as often without caring too much about how you got indicated.

Develop organizational, departmental; the world won’t retain the support of your followers’ team and personal capabilities.

Team building is an application of various techniques of Sensitivity training to the actual work groups in various departments. These work groups consist of peers and a supervisor.

Task 2: a)

In recent times Tata Motors have faced a lot of challenge especially from the growing competition and globalization. To fight back these external evils, Tata Motors came out with plans of expansion to fight back competition via mergers and acquisitions and to fight back globalization it decided to cut costs and thereby introduced the worlds cheapest car. But all these activities had severe implications on its internal organizational change. Change was seen both on the management and at the employee level. At the management level change was seen for cutting costs and providing the cheapest car to the world market and at the employee level change was seen because of the much needed Tata Motors to merge with Daewoo, which caused a lot of change in its employees.

Task 2: b)

Enterprise-wide change is undertaken as a matter of survival. It is not an option

and it is not a whim. Change carries high costs in terms of human and physical

resources, share prices, stakeholder insecurity, customer dissatisfaction,

receivables and cash flow. “The reality is often a painful period of change, during

which resistance is high, morale is low, productivity is falling, and confusion is

rampant.” (Calvello & Seamon, 1995) No organization undertakes this lightly.

So, the question is, if the cause is just, the need is clear, the alternatives

evaluated, and the path to success communicated so that anyone in the

organization can see that the change is not optional but essential, why does the

change fail? The answer, “Just being right isn’t enough: you have to win the

hearts and minds of the people who will make the change happen.” (Marsh,

2001) There is no disembodied organization that can be changed. Only the

people within an organization can make planned change a reality by changing

their behaviours and the ways they relate to one another.

Implementing change in an organization forces people to alter how they relate to

one another. Not only do their goals, processes, equipment, and reality change

but the very way they deal with others in the organization changes. This causes

anxiety and anxiety causes resistance. “only people who instigate change enjoy

it; other have to suffer it.” (Marsh, 2001)

Faced with forced change many employees feel threatened believing that they

will lose power, prestige, competence, and security. They feel that what is

happening is beyond their control, outside their sphere of influence, and they fear

it. Depending on how the particular organization has managed past change, the

fears may be well grounded in experience.

Task 3: a)

The changes that have happen within organizations around the world over the last five years, have revolutionized how organizations will continue to operate for the next five years.   Businesses have realized that people are more important, whether that be the customer or the employees.   Employees must be happy, self assured, educated, trained, motivated, and leaders in order to be able to create the type of business that produces quality product.   The customer must be happy, and if the employees are not happy, they have a hard time making the customers happy.  

Task 3: b)

Stakeholder Analysis is the process that:

Is intended for group stakeholders and Understands what stakeholders expect

from the project and what they need in relation to potential risks

Identifies actions to minimize project risks and maximize benefits by working

with the stakeholders.

This covers organisational stakeholder analysis but you might ask ‘What do I do about directly involving people?’ There are two basic approaches to this which can be summed up as Representation v Delegation. Both have advantages and drawbacks.

Representation:

Attempts to take in the full range of views, interest groups and organisational units as part of the full decision making process. Characterised by democratic, committee-type decision-making.

Advantages

Disadvantages

Covers full range of views

An obvious route to gain widespread acceptance of decisions

Involves people who may have limited knowledge of the subject area

Slows decision-making

Can result in compromises which don’t really represent ‘best fit’ in any particular area

Delegation: Delegates responsibility to those identified as being best suited to the job.

Advantages

Disadvantages

Work carried out by those with appropriate skills and knowledge

Permits project to move forward more rapidly

Acceptance relies on trust in those delegated – may be an alien approach in the education culture

Needs care to ensure that all relevant issues are properly understood and covered

Task 3: c)

A change management strategy identify, prioritise, engage and assess stakeholders. Explicit areas of spotlight include:

Ensure that all key stakeholders have an adequate understanding of the objectives, timeline and process.

Ensure that stakeholders who will be significantly impacted by the initiative or the change resulting from it have a clear understanding of how and when they will be affected.

Influence stakeholder attitudes to become more positive (or at least less negative) towards the initiative and/or the change that it will bring about.

Establish an effective feedback loop between the stakeholder group and the project team.

Task 3: d)

The three greatest barriers to organizational change are most often the following.

Inadequate Culture-shift Planning. Most companies are good at planning

changes in reporting structure, work area placement, job responsibilities, and

administrative structure. Organizational charts are commonly revised again and again.

Timelines are established, benchmarks are set, transition teams are appointed, etc.

Failure to foresee and plan for resultant cultural change, however, is also common.

