Module: Managing Change in Organisations
Lesson: Implementing change
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Implementing change
Content
Please access the “Implementing Change” Introduction, which introduces the topic.
Transcript of the “Implementing Change” Introduction podcast.
At the end of this session you will be able to:
8.1 discuss various approaches to implement change effectively and improve
organisational performance, for example, total quality management, business process
transformation and business process re-engineering
8.2 explain methods of continuous improvement, e.g., Kaizen and Six Sigma
8.3 define and discuss lean and agile concepts of manufacturing and the role of executive
commitments in the change process.
Introduction
In change management, several umbrella approaches have been developed to support the
change process. Their main use is to support the implementation of change and to seek
improvements in the performance of the organisation to which they are applied. Many of these
revolve around the desire to improve the quality of systems and processes and thus around
concepts such as Total Quality Management, Business Process Re-engineering and its
modern equivalent, Business Process Transformation, Six Sigma; and the current interest in
agile and lean processing. This lesson will focus on these approaches.
Total quality management
Increasingly, organisations are seeking opportunities to drive common business processes
across all aspects of their operations. They are also looking to simplify processes and
establish best practices. In this way, a solid foundation can be created within the business's
infrastructure, impacting the core operation of the company and enabling it to focus on its key
business drivers. This is known as business process transformation (also known as business
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process re-engineering).
Business process transformation
Why the focus on business transformation?
Greater change means greater opportunity. But to take advantage of it, organisations
frequently need to change their business models. In fact, they need to build change into their
business model to create an organisation flexible and resilient enough to reinvent itself
continuously as it works to exploit opportunities. Hence the emphasis on the “learning
organisation”.
Today, companies succeed only if they can transform themselves, and transform quickly,
consistently and with the bare minimum of redundancies, write-offs and uncertainty. Flexible
business models are at the heart of this new, resilient organisation. They allow companies to
seize new opportunities and avoid threats with minimal trauma to employees, shareholders
and business partners.
Why transform?
Organisations need to transform because everything around business is changing. And
because the list of things that are changing, is changing!
The constant that you take for granted today - your supplier, that government policy you are
relying on, the industry pricing structure - might be gone tomorrow. That means that you have
to build flexibility into your business processes.
Can you identify some changes in the business environment in which your company operates
that you feel require a significant transformational response?
Do they pose opportunities or threats?
Identify what action you can take to seize the opportunity or avoid the threat.
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There are numerous examples:
found a cheaper supplier? Move quickly enough and you can cut your own prices and be
more competitive
government upheaval? Avoid the threat to your business and get into a new market
off-shoring or outsourcing opportunity in Brazil? Move some of your operations to Brazil.
Put in place procedures to manage distributed operations.
The above demonstrate that changes are not just corrections to a spreadsheet or a contract.
These involve fundamental transformations to the way a business operates.
What is business process transformation?
There has been a huge focus over the last decade on business restructuring as a means of
achieving strategic change. This has been largely due to developments in information
technology. However, heavy investment in this area has not always yielded significant results.
Failure has largely been because the focus has not really been on restructuring business
processes, but rather leaving processes intact and using information technology to speed
existing processes.
Speeding existing business processes does not deliver step change. It does not address
fundamental performance deficiencies, nor does it address the opportunity for new ways of
working and new business models.
The concept of business process re-engineering (as it was originally referred to) has been
around since the 1990s. However, it is often misrepresented as a short cut to downsizing, as a
new quality control or as a lever to new IT systems. Today the more commonly-used term,
business process transformation, reflects a positive organisational change strategy, a strategy
to build flexibility and agility into the organisation, and enable it to transform easily as the
environment changes.
We shall use the terms business process transformation and business process re-engineering
interchangeably.
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Figure 8.01 - Business process re-engineering
Business process re-engineering then covers strategy, tactics and operations. It looks at the
“why”, “what” and “how”.
Business re-engineering principles
Today true business re-engineering is based on certain principles:
capture information once at the source. Make data, information and knowledge easily
available to all who need it
integrate geographically-distributed resources (avoid decentralisation)
empower decision-making by those who perform the work (remove unnecessary
management overheads)
eradicate specialist departments for specialist processes. Enable those who use the
outputs to perform the work
recognise the power of a seamlessly integrated strategic network - integrate your network
from supplier to customer to strategic partner.
