masterclass on the international practices of managing change - day 1

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IMPROVED STRATEGIC MANAGEMENT CAPACITY

PROJECT

7.10.2013 - Ankara

Management of Change: Learning from International Best

Practices

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Driving Forces and Key Enablers of Change Processes

Challenges and Obstacles within the Public Sector

The Long Conversation : Aligning the Key Organizational Elements

The Long Conversation:Building Key Org. Capabilities

Agenda


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Public management reforms are widespread and appear to

share many important similarities

Source: Nicholas Carr, OECD,Manuel Castells, John Elkington, Manuel Escudero, Oswaldo Lorenzo, Jeffrey Sachs, McKinsey Global Institute


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Public management reforms are widespread and share many important similarities


• High-performing government agencies do resemble well-run companies.

• Both have worthy goals, well-designed, IT-enabled, rational processes, strict accountability, and effective leaders.

• Dealing with common obstacles.

• Reforms involve learning and this process has to be given time to take place.


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Slash major budget deficits fueled by the economic

crisis




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Slash major budget deficits fueled by the economic crisis

Source: Nicholas Carr, OECD Manuel Castells, John Elkington, Manuel Escudero, Oswaldo Lorenzo, Jeffrey Sachs, McKinsey Global Institute

CONTEXT:

• Europe: from Greece to Ireland, Spain to the UK.

• Low growth, unemployment rates above 20%, a severe fiscal imbalance, and budget challenges.

PREMISE:

• Cutting budgets + be prepared for a long period of austerity.

• Reducing budget is not enough --) More efficient processes (keeping service levels) --) public sector simplification

ACTIONS:

• ITC as key enabler of productivity and competitiveness


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Slash major budget deficits fueled by the economic crisis


First Cycle:Law 11/2007 on citizens’ rights to electronically access services. This had a strong mobilising effect.

However, the multi-channel service delivery strategy enabling citizens to choose their preferred communication and access channels seems to have fallen short of its aims.

Second Cycle:Strengthen the use of the most efficient service delivery channels

Learning


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Public powers are shrinking


Source: Nicholas Carr, OECD, Manuel Castells, John Elkington, Manuel Escudero, Oswaldo Lorenzo, Jeffrey Sachs, McKinsey Global Institute


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Public powers are shrinking, but affirm their presence..

Source: Nicholas Carr, OECD, Manuel Castells, John Elkington, Manuel Escudero, Oswaldo Lorenzo, Jeffrey Sachs, McKinsey Global Institute

• Big part of our daily problems (climate change, humanitarian crisis) cannot be manged by any Nation-state on its own.

• Widespread privatizations and a recasting of the public sector.

• Budgetary discipline ---) limits to achieve a satisfactory level of services.


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Social media are becoming powerful facilitators of civic participation in the public

agenda




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Social media are becoming facilitators of civic participation in the public agenda



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We live in a multipolar world



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We live in a multipolar world

…in which emerging countries will increasingly consolidate their presence and decision-making power.

…this will lead sooner or later to new multilateral global governance arrangements.

Source: Nicholas Carr, OECD Manuel Castells, John Elkington, Manuel Escudero, Oswaldo Lorenzo, Jeffrey Sachs, McKinsey Global Institute


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We live in a crowded planet


Source: Nicholas Carr, Manuel Castells, John Elkington, Manuel Escudero, Oswaldo Lorenzo, Jeffrey Sachs, McKinsey Global Institute


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• Deterioration of the infrastructure:

• Could cause a crisis. • USA - Last 10 years:

• Airport capacity (+1%) vs. Air traffic (+37%)

• Two thirds of the human race will not have enough fresh water within 25 years. (Clarke

2002). • The Extinction Crisis (Hinrichsen & Robey)


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Minneapolis Bridge Collapse


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Information Technology is growing exponentially




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• Assimilation• Use and Exploitation• Adaptation

3D printing

Google glass



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…wealth, power and knowledge generation are largely dependent on the ability to

organize society to reap the benefits of the new technological system


Manuel CastellsUSC Professor


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Reflections


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Public Management is really facing “unstructured complexity”


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Limited time for change


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Organization

Purpose

Scope

Time(schedule)

Cost(resources)


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Organization

Purpose

Scope

Time(schedule)

Cost(resources)

Modularity


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Re-assess master plan& re-plan accordingly

• Understand trade-offs: time, scope, cost and quality/benefits

• Define clear and smaller project milestones

• Communicate clearly findings to key stakeholders.


edilmektedir Challenges and Obstacles within the Public Sector

Legal and Regulatory Issues



Less Flexible Workplaces


edilmektedir Less Flexible Workplaces

…bureaucracy constitutes the most efficient and rational way in which human activity can be organized, and that systematic

processes and organized hierarchies were necessary to

maintain order, maximize efficiency and eliminate

favoritism.

