Understanding and Diagnosing
1. Aditya Putri Pertiwi - 2140033606 Change
2. Devi Puri – 2140033083
3. Reffiano Noeris Hiwa - 2140033644 Group I
4. Siti Fidyanti N Hadju - 2140033184
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Understanding
and
Diagnosing
Change CHAPTER 1. MANAGING CHAPTER 2. IMAGES OF CHANGE
CHANGE: STORIES AND MANAGEMENT
PARADOXES
Kelompok I 08/12/2022 2
Understand how stories of change can
contribute to our knowledge of theory and
practice.
Managing Explain why managing organizational change is
both a creative and a rational process.
Change:
Stories and Identify the main tensions and paradoxes in
Paradoxes managing organizational change.
Evaluate the strengths and limitations of our
current understanding of this field.
Contents
Stories About Change: What Can We Learn?
The Story of Beth Israel Deaconess Medical Center
The Story of J. C. Penney
Tension and Paradox: The State of the Art
Assessing Depth of Change
What’s Coming Up: A Road Map
Change Diagnostic: The Beth Israel Story
Change Diagnostic: The J. C. Penney Story
Story of Change
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Stories About Change: What Can We Learn?
We also learn how the images that we hold about the
We will recognize these tensions and how they affect
way in which change should be managed, and of the
those who are involved in managing organizational
role of change agents, affect how we approach
change.
change and the outcomes we think are possible.
These stories about change can be one valuable
source of practical lessons, as well as helping to
These stories have actors: change leaders, other
contribute to our general understanding of change.
managers, staff, customers. They take decisions that
These stories are of course distinctive, one-off. How
lead to actions that trigger responses: acceptance,
can they contribute to knowledge and practice in
resistance, departure. There is a plot: a serious
general, in other sectors and organizations? Stories
problem that could be solved by organizational
are one of the main ways of knowing, communicating,
change.
and making sense of the world (Czarniawska, 1998;
Pentland, 1999; Dawson and Andriopoulos, 2014).
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The Story of Beth Israel Deaconess Medical
Center
The Solution
The Problems
The Setting
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Stories about Beth
Israel Deaconess
Medical Center
(BID)
Solution phase
Phase I He refused to reduce nursing levels, but the financial crisis was resolved.
The hospital is refining its annual plan, starting with two departments
who volunteered to take part in phase 1, orthopedic surgery and
Phase II pancreas, Other departments soon joined in. Operating plans had four
goals, addressing quality and safety, patient satisfaction, finance, and
staff and referrer satisfaction.
Levy appointed Mark Zeidel as chief of medicine for help overcome the
view that medical errors are inevitable. Levy put performance data
Phase III information on his public blog, which he started in 2006, and which
became popular with staff, the public, and the media. , with more than
10,000 visitors a day.
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The Outcomes
• BID was one of the leading academic health centers in the
United States, with 6,000 employees and state-of-the-art
clinical care, research, and teaching. Competing effectively
with other major healthcare organizations, BID was
generating annual revenues of over $1.2 billion.
• Paul Levy resigned in January 2011. He explained his
decision in a letter to the board of directors, making this
available to staff and the public on his blog.
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Stories about Beth
Israel Deaconess
Medical Center
(BID)
The Story of J. C. Penney
J. C. Penney Company, Inc. (known as JCPenney, or JCP for short) was one of America’s largest clothing and home furnishing retailers.
founded by James Cash Penney and William Henry McManus in 1913, the headquarters were in Plano, Texas. By 2014, with annual
revenues of around $13 billion, and 159,000 employees, JCP operated 1,100 retail stores and a shopping website at jcp.com. JCP once
had over 2,000 stores, back in 1973, but the 1974 recession led to closures.
• The company’s main customers were middle-income families, and female. JCP had a “promotional department store” pricing strategy
with a confusing system of product discounts.
• JCP had a “promotional department store” pricing strategy with a confusing system of product discounts. There were around 600
promotions and coupon offers a year. Mike Ullman, chief executive since 2004, had grown sales with a strong private label program,
with brands such as Sephora, St. John’s Bay clothing, MNG by Mango, and Liz Claiborne. Another 14 stores were opened in 2004, and
the e-commerce business exceeded the $1 billion revenue mark in 2005.
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J. C. Penney Problems
However, the recession in 2008
When the stock hit a record high in adversely affected sales; Core
2007 customers have mortgage and job
security issues.
Macy's and Kohl's, the main
Between 2006 and 2011, sales fell from
competition, have sales per square foot
$ 19.9 billion to $ 17 billion
of around $ 230
In 2008, JCP made an agreement to
In 2011, 50 to 70 percent of all sales
launch a new brand that was only sold
were discounted and that year the
in their stores. But JCP is not permitted
catalog business, with nineteen outlet
to use the name and logo of the
stores, was closed, along with seven
product (POLO). and the idea failed.
other stores and two call centers.