Most of these principles are supported by technology, but technology is not the magic answer
to successful transformation.
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No one in an organisation wants the inevitable disruption arising from re-engineering,
especially in large, established companies. It overturns everything that people have been
accustomed to. Vision, commitment and consistency are essential to change the status quo.
The focus in a highly competitive and global age should be on innovation, speed, service and
quality. This requires a fundamental rethinking of the business model and its processes.
If we take a business process to be a set of logically related tasks undertaken in pursuit of a
defined and agreed business objective, then business process re-engineering starts to look
fundamentally quite simple. It is about the improvement of productivity by looking at entire
processes, rather than at specific activities or functions.
The advantage of this wider approach is that a business process incorporates all the work and
the non-work (delays, storage, wastage, error-correction, etc.) associated with the sequence
of activities involved. It also involves the communication processes between the various parts
of the organisation or functions involved in a process, and the rules, regulations and
bureaucracies that surround it. Now, business process re-engineering starts to look like a
holistic approach to improvement.
Finally, business process transformation should be customer-focused. The purpose of
transformation is to deliver superior value to customers, measured as quality, service,
responsiveness and cost. In this way, customers are retained, new customers created and,
ultimately, revenue and profits increased.
Business re-engineering strikes at the very heart of an organisation - it changes the familiar
ways of working. Business re-engineering will only succeed if there is executive leadership
with true vision.
Read the following statement:
“Business process transformation is the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in critical, contemporary measures of
performance, such as cost, quality, service, and speed.”
Identify the four keywords that emphasise the essence of business process transformation.
Did you come up with the following?
fundamental
radical
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dramatic
processes.
Fundamental
Understanding the fundamental operations of business is the first step prior to re-engineering.
Business people must ask the most basic questions about their companies and how they
operate: Why do we do what we do? Why do we do it the way we do? Asking these basic
questions leads people to understand the fundamental operations and to think why the old
rules and assumptions exist. Often, these rules and assumptions are inappropriate and
obsolete.
Radical
Radical redesign means disregarding all existing structures and procedures, and inventing
completely new ways of accomplishing work. Re-engineering is about business reinvention,
begins with no assumptions and takes nothing for granted.
Dramatic
Re-engineering is not about making marginal improvements or modification but about
achieving dramatic improvements in performance.
There are three kinds of companies that undertake re-engineering in general:
companies that find themselves in deep trouble. They have no choice
companies that foresee the need to transform because of a changing environment
companies that are high-performance companies. They see re-engineering as a chance to
further their lead over their competitors and promote a culture of continuous improvement.
Processes
Process is the most important concept in re-engineering. In classic business structure,
organisations are divided into departments, and process is separated into simple tasks. These
simple tasks are then distributed across the departments. Some examples are receiving the
order form, picking the goods from the warehouses and so forth. These are delayed by artificial
departmental boundaries. This type of task-based thinking needs to shift to process-based
thinking in order to gain efficiency. Today, high-performance companies look to apply processbased thinking and seamless integration not just within their own organisation but also across
their strategic networks - with customers, suppliers and strategic partners.
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Top-down view
Business process transformation is a top-down approach. It is not about projects carried out in
isolation to examine a specific activity. Business process transformation is about looking at
entire processes, rather than at specific activities or functions. It also needs to be customercentric and look at the chain of activities leading to the customer output (whether that is
service or product).
To take a top-down view:
start with mission statements that define the purpose of the organisation and describe
what sets it apart from others in its sector or industry
produce vision statements which define where the organisation is going, to provide a clear
picture of the desired future position
build these into a clear business strategy, thereby deriving the project objectives
define behaviours that will enable the organisation to achieve its aims
produce key performance measures to track progress
relate efficiency improvements to the culture of the organisation
identify initiatives that will improve performance.
Core business processes in the pharmaceutical industry are being re-assessed and aligned to
meet the rapidly changing environment.
Read the article Uncovering the Hidden Value in Pharma Business Processes.
Do you see any pressures for change and actions taken in the Pharma sector that might have
general lessons for your own organisation? If so, make some notes and share them with your
fellow students on the Discussion Forum.
