Caterpillar: Change Management

Subject: Management
Pages: 12
Words: 3662
Reading time:
13 min
Study level: PhD

Introduction

Today, more than ever, business environments have become turbulent. Only those who manage to adapt and exploit these changes will have a chance of survival. Firms need to realize that technological advancements are a reality and these can either hinder or promote success. Additionally, consumers are getting more informed and their needs are constantly altering. Industries are now characterized by immense competition; an issue that could threaten traditional leaders. Sometimes the political climate in a country may be unfavorable for business so companies need to be aware of them. Change management is the answer to all these emerging changes and a detailed review of the role of change, change implementation, change agents, change measurement, and change diffusion will illustrate how it is indeed possible to weather the storm or even predict the storm and thrive in it.

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Importance of envisioning changeYuki and Lepsinger (2006) explain that some companies have carved a niche as providers of cutting-edge services and products. Such an approach requires them to be at the forefront of innovation and this means always responding to potential drivers. This strategy may be compulsory for all organizations in certain industries. For example, computer parts manufacturers, sellers, and distributors need to envision change continuously. Operators in the fashion industry need to be keen on changing customer preferences thus forcing them to always envision change. Players in the advertising industry also fall in the same category and so do those who deal with medical supplies or drugs. These kinds of firms need to envision change because the nature of their industries is such that one cannot survive without doing so. Usually, these firms take their time to understand elements of their business environment such that they can identify which ones will affect the way they carry on with production. Most of the time, they will need to study their competitors, customers, suppliers, governmental representatives as well as other stakeholders who will in one way or another impact the business. Therefore, if companies want to be leaders in their industries or if they exist in industries that are always changing then they need to involve all elements of the organization in the monitoring process so that they can be adequately involved in making necessary changes in their firms.

Envisioning change is also important because it allows an organization to foster the change culture. When this occurs, then change is no longer viewed as an interruption to normal business but a natural part of the system. It is always better to have great initiative and to continuously improve rather than react to serious and disruptive events every once in a while. When change culture has been engrained in an organization then participants will always be going through minor and relatively predictable changes. However if a company does not envision change and does not make it part of its culture then chances are that it will not respond well when a situation arises which will force them to change. In such dramatic occurrences, players are likely to get into a crisis since they have no idea about where to start. Usually envisioning change in an organization causes many companies to distribute information thoroughly and without restriction. This implies that people in the firm will already be highly adaptable and thus be able to step up when change arises.

Companies need to envision change because it is only after they have fully analyzed the right picture that they can understand how their environment will affect business. In the vision, a company is likely to include a number of issues ranging from strategic objectives, the symbols and slogans that will represent this vision, the key methods that will be utilized in achievement of these objectives as well as identification of the values involved in carrying out the vision. At the end of the day, most people in the firm will now be able to relate to the things that can be achieved if the vision of change was implemented. Envisioning change is critical in achievement of that change because it allows leaders to communicate the message that they believe in the vision. It will also cause other members of the organization to be committed to its realization because their leaders will have cast away any doubts of failure.

Application of the ways to implement change

Change can be implemented through the use of various concept actions that are based on innovation or change. One such concept is Lean Six Sigma. Caterpillar as an organization had been performing relatively poorly by the time it made the decision to implement this change. As of 2000, the company started facing immense competition from other players and there was little to show for their effort through their revenues. It decided to embark on a Lean Six Sigma change program that was geared at fostering the culture of change within the organization. This was not going to be an easy task because the company had branches in several parts of the world (Byrne et al., 2007).

Caterpillar realized that they needed to envision change. Consequently, they created a twenty year plan that was divided into four sections. In the first section, they covered some of the safety and quality issues; they also dealt with market positioning as well as ordering to delivery. Here, the company emphasized the importance of performance so that they could make sure that they had goals which were easily measurable and understandable. This planning process did not leave out any part of the organization even those ones that were at the very bottom. As a result, Caterpillar enforced a certain level of discipline that would later be crucial in making the change strategy work. It enforced a heightened level of accountability that would ensure people worked towards achievement of results.

