300320201INFS6004 Business Transformation Projects S.docx

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INFS6004 Business Transformation Projects Session 4 1/51
Business
Transformation
Projects
INFS6004
Marcus O’Connor & Steve Elliot
Session 4 - Relationships
& Models for diagnosing
organizations Nascar stock cars / Volvo Cars wind tunnels
Maryam Shahbazi (T)
Karen Lee (T)
1. Building (internal) relationships
2. Case study
3. Exercise
4. Review Assignment 1
5. Preview Assignment 2
6. Roles of models in diagnosing organizations
7. Indicative models
8. Characteristics of models
9. Introduction to diagnosis

10. Companies of the week
11. Next steps
Hayes 4th Ed. Chapters 6 & 7
Overview
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Change and relationships
Transformations,
Change, Politics and
relationships
2 case studies
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First Case Study……

Person Position Lunch Alliance
John CEO and Owner Y
Ron CTO with 30
years
experience
Y **
Jim CFO with 30
years
experience
Y and N **
Marcus CIO with no
experience
Y
Bill COO with 35
years
experience
N *
The problem…….
OFFICE WAREHOUSE
FACTORY
COMPUTER DOCK

THE LAYOUT…….
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Analyse Marcus’ approach to introducing change……
› What did Marcus do wrong?
› What did John do wrong??
› How would you have done it differently?
› What ‘style’ of intervening would have been most
appropriate?
› If you were John (CEO) what would you have done?
7
Exercise
© John Hayes (2014), The Theory and Practice
of Change Management, 4th ed.
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Problems at J&J
› New Finance Director (CFO)
› Initial cue…….Too much investment in inventories of some
finished
goods and too little investment for other finished goods
› How would YOU go about solving this problem?
A Systems Approach to Problem
Solving….
› Define the problem
› Define the requirements to solve the problem
› Develop alternative solutions to solve the problem
› Select the best/most appropriate solution
› Design the detailed solution
› Implement the solution
› Evaluate the implementation of the solution
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Defining the Problem:
The CFO’s initial ideas…..
› Believed forecast error was terrible!!
› Believed no effort into the forecasting process?
› Convinced CEO of the need to assess the quality of the
forecasting and
budgeting process at J & J. Beginning with a Discovery
Meeting.
The Discovery Meeting……
› Attendees…….
- CEO
- Sales Manager
- CFO
- Marketing Director
- Production Manager
- Consultant (Marcus)
› Terms of Reference:

- Improve forecasting accuracy
- Optimum balance of market demands and production
optimality
- A ‘third party’ to head up “pilot investigation’
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› Pilot investigation:
- “Very” economic production lots
- Terrible forecasting accuracy
- Missing data/ inaccurate data
- Simple forecasting tool could substantially improve
forecast accuracy
› Marcus recommended….
- Dedicated forecasting process
- Forecast accuracy accountability
- Examination of accountability for inventory holding
costs
Were Marcus’ recommendations appropriate and systematically
developed?

› The reactions…..
- CEO
- Sales Manager
- CFO
- Forecasting clerk
› Production Manager - FURIOUS!!!
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› The negotiated outcome……
- Pilot the improved ‘system’ with a product category
(feminine hygiene products)
- Monthly forecasting / planning meetings
- Marcus would chair the meeting!!!
Implementing the Recommendations….
› The first meeting……..

- Product manager of new product
- Sales manager, production manager, finance
manager
› DISASTER!!!!
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Outcomes and their
evaluation…….
Q1. What do you think were the outcomes of the intervention?
Q2. How would you measure the outcomes & Why?
Q3. Does it matter what measure you select?
Q4. When should you decide the measure?:
- Before the project starts?
- Once the project is 50% completed so you know what is
important?
- At the end of the project so you know what is the most
appropriate
measure for the company at that time?