…bureaucracy as a threat to individual

freedom, in which the increasing

bureaucratization of human life traps

individuals in an "iron cage" of rule-based,

rational control.

Source: Max Weber, Wikipedia


edilmektedir Less Flexible Workplaces

…bureaucracy constitutes the most efficient and rational way in which human activity can be organized, and that systematic

processes and organized hierarchies were necessary to

maintain order, maximize efficiency and eliminate

favoritism.

…bureaucracy as a threat to individual

freedom, in which the increasing

bureaucratization of human life traps

individuals in an "iron cage" of rule-based,

rational control.

Source: Max Weber, Wikipedia

This is mostly nonsense, particularly in today’s hyper-change environment where flexibility is essential


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Lack of a performance culture


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• Bureaucracy: “…follow instructions and procedures.”

• Lack of skills required to undertake the taks.

• Wrong incentives: promotions on the basis of who people know, not what they know.

• Lack of definition of what the meaning of success is...

• Lack of mission.


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Before Change:• OSHA measured success in terms of the

number of inspections and fines (sanctions) imposed.

• Punitive attitude toward business.• Employees lose sight of the overall

mission.


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After Reform:• Commitment to Mission.• “Reducing the number of injuries, illness,

and eaths in the workplace.”• Goals and metrics related to “the

elimination of all preventable workplace ills in ten years.”

• Literally impossible to achieve --) goal was to stimulate innovative thinking.


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Public Accountability


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Public Accountability

Penalties for failure are almost always greater than the rewards for exceptional performance


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The Long Conversation : Aligning the Key Organizational Elements


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0. Take a comprehensive approach

The Long Conversation: Aligning the Key Organizational Elements


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Strategy represents the purpose of the organization, in particular the value it intends to create for key stakeholders

Structure describes how people & assets are clustered in responsibility centers according to the nature of work, customers, etc.People and culture describe the skills and behaviors of people (including leaders), as well as their values and beliefs.

Business processes refers to the activities to be performed and coordinated in order to deliver value to stakeholders.

Technology comprises both tangible (systems and equipments) aas well as intangible (knowledge) assets that support processes.

Management processes consist of the systems put in place to steer the organization in the direction of its purpose.


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The Instituto de Astrofísica de Canarias (IAC) is an internationalized Spanish research centre. It has two headquarters and two observatories set in an environment of excellent astronomical quality, both constituting the European Northern Observatory (ENO) .

The Instituto de Astrofísica is the main headquarters and normal workplace of the greater part of its staff. Here, astrophysical research and technical projects are developed. There is also a postgraduate school. The IAC also considers scientific outreach as one of its principal aims.

Change Program:Implementating Management Systems and IT to improve process integration and coordination within the organization and with external partners (other European institutions in Italy, Germany, France and the UK.


edilmektedirThe Long Conversation:

Aligning the Key Organizational Elements

Mutual adjustment PEOPLEMANAGEMENT SYSTEMS & TECHNOLOGY

PROCESSES

STRUCTURE

• Greater decentralization and autonomy

• Greater inter-functional integration

• Role definition and incentives based on horizontal models

• Team work culture• Modification of

communication models• Changes in recruiting and

training procedures or needs

• Gains and losses in status

• Increase in information and material processing capacity.

• Standardisation of work.• Higher level of

interdependence and integration among tasks.

• Knowledge sharing practices

• Project-oriented approach

• Use of virtual platforms

• Use of ERP software.


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One of the goals early in the transition should be to identify potential misalignments:• Structure and strategy misalignment.

• Skills and strategy misalignment.

• Process and strategy misalignment.



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Skills and strategy misalignment

Change Program

Before:• Processes

performed by a local agency

After:• Processes performed by

third parties.• Integration and

performance control managed by the local agency


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Skills and strategy misalignment

Change Program

Operations Strategy:• Processes performed by

third parties.• Integration and

performance control managed by the local agency

Misalignment:• New Managers’ skills:

Orchestration rather than execution.

Controlling service levels rather than delivering service levels.

Developing and training.


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Leaders in government should be prepared to take on the

role of organizational engineers


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1. Improve performance against Agency Mission



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Improve performance against Agency Mission

Type of Public Organization

Mission Examples Performance Objectives/Metrics

Service Delivery Provide specified services to the public as efficiently and effectively as possible

Health care agencies, infrastructure development programs, financial services, information distribution, social service agencies

Efficient delivery, security and integrity, error minimization

Analysis and reporting Provide policy makers with specified information and analysis

Treasuries, budget authorities, intelligence agencies

Accuracy, timeliness, risk management

What is my organization’s mission?How is it expected to create public value?


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In Government, the fundamental strategic questions concern..:• The mission of the organization,• The interest of all various stakeholders,• The regulatory constraints within which

you must operate,• The extant skills and capabiities of your

group,• The availability of the resources you need.



