Leading Fundamental Business Change

by the Example of the Implementation of Cloud Computing in an IT Department

Master's Thesis, 2011

97 Pages, Grade: 1,0



1 Introduction
1.1 Background
1.2 Problem Description
1.3 Objectives and Delimitation of the Research

2 Methodology
2.1 Scientific Perspectives
2.2 Setup of the Master Thesis
2.3 Research Strategy - Expert Interviews

3 Aspects of Change and Leadership in Organizations
3.1 Types of Organizational Change
3.1.1 Change Performance / Degree of Change due to Senior (2010)
3.1.2 Timing of Organizational Change
3.1.3 The Three Stages of Change due to Lewin (1958)
3.2 Change Processes and Methodology
3.2.1 The Eight Stage Model due to Kotter (1996)
3.2.2 Psychological and Cultural Aspects
3.3 Communicating Change
3.3.1 Communication Principles due to Hartley and Bruckmann (2002)
3.3.2 Building Trust by Proper Corporate Communication
3.4 Why Learning and Innovation are Important

4 Cloud Computing and its Impact on IT Organizations
4.1 Traditional Information Technology Usage at Organizations
4.1.1 The History of Data Processing and Storage
4.1.2 Current Trends in Information Technology
4.1.3 Current Corporate Information Technology Challenges
4.2 Definition and Characteristics of Cloud Computing
4.2.1 Understanding the Definition of Cloud Computing
4.2.2 Characteristics of Cloud Computing
4.2.3 Cloud Computing Service Models
4.2.4 Cloud Computing Deployment Models
4.3 Aspects of the Change from Traditional IT to Cloud-based IT
4.3.1 Predictions of the IT environment
4.3.2 Traditional Layers of IT Operations
4.3.3 Cloud Layers of IT Operations
4.3.4 Aspects Concerning IT Security and Legal Considerations
4.4 Job Description Change of Corporate IT Workers
4.4.1 Diversification and Division of IT Workers
4.4.2 IT Tasks Affected by the Change
4.4.3 IT Roles Affected by the Change

5 Process of a Cloud-triggered Business Transformation
5.1 Relevance for the Organization
5.1.1 Classification of the Change
5.1.2 Meaning of the Change for the Employees
5.1.3 Relevance of Change in Service and IT Governance
5.2 Finding the Right People
5.2.1 Skills Required for Cloud Computing Managers
5.2.2 Psychological Barriers
5.3 Strategy Development and Vision
5.3.1 The Need for a Change of Corporate Culture
5.3.2 Developing a Vision
5.3.3 Guiding the Mission
5.4 Appropriate Business Change Communication
5.4.1 Internal and External Communication
5.4.2 Communicating the Change Mission
5.4.3 The Urgency of Short-Term Wins and Gains
5.5 Anchoring Achievements / Refreezing Phase
5.5.1 Making the Change Last
5.5.2 Preparing for Future Developments
5.5.3 Assessing the Risk of Cloud Computing

