Harnessing Resistance:

Using the Theory of Constraints to assist Change Management

Vicky Mabin, Victoria University of Wellington, NZ Steve Forgeson, WestpacTrust, Wellington, NZ
September 2000
Acknowledgements: Alan Wright, Lawrence Green Jeff, Leri, and John Davies

Overview
Review of change management literature Prerequisites for successful change Overcoming resistance to change A new approach? Case study Reflections and conclusions

Change Management: Perspectives from the literature

Vision Culture Communication Leadership Trust and Power Teamwork Change processes

Resistance to Change
Feedback that change proposal is flawed
eg Kanter (1985): 10 factors causing resistance due to losses, fears, unmet needs etc

Most view resistance as something to be dealt with and overcome

Schermerhorn (1989): 6 approaches for dealing with resistance to change, ranging from education/communication to coercion

Waddell and Sohals view of resistance to change

Research from 60s and 70s
benefits of resistance
better than apathy avoids group-think helps focus on areas needing addressing energy for change

largely ignored
... notable absence of management models that incorporate the possibility of utility in resistance ...

Prerequisites for success

All these factors are important in planning and carrying out change
present the big picture with clarity on goals logical and compelling communicated well develop trust and teamwork excellent leadership overcoming/utilising resistance

But how do you achieve them?

Pascales Prescription
Much deeper inquiry
unfolding competitive situation understanding of invisible patterns box

Conduct organisational audit Dont avoid conflict: confront and resolve it

disagree without being disagreeable tackle underlying assumptions and invisible premises on which decisions are based

Theory of Constraints (Goldratt, 1990 )

Not part of Change Management literature but it
uses resistance to change explicitly and positively to develop change proposals

Focuses on 3 questions
What to change? To what to change How to cause the change?

So what is TOC?
Systems methodology . including
Thinking Process framework and tool kit
which seeks to help people learn how to use the psychological aspects to assist, rather than to impair, the implementation of .. solutions Provides practical guidelines to put into practice the prescriptions for organisational change

TP Roadmap
What to Change? Identifying the Problem

UDE UDE UDE UDE

2. Current Reality Tree: Is the core conflict really the cor e conflict? 3. Evaporating Cloud: What assumption(s) are we going to challenge?

Analysis

1. Three-Cloud Proces s: What core conflict is responsible for the UDEs?

Assumption/ Inje ction Core Conflic t

Clouds objective

To What to Change? Constructing the Solution

How to Cause a Change? Designing the Implementation

6. Trans ition Trees: What actions must we take to implement the PreRequisite Tree?

Strategy
DE

IO IO

Tactics

5. PreRequisite Tree: In what or der do we implement the T.O.s and what blocks their implementation? All TOs implemented

DE DE
TO

Action

TO

TO

DE Obs IO
TO Great Idea

Obs Obs
Action

Obs IO IO Obs

IO Obs IO IO

IO

4. Futur e Reality Tree: Ensures that the starting injection will lead to all the DEs without creating negative branches. Copyright Avraham Y. Goldratt Institute, 2000 1

WestpacTrust Case Study

The merger (Westpac + Trust Bank)
largest financial institution in NZ down-sizing mandated displacement strategy channels (DSCs)

The Wanganui area project and our role The problem diagnosis (Sept 97)
using CRT and CCC

WestpacTrust CRT Version2

Merger fails

Analysis
35 In-branch customer service levels fall 42 Managers are not motivated to supply leadership to branch teams

Profits fall

54 Customers are at risk of moving their business from the bank

45 Customers develop a negative image of the organisation

52 Staff communicate their unease to customers 51 Customers have developed relationships with staff 44 DS Strategies fail

25 Staff are unsettled about their future with the organisation

24 Sales targets are a major part of staff appraisal system

23 Staff feel that they are losing sales opportunities

43 Some staff will not sell the DS products

34 Some staff resent the increase in workload

22 Fewer customers come into the branch

41 Managers are not motivated to promote DS channels 33 Some staff feel they are asked to do more with less resources

13 Managers are uncertain about their future with the organisation

Customers get confused

21 DS channels do not require the customer to come into the branch

Some staff try to sell the DSC's

Some staff resist selling the DSC's

30 There will be more customers though the remaining branches

20 Customers are asked to complete their banking using DS channels

Staff feel uncertain about the best option

There is tension and uncertainty There is pressure to prevent the DSC's from working

There is pressure to make the DSC's work

DSC's are the only way to achieve this aim The merger is based on the understanding that we will reduce branch and staff numbers while customer numbers remain the same

