Masterclass on the International Practices of Managing Change - Day 1

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IMPROVED STRATEGIC MANAGEMENT
CAPACITY PROJECT
Management of Change:
Learning from International Best
Practices
7.10.2013 - Ankara

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Agenda
Driving Forces and
Key Enablers of Change Processes
Challenges and Obstacles
within the Public Sector
The Long Conversation :
Aligning the Key Organizational Elements
The Long Conversation:
Building Key Org. Capabilities

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Driving Forces and
Key Enablers of Change Processes

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Driving Forces and Key Enablers
of Change Processes

Public management reforms
are widespread and appear to
share many important
similarities
Source: Nicholas Carr, OECD,
Manuel Castells, John Elkington,
Manuel Escudero, Oswaldo Lorenzo,
Jeffrey Sachs, McKinsey Global Institute

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Public management reforms are widespread and
share many important similarities

• High-performing government agencies do
resemble well-run companies.
• Both have worthy goals, well-designed, ITenabled,
rational
processes,
strict
accountability, and effective leaders.
• Dealing with common obstacles.
• Reforms involve learning and this process
has to be given time to take place.

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of Change Processes

Slash major budget deficits
fueled by the economic
crisis


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Slash major budget deficits fueled by the
economic crisis
CONTEXT:
• Europe: from Greece to Ireland, Spain to the UK.
• Low growth, unemployment rates above 20%, a severe fiscal
imbalance, and budget challenges.
PREMISE:
• Cutting budgets + be prepared for a long period of austerity.
• Reducing budget is not enough --) More efficient
(keeping service levels) --) public sector simplification
ACTIONS:

• ITC as key enabler of productivity and competitiveness
Source: Nicholas Carr, OECD

processes

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Slash major budget deficits fueled by the
economic crisis
First Cycle:
Law 11/2007 on citizens’ rights to
electronically access services.
This had a strong mobilising effect.
However, the multi-channel
service delivery strategy enabling
citizens to choose their preferred
communication and access
channels seems to have fallen
short of its aims.

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

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of Change Processes

Public powers are shrinking


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Public powers are shrinking, but affirm their
presence..
• Big part of our daily problems (climate change,
humanitarian crisis) cannot be manged by any
Nation-state on its own.
• Widespread privatizations and a recasting of the
public sector.
• Budgetary discipline ---) limits to achieve a
satisfactory level of services.


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of Change Processes

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

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


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of Change Processes

We live in a multipolar world

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We live in a multipolar world
…in which emerging countries
will increasingly consolidate
their presence and decisionmaking power.
…this will lead sooner or later
to new multilateral global
governance arrangements.

Source: Nicholas Carr, OECD

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of Change Processes

We live in a crowded planet

Source: Nicholas Carr,

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• Deterioration of the infrastructure:
• Could cause a crisis.
• USA - Last 10 years:
• Airport capacity (+1%) vs. Air
traffic (+37%)

• Two thirds of the human race will not have enough
fresh water within 25 years. (Clarke 2002).
• The Extinction Crisis (Hinrichsen & Robey)


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Minneapolis Bridge
Collapse

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of Change Processes

Information Technology
is growing exponentially


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Information Technology is growing exponentially
Google glass

• Assimilation
• Use and Exploitation
• Adaptation

3D printing

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…wealth, power and knowledge generation are
largely dependent on the ability to organize
society to reap the benefits of the new
technological system

Manuel Castells
USC Professor

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Reflections

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Public Management is really
facing “unstructured complexity”

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Challenges and Obstacles
within the Public Sector

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Challenges and Obstacles within the Public Sector

Limited time for change

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Purpose

Organization

Cost
(resources)

Scope

Time
(schedule)

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Purpose

Organization

Cost
(resources)

Modularity

Scope

Time
(schedule)

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Re-assess master plan
& re-plan accordingly

• Understand trade-offs: time, scope,
cost and quality/benefits
• Define clear and smaller project
milestones
• Communicate clearly findings to key
stakeholders.

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Legal and Regulatory
Issues

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Less Flexible Workplaces

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…bureaucracy constitutes the
most efficient and rational way
in which human activity can be
organized, and that systematic
processes and organized
hierarchies were necessary to
maintain order, maximize
efficiency and eliminate
favoritism.

Source:
Max Weber,
Wikipedia

…bureaucracy as a
threat to individual
freedom, in which the
increasing
bureaucratization of
human life traps
individuals in an "iron
cage" of rule-based,
rational control.

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…bureaucracy constitutes the
most efficient and rational way
in which human activity can be
organized, and that systematic
processes and organized
hierarchies were necessary to
maintain order, maximize
efficiency and eliminate
favoritism.