Business process transformation: Where to start?
Begin at the top
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Real business transformation takes time, and it takes co-operation from every division, every
discipline and every employee. This kind of deep, long-term change needs to be driven from
the top - from the CEO and the rest of the senior management.
Look closely
Before you can move forward, you have to know where you are. What does your company do
well? What is holding it back? What threats are you facing, and where are you most
vulnerable? Make sure your answers are detailed and specific. Remember: if you do not seek
out the inefficiencies and vulnerabilities in your organisation, someone else will. The right
answers here will be a strong foundation for the rest of your transformation.
Answer basic questions
What does your company do best? And what business structure will let you do it? Once you
establish your core focus, you can build your organisation around it: vertical or flat hierarchies?
Centralised functions or modular groups? You will need to answer these questions eventually,
but business transformation is not about a fixed set of answers. You will need to evaluate the
structure of your company process-by-process, division-by-division.
Make transformation pay for itself
Begin small - choose one or two areas where transformation will have the most impact (e.g.,
distribution or managing a client relationship). Once that is complete, take the added value and
use it to fund the next round of change. Then do it again. And again. By making transformation
pay for itself, you will make the process faster, easier and more accepted at every level of your
organisation.
Continuous improvement and quality
Quality is inextricably linked with customer satisfaction today. Strategies such as the learning
organisation, knowledge management and business process transformation are all based on
the principle of continuous improvement. The mark of a “quality” company is viewed by
customers as one that is continuously improving.
The Kaizen method of continuous incremental improvements is originally a Japanese
management concept for incremental (i.e., gradual and continuous) change (i.e.,
improvement). Kaizen is actually a way-of-life philosophy, assuming that every aspect of our
life deserves to be constantly improved. The Kaizen philosophy lies behind many Japanese
management concepts, such as total quality control, quality circles, small group activities and
labour relations. Key elements of Kaizen are quality, effort, involvement with all the employees,
willingness to change and communication.
Kaizen
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The term “Kaizen” comes from Japanese, meaning continuous improvement; it originates
from “kai”, meaning continuous, and “zen”, meaning improvement. Some translate “kai” to
mean change and “zen” to mean good, or for the better.
Japanese companies distinguish between innovation (seen as radical) and Kaizen
(continuous).
The foundations of the Kaizen method consist of five founding elements:
teamwork
personal discipline
improved morale
quality circles
suggestions for improvement.
The Kaizen model can be seen in Figure 8.02.
Figure 8.02 - The Kaizen model
The four underpinning concepts are:
TFM - Total flow mapping (to optimise flows of work through the organisation)
TPM - Total productive maintenance (to ensure machinery etc. is optimally maintained and
the workplace kept clean and well organised with the least disruption to productive
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efficiency)
TQM - total quality management (to ensure the quality of the outputs of the work are
maximised)
TSM - Total service management (to ensure that customers get the best service quality
possible).
To read more about Kaizen and its accompanying concepts such as Kanban, Poka Yoke and
Genba Kanri, and a series of case studies relating to Kaizen and TQM, visit the Kaizen
Institute at:
http://uk.kaizen.com/kaizen-tools.html
Total quality management: Six Sigma
Total quality management, abbreviated as TQM, stems from Kaizen. It is a management
strategy for improving workforce performance. Total quality refers to the culture, attitude and
structure of a company that seeks to provide customers with products and services that satisfy
their needs. A popular approach is that of “Six Sigma”. In many organisations this simply
means that the organisation adopts measures of quality that strive for near perfection in every
process.
Six Sigma is a disciplined data-driven approach, coupled with a methodology for eliminating
defects. The term “Six Sigma” derives from the use of six statistical measures of performance.
To achieve Six Sigma a process must not produce more than 3.4 defects per million
occurrences. A defect is simply measured by not meeting the client specification.
The underlying philosophy of Six Sigma is that total quality management via continuous
process improvement can be achieved only by strict measurement-based discipline. The
approach can be applied to both the improvement of existing processes, and the development
and introduction of new ones.