The eventual outcomes…..
› New forecasting process embedded into organisation
› Reduction in forecast error to around 25% overall.
› Stakeholders (mostly) happy:
- CEO
- Sales Manager
- CFO
- Production Manager
- Consultant (Marcus)
› Savings of $20m p.a. in reduced inventory costs
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Individual Research Assignment (UoS Outline)
“Select, analyse and submit a brief written description of a
news item for a specific company relevant to the topic for a

particular week in INFS6004 and analysis of the likely
transformative impact of this news item
Note: Students are encouraged to focus their project on an
industry and a company of interest to their future career”
Assignment 1
Individual Problem-based Assignment (UoSO)
“Evaluation of business strategic intent, business models and
transformative change in a selected company. Each student
must select a different company* and obtain approval”
Analyse and describe an example of transformative change
Explain why and how it is transformative
Determine and describe the firm’s strategic intent and Business
Model Canvas (BMC)
Evaluate the extent to which the strategic intent and business
model(s) support or conflict with the change
Select and apply current frameworks to identify and describe
successful and unsuccessful change management and
leadership practices and their sustainability in the firm
Conclusions about management of change in the firm
Recommend how the firm can improve their current practices
* You make select & request approval for the same company as
Assignment #1 IF the
company meets ALL requirements. NOTE: Most students do not
do so.
Assignment 2 - 2,500 words
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... involves gathering, analysing and interpreting
information about how the organization is functioning
21THE THEORY & PRACTICE OF CHANGE MANAGEMENT
3rd Edition, John Hayes, Palgrave, 2010
Organizational diagnosis
Main steps
• Selecting a conceptual model for diagnosis
• Clarifying information requirements
• Gathering information
• Analysis
• Interpretation
22
Organizational diagnosis
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We simplify the real world by developing models that focus
attention on

limited number of key elements
way these elements interact with each other
the outputs produced by these interactions
23
We use these models to :
• guide the kind of information that we attend to
• interpret what we see
• decide how to act
THE THEORY & PRACTICE OF CHANGE MANAGEMENT 3d
Edition, John Hayes, Palgrave, 2010
What are the major advantages and disadvantages
of using diagnostic models?
Q:
The role of diagnostic models
INFS6004 Business Transformation Projects Session 4
24/5124THE THEORY & PRACTICE OF CHANGE MANAGE
MENT 3rd Edition, John Hayes, Palgrave, 2010
Selecting models for diagnosis
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Management
Practices
Work unit
climate
Motivation
Individual and
Organizational
performance
Structure
Systems
(policies and
procedures)
Tasks and
individual
roles
Individual
needs and
values
External
Environment
LeadershipMission
and

strategy
Organization
culture
Component models look at
particular aspects of
organizational functioning
Component and holistic models
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Component models look at
particular aspects of
organizational functioning
Management
Practices
Work unit
climate
Motivation
Individual and
Organizational
performance
Structure
Systems
(policies and
procedures)

Tasks and
individual roles
Individual
needs and
values
External
Environment
LeadershipMission
and
strategy
Organization
culture
THE THEORY & PRACTICE OF CHANGE MANAGEMENT 3r
d Edition, John Hayes, Palgrave, 2010
Component and holistic models
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The story of the six blind men feeling an elephant illustrates on
e of the
problems that can arise when using component models for diagn
osis

27
Each one touched a different part of the elephant’s
body.
• The blind man who felt a leg said the elephant was
like a pillar;
• the one who felt its tail said it was like a rope;
• the one who felt its trunk said it was like a tree
branch;
• the one who felt its ear said it was like a hand fan;
• the one who felt its belly said it was like a wall;
and the one who felt its tusk said it was like a spear
Looking only at specific components may not give a good impre
ssion of the whole
Learning through telling stories
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One approach to
diagnosis is to start by
using component
models to examine
how the many different
aspects of an
organization are working
Management
Practices

Work unit
climate
Motivation
Structure
Systems
(policies and
procedures)
Tasks and
individual
roles
Individual
needs and
values
LeadershipMission
and
strategy
Organization
culture
Component models
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... and to combine these
assessments to build a
‘big picture’ of how the
organization functions as
a whole
Management
Practices
Work unit
climate
Motivation
Structure
Systems
(policies and
procedures)
Tasks and
individual
roles Individual
needs and
values
Leadership
Mission

and
strategy
Organization
culture
Component models
An alternative approach is
to start by looking at the
‘big picture’ before drilling
down to explore particular
components in more detail
30
Management
Practices
Work unit
climate
Motivation
Individual and
Organizational
performance
Structure