6 Conclusion
6.1 Reflection and Results
6.2 Recommendations and Critics

II. Table of Figures

Figure 1 Change Timings (Magntitude of Change) 18

Figure 2 Different Timings of (Planned) Change 19

Figure 3 Three Phase Model by Lewin 20

Figure 4 Constant IT Change 20

Figure 5 Management Versus Leadership (due to Kotter 1996) 22

Figure 6 Model of “Barriers to Empowerment”, Kotter (1996) 24

Figure 7 The Four Rooms of Change 28

Figure 8 Employee Movement in the Four Rooms of Change 29

Figure 9 Actions of the Leadership Team to Keep Individuals Moving 29

Figure 10 1960s Mainframe Usage 40

Figure 11 1970s Direct Connections to Mainframe 40

Figure 12 1980s Local Area Networks and Personal Computers 42

Figure 13 1990s Growing Importance of the Internet 43

Figure 14 Growing Importance of Roaming (Internet Based) Devices 44

Figure 15 IT Operation Layers 53

Figure 16 Operational Layers when using a Hybrid Cloud 54

Figure 17 Recurring and Creative Tasks 57

Figure 18 Creative Tasks and Cloud Management 58

Figure 19 Impact of a Cloud Computing Change 61

Figure 20 Cloud Computing Change Performance 61

Figure 21 Change of Skillset Required due to Gartner 65

Figure 22 Current Vision of the IT Department’s Responsibilities 71

Figure 23 Future Vision A of the IT Department’s Responsibilities 72

Figure 24 Future Vision B of the IT Department’s Responsibilities 73

Figure 25 Change Communication Timeline 76

Figure 26 Cloud Computing Change Timing 78

III. Executive Summary

This thesis examines the nature of fundamental business changes, how they affect a company, and how a management team can implement the change successfully. A fundamen- tal business change is defined as affecting not only small technical or organizational niches of a department. It is rather the re-organization of a business as a result of the re-structuring of either the entire organization or a single department. It affects (often repeatedly) the majority of employees, the majority of processes and includes a large amount of technical changes.

The introduction of Cloud Computing within an IT department is hereby used as an ex- ample. Cloud Computing is the obtaining of IT capabilities from an external provider, as a service in a pay-per-use manner and over the Internet. This new technology changes the busi- ness of an IT department fundamentally. The following areas are affected by the change to- ward Cloud Computing:

1. People: IT employees do not setup server machines and operating systems any- more. They will select, evaluate and contract external providers which then de- liver the IT service for them. They will still need profound technical expertise in order to evaluate the cloud service and to connect it to the organization’s IT, but their roles will change to a more “account manager”-like role.
2. Technology: Large amounts of IT devices move from the company’s premises to the cloud vendor.
3. Organization: The IT department has to deliver internal and external services and is therefore in a new competitive situation. The alignment to the organiza- tion’s core business needs to come closer and the communication in between needs to be intensified.

A change toward Cloud Computing is not a single change or a single step. This thesis shows, based on the result of empirical research, that the most productive way for a leadership team to guide the change is by establishing a new corporate culture where change is normal and part of the professional modus operandi. It is a business mode that encourages its IT em- ployees to be open to new responsibilities, such as administration skills or the communication with organizational sectors of the company. This corporate culture would furthermore foster openness and curiosity about new technology and technology that is being delivered by an external provider. However, the leadership team should not “over-perform” in this task in order to keep a certain level of stability and reliability. Maintaining a certain level of permanence is crucial to satisfy the individuals need for stable environment.

The most important points for leaders to achieve this fundamental business change of the IT department are outlined in this thesis as follows:

1. Respect the Past: Be aware and highlight that a certain portion of the on premise infrastructure will continue to reside within the organization’s facilities where technical specialists will always be needed. Make clear that the employees are still working for a reliable and stable organization.
2. Communicate a Clear Goal: Cloud Computing will serve as an example of the advantages of not explicitly talking about this new technology and its implemen- tation. Instead of communicating the change toward Cloud Computing (a noto- riously unclear term), leaders should communicate the actual changes that will take place. What needs to be communicated is that the organization is trying to move commodity business to clearly defined services which are ran in an exter- nal datacenter.
3. Create Perspectives: With every change comes opportunity. Insecurity and the fear of job loss have a massive impact on job performance. Thus a leadership team should avoid phrases such as ‘cutting cost’ or ‘saving money’. They should instead highlight new development opportunities for the employees and the increase of the organization’s performance.
4. Maintain Security: The security and stability of the workplace is of great con cern of employees and should be maintained. The security and integrity of data is a fundamental business need and must be maintained when changing the IT strategy.

IV. Applied Terminology

Information Technology: a firm’s total investment in computing and telecommunications technology;1

Consultant: Consultants are people who operate in any organization by planning, recommending, assisting or advertising on many different areas such as financial services, human resources, organizational effectiveness etc. They can influence but do not direct control. They should transfer knowledge.2

Cloud Computing: obtaining IT capabilities from an external provider, as a service in a pay-per-use manner and over the Internet.”3

Social Media: websites and tools that rely on people, who are using them in an interactive manner. The content is not being provided by a super user, but by the normal users themselves.4

Enterprise 2.0: If Social Media tools are used within an enterprise (organization), the toolset used is called an “Enterprise 2.0” system.

“The Organization”: A fictional organization to serve as example to demonstrate different models and findings. The term “Organization” in this thesis always represents the whole organization, and not a single department.