The relative expertise of Six Sigma practitioners is measured in terms of martial art type
designations:
green belt - those learning how to apply Six Sigma disciplines and are coached by black
belts
black belt - those who have completed sufficient training to demonstrate mastery of the
subject, and completed several projects and an examination. They can be further coached
by master black belts
master black belts - experienced black-belt practitioners.
Here is a brief overview of the purpose of Six Sigma:
https://www.youtube.com/watch?v=Yyk8G0zrfpU
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And a slightly longer explanation:
http://www.youtube.com/watch?v=C8q-Zzgk1Uw
So how does TQM, Six Sigma, etc., relate to the concept of “lean”? Watch the following
video, which is useful in bringing these concepts together. Make any notes you think useful
and relevant to your own organisation:
http://www.youtube.com/watch?v=uXc1lY4vPxU
Lean and agile
Another very popular concept today is that of the lean or agile manufacturing system. See the
article by Naylor et al relating the concepts of lean and agile into traditional views of the total
supply chain. We will not explore this in too much detail as this is not a production
management module; however, it is worth noting that they are not the same thing.
Agility in manufacturing systems is best suited to managing a fluctuating, even unpredictable,
demand for your output.
Leanness in manufacturing is best suited to a stable production process.
The former reflects an intention to develop the flexibility to cope with change and uncertainty,
without incurring unnecessary costs.
The latter reflects an intention to develop the most cost-effective system possible, and thus a
stable and predictable set of processes is desirable.
The tradition has to be to see these two approaches as part of a logical progression; i.e., lean
is what we ideally seek to achieve, but agile is the reality for most modern manufacturing
organisations; whereas in reality, both have their place within the total supply chain.
The Naylor et al. article is detailed and in full may be of more interest to those of you studying
project management as a specialism. However, for the rest of you, please quickly read (or
skim) through even if you are not manufacturing-based, as the general concepts are
applicable in all process-based operations, including services and the public sector.
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Executional commitment
Quality management is very much a top-down approach. Lack of top management
commitment is, in fact, the biggest barrier to the success of quality initiatives. Quality initiatives
started at operational levels rarely succeed, however enthusiastic the proponents, because
such initiatives inevitably hit barriers when it comes to management support in execution.
Top management (starting with the CEO) must be convinced that quality affects their bottom
line and profits. Only then do they become advocates of quality.
Becoming a “quality” company requires the right corporate culture, one that is committed to
seeking continuous improvements, one that collaborates and one that places the customer
first. The “quality” culture has to ripple throughout the organisation. It is important that all
employees understand the benefits of quality to their customer base, to the organisation and to
themselves.
Middle management is particularly key to the execution of successful quality programmes.
They are the people in the organisation that make things happen. Securing the commitment of
middle management is vital. Statistics show that companies with committed, enthusiastic and
persuasive middle management are far more likely to succeed in implementing quality
programmes.
Finally, fear of change is a common barrier and affects middle management as well as
operational levels.
Middle management
Middle management may associate change with loss of control. Top management must focus
on educating and winning over middle management first. Quality companies need to adopt a
very different management style from traditional companies. “Command and control” gives
way to leadership, vision and empowerment of individuals to take personal responsibility. In a
quality company, middle managers have to be leaders and:
use participative management
envision the future
promote attitudes of “customer comes first” and strive for improved quality
question efficiency of processes and constantly strive to reduce waste
be innovative in products and services
motivate people
develop people’s talents, skills and knowledge
empower employees
reward effort and innovation, not position
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be constantly focused on continuous improvement.
Operational Level
Fear of change, and resistance to change, are also barriers at the operational levels. Some
people will inevitably question the rationale for change. Commitment to change can only be
achieved once individuals and groups have been brought into the change process. In order to
do so, people must be free to challenge the relevance of total quality in the context of business
needs and also challenge the implementation aspects.
Quality initiatives and managing change
Develop clear objectives and communicate rationale for quality programme
The benefits of quality to the organisation and to the individual must be communicated.
Be inclusive of staff at all levels when planning quality programmes
Relate change, in as individual a manner as possible, throughout the organisation. The more
specific and tailored the dialogue with groups of people, the more likely you are to win them
over. Operational staff are often more aware of the changes that are necessary to improve
quality than their managers. Involving them is therefore vital for success but also reduces their
fear of change. They should not view quality management change as something that has been
imposed on them by management but as something they are influencing and proactively
participating in.