Systems
(policies and
procedures)
Tasks and
individual roles
Individual
needs and
values
External
Environment
Leadership
Mission
and
strategy
Organization
culture
Holistic models
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Management
Practices
Work unit
climate
Motivation
Individual and
Organizational
performance
Structure
Systems
(policies and
procedures)
Tasks and
individual
roles
Individual
needs and
values
External
Environment
Leadership

Mission
and
strategy
Organization
culture
An important dynamic
of the whole system
concerns the nature of
the interactions
between the
component parts
Source: Burke and Litwin, 1992: 528
Holistic models
Describe a situation where you would use:
1. A component model
2. A holistic model
3. Why?
Group Discussion

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They are:
within a larger system
to avoid entropy, ie deterioration over time
by feedback
same outputs can be produced even with a
different configuration of systems
in their mode of functioning
seeking
by boundaries
Organization
transforms inputs
into outputs
outputsinputs
Organizations are open systems
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Systems theory predicts
that changes to any one

of the elements of an
organization’s system
can cause changes to
the other elements
http://en.wikipedia.org/wiki/Biosphere_2
Open systems theory?
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Employees &
other tangible
assets
Formal
organisational
arrangements
Social
system
Technology
External
environment

Dominant
coalition
Source: J.P. Kotter, An
integrative model of organisational dynamics, in
Porter, Nadler & Cammin, Organizational Assessment, Wiley, 1
980
35
Source of potential
behaviour & constraint
Impact on
1. Kotter's integrative model of
organisational dynamics
Over the short term effective organizations are those that
have key processes that are characterised by levels of
decision making effectiveness and matter‐energy efficiency
that help to ensure that resources are used efficiently
processes
36
Organizational effectiveness ‐ short term

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Over the medium term effectiveness is
determined by the state of alignment (quality of
fit) between the structural elements
Examples of poor fit:
coalition and task
environment
and technology
and formal
organisation
37
Organizational effectiveness ‐ medium term
Over the long term, effectiveness is determined by an
organization’s ability to adapt in ways that will maintain
internal and external alignment
›
This adaptability is a function of the state of an organization’s
structural elements

› These can range from highly constraining to not constraining
For example, an organization that has a single complex
technology that is difficult to adapt (so change will
require a massive capital investment in new technology)
is more constrained than an organization that has a
technology that can be used in different ways to produce
a variety of goods and services and which can be
modified incrementally over time
38
Organizational effectiveness ‐ long term
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Some models focus on diagnosing the quality
of an organisations alignment with the
external environment
A simple example is SWOT
39

Diagnosing external alignment
SWOT is a diagnostic model for assessing external
alignment and identifying what needs to be
changed to improve organizational effectiveness
40
2. SWOT
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Some diagnostic models focus primarily on
the quality of an organization’s internal
alignment.
A good example is the Mckinsey 7S model
Diagnosing internal alignment

Source: Pascale & Athos, 1981, The Art of Japanese
Management
Inter-related internal factors that
influence organisational effectiveness
3. McKinsey’s 7S model
dongm
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dongm
高亮
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Some diagnostic models are more
comprehensive and pay attention to both
internal and external alignment
An example is the Burke-Litwin causal model
of organizational performance and change
43

Diagnosing internal & external alignment
The Burke‐Litwin
causal model of
organizational
performance and
change
• internal & external
alignment
• relative weight of
causal relationships
Management
Practices
Work unit
climate
Motivation
Individual and
Organizational
performance
Structure
Systems
(policies and
procedures)

Tasks and
individual roles
Individual
needs and
values
External
Environment
Leadership
Mission
and
strategy
Organization
culture
44
4. Burke-Litwin causal model
dongm
高亮
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transformational elements
Management
Practices
Work unit
climate
Motivation
Individual and
Organizational
performance
Structure
Systems
(policies and
procedures)
Tasks and
individual roles
Individual
needs and
values
External
Environment

