Process improvement and change

Lecture 1

- Questions related to the summaries and critical reviews of the four improvement approaches (30 %)

- Based on a case description, one question on diagnosis of the change conditions (10%)- Based on a case description: make an improvement plan (10 %)- The topics as discussed in the lectures and in the book of Cawsey et al. (50 %)

The red queen phenomenon: Organisations must constantly adapt, evolve, and proliferate not merely to gain productive advantage, but also simply to survive

In global competition, what matters is not the firm’s absolute rate of learning and innovation, but the relative pace of its development compared to its rivals

Change Process

- What needs to change (content)- How to bring about that change

Change: three main processes:

Organizational change roles:

- Leaders / agent- Initiators- Implementers- Facilitators- Recipients

Four perspectives on change:

1. Structural-functional perspective (chapter 5)- Changing structures and functions- Planned change- Related organizational theories: system theory, structural theory

o Inputs-transformation-output; rational arrangement of tasks; no focus on culture, power

2. Multiple constituencies perspective (chapter 6)- Change by negotiation- Planned change- Related organizational theories: Stakeholder interests

o Manage stakeholders, pluralist conception of power, change still top down, governance, consensual negotiation, avoid conflict by participative management.

3. Organizational development perspective (chapter 7)- The humanistic approach to change- Planned change- Interventions on several levels

o Structural-functional perspective + HR, action research, organizational diagnosis, process consultation, personal growth, organizational learning

4. Creativity and volition- A critical theory of change- Change can not be planned- Conflict, flux and change, construct a grand narrative

o Change does not emerge from consensus but from conflict, people main element of analysis rather than systems.

Change models vary on:

Scale: Network or chain of organizations, single organizations, departments, teams or individuals

Scope / pace: Incremental / continuous vs. Radical / discontinuous Source: Anticipatory ( pro-active) vs. Reactive (response to external stimuli). How: Planned vs. Emergent

o Thinking first – Seeing first – Doing first

Planned = Intentional, rational change, control over change process Emergent = Ongoing, unpredictable, informal, respond to problem and opportunities.

Thinking First

When the issue is clear and the context structured Magnitude of the change is often incremental in nature Straightforward, well-structured solutions

Seeing First

When many elements have to be combined into creative solutions Commitment is key and communication across boundaries is essential. People need to

see the whole before becoming committed

Doing First

When situation is novel and confusing Complicated specifications would get in the way and a few simple rules can help people

move forward.

Four types of change:

Lecture 2:

Barriers to recognize the need for change

- Mental models about the world become blinders - Existing values and corporate culture may harden into dogma - Past successes reinforce existing practices - Leadership practices may impede recognition of need for change - Embedded systems and processes can harden into unquestioned routines and habits - Existing relationships can become shackles that impede the ability to respond to a

changing environment

Creating awareness of the need for change Different methods:

- Information and education - Make the organization aware of the crisis or create a crisis

- Identify a transformational vision

- Transformational leadership

- Identify common/shared goals and achieve them

Change context: Internal context

- Scope: Who defines the problem and in what terms- Capability: The degree to which relevant capabilities are available to bring about the

change:o Individual levelo Managerial levelo Organizational level

Kind of capabilities:

o Technical knowledge and skills (relevant to the what to change)o Project management knowledge and skillso Problem solving skills (creativity, analyzing skills, method skills)o Communication skills (convince, negotiate, motivate etc.)

- Readiness for change:Individual:o Cognitive component

o Believe that change is neededo Affective component

o Currently experienced positive feelings regarding the change

Group

o Emerges from individual’s readinesso Communicate with each other in order to make sense of the situation (develop

collective beliefs). - Power: Different dimensions of power:

o Resource power: Access to valued resources in organizations; rewards, sanctions, charisma, expertise etc.

o Process power: The control of formal decision-making arenas and agendaso Meaning power: The ability to define the meaning of things

- Capacityo Time availableo Money: Investments, training, meetingso Information processing