“The organization’s IT department”: is the IT department of the organization mentioned above.

Leading Fundamental Business Change Dominik Heinz

V. List of Abbreviations

illustration not visible in this excerpt

1 Introduction

1.1 Background

The information technology (IT) sector is marked by constant change, a fast pace, and innovative developments. Individuals who are employed within the IT sector agree during their job application interview, that they are willing to learn, that the will never stop asking question, and that they are flexible, and always curious to know the latest and the greatest. Without having these character traits, IT employees can get lost quickly in the complex and fast changing technology jungle. To put it in the words of Pugh: “One of the most striking things about change in information services is that it has become the norm.”5

One such recent change is a new technology called Cloud Computing which is quoted and discussed in journals and discussion boards. Cloud Computing is considered the next big revolution comparable to the invention of the Internet. It is said to change fundamentally the working style and responsibilities of current IT employees.

Considering the magnitude of this innovation, Cloud Computing lends itself for a study of the impact and management of significant changes within a business. Businesses are, in general, always exposed to internal changes, yet often lack guidelines and ideas about the most productive way that these changes can be implemented. This thesis uses the new tech- nology of Cloud Computing in order to exemplify how a fundamental change within a busi- ness can or should be handled. Ultimately, it revises standard models of change, such as the unfreeze-change-freeze model, which are not advisable for many companies anymore, partic- ularly in the IT sector.

1.2 Problem Description

Business employees often feel uneasy with any kind of change of a company. Change raises concerns about potentially losing important responsibilities, one’s position, one’s repu- tation, or even one’s job. In addition, skepticism often arises about business change in general and whether it is really needed or helpful. However, management teams are often forced to Leading Fundamental Business Change Dominik Heinz plan and commit a business change in order to bring the business forward and to stay competitive on the economic market. Kotter lists some such examples stating that “more and more organizations will be pushed to reduce costs, improve the quality of services, locate new opportunities for growth, and increase productivity.”6 Business change is bound to happen to any company, yet it can be a challenge for the management team to overcome those concerns and to guide the company through the change successfully.

This thesis wants to offer guidelines and ideas for a successful business change by us- ing Cloud Computing as an example. This innovation is ideal in examining productive ways of handling business change because it transforms fundamentally how each IT department member works. It is a change that impacts both the technological and organizational structure of an organization. Cloud Computing is furthermore ideal because it lacks a clear definition. As there are different technologies that are labeled with this term, the resulting change will also be varying. As Velte maintains: “Cloud Computing is everywhere. Pick up any magazine or visit almost any IT website or blog and you’ll be sure to see to see talk about Cloud Com- puting. The only problem is that not everyone agrees on what it is. Ask ten different profes- sionals what Cloud Computing is, and you’ll get ten different answers”.7 Therefore, clarifica- tions and explanations of this innovative phenomenon will be provided as well.

1.3 Objectives and Delimitation of the Research

The thesis seeks to strengthen the nexus of two main divisions of a company, which is a company’s organizational sector (management and leadership) on the one hand, and its technical division on the other. The implementation of Cloud Computing within a company will be used as an example of how to lead a fundamental business change. The emphasis will lay specifically on how a change, such as Cloud Computing, affects employees both in theory and in practice, and how an IT leadership team can react most wisely.

Aim 1

The first aim of this thesis is to illustrate and discuss different methods of how to manage business change. In order to understand all subsequent topics about change management, the proper definition and delimitation of a business change is crucial. In addition, leadership aspects, competencies and tasks have to be clarified

Aim 2

Secondly, the technological, historical, and theoretical aspects of Cloud Computing have to be elaborated. Only a proper understanding of this technology, its possible usage, and its impact on a corporate IT department will enable a proper analysis of its relation toward change management.

Aim 3

Thirdly, the switch toward Cloud Computing as a business change needs to be investigated in order to be useful as example. This includes the analysis of various factors, such as timing, impact, and results of this change. Finally, the handling, managing, and the leading of this business change has to be elaborated.