The organization dealt with the operations sections. It had slightly over four thousand employees who included professionals in various sectors. They were taken through an intensive nine month training that would enable them to act as change agents in their units. They were therefore equipped to start the process of transforming their organizations. The professionals acted as mentors to other members of the organization who could then contribute towards the overall change management goals. These changes were implemented in large ways and small ways and eventually led to the creation of very effective processes and innovative products. For instance, in the research and development section, the company ensured that engineers or other professionals worked well with each other to improve processes. The lean Six Sigma also fostered change with regard to the degree of collaboration between the employees and clients (Byrne et al., 2007). They made a shift towards better problem solving and therefore developed solutions towards the major challenges in the company. One search example was with regard to its relationship with oil mining industries in Canada. The company realized that their customer’s processes were rather complex especially in terms of terrain. Consequently, Caterpillar decided to diversify its mining trucks such that sand oil miners could get a greater selection of models. They also altered the prices of the various models so that consumers could pick up the ones that actually relate to them and apply to them. The company also created another revolutionary product which was ‘ascert’ technology in its engines. This allowed Caterpillar to stand out from its competition because it could now offer an environmentally friendly commodity. Furthermore, it provided customers with costs savings and therefore made them quite outstanding. Caterpillar also looked into their supply chain and worked towards improving it. They reduced lead times by about fifty percent by redesigning their scheduling processes (Byrne et al., 2007).

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It should be noted that change by its very nature is quite multifaceted. This implies that leaders who try to explain and specify all aspects of the change process will be frustrated in the end. The most effective way of implementing change is by allowing other members of the organization to participate in this process. In other words, delegation is always a key component in achieving this.

Roles of change agents

Lunenberg (2000) explains that there are three major roles carried out by change agents. Sometimes the change agent may come from outside or may be the manager of the organization. Either way, he or she must engage in these three roles which are: consulting, training and research. As a consultant, the change agent’s job is to look for information either inside or outside the institution so as to determine the issues that are relevant to change management. Secondly, the change agent needs to act as a trainer. In this role, the latter individual is normally supposed to help determine the action steps that need to be taken in light of the information acquired and should also equip members with the sets of skills needed to respond to those findings. Many organizations choose to do this through the help of external consultants while others prefer to do it on their own. Third, the change agent should also be regarded as a researcher. Here he evaluates the change strategy and identifies ways of improving it for effective future performance.

It should be noted that change agents differ tremendously according to the kind of approach they use in order to implement change. Sometimes an organization may utilize a radical change agent who employs external means in order to affect the goings on inside the firm. This kind of change agent is usually expected to organize mass demonstrations that will exert external pressure upon the organization to change. In other words, this one is best known as the outside pressure type. On the other hand, a change agent may be a people – change – technology kind. He reasons that people’s performance directly affects organizational performance so he often works on the behavior of members in the organization. In this regard, he will utilize things such as job enrichment and goal setting in order to alter behavior. At such moments, this kind of change agent will have minimized low employee morale or poor quality work. In other instances, a change agent could be the analysis-for-top type. Here, such a person normally works on improving the technological aspects of the firm or its inherent structure. Someone like this will do policy analysis, operations research and other analytics in order to boost organizational efficiency (Mansfield, 2011). Sometimes the change agent under consideration may be the organization development kind. Such people would rather focus on the internal issues rather than the external ones. In other words, they tend to look into aspects of communication and intergroup relationships that affect the internal processes of the company. At such times, the latter individuals will often be responsible for in-house training and they will also carry out some kind of sensitivity training that will work on communication issues or other internal matters in the firm.