Assess individual reactions to change
Pre-empt negative reactions and assess these reactions. Those threatened should be
supported, and those who see it as an opportunity should be encouraged.
Review activity 1
Choose an area where transformation will have most impact, an organisational sphere with
which you have familiarity (e.g., sales process, supply chain.):
map your company’s existing processes. Are these processes up-to-date?
identify the value drivers. What is driving value in my processes that I can leverage even
more?
identify what changes can be made to streamline the process, or improve information
flows, or improve cross-functional integration, or introduce project management (or other
changes). Analyse the potential impacts of such changes.
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Prepare a report (no more than three A4 pages) and discuss it with your manager.
Review activity 2
Participative management, vision, empowerment and people development are all important
characteristics of “new” management in quality companies.
From what you have learned of total quality management and continuous improvement, why is
this so important?
Do you agree that traditional management practices based on control stifle quality
management?
Are there any risks with this “new” leadership/management style?
Summary
In this lesson, we have looked at the approaches to implement change strategies which help to
improve the quality of systems and processes. These concepts are total quality management
(TQM), business process re-engineering (BPR) and its modern equivalent business process
transformation (BPT), Six Sigma, and the current interest in agile and lean processing. We
started with the rationale for business transformation and discussed its underlying principles,
such as making information available and decision-making. Then we analysed the top-down
view of BPT from formation of the mission and vision statements to identifying initiatives that
improve performance. Japanese approaches to continuous improvement, such as Kaizen with
its various components (teamwork, personal discipline, improved morale, quality circles and
suggestions for improvement), total quality management (TQM) and Six Sigma were also
discussed. This led to our analysis of lean and agile manufacturing and various initiatives that
managers can take to initiate and implement change.
Reflection
Having completed this lesson, please reflect on your study approach to the lesson. Please
revisit your thoughts in your Notebook space and review your understanding of the learning
outcomes that we have covered. Please assess how you have interacted with various
activities. Moving forward, please think how your experience of studying this lesson will impact
how you approach the next lesson in this module. What changes would you make?
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Reading strategy
Essential reading
Carnall, C. A., 2012. Managing Change in Organisations. 5th edition. London: Pearson
Education Ltd. (Available on Myilibrary)
Wider reading
Burnes, B., 2009. Managing Change. 4th edition. FT/Prentice Hall.
Davenport, D., and Prusak, L., 2000. Working knowledge: How organisations manage what
they know. 2nd edition. Harvard Business School press.
Johnson, G., and Scholes, K., 2008. Exploring Public Sector Strategy. FT/Prentice Hall.
Johnson, G., Scholes, K., Whittington, R., 2010. Exploring Corporate Strategy. 9th edition.
Pearson.
Kotter, J., 2012. The Heart of change: Real life stories of how people change their
organizations. Harvard Business School Press.
Kotter, J., and Schlesinger, L., 2008. Choosing Strategies for Change. HBR. July-August.
Senior, B., and Swailes, S., 2010. Organizational Change. FT/Prentice Hall.
Welcome to Kaizen Institute http://uk.kaizen.com/kaizen-tools.html (accessed 7/1/18).
What is Lean Six Sigma? https://www.youtube.com/watch?v=Yyk8G0zrfpU (accessed
7/1/18).
What Is Six Sigma? The basic principles of Six Sigma http://www.youtube.com/watch?v=C8qZzgk1Uw (accessed 7/1/18).
What is Lean Six Sigma? http://www.youtube.com/watch?v=uXc1lY4vPxU (accessed 7/1/18).
References
Cortada, J. W., Enahoro, H., Fraser, H. E., 2004. Uncovering the hidden value in pharma
business processes. New York: IBM Institute for Business Value.
Edmonds, J., 2011. Managing Successful Change. Industrial and Commercial Training. 43(6),
349-353.
Livingston, I. R., 1993. Managing change through structuring the processes of organisations.
Business Change and Re-engineering. 1(1) 28-33.
Naylor, J. B., Naim, M. M., Berry, D., 1999. Leagility: Integrating the lean and agile
manufacturing paradigms
in the total supply chain. International Journal of Production Economics. 62, 107-118.
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