ORGANIZATIONAL TRANSFORMATION CIS 654

OVERVIEW AND COURSE REQUIREMENTS

Why include a class in Organizational Transformation (OT)
Change is a key organizational component When the rate of change inside an organization is slower than the rate of change outside an organization. The role of information technology (IT) is key in any transformation

A Language of Change
Re-engineering Re-invention Re-building Re-making Re-organization Re-designing

have you or any member of your family been laid off. downsized.Impact on Employees In the past five years. or otherwise lost a job through no fault of your/their own? Did employers have more loyalty to their employees ten years ago? Twenty years ago? .

Definition of Reengineering The fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance. .

Four key words in the definition 1. C. C. B. start from a clean slate 2. E. B. . Instead of fixing what you have and what you are currently doing by imagining that your company doesn’t even exit today then create it new? In other words. Dramatic (improvement) A. Radical A. D. Reduced cost Increased speed Greater accuracy Greater quality Etc… Radical means going to the root of things.

Sub-optimization might not be good! .Four key words in the definition 3. B. Process A. Horizontal work flows that cut across departments or functions C. Evolution leads to Isolated “Islands” of Activity D. A business process is a set of interrelated work activities with inputs and value-added tasks that produce outputs.

Four key words in the definition 4. How the work is done to produce the product or service and deliver it to the customer. B. The starting point for organizational success is well-designed processes. Redesign A. .

Why Reengineering? Three Cs Customers: More sophisticated and demanding on the products they want. Customer Satisfaction!!! . but how well we supply the needs and wants of the customer. Competition Has become global vs. local. so now instead of just a few. we now compete with thousands! Change Instead of the focus on being on how well we operate.

Simple example: QWERTY .BPR Requires a Questioning of the Status Quo “the continuity of time sequence” Procedures have a habit of arranging themselves into structures. institutions. and concepts and becoming virtually immortal.

(Slow) • Now—Customer care advocate handles it all!  Customer focus  1/2% then—now 70% solved by the person they spoke with originally  40% resolved while still on line .Examples GTE (local phone service provider) Maintenance and repair process • Then--Repair clerk. central office technician. line tester. service technician.

Their worst competitors took only 10 weeks and the best 6 weeks • The auto manufacturer gave feedback as soon as they got the parts. Use any toolroom that is available. to engineer who designed from scratch. Design sent by mail. win rate on new proposals 4 times better. Instead of mail it is all done electronically. . designs based on previous similar parts and a computer program reconfigures the old parts to the new specs. Pick a place to manufacture this design and use that toolroom. the part then was sent to customer • This process typically took 20 weeks.Examples Federal Mogul (makes car parts) To get contracts from car manufacturers they: • Sales rep visits customer to get specs. • Now—engineer goes to customer. profitability more than double. Design sent to toolroom.  Twenty-week to 18 days. Hand off specs. 3 days to 1 minute. so Federal was losing out.

BPR Focuses on Specific objectives Reverse-design process. Figure out what you want. then work backwards until you get it! Backward chaining GTE faster repair (customer satisfaction) Federal Mogul faster design (customer satisfaction) .

BPR Focuses on Breakthrough Results Inherent Slack Inventory Production capability Manpower Working capital .

and otherwise altering work activities. consolidating.BPR Focuses on Significant Cultural Change Social Change Typically involves eliminating. doing more with less What are the negative effects on employees? . Layoffs and early retirement programs Not downsizing or restructuring Or doing less with less But.

Don’t focus on processes. Place some aspects of the business off-limits. . Don’t reengineer but say that you are. Go directly from conceptual design to implementation. 2.The Top Ten Ways to Fail at Reengineering 1. Proceed without strong executive leadership. 4. 9. 8. 3. Reengineer slowly. Spend a lot of time analyzing the current situation. 6. 10. 7. Be timid in redesign. Ignore the concerns of your people. 5. Adopt a conventional implementation style.

