Progression of Change

Kathryn W. Jablokow, Robert E. Samuel
Penn State University


Motivation for Study
Leaders must constantly deal with the difficulties of how change is reshaping organizations, markets, and industry boundaries. This turbulence has leaders constantly dealing with the pressure to identify and observe the progression of change. However, leading indicators related to the progression of change are often difficult to observe. This study will highlight leading theories that leaders utilize to make critical decisions to stay the course or reverse direction. The collective awareness of change allows leaders to formulate a strategy and develop the core discipline of Change Lifecycle Management (CLM).

Approaches to Change
The following highlights historical key theories of change:

  • Kurt Lewin Planned Change: Field Theory, Group Dynamics, Action Research, and 3-Step Model
  • Complexity Theories: internal democracy, self-organization, order-generating rules.
  • Evolutionary Theory: natural selection, probability, and complexity
  • Kuhn – The Structure of Scientific Revolutions
  • Principles of Change ˡ

Hall has been a leader of an international team of researchers studying the change process in schools, colleges, businesses, and government agencies. The sample of change principles outlined below is presented as predictable aspects of change.

  • Change is a process, not an event
  • An organization does not change until the individuals within it change
  • Interventions are the actions and events that are key to the success of the change process
  • There will be no change in outcomes until new practices are implemented

Leadership and Change
The following topics are often discussed when describing leadership with respect to change:

  • Creating the case for change
  • Creating structural change
  • Implementing and sustaining change
  • Facilitating and developing the change capability

Organizational lmpact
The following are topics often discussed when assessing the impact of change on an organization:

  • Reform or Transform
  • Establish cultural values
  • Strategies for Cultural change
  • Overcoming resistance to planned culture change

Understanding Progression of Change

KAI Theory

  • Overview
  • Style
  • Paradox of Structure

Catalytic Nature of Change
Spiral versus Pendulum

Observing Progression of Change
Scientific Examples

Health Care lnsurance Case Study

Aetna, Inc. 2000 to 2006 Turnaround Success
Aetna, Inc. is continuously facing growing challenges to maintain a competitive environment and remain flexible to accommodate the currently dynamic nature of the health care industry. As a primary insurance provider of health, disability, group life, and pharmacy, Aetna completed managerial and organizational changes to be competitive.

Summary of Events
As indicated in recent survey results, division-wide meetings, and open discussions, individuals experienced increased stress due to management changes recently introduced. These changes include three different Chief Executive Officers (CEOs) between 1999 and 200I, the appointment of a new Chief Information Officers (CIO) in 2001 and 2005, and the introduction of new processes to add structure to inefficient operations. This research studied the progression of change within Aetna and the perceived movement as observed by key individuals.

Observed Progression of Change
Change affects many Adaptive-Innovative elements ², however, this research focused on two primary and two additional supplemental elements:

1. Catalytic nature of change – Did Aetna experience a spiral progression or a pendulum progression?
2. Cognitive climate – Is the progression of change accurately reflected in the group climate?

After reviewing several executive level presentations, key phrases and statements were identified that indicated a change in direction or a strengthening of a current direction. For example, in April 2, 2001, CEO Jack Rowe M.D. stated ³ “I want to express my gratitude to Bill Donaldson [former CEO] for his contribution as chairman over the last 13 months. Under his leadership, we put Aetna on a new course. We are taking aggressive steps to improve our operations and overall customer service, enhance our financial performance, create a member-centric business model, and restore relationships with key constituencies.”

Dr. Rowe indicates in just a few words how a change from a more innovative view (represented with the words “new course”) to a more adaptive view (represented with the words “aggressive steps to improve”).

This statement shows a pendulum swing from more innovative to a more adaptive view. The corporate problems of 2001 (lost market valuation, lawsuits) needed a more adaptive approach after years of positive membership growth supported by the leadership of a more innovative management team.

Similar statements between 2001 and 2006 by Dr. Rowe showed a spiral progression from a more innovative to a more adaptive and then back to a more innovative movement. This is shown by the
corporate theme statements from 2002 through 2006:

• Return to Basics in 2002; as indicated by Dr. Rowe in late 2002 ⁴, he used phrases such as “requires a series of surefooted steps” and “entail a more disciplined approach” to prepare the management leadership for a more adaptive problem solving approach.

• Gaining Ground in 2003; Dr. Rowe mentions in late 2002⁵ “at the midpoint of our turnaround plan … through a lot of hard work – day after day, week after week, month after month – we have fulfilled our commitment” to show a diversified balance between adaptive and innovative problem solving for the upcoming 2003 year.

• Hitting our Stride in 2004; “As we complete Aetna’s transformation, we also can help shape the future of the industry … seeking new opportunities”⁶ stated Dr. Rowe at the end of 2003 shows a slight direction back to a more innovative approach. In 2004, Dr. Rowe also reported⁷ “we will be focused on delivering a unique value proposition to customers; taking advantage of our strengths — information, innovation and integration. The next three years are about making Aetna the leader and profoundly changing the role and view of health insurers. I’m very excited about this next phase of our company’s evolution. Thanks for all of the work you’ve done to lay the foundation for the new Aetna. We are hitting our stride and ready for the future.”