2 Methodology

2.1 Scientific Perspectives

This thesis relies on current scientific literature that concerns itself with business communications, leadership, and change management. Cloud Computing is a new technology that cannot look back on a set of scientific studies. It is therefore described and analyzed on the basis of online magazines, technical papers, and commercial whitepapers. In order to strengthen the empirical basis of this study, interviews have been conducted with active managers from information technology departments or information technology consulting groups. The analysis of these interviews is included in this thesis.

2.2 Setup of the Master Thesis

This thesis is divided into three large sections each one interrogating a specific area of concern.

Section Three:

This section will cover “Aim 1” described in the objectives. The heading will be “As- pects of Change and Leadership in Organizations” and it will cover leadership and change management topics. As these topics are thoroughly represented within the scien- tific literature, this section and its result will rely and compare findings of those studies.

Section Four:

This section will cover “Aim 2” described in the objectives. The heading will be “Cloud Computing and its Impact on IT Organizations” and it will describe and explain the technology of Cloud Computing. Since this term and the surrounding topic are rather new, it will only be possible to partly cover it by using scientific publication. Most quotations used will come from actual online sources.

Section Five:

This section will cover “Aim 3” described in the objectives. The heading will be “Pro- cess of a Cloud-triggered Business Transformation” and it will be a synthesis of section three and four. The leadership and change management topics will be connected with the example of a Cloud Computing triggered change. In order to get an actual and very practical connection, all results will be compared with information gathered by expert interviews.

Please note: Online sources and citations have been referenced within the thesis by us- ing an “ online address shortener ( http://bit.ly ) ” in order to achieve a better readability. All full and original online addresses are referenced together with the shortened address within the bibliography.

2.3 Research Strategy - Expert Interviews

This thesis discusses one of the latest trends of the information technology world. The downside is that it is so new that there does not exists a wide variety of scientific literature which is necessary to elaborate and prove the relevant questions and objectives as described in chapter 1.3. The only possibility to find out the newest information and trends about the topic Cloud Computing lies in expert interviews which have been conducted with representatives from the IT business and science. The questions asked are not directly in conjunction with specific chapters of this thesis. Instead, they match the questions a CIO poses when conducting the change toward Cloud Computing.

The following questions were used for the “Interview Concerning Cloud Computing and Its Impact on IT organizations”:

1. What is in your opinion the best definition of Cloud Computing?
2. Why do you think the Cloud Computing “trend” emerged?
3. What customer pain is primarily addressed by Cloud Computing offerings?
4. What is your personal experience with Cloud Computing?
5. How long do you think, this trend will last?
6. What changes for an organization in their day-to-day business if their IT depart- ment makes a switch toward Cloud Computing?
7. And what changes within the IT department of this organization when starting to use cloud based services?
8. Does the corporate culture need to change in order to be cloud ready?
9. Will Cloud Computing create or kill IT jobs?
10. How dense is the conjunction between the corporate culture and the IT strategy of this corporation?
11. Do you think IT roles need to be changed or aligned if an organization begins to use cloud services instead of on premise services?
12. How long do you think a Cloud Computing introduction change will take for a large business?
13. At last, name 3 main advantages.
14. And 3 disadvantages.

The following participants were interviewed for the “Interview Concerning Cloud Computing and Its Impact on IT organizations”:

Please note: the personal views and opinions expressed are strictly those of the inter viewee and do not reflect the views of the interviewee ’ s employers or affiliated entities.

Participant Name: Astrid Beck

Company: University of Applied Science Esslingen, IT Faculty Function: Professor specialized on Human Machine Interfaces

Participant Name: Bernd Friedrich

Company: Atos Deutschland

Function: Director PSU CBO (R&D for Client Desktop)

Participant Name: Joachim Heinz

Company: T-Systems MMS

FOM Graduate School of Business 15

Leading Fundamental Business Change Dominik Heinz

Function: Senior Consultant Web 2.0, Enterprise 2.0; Social Media Expert.