Leadership
Mission
and
strategy
Organization
culture
45
Transformational change
transactional elements
Management
Practices
Work unit
climate
Motivation
Individual and
Organizational
performance
Structure

Systems
(policies and
procedures)
Tasks and
individual roles
Individual
needs and
values
External
Environment
Leadership
Mission
and
strategy
Organization
culture
Transactional change
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Life cycle models posit that organizations
progress through a series of predictable stages
of development and that each stage brings with
it a set of alignment related issues that have to
be managed
An example is Greiner’s five phases of growth
47
Life cycle models
Crisis of
LEADERSHIP
Crisis of
AUTONOMY
Crisis of
CONTROL
Crisis of
RED TAPE
1. Growth through CREATIVITY
2. Growth through DIRECTION

3. Growth through DELEGATION
4. Growth through COORDINATION
Crisis of ?
5. Growth through
COLLABORATION
time
Size
Source: Greiner, 1972, HBR, 50, 38.
48
5. Greiner’s five phases of growth
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1. Relevance to issues under consideration
2. Identifies elements and cause and effect
relationships that contribute to the

problem or opportunity
3. Indicates which of the above have most
weight
4. Highlights aspects of organizational
functioning that the change agent can do
something about
Selecting a model for diagnosis
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How does the
organization go about
matching its
resources with
opportunities, and
creating a competitive
advantage?
What are the formal
and informal
arrangements for
grouping and
coordinating
activities?

Source: Pascale & Athos, 1981, The Art of Japanese
Management
Clarifying information requirements
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Company of the Week
17th March 2014: Mary T. Barra, General Motors’ CEO,
announced another round of wide-ranging recalls, a sign
that the company was moving with a new sense of
urgency on safety problems after it disclosed a decade-
long failure to fix a defect tied to 31 accidents & 12 deaths
Q: Is this an example of transformation or change? Why?
The recalls, which cover 1.7 million vehicles worldwide for a
variety of problems,
come in addition to last month’s recall of 1.6m vehicles
In chronologies submitted to federal regulators, the company
said it first knew of
flaws in its ignition switches as far back as 2001
Ms. Barra said, “Our system of deciding and managing recalls is
going to change.”

http://www.nytimes.com/2014/03/18/business/gm-chief-barra-
releases-video-on-recalls.html?action=click&content
Collection=Business%20Day&module=RelatedCoverage&region
=Marginalia&pgtype=article
General Motors a)
22 March 2014: A Federal investigation into GM is to determine
whether:
1. the automaker committed bankruptcy fraud by not disclosing
defects
that could lead to expensive future liabilities, and
2. the defects were not disclosed to safety regulators
The investigation is by the same FBI agents and federal
prosecutors that
built a fraud case against Toyota for concealing information
about car
defects that put lives at risk. The Toyota case was settled for
$1.2 billion
The GM and Toyota cases hinge on the same issue: whether
company
officials failed to tell the government and the public something
that it knew
to be true.
http://www.nytimes.com/2014/03/22/business/gms-bankruptcy-
drawn-into-defect-
inquiry.html?emc=edit_th_20140322&nl=todaysheadlines&nlid
=37901816&_r=0
“At the new General Motors, we are passionate about designing,
building and
selling the world’s best vehicles. This vision unites us as a team

each and every
day and is the hallmark of our customer-driven culture”
www.gm.company/aboutGM/ [21 March 2014]
Q: What changes are required? What models could you use?
Why?
General Motors b)
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53
1. Determine objectives
2. Select appropriate conceptual model
3. Determine information scope & requirements
4. Determine information sources & techniques
5. Information collection
6. Analysis
7. Interpretation
8. Conclusions, outcomes
9. Implications
10.Review, revise, repeat as required
A diagnostic process
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1. So, what would you do? Where would you start?
How to measure performance?

2. Select an appropriate conceptual model for diagnosis
Three characteristics of a good model:
a) Relevance to the issues under consideration
b) Ability to identify critical cause and effect relationships
c) …

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