Abraham Lincoln’s riddle: If you call a horse’s tail a leg. doesn’t mean that is what they are actually doing! This can hurt future implementations when you really decide to do it right. just because you are putting in a new computer system. Not a dramatic improvement! . For example. you may have only automated the process you are currently doing. doesn’t mean that you reengineered what you do.1. Don’t reengineer but say that you are. how many legs does the horse have? Just because the term “reengineering” is popular and used often.

Don’t focus on processes. You can’t reengineer an organization only processes in that organization. either directly or as contributors to other processes.2. their inputs. and their outputs should be easily comprehensible by anyone in the organization. The processes. You should be able to describe specific inputs and outputs for each one Each process should cross a number of organizational boundaries. There should be a focus on goals and ends rather than actions and means. ALL the processes relate to customers and their needs. .

Waste of time Can inhibit change . Look for the “What and the Why” not the “How” because the how is going to change. You should understand the process. because you already know it’s not good and we are looking for dramatic improvement. but don’t spend too much time on it. Spend a lot of time analyzing the current situation.3.

4. Leadership support is a must because change is hard and resistance from within will kill it once implementation begins. Reengineering is a top-down phenomenon. Proceed without strong executive leadership Only a senior executive who deeply believes in the reengineering cause can actually make it happen. .

they adopted it! . otherwise.5. Reengineering requires bold and imaginative thinking about process design and how work is done. Be timid in redesign. There may already be great ideas lurking in the minds of your employees just waiting for you to ask. Create an environment so people can share their radical ideas without fear of ridicule. On company offered cash for people that came up with a too radical idea.

You could try out a new concept by developing a prototype.6. so instead try it out in a safe environment. It can also help you with refining the actual implementation. Go through a series of intermediate steps and put out the fires as you proceed. You want to catch the major flaws before they actually happen. Go directly from conceptual design to implementation It never goes as one plans. .

Reengineer slowly You should see at least some major improvements in 12 months or you are sure to fail. You can lose focus Don’t increase the size without very good reason. Resistors will gain power Employees will exhausted from all the change without anything to show for it. Executive management will lose faith and funding will dry up. Continually increasing the scope will cause you many delays and therefore failure.7. .

. If you radically redesign your processes but refuse to change the compensation plan. or job titles. Place some aspects of the business off-limits. Everything must be on the table with no limits for change. the structure of the organization.8. then you will certainly fail.

The old way of planning an implementing must be thrown away. Make the decision to change and then do it! More like a prototyping. then go full steam ahead. Be sure of what you want. figure out how it will be done.9. . Adopt a conventional implementation style.

Empowerment Involvement Compensation . Employees’ will ask themselves. “What is in it for ME?” No matter how great your idea is. if you don’t have the support of your employees you will be in trouble. Ignore the concerns of your people.10.

Leadership: Primary Ingredient Unyielding top management support is a must to see the reengineering through. If the leader isn’t the top dog. They must have the power and ability to get it done. . make sure the top dog isn’t biting the leader in the leg. Middle management have made a career of the current system and will resist because they have the most to lose.

See the need for change early. Charisma to get it done.Characteristics of the Leader Passion for the project and company Be able to inspire trust Be able to inspire confidence Exhibit an unusual combination of impatience with the current system and patience when dealing with obstacles and setbacks (perseverance). .

. Create an environment where it can succeed. Make the reengineering succeed. Measurement Making sure everyone follows through by being involved.Responsibility of the Leader Make the decision to reengineer. Appoint process owners and specific tasks and provide them with the resources they need.

it is dismissed. . you will not change behavior. otherwise. then it is believed. Communication must be simple. Communication must be dramatic.The three Ss of Reengineering Leadership Signals: Explicit Communications Communication must be relentless. Symbols: Personal Behavior If behavior supports the talk. Systems: Measurements and Rewards If you don’t change what you measure the rewards for improvement.

The kinds of people picked must reflect the nature of the endeavor itself.The Reengineering Team: Second Ingredient Reengineering is not a one man show. and style. so we must create a team from the best and the brightest individuals that fit the job. context. . Let’s look at what they will do in terms of content.

including fleshing out full details of its operations. Constructing the new process. .Content (the task at hand) Understanding the old process and customer requirements. Selling the new way of working and living to the organization as a whole. Inventing a new process design that shatters long-held assumptions.