• Breaking Away in 2005; By mid 2005, Dr. Rowe stated, ⁸ “we continued to attract new customers with innovative, value added products, and had a number of “firsts” … Breaking Away In ’05.” It laid out what we need to do this year to grow Aetna’s business in a meaningful way, build on our leadership position and allow us to “break away” from the competition.” This shows Aetna’s leadership more innovative approach (represented with such words as “firsts”) by completing the spiral to meet the original leadership direction from 2000 but with more structure and accountability gathered during the more adaptive years.

• Shaping our Future in 2006: This statement speaks to the importance of continued growth and innovation in Aetna’s quest for industry leadership. It is interesting to note that time seems to be an independent variable when evaluating the catalytic nature of change. Large change (including mergers along with senior management rotation) over a short timeline seems to result in a pendulum of change effect that could have negative business results. Aetna experienced this when three CEO rotations, and associated management staff, occurred between 1998 and 2001. However, the same degree of change over a longer timeline seems to result in a spiral of change effect that has, in Aetna’s case, resulted in a positive business result. This is representative of Aetna’s phased and controlled management rotation over a six year period of 2001 – 2006.

The following figure shows the corporate change momentum:

Figure 1 – Aetna’s Spiral of Change

The cognitive climate of the AIS organization followed the exact same path as the corporate change direction, just several years delayed. One manager explained this delay as a typical phenomenon where initiatives “funnel down” through the organization. Cognitive climate could have played a significant role when exploring this delayed reaction. As Kirton highlights, “it is assumed that a group’s cognitive climate is part of the wider organizational climate, itself a part of the wider, general culture … individuals feel a pressure to conform to the climate guideline structure.” ⁹

Due to the wealth of material, the process of summarizing the interview data involved a considerable amount of time and effort. However, a common thread developed as every interview contained references to a framework named “The Aetna Way (shown in Figure 2). The Aetna Way defines the mission (“Why we exist”), values (“What we believe in”), goals (“What we are trying to achieve”) and business practices (“How we run our business”).

Figure 2 -The Aetna Way

This framework shows the key values that Aetna promotes to encourage a change in the organization to better serve their key constituents. As discovered through the interviews, this framework is a direct result of a consulting engagement with InnoSight. InnoSight promotes the innovation theories of Clayton M. Christensen. Within Christensen’s book The Innovator’s Dilemma (1997), he discusses creating capabilities to cope with change. He states ˡ⁰ “managers who determine that an organization’s capabilities aren’t suited for a new task, are faced with three options through which to create new capabilities. They can: 1) acquire a different organization whose processes and values are a close match with the new task; 2) try to change the processes and values of the current organization; 3) separate out an independent organization and develop within it the new processes and values that are required to solve the new problem.” Aetna selected to try to change the process and values of the current organization with The Aetna Way.

During the interview process, every individual became more interested in my general research interest as the conversation progressed. I observed that the more innovative managers asked for me to report back to them with all of my suggested actions after the research is finished. The adaptive managers were generally interested only in the suggested actions, if any, that directly impacted their group. Kirton reveals that “what adaptors tend to demand is ‘targeted breakthrough’, which seemed to mean innovation carefully controlled for direction and depth.” ˡˡ This observation seems to explain the attempt to introduce a potentially new “innovative” method to look at change management. The technical contributors were generally not interested in a summary of the findings. However, both were very interested in the general study of the theory.

Macro-level decisions provide direction and significantly influence the change lifecycle. Micro-level decisions reinforce macro-level to optimize the progression of change. Change Lifecycle Management (CLM) involves the understanding, observing, and mapping of multiple, dynamic indicators throughout the progression of change.

Kirton, M.J., Adaption-Innovation, Routledge, 2003.
Robinson, James. From Managed Care to Consumer Health Insurance: The Fall and Rise of Aetna. Health Affairs, Volume 2, Number 2, 2004.
Martinez, Barbara. Behind Aetna’s Turnaround: Small Steps to Pare Cost of Care. The Wall Street Journal, August 13, 2004.

ˡ Hall, G. and Hord, S. (2006), Implementing Change: Patterns, Principles, and PotHoles, Second Edition, Pearson Education, Inc.
² Kirton, M. J. (2003), Adaption-Innovation, Routledge.
³ Rowe, J. (2001). Annual Report, Aetna, Inc.
⁴ Rowe, J. (2001). Corporate Internal email to employees. Aetna, Inc.
⁵ Rowe, J. (2002). Corporate Internal email to employees. Aetna, Inc.
⁶ Rowe, J. (2003). Corporate Internal email to employees. Aetna, Inc.
⁷Rowe, J. (2004). Corporate Internal email to employees. Aetna, Inc.
⁸Rowe, J. (2005). Corporate Internal email to employees. Aetna, Inc.
⁹Kirton, M.J. (2003), Adaption-Innovation, Routledge. Page 244.
ˡ⁰ Christensen,C. (1997). The Innovator’s Dilemma, Harper Business, page 172.
ˡˡKirton, M.J. (2003), Adaption-Innovation, Routledge. Page 211.