Participant Name: Monika Schaufler

Company: Cisco Systems

Function: Sales Manager for Vertical Manufacturing Industry

Participant Name: Ralph Kink

Company: Microsoft Deutschland GmbH

Function: Cloud Director (Enterprise Services, Microsoft & Partner Cloud Products)

Participant Name: Stefan Krüger

Company: tangokom

Function: Managing Director, Consultant

Participant Name: Thomas Schmitt

Company: T-Systems International

Function: Director Global Enterprise Architecture

Participant Name: Thomas Titze

Company: Microsoft Deutschland GmbH Function: Enterprise Architect

Participant Name: Dr. oec. HSG Judith Schütz

Company: OSN Open System Network AG

Function: Managing Partner (Expert for Project and Change Management)

The protocols of the interviews can be found in the appendixes B1 to B9. The answers of the participants have been noted down in German language because the interviews have been conducted in German language as requested by the participants.

3 Aspects of Change and Leadership in Organizations

In this section, the different types of change, change management and methodologies are elaborated. After outlining types of organizational change and their definitions, the impact of change on the organization and the employees will be shown. Mastering a change within an organization relies heavily on the way that the organization is led and managed. Thus the proper evaluation and elaboration of different leadership responsibilities and characteristics are essential.

3.1 Types of Organizational Change

Organizational Change can happen in various different methods and timeframes. In or- der to get a better view on different approaches to organizational change, the different meth- ods and timeframes when conducting an organizational change will be shown in the following chapter.

3.1.1Change Performance / Degree of Change due to Senior (2010)

One common differentiator is the magnitude, or ‘degree’ of change. Barbara Senior and Stephen Swailes describe in their publication “Organizational Change” six different terms concerning organizational change performance.8

-Convergent vs. Radical

The convergent method describes the fine-tuning of existing configurations. The radical method is putting the organization or department into a complete different setting or context like being transformed from one blueprint to another.

-Planned vs. Emergent

The planned change has a clearly defined starting and ending point as well as clearly defined states of an organization or part of an organization. “Most planned changes are directed at dealing with performance gaps to bridge the discrepancy between the de-

-Leading Fundamental Business Change Dominik Heinz

sired and the actual state of affairs.”9 The emergent change is happening out of the culture or climate the management was creating, it is not triggered by a concrete goal.

-Evolutionary vs. Revolutionary

The evolutionary or “continuous” change is slowly adapting existing structures whilst the revolutionary method is conducting a change in structures.

To illustrate the different scales of impact to an organization, the change methods could be chained by their different timings:

illustration not visible in this excerpt

Figure 1 Change Timings (Magntitude of Change)

3.1.2 Timing of Organizational Change

As Jackson points out: “In addition to differences in the magnitude (degree) of change are differences in the timing of change”10. The difficulty here lies in the term “timing” which is used in various different ways. “Timing” can indicate the starting point of change in relation to whether the event which triggered the change happened before or after the change. In the first case, Jackson (2008) differentiates between a reactive change, which is being conducted as a result of a critical situation, or a massive change within the businesses environment and an anticipatory change, which is planned dependent of an obvious or apparent need11.

This first way of interpretation leads to the question, whether an organizational change should be conducted before or after the event that showed the need. Most management literature agrees that proactive change must be preferred instead of reactive activities. However, this leaves the difficulty of finding the right time to start. Holland suggests: “The idea is to identify when the organization needs to have its change completed so that organizational goals in the marketplace can continue to be met.” If the performance trends of an organization show a negative development, the management needs to find the presence of business opportunities, see how long these opportunities stay open, and how soon the organization can accomplish or is in need of these opportunities.

In yet another interpretation of the term, “timing” covers the duration of a complete change from its beginning to its end. A change can happen reactive of short-term like for ex- ample just days or weeks. It can also take for years depending on the magnitude of the task:

illustration not visible in this excerpt

Figure 2 Different Timings of (Planned) Change

3.1.3 The Three Stages of Change due to Lewin (1958)

The “three stages” model is an approach to describe the different phases of a change. It is highly simplified, and it separates an (organizational) change into three big stages. The model has been described very well in the publication “Managing Change in Organizations” by Sengupta and Bhattacharya12 which draws the process of the three stages originally devel- oped by Lewin (1958):

1. Unfreezing (Stage 1)

This phase describes the destabilization of the present balance of forces in order to overcome the resistance of change. Different methods of destabilizing depend on the circumstances. They can include external or internal forces like new targets, budget or the introduction of new personnel in favor of change.13