Sales continue to fall.
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J. C. Penney solution
In 2010, two billionaire investors, Bill Ackman and Stefan Roth, approached Ullman with an offer to buy a large number of JCP
shares. They felt that the company had potential but on the first day of their meeting Ullman was involved in a serious car
accident, suffering several injuries
The board wants a replacement, and there are no internal candidates. Ullman suggested Ron Johnson, who worked for Steve
Jobs at Apple.
In November 2011, Ron Johnson was appointed chief executive officer. JCP stock rose 17 percent on the announcement.
In December, after a month in office, he told the board his plan to revive the company in a fundamentally new way of doing
business and the board agreed.
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Johnso
Phase 1 : First, he wants to change the culture that already exists. In February
2012, he installed a large transparent acrylic cube at the company's headquarters.
The cube is a version of the new company logo.
n
Strategy Phase 2 : “no more promotions” WHY?. Why wait six weeks to mark an item down
to the price at which it would sell?
Johnson simplified the pricing structure with “everyday” prices, which were what
used to be sale values; “monthly value,”
Phase 3 : Johnson developed a “store within a store” strategy, with each store
becoming a collection of dozens of separate “boutiques.”
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The outcomes The results published in February 2012 were poor. Revenues had fallen by $4.3
billion, making a $1 billion loss. he stock fell to $18, and Standard & Poor’s cut JCP’s
debt rating to CCC+ (a long way from “triple A”).
• April 2012, JCP laid off 13 percent of its office staff in Texas, closed one of its call
centers, and also “retired” many managers, supervisors, and long-serving
employees on the grounds that new working practices required less oversight.
In May 2012, store sales were down 20 percent compared with the previous year.
Johnson had projected a short-term drop in sales, but not by that much.
• In July 2012, a further 350 headquarters staff were laid off. By October 2012,
online sales were almost 40 percent down over the year.
During Johnson’s two-year tenure, the price of the JCP stock fell by almost 70
percent, and sales fell in 2012 by 25 percent, resulting in a net loss of $985 million.
• In March 2013, Steven Roth, who had backed Johnson’s appointment but who
had now lost faith, sold over 40 percent of his JCP shares at a loss of $100
million. Bill Ackman resigned from the board in August, selling his shares at a loss
of $470 million.
In May, Mike Ullman was reinstated and JCP ran an “apology ad,”
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Tension and Paradox: The State of the Art T
Tension when two or more ideas are in opposition to each other
Paradox when two or more apparently correct ideas contradict each other
The literature—research and other commentary—can be difficult to access, and to absorb, for the following reasons (Iles and Sutherland, 2001):
Multiple Perspectives
Conceptual Spread Fluid Boundaries
there are contributions from
the concepts that are used range depending on the definitions of
several different schools,
in scale, from whole schools of change and change management
academic disciplines, and
thought or perspectives, through in use, the boundaries of the topic
theoretical perspectives—there
methodologies, to single tools vary between commentators
are several literatures
Rich History Varied Settings
interesting and useful as with our stories, evidence and
contributions date from the examples come from a range of
1940s, and recent work has not organizational types and contexts,
necessarily made previous using different methodologies
commentary irrelevant
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The practicing manager, less interested in theoretical perspectives, wants to know “what
works?” There are difficulties in providing a clear answer to that question, too, for the following
reasons:
MANY VARIABLES SLIPPERY CAUSALITY MANY STAKEHOLDERS
EVEN WITH SIMPLE CHANGES, THE IMPACT IS IT IS DIFFICULT TO ESTABLISH CAUSE AND EFFECT DIFFERENT STAKEHOLDERS HAVE DIFFERENT VIEWS
MULTIDIMENSIONAL, AND MEASURING CLEARLY ACROSS COMPLEX PROCESSES THAT UNFOLD OF THE NATURE OF THE PROBLEM, THE APPROPRIATE
“EFFECTIVENESS” HAS TO CAPTURE ALL OF THE OVER TIME, USUALLY AT THE SAME TIME AS LOTS OF SOLUTION, AND THE DESIRABLE OUTCOMES—
FACTORS TO PRODUCE A COMPLETE PICTURE OTHER CHANGES WHOSE MEASURES TO USE?
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How these tensions and paradoxes are managed has
implications for the process and outcomes of change.
Systematic Tools, or Messy Political Process?
Organizational Capabilities, or Personal Skills?
Rapid Change, or the Acceleration Trap?
Change Leader, or Distributed Leadership?
Learning Lessons, or Implementing Lessons?