- Preservationo The degree that preservation is relevant: What does the company wants to

maintain, protect, keep the same? Ways of working Cultural aspects Employees with particular skills, characteristics, competencies Mix of employees Maintain the collaboration with specific suppliers, clients

Lecture 4

Examples of what to change:

o De/Centralize the purchasing function in an organizationo Create more empowered employees: decentralisation of tasks, responsibilities and

authorities to employeeso Create a formal meeting (e.g. once per week) to coordinate tasks that need to be

executed for a specific client groupo Intensify the integration with suppliers by creating more informal structures

Rule related behavior (opposed to knowledge related behavior)

People act in accordance to a rule and procedure = compliance- Violation: Deviation from a procedure, standard or rule

o Unintentional: Procedure is not known or unawareness of violatingo Intentional:

Routine violation: Short cuts that become habits Optimizing violation: Optimizing non-functional goals Situational violation: Failures due to bad or unavailable equipment, tools,

time that are necessary to complete job tasks.

Violation occur:

- Can increase risks and reduce quality- May put a system in a more vulnerable state

+ Not always results in unwanted outcomes

+ Violations may become a “best practice” if rules are not appropriate.

How to structure your change process?

Change leadership:

- Change initiators Identifies need and vision and acts as a champion.

- Change Implementers Chart the detailed path forward & make it happen

Nurture support and alleviate resistance

- Change Facilitators Aids in analysis & issue management along the way

Provides advice and council

Sometimes helps smooth the way through helping resolve issues, alleviate resistance & nurture support

- Change Recipients (Note: can have a very active role)

Those affected by the change

Have to alter behavior to ensure change success

Examples of structuring the change process:

•Combination of (a) change team that has same structure each time, but with different participants per unit/department, and (b) supported by experts (e.g. introduction of new system per department)

•Core change team and flexible skill of project teams

•Core change team and a few sparring teams (per topic, per stakeholder) to mirror ideas and results

•One change team that only consults stakeholders

•A hierarchical structure of change teams per topic (i.e., on lower and higher levels of the organization same kind of change teams focusing on one specific topic/theme)

What to take into account when choosing a structure:

- Complexity of the problem and solution- Scope of problem and framing of solution- Diversity in views and stakeholders- Cultural context- Performance – change (speed, efficiency, commitment)- Context characteristics

o Thinking firsto Seeing firsto Doing first

Informal structures:

- Social structures that govern how people work together in practice- Evolving constantly- Requires insider knowledge to be seen

How to make use of informal organizational structures in change processes?

- Formal plans policies, procedures and standards- Lighten management workload

o Provide social control and status- Fills gaps in management abilities

o Reduce emotional and psychological pressures- Encourage improved management practice

o Push professionalism

Leadership:

- Directive vs. participative- Situational leadership: Style depending on focus of relationship or more on task- Transactional leadership- Transformational leadership: Strongly related to improvement and change

Transformational leadership: To move people, inspire with vision, give attention etc.

Change leader

- Leads the change- May be the formal leader of the organization as well- Informal change leader can emerge anytime throughout the change process- Depending on the kind of change (incremental / radical etc.)

Leader roles:

- The Catalyst: Overcomes inertia and focusses the organization- The Solution giver: Knows how to solve the problem- The Process helper: Facilitates the “How to” of change playing the role of third pary

intervener- The Resource linker: Brings people and resources together to solve problems.

Change agent types

1. Emotional Champion •Clear vision of what the organization needs

•Uses vision to capture hearts and motivations of organization members 2. Intuitive Adapter •Clear vision for the organization

•Uses that vision to reinforce a culture of learning and adaptation. 3. Developmental Strategist •Analyzes the competitive logic of the organization and how it no longer fits the organization's existing strategy and the environment.