2. Change (Stage 2)

This phase describes the move of the unbalanced system into the desired direction.14

3. Refreezing (Stage 3)

In this phase a new balance has to be established at the organization in order to integrate the change to the status quo. If the refreezing phase is incomplete, the change will be ineffective and pre-change behaviors will be resumed.15

illustration not visible in this excerpt

Figure 3 Three Phase Model by Lewin

In the opinion of the author, this model potentially does not fit to a typical IT change. In the IT world, there never seems to be time for a refreezing of a specific change. Systems are at constant flux, updates and service packs come in weekly or monthly cycles, and software versions are quickly outdated. Thus Lewin’s model in the IT sector would, realistically look more like this:

illustration not visible in this excerpt

Figure 4 Constant IT Change

3.2 Change Processes and Methodology

A vast amount of literature exists on change management and change methodology. In this thesis, not all current models and approaches can be shown or listed. However, there are methods which seem to be widely accepted standard. One of these methods is the “eight stage model” by John Kotter (1996), which will be illustrated in detail in this chapter.

3.2.1 The Eight Stage Model due to Kotter (1996)

John P. Kotter developed a change process, which describes eight stages of a successful organizational change. These stages are sorted by the timeline given from a complete change, beginning with the planning of the change and ending with the successful transformation. Kotter in this model often underlines the importance of leadership and communication skills. The eight stages are described as follows:

Establishing a Sense of Urgency

In the first stage, all stakeholders need to establish a sense of urgency. They have to feel in a way that the planned change is important and needed for the organizational success. “Establishing a sense of urgency is crucial to gaining needed cooperation. With complacency high, transformations usually go nowhere.”16 There are various methods to accomplish this. For example

-using the reference to a clear danger,
-adding (showing) value to the organization and
-benchmarking current organizational practices.17

One of the preferred ways should be, to show the value the planned change will ship, and to make sure, all stakeholders will understand the idea, and determine for themselves that the planned change is really a good thing and is needed.

Creating the Guiding Coalition

Kotter arguments that teams and coalitions always outperform individuals when it comes to change. Individual Leaders should not work and fight for the change alone. He recommends setting up a group of people, who will actively work on the change planning and conduction and who propagate the change to others. “This group will help provide the leadership for change as well as the integrity, authority, and influence needed to successfully execute the transformation.”18

Due to Kotter, the guiding coalition’s members must have extraordinary potential in four specific areas for the team to succeed: position power, expertise, credibility, and leadership. Concerning these characteristics, the appropriate balance of those areas is very important. For example “a guiding coalition of good managers and poor leaders will not succeed”19 because the managerial skills only keep the change process under control whilst the leadership capabilities drive the change20. The following illustration will show the delimitation of leadership and management:

illustration not visible in this excerpt

Figure 5 Management Versus Leadership (due to Kotter 1996)

Developing a Vision and Strategy

Most individuals follow and pursuit short term wins and goals. Most organizational changes however are planned and conducted with a long-term prospective. In order to lead individuals to pursuit long-term goal, a vision can be helpful. The purpose of a vi- sion is to motivate people, to achieve something that may not be purely in their short term interest.21 Due to Ryan, a good vision constitutes of the following characteristics:

- It is imaginable
- It is desirable (there is a sense of urgency)
- It is feasible
- It is focused
- It is flexible
- It is communicable

Additionally, as the task for creating the vision is at the leader, Ryan also emphasizes that a good vision can only be developed “by spending time with people, engaging them in debate about what is possible and what is desirable.”22 Thus, creating a vision is, like creating the guiding coalition, highly dependent on interpersonal skills like communication and team-building.

Communicating the Change Vision

Large changes and the corresponding visions develop over time. During the process, the guiding coalition’s members undergo various situations and challenges, where they have to stand enormous intellectual and emotional pressure since the change of course not only affects the employee’s futures, it also affects the guiding coalition’s mem- ber’s futures. It is a great threat to underestimate the magnitude of the task. Due to Kotter, the only way to circumvent this issue is to keep it simple. “The time and ener- gy required for effective vision communication are directly related to the clarity and simplicity of the message”23. “Simplicity” and other communication principles will be elaborated further in chapter 3.3.