Pressure: Usually needed yesterday so they operate under conditions of great urgency and intensity. It must be tried in reality.Context (environment) Uncertainty: the old way is wrong. . not on paper. Experimentation: iterative experience. and we don’t yet have a new way.

. possibilities. The reengineer lives in a stream of options. tested before the environment is stable.Style Reengineering is a journey into the unknown. Ideas must be formulated before all the facts are in. Stumbling forward and being comfortable with it. alternatives. It is about exploration and discovery rather than analysis and knowing. and evaluated fore the results are conclusive.

The Profile of a Reengineer Process-orientation Holistic perspective Creativity Restlessness Enthusiasm Optimism Persistence Tact Team player Communication skills To wrap it up. Why? . the perfect member would be a female engineer who has changed jobs frequently and has a background in sales.

The needs of the customer of that process. The process that is being reengineered. The team itself.Team members share dedication to three things. These three things should come first for all team members and the management needs to create the environment that it can happen. .

. and to ask the hard questions. Sharing: Common objectives. Daring: encouraging everyone on the team to be innovative and adventurous.Team Building Caring: having an environment that allows open and honest communication. there are no winners on a losing team.

Avoid Commonplace Dysfunctional Behaviors by making them known Not listening Idea killing Personal attacks Silence Over sharing .

Compensation: Bonus for job well done. they know what will happen to them when the job is done. Communications: the more the merrier. Care and compassion: Take care of them! .Team management Career paths: So. Celebration: fun time.

C. Hearts: Deal with the motivation and perseverance of getting the job done. What do consultants do? A.Do You Need Help with the Reengineering Process? 1. Hands: Actually do some of the jobs of reengineering. . Heads: Bring knowledge and brain power B.

Pros and Cons of Consultants
Pros
More experience that will help you avoid pitfalls. Getting access to essential skills Third-party objectivity

Cons
Become dependent on them. Cost $ May take you down the wrong road. Not accountable.

Assumption Busting for Fun and Profit
Rule of Whacko: Any valuable new process design will at first appear to be whacko. That is, if someone approaches you with a proposal for a new process design that strikes you as interesting and plausible, our advice is: Throw it away. Breaking Assumptions: surfacing and questioning the underpinnings of the old process, the reasons why it was designed to work the way it did.

Assumption Busting: continued
Ford accounts payable example:
Purchase order from purchasing, receiving document from the receiving dock, and an invoice from the vendor: checked to see if they all match and if they did, issue a check. Now, the person on the receiving dock takes possession of the goods, checks to see if they match against an order, and if so, authorizes payment, if not they don’t accept.
• • • • Why wasn’t this done all along? The old way was never designed, it just happened. Didn’t have the technology to do it the new way. Based on assumptions: such as, dock workers can’t or shouldn’t authorize payments! Etc.

. deal with customers. and dispatch service technicians.Assumption Busting: continued GTE: one individual couldn’t do it all. Federal Mogul: every design was unique that engineers couldn’t interact with customers that a part had to be tooled in the same plant where it was to be made. test the lines.

Ford example. too labor intensive. Assumption: the ideas we take for granted that caused the rules to happen. such as Ford’s accounts payable being too slow. Rule: Then identify the rule or rules that allow that problem to occur. Ford example.Assumption Busting: continued How do we go about identifying faulty assumptions from ones that are still valid? Problem: First identify the problem that you are currently having. dock workers can’t authorize payment because they don’t have the information or authority. .

What is the underlying assumption here? .Assumption Busting: continued IBM Credit Corporation example: One person checked the applicant’s credit rating Another decided what interest rate to charge A third person put together the lease agreement And a fourth prepared the response to the customer.

bring it into the store. A driver would come to a store. which was hard to manage and very expensive to keep.Assumption Busting: continued Example. fill out a manifest for the store manager’s signature. and then send the form to headquarters for processing and billing. All of this depended on what was inventoried in the truck. go back to the van to pull inventory. . see what was missing from the shelf. a consumer goods maker distributed its products to retailers through a network of route drivers.