•Seeks to alter structures and processes & shift the organization to the new alignment 4. Continuous Improver •Analyzes micro-environments

•Seeks changes such as re-engineering to systems and processes looking for smaller gains

Competences of change leader / agent

1. Know yourself2. Be always open to learn and determination3. Sensemaking and visioning skills4. Communication skills5. Interpersonal skills6. Implementation skills to close the knowing-doing gap

a. Team management skillsi. Larger changes: Design implementation team

ii. Continuous change: Continuous improvement teamb. Project management skills

7. Intelligence

Behaviors of change leaders / agent

- Framing behaviorso Changing the sense of the situation, establish starting points for change, design

the change journey- Capacity-creating behaviors

o Creating the capacity for change, create connections in the organizations - Shaping behaviors

o Attempts to shape what people do ( Role model).

The approval process

- Formal approval: Using systems and structures to obtain formal approval for change = the traditional hierarchical approval approach, the rational approach.

- Strategies based on creeping commitment and coalition building:o Foot-in-the-door approach: Acclimate organizational members to change ideaso Create the momentum, create support from key coalition members

- The renegade approach: Strategies involving simply forging ahead without formal approval

The process of improvement (In general):

1. Create a sense of urgency2. Collection of data3. Evaluation of potential improvement areas4. Creation and implementing solutions5. Iterative and sequential processes

What determine the choice in process steps?

- Fit with mission, vision, strategy and systems- Magnitude of the change- Uncertainty: How predictable and controllable is the change process?

When more uncertainty about problem definition and solution:

- Non-linear approach with feedback cycles- A structured step-wise approach- An open approach is more effective- Formalize outcomes.

Lecture 5:

Recipients (Receive end of change):

- Reactions vary from positive to negative, and ambivalence often comes first- Resistance is not inevitable: Listen, understand and respond in an early stage in order to

understand and support.

Ambivalence (Doubt / Hesitancy) to change is no surprise:

- Mixed feelings are common as recipients try to make sense of the change- Ambivalence generates discomfort, difficult to express emotions- Ones feelings solidify, they become more difficult to change again

Influence tactics

Goal is to increase the readiness for change of recipients and influence behaviours; Tactics:

1)Systemic or system adjustment

- What kind of structures and systems influence change recipients’ behavior?

o Who does what en when in the change process?

o Leaders of change processes

2)Education & communication

- Stage of the change process

- Types of education (way that input is provided, size of group, F-to-F)

- Focus on kind of feelings and competencies

Determinants for success are:

- Length of education (longer = more effective)

- Composition of group

- Use of opinion leaders

- Active participation in educational activities

Goal is to help people by listening for information and sort out what actions are needed now.

Communication as influence tactic:

o Stability narrative: Change does not change that much in the organization

o Progressive narrative: Change does change a lot in the organization

Communication plan is an important part of any improvement plan:

Puts the need for change on the angenda

Creates need for change among recipients

Informs about the change and progress and can influence people

Gain feedback

Communication is a two way thing and has different functions: Inform, Motivate, Learn, Negotiate.

3)Participation & involvement

Goal: Increase the need, readiness, acceptance and sustainability for change. Also develop ideas for change.

Name the problem, create cohesion, create an environment for feedback and use relevant trusted co-workers.

4)Facilitation & support

5)Negotiation & agreement

Three main problems (cognitive mistakes)

- Fixed – pie assumption:

o Example of both people want that orange

- Escalated commitment

o Example of movie ticket and considering to go

- Anchoring and gain-loss fraiming

o Example of price of a share and offer

Fairness:

- Perception of fairness & Justice

- Procedural justice (= was procedure managed fair)

- Distributive justice (= was the end decision a fair one)

6)Manipulation & co-option and explicit & implicit coercion

Engaging those who are neutral or opposed, or engaging in ingratiating behaviour flattering behaviour.

- Managers have the explicit right and responsibility to insist that changes need to be done.

- Time pressure, no change observed and other options have been exhausted.

Some are more push tactics, while others pull tactics

- Pull strategies are most effectiveo Inspirational appeals attract people towards the changeo Seeking the participation of others

- Combination of both tactics: Intermediate effectivenesso Rational persuasion, integration, personal appeals and exchange tactis

- Push strategies are least effectiveo Use of facts, logic or pressure to push people towards the changeo Legitimating tactics: Framing request as in line with policy and authorityo Coalition building

Use of data in change management

Perceived limitations of current existing measures:

- Ignore value of intangible assets- Historic performance don’t mention future alertness- Pursuing short term results rather than long term goals- In chains: Ignore alignment of measures used at different parties to be able to changes.