We must keep our existing customers while reducing branches and staff

We must keep an effective workforce

Staff feel threatened by new strategies

It is hard to get new customers

We wish to make the merger successful

Positive staff attitudes are especially important in the service industry

Core Conflict Cloud

It is hard to DSC's are the get new only way to Success depends on customers achieve this aim lower branch and staff numbers for the same customer base Keep our existing
customers while reducing branches and staff Make the merger successful Keep an effective workforce Prevent the DSC's from working Make the DSC's work

Positive staff attitudes are especially important in the service industry

Staff feel threatened by new strategies

We run a change management programme to show why DSC's are important

What next?
FRT - showing big picture of future NBRs - dealing with Yes, but issues PRTs - detailing obstacles and prerequisites to implementation TTs - detailed step-by-step action plans Critical Chain project and resource planning
see roadmap

TOCs 6 steps to buy-in

1 2 3 Steps to Buy-In Consensus on the core problem Consensus on direction of the solution Consensus that the solution solves the problems and achieves the desired results and strategic objectives Ensure all significant negative sideeffects have been surfaced and trimmed Ensure all major obstacles to implementation have been surfaced and addressed Ensure we have commitment of all leadership to making the implementation successful
Source: Burton Houle (2000)

TOC tools CCC, CRT CCC FRT

NBRs

PRTs

TTs

Results - measurable
Percentage of transactions that could have been performed through the DSCs.
Original Proportion of displaceable Branch transactions (%) Trust Bank Wanganui Westpac Wanganui Trust Bank Chartwell Westpac Te Rapa 71 74 60 72 41 38 43 47 Proportion as at December 1997 (%) Reduction in displaceable transactions (%) 30 36 23 25

Qualitative Results
Westpac Branch
Clear understanding of current situation and need for DSCs from TOC maps Ownership of project Unity between manager and staff Strong leadership

Trust Bank Branch

Lingering resentment re merger Lack of acceptance of current situation Tension between manager and staff Lack of clear direction and leadership

3 Requirements for change

(Dettmer 1998)
1. Technically feasible 2. Economically feasible 3. Politically feasible
Any change effort that addresses the first two without the third is dead in the water!

Causes of resistance & TOC tools

Fear of the unknown Loss of control Loss of face Loss of competency Need for security Poor timing Force of habit Lack of support Lack of confidence Lingering resentment CRT, FRT FRT CRT, CCC FRT FRT, NBR FRT, PRT, TT CRT, PRT, TT TT FRT, PRT, TT NBR, FRT, PRT

6 psychological barriers (Dettmer)

Who stands to LOSE from the change? Who stands to GAIN from the change? Whose STATUS might change? Whose AUTHORITY might change? Whose SECURITY might be threatened? Whose SATISFACTION might be compromised? Dettmer recommends using Conflict Clouds to identify and resolve the various conflicts underlying these barriers, enabling the full solution to be implemented.

Conclusions
TOC provides framework and tool kit to help manage and lead change through:
Vision, Leadership,Communication ... Harnessing resistance Surfacing assumptions Confronting and resolving conflicts Combining rigorous logic with psychological factors To aid analysis, strategic, and tactical planning and implementation

Leaders v Managers
Behavioural differences:
Leaders behaviours innovate long range perspectives eye the horizon challenge the status quo focus on people communicate originate do the right thing Source: Bennis (1997) Managers behaviours administer short term views eye the bottom line accept the status quo focus on structure command imitate do things right

Conditions leading to trust

Competence Openness Supportiveness Reward systems A demonstration that the leader can do the job A willingness to share relevant information An acceptance of people as they are and tolerance for disagreement Win -win reward systems where everyone benefits from a persons or a departments success - or at least no one suffers
Source: Zand (1997)

Figure 3a: Conflict Cloud

Customers use DSCs Managers feel certain about their future Staff feel settled

Staff promote DSCs

Staff must not promote DSCs

Figure 3b: Conflict Cloud Assumptions

Staff are best at convincing customers

Customers use DSCs Managers feel certain about their future

So they perform well

Staff promote DSCs

Cant do both!

Staff feel settled

Staff must not promote DSCs

New ways make staff feel unsettled

Figure 3c: Conflict Cloud Proposed Solution

Staff are best at convincing customers To avoid the threat of further job losses

Customers use DSCs

Staff promote DSCs

Managers feel certain about their future

Cant do both!

So they perform well

Staff feel settled about their future

Staff must not promote DSCs

New ways make staff feel unsettled

Implement a change programme to ensure all staff feel confident about DSCs and why theyre needed