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2. Create a Roadmap:

Identify performance objectivesSet priorities

Roll out the change program



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Change program must be formally defined in terms of milestones and deliverables,

monitoring and tracking the schedules are critical activities to ensure deadlines are met.



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Change Program must be…

Time

Eff

ort

Level

InitiatingPlanning

Executing

ClosingAssessing

…formally defined in terms of milestones & deliverables

…executing + …monitoring and tracking the schedules


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The Long Conversation:Building Key Org. Capabilities


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The Long Conversation: Building Organizational Capabilities


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Operational

Effectiveness

Intelligence

Automation

Coordination

Information


edilmektedir ERICSSON: Adaptation Process Building Organizational Capabilities

Business Model (Strategy)(Fundaments)

Key Process Characteristics Key Enabler (ITC)

1998-1999 •Decentralized global company•Internal capabilities in each area or business process•Independence.

•Decentralized requisition management•Catalogued materials•Centralized management of suppliers.

•SAP & B2B Procurement

2001 •Consolidation of support processes in shared services•Service culture in back-office departments•Supplier delivering in more than a country.

+•The same electronic purchase-to-pay process for the market unit (Portugal-Spain)

•E-p2p (new SAP version)

2002-2003 •Global company•Reduction of local capabilities•Consolidation of subsidiaries and suppliers•Supplier: global contract and local deliveries.

+ •Common global purchasing process for MRO•Centralized management of the process.•Outsourcer: IBX.

+•IBX marketplace


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Collaborative network of key agents/users engaged in

collective action-learning and knowledge diffusion



edilmektedir Social learning: …learning by observing the actions of other people.

Teams or Commitees

Team Leader

Agency Top Manager


edilmektedir Collaborative network

Element Intra-unit team Social network

Org. Scope Functional or business units Multi-functional and multi-business

Size and cohesiveness

Small, closed and tight Large, open, and loose

Members Employees affiliated to functional or business unit

Users across the organization at all levels.

Perspective Depth of dimensional detail, regarding function, product, geography or channel.

Breadth of multi-dimensional interdependences

Paradigm Variety

Low. Social and technological affinity induces shared paradigms among members.

High. Paradigms may clash, exposing conflicts and dilemmas.

Coordination Role

Key user coordinates intra-unit work and learning, connecting it to the larger multi-dimensional perspective addressed by the social network.

Key users participate in cross-functional action-learning and knowledge diffusion across the social network, informing it with their narrow intra-unit perspective.


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Encouraging learning and sharing mastery techniques

within the different org. areas



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Leading through an involved and developmental style of leadership

that creates a supporting atmosphere for learning &

exploration



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Be a Leader, not a Bureaucrat



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• Energy management

• Encourage proper behaviour

• People development

• Humility and impetus


Gustavo DudamelCurrently serving as Music Director of both the Simón Bolívar Symphony Orchestra of Venezuela and the Los Angeles Philharmonic.


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Changing the collective behaviour of the group changes the culture…



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Transitioning from traditional planning and control to

management by directed incrementalism



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…working on the short and long terms in parallel, you are going to

be stronger.



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Change Program must be based on…

A structured chronological framework

A Development and Learning process


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Change Program must be…Element Description

Strategy Bidirectional alignment between organization and the adoption strategy. Automation, coordination and information support opportunities are identified by a discovery process that contains Osmosis, Growth and Adaptation. Strategy is not only deliberate, but also emergent.

Leadership Top managers create the appropriate environment for exploring opportunities and learning; this environment is neither directive nor laissez faire but “involved and developmental”. Cross-unit management team stimulates convergence of the learning process.

People Key users/agents are catalysts of learning acting as pivots between the deep intra-area perspective in their units and functional domains and the broad inter-area perspective of internal and external business processes and systems. Supporting specialists work under a “prototype” mindset.

Organizational structure

Teams and Social Open Networks combined to provide both depth of dimensional (function, processes) detail, and breadth of multi-dimensional perspective. Effective governance by the cross-unit management team with participation of key users.


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Change Program must be…Element Description

Planning and Control

Directed incrementalism: a management decision making approach that balances direction (expressed as vision and objectives) with incremental execution. Visions are translated into strategic options and put into practice through action-learning. Fast learning cycles eliminate non promising options and concentrate resources on most promising ones, progressively revealing appropriate transition paths. This approach is key to handle the inherent uncertainty and political context of the Long Conversation.

Motivation People motivated by an environment of collaboration, discovery, conjoint design and public recognition of contribution, combined with the satisfaction that results from achieving business value from ES by co-creating a path of small, progressive victories.


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Final Thoughts

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Oswaldo LorenzoProfessor of Management

Deusto Business School, SpainBlog: www.longconversation.com

@Lorenzooswaldo

http://www.longconversation.com/

masterclass on the international practices of managing change - day 1

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