More efficient and reduced inventory. pack it all up and shrink wrap the items for each store. . use prediction models to predict what will be needed. Rule: the drivers decide what is needed after they arrive at the store.Assumption Busting: continued Problem: the company is carrying lots of inventory on the trucks. Instead. Assumption: The company doesn’t know what is missing from the shelf until the driver checks. load the trucks in proper order and have preprinted invoice to drop off with retailer.

The Hardest Part of Reengineering CHANGE! Getting people to let go of their old ways and embrace new ones. Jobs Organizational structure Measurement and rewards Career path Management roles Interpersonal relationships Value systems . All deal with people in the organization and the ultimate goal of customer satisfaction.

Resistance has many motivations. There’s no one way to deal with resistance: Manage it! . Resistance doesn’t always show its face.Principles of Change Resistance to change is natural and inevitable.

Dealing with change the 5 Is are all based on communication! Incentives—positive and negative Information—dispel uncertainty and fear Intervention—one-on-one connections Indoctrination—make change seem inevitable Involvement—make people part of the effort .

The rumor mill: real source. False familiarity: Got the T-Shirt already! Fear of Layoffs: Fear of the unknown. NO SECRETS! Sloppy execution: incomprehensibility.Impediments to Communication Disbelief: Trustworthy? Actions speak loud. Abstraction Complexity clichés .

you will bore them to death! Clichés: “We are in a win win situation!” Don’t be trite! Don’t over communicate! .Sloppy execution Incomprehensibility: Speak Plain nontechnical Abstraction: Be specific and use stories. Complexity: Don’t be too specific.

2. 3. listen. 7. 4. 10. 8. encourage Make the message tangible Listen. 5. 6. 9. Segment the audience Use multiple channels Use multiple voices Be Clear Communicate. communicate Honesty is the only policy Use emotions. console. not just logic Heal. listen .Ten Principles of Reengineering Communications 1. communicate.

All reengineering messages must be tailored to the specific characteristics and requirements of each constituency. B. C. Segment the audience: A. .Ten Principles (continued) 1. Micromarketing is the name of the game. Divide large diverse markets into smaller and more homogeneous segments.

Variety counts and so does originality. give out hats. Use a mix of presentations. logos. design simulations.Ten Principles (continued) 2. articles. . Have a reengineering motto. Use multiple channels of communication. B. C. comic strips. etc. A. etc. tshirts. videos.

By using different people to deliver the reengineering messages. you will enhance your ability for understanding. Some people relate better to others. B. Make sure they are not just giving the same message.Ten Principles (continued) 3. Use Multiple Voices: A. . They need to give their own perspective so the information will be richer.

C. D. but it’s not enough B. A.Ten Principles (continued) 4. Communicate Clearly: A. Reengineering has the four Ps. Purpose (Why) Process (How) Progress (Keep the momentum going) Problems (Humility helps with relationships) . Sizzle helps to sell. B.

they don’t understand it. D. Rule of the fifties: The first fifty times you say something. and the third fifty times.Ten Principles (continued) 5. Communicate TIMES 3 A. through many channels. people don’t hear it. Do so with many ways. Rule of seven times seven: The same thing must be communicated 7 times in 7 different ways before anybody will believe it. the second fifty times. Repetition works well. B. and by many people. C. they don’t believe it. .

Honesty is the only policy: A. Lies about reengineering are not only unethical—they are foolish and counterproductive. Just one lie or attempt to deceive by leaving out information will destroy ALL trust. acknowledge it. is always better than leaving it up to their imagination. face it. If something is unknown. Truth. C. . If a mistake is made. D. Complete honesty has to happen consistently to build trust. no matter how hard it is. admit it.Ten Principles (continued) 6. If something is painful. B.

E. F. B.Ten Principles (continued) 7. D. Use Emotions. Not Just Logic: A. C. Communicate passion! Fear Greed Joy Hope Playfulness .

C. D. encouragement. Communicate to Heal: A. Messages of hope. We must value our employees! .Ten Principles (continued) 8. Reengineering affects real people with real lives and cause real pain. B. consolation. Use communication to minimize the stress and trauma that it causes. or appreciation.