Empowering Employees for Broad-based Action

Empowering employees is based on a leadership principle known as path-goal theory by Beitler (2006).24 The path-goal theory is “a direct extension of the expectancy theo- ry of motivation, […] it suggests that the primary functions of a leader are to make valued or desired awards available in the workplace and to clarify for the subordinates the kinds of behavior that will lead to goal accomplishment and valued rewards”25. In order to achieve this task, barriers to empowerment described by Kotter needs to be overmastered. The following illustration (next page) shows common barriers:

illustration not visible in this excerpt

Figure 6 Model of “Barriers to Empowerment”, Kotter (1996)

Generating Short-Term Wins

“What use is a vision if it is not known, heard, spoken, and shared? Periodic reminders of the […] vision, including reflections upon short-term victories and their implica-tions, are essential during all stages”26 of a change process. The individuals who are working on conducting the change need to get an idea of their works impact and results. If these people do not get any short-term wins and benefits as a result of working hard, the overall motivation will drop quickly. Thus besides living the vision for the long-term goal, leaders must create and celebrate short-term wins of the organization. Due to Kotter, a short-term win should have these three characteristics:

-High Visibility - the majority of the employees should experience the result as being real and not hype.
-No ambiguity - the result should be clear.
-A clear relation to the change effort.27

Consolidating Gains and Producing More Change

There is a big temptation and risk for managers to celebrate the overall efforts and re- sults of a change too soon. A premature victory celebration kills momentum, because people who have been resisting the transformation effort see the declaration of victory as an opportunity to stop change.28 It is therefore better to wait longer until real and profound results have been achieved, or to plan and seek for smaller goals and mile- stones that can be reached faster. If the leadership team is capable to keep up momen- tum and to teach the organization to produce even more change, a first step toward a so-called “learning organization” has been made. The “learning organization” will be described in chapter 3.4.

Anchoring New Approaches in the Culture

The “anchoring” phase is most likely the same as the “refreezing” phase described above. The goal is to save the new learning and achievements the organization made and to anchor it within the corporate culture. Corporate culture and psychological as- pects will be discussed in chapter 3.2.2.


1 Weill, P.; Broadbent, M. (1998), p.6

2 Hornstein, H. (no date), p.2

3 Stanoevska-Slabeva, K. (2009), p.49

4 Safko, L.; Brake, D. (2009), p.52

5 Pugh, L. (2007), p.1

6 Kotter, J.P. (1996), p.3

7 Velte, T; et. Al. (2009), p.3

8 Cp. Senior, B et. Al. (2010), p.41

9 Sengupta, N.; et. Al. (2006), p.6

10 Jackson, S.E., et. Al (2008), p.76

11 Jackson, S.E., et. Al (2008), p.76

12 Sengupta, N.; et. Al. (2006), p.7

13 Cp. Sinclair-Hunt, M; et. Al. (2005), p.124

14 Cp. Sinclair-Hunt, M; et. Al. (2005), p.124

15 Cp. Marquis, B.L.; Huston, C.J. (2008), p.169

16 Kotter, J.P. (1996), p.36

17 Cp. Englund, R.L.; et. Al. (2003), p.33

18 Gilley, J.; Gilley, A. (2003), p.84

19 Kotter, J.P. (1996), p.58

20 Cp. Kotter, J.P. (1996), p.57

21 Cp. Ryan, R. (2007) p.63

22 Ryan, R. (2007) p.64

23 Kotter, J.P. (1996), p.89

24 Cp. Sabri, E.H.; et. Al. (2006), p.180

25 Griffin, W.R. (2007), p.334

26 Saxena, A. (2008), p.197

27 Cp. Kotter, J.P. (1996), p.122

28 HBS School Press (2008), p.81

Excerpt out of 97 pages


Leading Fundamental Business Change
by the Example of the Implementation of Cloud Computing in an IT Department
University of Applied Sciences Stuttgart
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
1059 KB
leading, fundamental, business, change, example, implementation, cloud, computing, department
Quote paper
Dominik Heinz (Author), 2011, Leading Fundamental Business Change, Munich, GRIN Verlag, https://www.grin.com/document/278043


  • No comments yet.
Read the ebook
Title: Leading Fundamental Business Change

Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free