When the planning team is too narrowly defined or too focused on objective analysis

and critical thinking, it becomes too easy to lose sight of the fact that the planned

change will affect people. Even at work, people make many decisions on the basis of

feelings and intuition. When the feelings of employees are overlooked, the result is

often deep resentment because some unrecognized taboo or tradition has not been

duly respected.

Lack of Employee Involvement. People have an inherent fear of change. In most

strategic organizational change, at least some employees will be asked to assume

different responsibilities or focus on different aspects of their knowledge or skill. The

greater the change a person is asked to make, the more pervasive that person’s fear

will be. There will be fear of change. More important, however, there will be fear of

failure in the new role. Involving employees as soon as possible in the change effort,

letting them create as much of the change as is possible and practical is key to a

successful change effort. As employees understand the reasons for the change and

have an opportunity to “try the change on for size” they more readily accept and

support the change.

Flawed Communication Strategies. Ideal communication strategies in situations

of significant organizational change must attend to the message, the method of

delivery, the timing, and the importance of information shared with various parts of

the organization. Many leaders believe that if they tell people what they (the leaders)

feel they need to know about the change, then everyone will be on board and ready to

move forward. In reality, people need to understand why the change is being made,

but more importantly, how the change is likely to affect them. A big picture

announcement from the CEO does little to help people understand and accept change.

People want to hear about change from their direct supervisor. A strategy of engaging

direct supervision and allowing them to manage the communication process is the key

to a successful change communication plan.

Task 4: a)

RELEVANCE OF THE MODELS OF CHANGE

Kurt Lewin theorized that there are three stages to change:

Unfreezing:

Old ideals and processes must be tossed aside so that new ones may be learned. often, getting rid of the old processes is just as difficult as learning new ones due to the

power of habits. Just as a teacher erases the old lessons off the chalkboard before beginning a new lesson, so must a leader help to clear out the old practices before beginning the new. During this part of the process you need to provide just a little bit of coaching as they are unlearning not learning and a lot of cheerleading (emotional support) to break the old habits.

Changing:

The steps to the new ideals are learned by practicing:

W h a t I h e a r , I f o r g e t .

W h a t I s e e , I r e m e m b e r .

W h a t I d o , I u n d e r s t a n d .

Although there will be confusion, overload and despair, there will also be hope, discovery, and excitement. This period requires a lot of coaching as they are learning and just a little bit of cheerleading due to the affect of Arousal Overloading.

Refreezing:

The new processes are now intellectually and emotionally accepted. What has been learned is now actually being practiced on the job. Just a little bit of coaching is required and a lot of cheerleading is used to set up the next change process. . . remember it is c o n t i n u o u s process improvement!

Task 4: b)

1. Formulation of a clear strategic vision: In order to make a cultural change effective a clear vision of the firm’s new strategy, shared values and behaviours is needed. This vision provides the intention and direction for the culture change.

2. Display Top-management commitment: It is very important to keep in mind that culture change must be managed from the top of the organization, as willingness to change of the senior management is an important indicator (Cummings & Worley, 2005, page 490). The top of the organization should be very much in favour of the change in order to actually implement the change in the rest of the organization. De Caluwé & Vermaak (2004, p 9) provide a framework with five different ways of thinking about change.

3. Model culture change at the highest level: In order to show that the management team is in favour of the change, the change has to be notable at first at this level. The behaviour of the management needs to symbolize the kinds of values and behaviours that should be realized in the rest of the company. It is important that the management shows the strengths of the current culture as well, it must be made clear that the current organizational does not need radical changes, but just a few adjustments.

4. Modify the organization to support organizational change: The fourth step is to modify the organization to support organizational change.

5. Select and socialize newcomers and terminate deviants: A way to implement a culture is to connect it to organizational membership, people can be selected and terminate in terms of their fit with the new culture.

6. Develop ethical and legal sensitivity: Changes in culture can lead to tensions between organizational and individual interests, which can result in ethical and legal problems for practitioners. This is particularly relevant for changes in employee integrity, control, equitable treatment and job security. Change of culture in the organizations is very important and inevitable. Culture innovations is bound to be because it entails introducing something new and substantially different from what prevails in existing cultures. Cultural innovation is bound to be more difficult than cultural maintenance. People often resist changes hence it is the duty of the management to convince people that likely gain will outweigh the losses. Besides institutionalization, deification is another process that tends to occur in strongly developed organizational cultures. The organization itself may come to be regarded as precious in itself, as a source of pride, and in some sense unique. Organizational members begin to feel a strong bond with it that transcends material returns given by the organization, and they begin to identify with in. The organization turns into a sort of clan. Marsh, Christine. (2001, March). Degrees of Change – Resistance or

Resilience. Performance Improvement, v40 n3 pp 29-33.