D. “Shake it up. B. “Break it up. A.” printed on paper that can’t be torn.Ten Principles (continued) 9.” Give them a tensionrelieving soft rubber ball. Things are not what they seem. “We’re going to have a ball. .” Hand warmer that wasn’t warm until it was shaken up. find a new way of doing it.” Silly putty won’t break until refrigerated. You can’t be passive. Be resourceful. C. Communicate Tangibly: Use Gimmicks. “Tear it up.

Opportunity for employees to vent and express their feelings. C. open discussion. suggestion forms. B. surveys. etc. it must be two-way. Communication is not just talking. Use focus groups. A. Listen. Listen: A.Ten Principles (continued) 10. questionnaires. interviews. It gives you feedback on how well your communications are going. . Listen.

values really lie at the heart of any successful attempt to reengineer. inevitably.Reshaping an Organization’s Values Organizational values represent people’s most basic beliefs about their work. As intangible as they may seem. as slippery as they may be to grasp in conversation. they shape people’s behavior and how they perform that work. as difficult as they may be to define. .

Making new values a reality Ensure they are reflected in process designs If you say you want to care about the customer. Pull or smoke and mirrors? Incorporate them into measurement and reward systems If customer satisfaction is key. the manager needs to show it first! Use them in difficult situations Tylenol example. that’s what we measure! State them clearly and uniquely . but don’t have a way to interact with them. it is the only way! If we are suppose to care about the customer. Have executives demonstrate them through personal behavior Example isn’t the best. hot air.

4. Counterrevolutionaries are usually motivated by the belief—things were better as they were before. Every revolution spawns a counterrevolution. . 2. Newton’s Third Law asserts that every action has an equal and opposite reaction. 3. The following are typical arguments.Combating the Counterrevolutionaries 1.

intelligence.Reengineering does not work (false). 2. Reengineering has a 70% failure rate: Out of context. No reengineering project will fail if it is done correctly. 3. The organizations need to have the will. and passion. 1. Give examples of those companies where it did work and show the great results! . Those will succeed.

It’s just total quality management. we are looking for dramatic improvement! . TQM is incremental. reengineering totally reconfigures processes to exploit the full potential of technology. Different from automation: Automation adapts technology to processes. It doesn’t really matter if it is new or not. reengineering is radical.Reengineering is nothing new.

how can it not be radical? . One way to contend with reengineering is to try and say it doesn’t go far enough.Reengineering is not radical enough. Since the reengineering we plan to do is going to change everything we do.

The organization can’t survive such change. No pain. Yes. What is the alternative? If we go out of business. Dramatic improvement has to be paid for in some way. how traumatic will that be? . no gain. it is not fatal.Radical change is dangerous and inhumane. reengineering does create some turmoil and real pain.

size. or the back office.Reengineering isn’t for us because we are different Reengineering is not about project. . routine. no matter the organization. Reengineering is about changing the way work is done. Work is Work. Reengineering applies equally to processes that are creative and to those that are routine.

. Contentment and complacency are dangerous feelings. reengineering must not be vital for your organization.We can’t afford it Good for you! If you can’t come up with the resources.

. Keep up the good work! Make sure you keep current with reengineering techniques and practices.We’ve already been doing reengineering for years They could be true.

and downsizing doesn’t work Half true. Downsizing doesn’t work.Just another name for downsizing. especially work that doesn’t create value for the customer. it is about getting rid of work. the second part. but reengineering does! . Reengineering is not about getting rid of workers. Eliminating people without eliminating work may lead to short-term payoff but definitely leads to long-term disaster.

etc.Reengineering is just a cost-cutting tool. . Cost-cutting may just be a benefit of finding out a better way of doing things. but it is not the reason we do them. but we need growth It can cut cost. accuracy. but it can also deal with cycle time. Customer focus on what we want to do. quality.

. and consistent with people’s intuition is likely to be accepted and to work. readily understandable.Reengineering is just common sense Thank you very much! An idea that is simple.

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