1. Diagnostic control systems

- Traditional, what performance to achieve: sales data, production costs, inventory level etc. - Focus: Internally, setting and achieving goals- Use for: Understanding critical performance variables (what change should lead to)

2. Belief systems

- Relations to higher values of organization and employees mission and vision- Focus: Internally, what the organization stands for- Use for: Frame change in alignment with core beliefs to guide solutions and motivate.

3. Boundary

- To do right: Where not to go, limits on spending authority- Focus: Internally, limits to action- Use for: Provide focus and clarity & motivate creativity.

4. Interactive control system

- Uncertainties in and assumptions about wider environment expectations on customer demand, competitors actions, technological breakthroughs etc.

- Focus: External environment, opportunities and threats- Use for: Frame the change initiative, continuous dialogue, knowledge and learning. Modify

and adapt.

Tutorial 6

Customer involvement in changes / improvements

Two roles of customers:

1. Provide information: Information sourcea. What do you want to know? Needs, preferences, experiences etc.b. Different informing / evaluating roles.

Which customers to involve?

Stratified: Closeness:

- Customers with whom a firm frequently interact even outside development projects- Customers with whom a firm has maintained a long business relationship

Stratified: Lead users:

- The degree to which customers involved were positioned to benefit significantly from the solution provided

- The degree to which customers faced the need for the improvement before the rest of the market.

2. Co-producer of change improvement- In what stage? Framing problem, development of solution of implementation of

solutions- In what role? Improvement team, responsibilities and change roles in the team- Conditions? Time, money, involvement and privacy

Managing expectations? Their role and impact should be clear and realistic

Supplier involvement (slide 29 for case example)

Complicating issues regarding the change context when involving suppliers

- SCOPE: o Supplier might have different interests o Supplier might not be the problem owner

- CAPABILITIES:o What is the expertise in technical and change capabilities.o Who has the capabilities

- POWER:o What are relevant power sources to considero No hierarchical power relationship between supplier and buyer

- READINESS FOR CHANGE:o Who are the recipients of change?o Which stakeholders are involved?

- CAPABILITIES:o Who pays for investments?o Who puts in effort, time, resources and knowledge?

- PRESERVATION: o Keep Businesso Keep good relationshion

Change process Plan, design, test & implement

Lecture 7: Power and culture in change

Unitary view (=Harmony-model)

- Realize common goals- Conflict is rare, are removed by managers- Power not very meaningful, managers lead the organization to achieve shared interests

Pluralist view (=Conflict model):

- There are individual and group interests in an organization- Conflict is inherent to organization- Power is crucial to understand how organizations work

Culture is about focus, attitudes, values, beliefs, norms of behaviour, ethical codes, basis assumptions about what is important.

Organization’s capacity to change (Senior and Swailes, 2010).

- Innovation and risk taking- People, team outcome orientation- Internal / External focus (sharing information)- Organization’s structure facilitates changes- Attitudes to conflicts- Give people autonomy and support

The three major levers for culture change

1. Leadership alignmentI. Top-down

II. Culture sees as a strategic agenda2. Informal social networks

I. Bottom-upII. Informal change leaders

3. Internal work policies / processesI. Sustaining mechanisms

II. Revise policies and processes to drive new behaviours. III. Communication technology & Rewarding

Continuous improvement (= dynamic capability)

A systematic effort to seek out and apply new ways of doing work, actively and repeatedly making improvements.

Essential for creating a CI dynamic capability are:

1. A coherent infrastructure to coordinate and support CIa. To execute CI projectsb. To coordinate and support CI projects and to create a culture for CI

2. An organizational learning perspective

The 8 areas are:

A: Purpose

- Organization direction and CI goalso Coordinate the direction of CI initiatives

- Balanced innovation and improvemento Companies focus on variation control and improvements but keep focus and

culture of risk-taking.