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Assessing Depth of Change
At the bottom of this figure sits the “small stuff” that may not even be regarded as “change.” In the middle of the scale we have “sustaining
innovation,” which involves improving on current practices. At the top of the scale is “disruptive innovation,” which involves radically new
business models and working methods (Christensen, 2000).
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What’s Coming Up: A Road Map
• If you follow the recipe correctly, that cake
should be perfect; enjoy. However, success is not
guaranteed by following a set of change
implementation guidelines. There are two main
reasons for this.
•First, designing a change process is a task with
both technical and creative components;
blending these components can in many
circumstances be a challenging business
involving much trial and error.
•Second, what works depends on organizational
context, which is not stable but which can
change suddenly and in unpredictable ways.
External conditions can change, intensifying or
removing the pressures for change. Budget
considerations may mean that resources are
diverted elsewhere
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Change Diagnostic: The Beth Israel Story
1. Identify five factors that explain the success of this corporate turnaround.
The sense of urgency, the “burning platform,” created deliberately by the new chief
executive, who was open with all staff about the true position concerning the hospital’s
finances.
The focus that was consistently maintained on improving the quality and safety of patient
care, which appealed (perhaps more than budget layouts) to the professional values of
clinical staff.
The phased approach that involved, first and quickly, fixing the finances; second, repairing
medical-managerial relationships and getting staff involved in operational plans; and third,
focusing on safety issues and eliminating harm. Frontline staff involvement was key.
Making hospital and department performance data available to staff, the public, and the
media, to inspire pride in achievement and to stimulate further improvements.
The creation of a “leadership constellation” through the appointment of other senior staff
who understood and who supported the chief executive’s goals and strategy (Denis et al.,
2001).
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How would you describe Paul Levy’s role
and contributions to this turnaround?
One of his main contributions was to
insist on transparency, about the
A second key contribution concerned
Did Paul Levy actually change hospital’s financial problems and
his consistency of purpose, the
anything directly? He described his with performance data. That
relentless focus on the quality and
style as “creating the environment” transparency may have been
safety of patient care, which were
that enabled other people to do uncomfortable for some, but it
issues that engaged and motivated
good work. created pride in achievement and
clinical staff.
the motivation for continuous
improvement.
His innovative use of the Internet
He stayed with BID for nine years.
and his personal blog about “running
Not many chief executives stick
a hospital” made sure that everyone
around for this long. But tenure
—staff, patients, the wider
helps to build influence and
community, the media—knew what
reinforces the consistency of
he was thinking and doing and why,
purpose.
building respect and trust.
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• Levy had no healthcare background. Maybe this means that one does
What insights not need specialist sector knowledge and experience to drive a
corporate turnaround. But he made sure that he had access to those
does this story specialist resources though his other senior appointments.
• He had confidence in his management approach. That confidence
have to offer may be as important as the style—maybe a different style, applied
consistently, could be just as effective, especially when it involved
concerning laying off a number of staff soon after taking up his new post, and
standing up to the board of directors and defending a view different
from theirs.
the role of the • The role of a change leader is a demanding one, and it can be difficult
change
to maintain for long periods. It is necessary to recognize when it is
time to leave—and also to know when leaving would damage the
project. Levy departed only after BID’s financial, clinical, and
leader? operational performance goals had been achieved and the future of
the hospital was secure.
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What lessons about
managing organizational
change can we take from
this experience and apply
to other organizations, in
healthcare and in other
sectors? Or, are the
lessons unique to Beth • This is controversial. A lot of the research evidence concerning organizational change
Israel Deaconess Medical management—what works and what doesn’t—relies on case study accounts such as
Center? this. Could an approach to rapid and radical organizational change that worked in a
large hospital in Boston be applied to a small software design company in Sacramento?
Looking at the details, the answer is probably “no”; the software company doesn’t have
to worry about medical engagement and patient safety metrics. Looking at the
approach in general, however, the answer is probably “yes.” If our software company
was losing money and reputation, a new “straight talking” chief executive with clear
and consistent goals, an inclusive management style, a strong management team, and a
transparent approach to the use of performance data to motivate improvement could
be a highly effective combination.
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Change Diagnostic: • First, he was charismatic, passionate, energetic, and
persuasive, using theatrics (the acrylic cube) to draw attention
The J. C. Penney Story and generate excitement. These are useful characteristics for
change leaders to possess, although in this case they
contributed to the problems. It is possible to be too
What aspects of Ron charismatic, too passionate, too energetic, too persuasive, too
theatrical.
Johnson’s turnaround
strategy were
appropriate, • Second, he was highly innovative, bringing lots of fresh ideas to
praiseworthy? a long-established and stale organization. Organizations that
have been trading for a century will often benefit by importing
new thinking and practices from other sectors. Third, he was
action-oriented and wanted to move quickly, to bring about
radical change rapidly.