How governance of change and diffusion of change are accomplished

In order to make sure that members of an organization support change management in an organization then governance should involve creating support for them. In this regard, the company needs to be aware that human nature naturally resists change so support should be offered in order to reverse that resistance. Governance of change should therefore involve creating support through a series of avenues. First, a company’s leaders can start by explaining why they need change and they must try as much as possible to stress the need for urgency. This will cause members of the organization to support this initiative because they will have fully understood what that issue actually involves. Furthermore, governance of change should not just cover education or communication of the change issue but it should also involve mobilization of support from the company. Leaders need to look for potential loopholes or opponents of the change and then establish ways of handling that resistance (Thota, 2012). Most of the time it may be very difficult for just one leader to garner support for a certain change process. In these circumstances, it is will always be imperative for them to look for other supporters both within and outside the organization. These individuals can act as important influencers amongst their peers. From the external environment, it can be possible for officials in the government, labor union representatives and financial executives to support the change. This would make it quite easy for the concerned change initiatives to work. However, a leader must have assessed the likelihood for support from these external parties prior to garnering their support and backing throughout the process.

Diffusion of change needs to be done in a manner that acknowledges the major issues involved in implementation of change. Chew et. al. (2006) explain that change can be diffused through the cooperation and collaboration of leaders and their employees. In other words, these leaders need to realize that people will have different attitudes towards change and not everyone will be in a position to voice their concerns. Consequently, leaders need to interact with staff so as to get feedback from them concerning change implementation and also so as to meet their underlying needs. Furthermore, the concerned leadership should also incorporate this feedback in the change process by first listening to people and then applying some suggestions in the ongoing change process. Lastly, diffusion of change can be done through taking corrective actions in the change process. Sometimes, positive outcomes may be reported for customers but not for the concerned employees. In this regard, leaders must be sensitive to the extra workload and diminished spirits of members of the organization. It is only by responding to these needs that a company can effectively offer its employees some real solutions to problems.

Governance should also involve the facilitation of change. In other words, leaders need to identify any unfilled positions for change agents. They then need to look for ways of filling them and supporting those change agents in their role. Leaders should offer resources to those concerned so that they can effect the change easily. They should also be there to ease the pain of the company’s members when carrying out the changes as most of them will feel threatened by those changes. Information flow is an important part of this process and will definitely go a long way in ascertaining that everyone is aware of the progress being made in the change process. Governance should also involve determining some of the early opportunities for celebrating success as this boosts morale in the firm and fosters people’s commitment to change. The major sponsor of the change should be at the centre of this change process so that he or she can demonstrate his or her enthusiasm to the change process. However, this should not be confused for a lack of delegation throughout the process (Lavalle, 2009). If the sponsor does not appear to be committed to the process then chances are that other people will also not be convinced to put their weight behind it as well.

Strategy and purpose of change

The most effective way of handling change as a strategy is not to leave the job to top executives in the organization but to look for ways of getting everyone to contribute. In strategizing for an organization, companies need to know exactly where they are going; that means that they should have certain goals. This also implies that they should decide on the role of change in their company and what change will achieve for them. Also, they should have specific action steps that will help them work towards the goal. They need to allocate resources for taking those steps. However, for change to be seen as strategy in an organization it needs to be relevant to the firm’s core competencies. The company must first understand the activities that are important in achievement of its objectives. After doing so then the company can offer successful methods of implementing those objectives. Change management never really ends at the implementation phase. It is almost always crucial to set benchmarks and assess the effectiveness of those change initiatives. Usually, monitoring should occur against the backdrop of the goals and the vision set at the beginning of the change process. Even though everyone will be involved in the instatement of change within an organization, there will still be a need for a strong leader who can motivate and inspire others with his vision. There should always be someone responsible for the task of causing change around the company. Top leaders tend to support and mobilize but they also look for ways of bringing together members of the team (Gilley et. al., 2007). Also, for change to function as strategy then the goals set out should not just be limited to the entire organization; the various departments and business units in a company should also have their separate missions, objectives and aspirations as well.

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Change sometimes needs to be examined in terms of how it can alter the mindsets of employees. If change is regarded as a vital part of the day to operations of a company, then chances are that the organization’s stakeholders will always strive for continuous improvement and this will almost always cause better outcomes. The purpose of change is therefore to alter the way people think in an organization in order to make them highly effective. Change also makes an organization sensitive and flexible towards its external environment and also leads to a situation in which business priorities always take precedence. Sometimes some companies lack mechanisms for aligning international processes with technological or internal changes. When change takes centre stage in an organization’s outlook then it is likely that all their processes will be aligned to these external and internal changes. It is also likely that different employees have different expectations of where their company will be headed. Alternatively, some may have divergent opinions about the importance and effect of challenges in the company. Because of these varied understandings, it is always vital for change agents to guide stakeholders in the firm when challenges arise. The purpose of change and change management in this regard is to make organizational stakeholders to always be at the forefront of handling major challenges. This means that the concerned parties can always adapt to the ever changing marketplace and it also increases their likelihood of survival at such times (Carnall, 2008).