B: Process

- Focus on creating a constant-change cultureo Scanning of external environment (Benchmarking)o Voice of the customer o Workshop for middle management to generate ideaso Leadership and team involvement

- Parallel participation structureso Cross-functional personnel teams

- Standardize processeso Standard operating procedures as baseline for improvementso Use of previous experiences

- Standardized improvement methodo Six Sigma, BPR, Lean and TQM

C: People

- Training and career patho Formal inhouse training for employees participating in improvement project

- Technology supporto Database of project report to learn from previous experiences

Conclusion CI dynamic capability

Infrastructure for continuous improvement can provide organizations the agility and consistency necessary to continually update operational processes

Having a system in place that incorporates coherent CI infrastructure decisions within the eight areas categorized by purpose, process, and people would enable managements to steer their organizations in an unified direction.

Regardless of the type of CI initiative that an organization chooses, consistent patterns of decisions in these areas can provide the dynamic capability to deal with changes in the environment. Within the eight decision areas many combinations are available

What is important is that a CI infrastructure can be purposefully constructed to support vital CI efforts.

Improvement approaches!!

1. Lean: Is seen as both a philosophy and as a set of tools and practices

a. Operational tools to reduce wase and minimize variability / cost

b. Execute operations at minimum cost, with no waste

i. Eliminating non-value adding activities

ii. Reduce process variability Design system that is capable of delivering the requested results.

2. Six Sigma: A meta-routine for improving processes

a. Reduce variation in processes (focus on how to change).

b. Critical-to-Quality characteristics (CTQ): Dimensions of product and process quality on which a six-sigma project aims to achieve improvement. (example. Reduce number of defects)

i. Root cause analysis to see which factors influence this CTQ

c. Define, Measure, Analyze, Improve and Control

i. Champions in define step

ii. Black belt as project leader in all steps

iii. Green belt in measure, analyze and improve

iv. Process owners in control step

3. BPR: A fundamental rethinking and redesign of operating processes and organizational structure.

a. Focus on processes and not on tasks jobs or people for solutions redesign the strategic and value added processes.

b. Reduce costs and lead time.

c. A deep change must occur in the key behavior levels of the organization in order to transform.

4. TQM: Plan, do, check and act / improvement.

a. Focus on changing quality

b. Apply a contingency strategy = factors that need to be taken in account when designing an appropriate TQM-system

i. Firm size

ii. Industry type

iii. Process and product characteristics

iv. Manufacturing strategy

v. TQM duration

vi. Uncertainty

There should be a fit between characteristics of an organization and the kind of activities that are deployed to manage quality

- Lean, TQM and Six sigma focus on incremental and continuous improvement

- BPR focus on radical change approach

- All planned change approaches in which customer perspective is relevant!

External environment

- Lean: Depends on unit of analysis, lean implementation should fit with production environment and stability of demand.

- Six Sigma: Only reflected in taking into account customer requirements

- BPR: Project is often initiated by, strong economic- and technical factors

- TQM: Not really, but external environment can be a contingency factor

Scope

- Lean: Focus on cultural and operational problems

- Six Sigma: Various problems can be dealt with

- BPR: Large project in which every single process is questioned on its efficiency and effectiveness

- TQM: No pre-determined scope, while quality is very broad

Other elements of change context:

Capabilities is who has an role in the improvement project.

For BPR: Initiatives is from top management (=change leader) but implementation is by lower level managers and workers.

The 7 types of wastes:

1. Overproduction

2. Inventory

3. Waiting

4. Motion (movement within a process)

5. Transportation (movement between processes)

6. Rework

7. Overprocessing

8. Potential of people

Proces steps

Lean: 5 principles

1. Specify value

2. Identify the value stream

3. Avoid interruptions in value flow

4. Let customer pull value

5. Start pursuing perfection again

a. Implementation parallel, sequential or both

Six-Sigma: DMAIC, design for sig sigma

BPR: Preparation, process-think, creation, technical design, social design and implementation.

TQM: Plan – Do – Check – Act.