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What mistakes
• Ignoring the company’s traditional core customers was probably his first and most serious mistake.
There was no market research, either directly with customer groups or indirectly through store staff
and managers, to develop a better understanding of the buying habits and preferences of JCP
did Ron Johnson customers. How would customers interpret the changes that he wanted to implement? It would have
been helpful to know the answer to that question before proceeding. This lack of customer knowledge
led to some disastrous marketing, and to pricing and merchandising strategies that alienated core
make? customers without attracting new shoppers. Selling more expensive products seems like a good way to
increase sales per square foot, but only if your customers want those items and can afford to buy them.
• Second, he allowed his new top team of “outsiders” to distance themselves from the existing JCP
managers and staff. This meant that the top team had restricted access to the business knowledge
stored in the corporate memory, and it also created unnecessary tensions between the DOPES and the
Bad Apples.
• Third, he made critical decisions based on his own judgement, dismissing the views of other senior
executives.
• Fourth, he acted rapidly. While speed may be necessary, especially in a crisis, introducing so many
changes at a quick pace was destabilizing.
• Finally, and linked to the fourth point, he did not pilot test his big ideas before committing the
investment and implementing them. Johnson’s approach to change at JCP had two other adverse
consequences. First, he damaged the brand image, and that would take time—perhaps years—to
repair. Second, he closed the door to any future JCP chief executive who might be tempted to play the
part of charismatic innovator.
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• There is no correct answer to this question, but there is a wide range of possibilities.
• The first obvious suggestion concerns better customer intelligence. Did sales fall because middle-
income families were hit by recession and customers became confused by pricing practices? Or
What would
would customers have welcomed an expansion of the range of JCP exclusive private brands and a
modified promotions program instead?
• A second suggestion concerns testing new ideas in a small number of representative outlets to
you suggest
see how those would work before committing the whole organization.
• Third, review the decision to fill senior management roles with friends and “outsiders”; did the
organization have internal candidates who could have filled at least some of those roles equally
he could well? Find ways to integrate new with existing staff: teambuilding, corporate events, job rotations
and partnerships, insisting that senior staff move to Dallas.
have done
• In summary, these suggestions concern market research, pilot testing, recruitment, and
promotions policy. However, this does not suggest that changes should have been made slowly,
just a little less rapidly. That would have allowed mistakes and wrong turns to become apparent,
so that they could be withdrawn, lessons learned, and revised plans put in place. Johnson’s
differently? •
charisma, passion, and energy could have driven this alternative approach effectively.
A final suggestion for Ron Johnson would be: ask your board to probe and to challenge your
decisions, and listen carefully to what they say. The why and how of change in this case would
probably have been more successful if these had been the result of board decisions, and not Ron
Johnson’s decisions. The board themselves, in this case, seem to have made the mistake of not
challenging their new, charismatic, persuasive, passionate chief executive.
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Story of Change PT. XYZ
The Setting The Problems The Solution
• PT. XYZ is aholding company • Selama ini pembuatan • Manager memutuskan
mempunya beberapa anak laporan konsolidasi dilakukan untuk
perusahaan. Untuk melihat secara manual menggunakan
laporan keuangan anak anak Microsoft Excel, anak anak mengimplementasikan
perusahaan PT. XYZ harus perusahaan sudah mempunya system Laporan
membuat laporan keuangan system masing masing, Keuangan konsolidasi
konsolidasi. Selama ini selama ini tidak masalah tapi untuk PT. XYZ.
laporan keuangan konsolidasi pada awal tahun 2020, PIC
dibuat dengan resign sehingga Losing
mengumpulkan laporan knowledge for the operation
keuangan anak perusahaan after ation for the PIC, Human
perbulannya dikumpulkan error caused by the manual
oleh holding company dibuat operations, Leaking or losing
eliminasi jurnal jurnal data caused by high
konsolidasi kemudian dependency on Excel
dibentuk lah laporan operation.
keuangan konsolidasi hasil
keuangan anak anak
perusahaan.
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Solution phase
Implementasi Sistem Laporan
Keuangan Konsolidasi
Phase I
Proses manual dan Sistem
dilakukan berbarengan selama 3
Phase II bulan.
Proses dilakukan seluruh disistem
baru ketika
Phase III
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The Outcomes • CEO PT. XYZ dapat melihat laporan hasil konsolidasi secara
langsung tanpa meminta terlebih dahulu ke manager atau
PIC. Posisi keuangan anak anak perusahaan dapat dilihat
secara real time dan dapat mengambil keputusan paling
cepat untuk anak anak perusahaan.
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Source
• 1.
https://www.health.org.uk/publications/case-study-beth-israel-deaco
ness-medical-center
• https://kensegall.com/2018/06/11/ron-johnson-was-right-about-jcpe
nney/
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