How to assess and measure change

Change measurement is a crucial component of organizational change management because companies cannot simply work haphazardly; they need to know whether the strategies and methods they employ are working or not. Furthermore, some of the approaches may be more effective than others so the company should be in a position to determine which ones so that it can focus on the ones that work or improve the ones that do not. Change measurement should never be complicated because it will undermine the very purpose of assessment. People will not understand the system and they will not be motivated to improve in the subsequent future. Therefore the assessment method offered is a six step procedure that begins with a definition of the things that need to be measured. This should then be followed by the process of collecting raw or baseline data. The third phase is having an aim while the fourth one is collecting specific data that is related to the aim. Fifth, companies need to represent those results in a chart and lastly they need to ask questions.

The first step as stated earlier involves defining what will be measured. This is normally one of the most crucial steps because it reflects upon the objectives which had been set out during change commencement. Furthermore, it ascertains that all the stakeholders are on board because they should have been involved in the goal setting process. The definition phase needs to be such that it can be easily understood by all. The second step involved collection of raw or baseline data which should occur prior to the change process. The purpose of this step is to allow the firm to work backwards in order to ascertain that whatever they did actually relates to this baseline. The third step is to have a clear aim for improvement. In other words, the organization should target a certain figure. For instance, if it is a health organization then an example of an aim that is applicable here is: “to reduce patient waiting times by sixty to twenty percent”. It should be noted that these aims are never curved in stone; companies need to adjust them in order to make them more realistic or more ambitious. Organizations can then work on data collection as the fourth step. Here they need to focus on that data that specifically relates to the change process. The data needs to be related to the baseline data set out in step two. The trick is always to be consistent about this collection. Step five involves using visual aid to represent the progress or the data collected. Some firms use excel while others prefer creating the graphs manually. A simple example can be a plot of delivery time versus time in months. A company can visualize the effectiveness of their change process over time and thus compare each monthly result with what had been done previously. Lastly, firms need to ask question; in other words, they need to place the results in context. They should find out which results worked and for those that did not, they should ask why (NIATX, 2008).

Conclusion

Change management is never a one-size-fits-all endeavor as it heavily depends on the nature of the firm and the industry that it operates in. Nonetheless the most important thing to realize is that when change is done incrementally rather than haphazardly then it is likely to be successful. Fostering a change culture will tend to cushion the firm against resistance and will ensure that transitions occur smoothly.

References

Yuki, G. & Lepsinger, R. (2008). Leading change: adapting and innovating in an uncertain world. LIA 26(2), 1-14.

Gilley, A., Gilley, J. & Heather. (2008). Organizational change and characteristics of leadership effectiveness. NY: McMillan.

Carnall, C. (2008). Managing change in organizations. NJ: Prentice hall.

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NIATX (2008). How to measure the impact of change.Web.

Bryne, G., Lubowe, D. & Blitz, A., (2009) Driving operational innovation using Lean Six Sigma. IBM report G510-6331-01(1-16).

Lavalle, S. (2009). Business analytics and innovation for the intelligent enterprise. IBM Global business services executive report GBE03211-USEN-03(1-20).

Thota, H. (2012). Key concepts in innovation. NY: Palgrave.

Lunenburg, F. (2010). Managing change: role of the change agent. International journal of management, business and administration, 13(1):1-6.

Chew, M., Cheng, J. & Petrovic- Lazarevi, S. (2006). Journal of global business and technology 2(1), 56-66.

Mansfield, J. (2011). The nature of change: an introductory text to designing complex systems and managing change. London: Imperial college press.