…bureaucracy as a
threat to individual
freedom, in which the
increasing
bureaucratization of
human life traps
individuals in an "iron
cage" of rulebased, rational control.

This is mostly nonsense, particularly in today’s hyperchange environment where flexibility is essential
Source:
Max Weber,
Wikipedia

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Lack of a performance culture

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• Bureaucracy: “…follow instructions and procedures.”
• Lack of skills required to undertake the taks.

• Wrong incentives: promotions on the basis of who
people know, not what they know.
• Lack of definition of what the meaning of success is...

• Lack of mission.

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Before Change:
•

•
•

OSHA measured success in terms of the
number of inspections and fines
(sanctions) imposed.
Punitive attitude toward business.
Employees lose sight of the overall
mission.

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After Reform:
•
•
•

•

Commitment to Mission.
“Reducing
the
number
of
injuries, illness, and eaths in the
workplace.”
Goals and metrics related to “the
elimination of all preventable workplace
ills in ten years.”
Literally impossible to achieve --) goal
was to stimulate innovative thinking.

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Public Accountability

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Public Accountability

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

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The Long Conversation :

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0. Take a comprehensive
approach

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Strategy represents the purpose of the organization, in particular the
value it intends to create for key stakeholders
Structure describes how people & assets are clustered in
responsibility
centers
according
to
the
nature
of
work, customers, etc.
People and culture describe the skills and behaviors of people
(including leaders), as well as their values and beliefs.
Business processes refers to the activities to be performed and
coordinated in order to deliver value to stakeholders.
Technology comprises both tangible (systems and equipments) aas
well as intangible (knowledge) assets that support processes.

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

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The Instituto de Astrofísica de
Canarias (IAC) is an internationalized
Spanish research centre. It has two
headquarters and two observatories
set in an environment of excellent
astronomical quality, both constituting
the European Northern Observatory
(ENO) .
The Instituto de Astrofísica is the main
headquarters and normal workplace of
the greater part of its staff.
Here, astrophysical research and
technical projects are developed.
There is also a postgraduate school.
The IAC also considers scientific
outreach as one of its principal aims.

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

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• Increase in information and
material processing capacity.
• Standardisation of work.
• Higher level of
interdependence and
integration among tasks.
• Knowledge sharing practices

MANAGEMENT
SYSTEMS &
TECHNOLOGY
• Project-oriented
approach
• Use of virtual platforms
• Use of ERP software.

• Team work culture
• Modification of
communication models
• Changes in recruiting and
training procedures or
needs
• Gains and losses in
status

PROCESSES

Mutual adjustment

STRUCTURE

PEOPLE

• Greater decentralization
and autonomy
• Greater inter-functional
integration
• Role definition and
incentives based on
horizontal models

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One of the goals early in the
transition should be to identify
potential misalignments:
•

Structure and strategy misalignment.

•

Skills and strategy misalignment.

•

Process and strategy misalignment.

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Skills and strategy misalignment

Change Program

Before:
• Processes
performed by a
local agency

After:
• Processes performed by
third parties.
• Integration and
performance control
managed by the local
agency

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Skills and strategy misalignment

Change Program

Misalignment:
Operations Strategy:
• Processes performed by
third parties.
• Integration and performance
control managed by the
local agency

• New Managers’ skills:
Orchestration rather
than execution.
Controlling service
levels rather than
delivering service
levels.
Developing and
training.

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Leaders in government should
be prepared to take on the
role of organizational
engineers

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1. Improve performance
against Agency Mission

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Improve performance against Agency Mission
Type of Public
Organization

Mission

Examples

Performance
Objectives/Metrics

Service Delivery

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

Health care agencies, Efficient delivery,
infrastructure
security and integrity,
development
error minimization
programs, financial
services, information
distribution, social
service agencies

Analysis and
reporting

Provide policy makers Treasuries, budget
with specified
authorities,
information and
intelligence agencies
analysis

Accuracy, timeliness,
risk management

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

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In Government, the fundamental
strategic questions concern..:
•
•
•
•
•

The mission of the organization,
The interest of all various stakeholders,
The regulatory constraints within which
you must operate,
The extant skills and capabiities of your
group,
The availability of the resources you need.

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2. Create a Roadmap:
Identify performance objectives
Set priorities
Roll out the change program

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Change program must be formally defined in
terms of milestones and deliverables,
monitoring and tracking the schedules are
critical activities to ensure deadlines are met.

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Effort Level

Change Program must be…

Executing
Initiating

Planning

…formally
defined in terms
of milestones &
deliverables

Closing

…executing +
…monitoring
and tracking the
schedules

Assessing

Time

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Building Key Org. Capabilities

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Building Organizational Capabilities

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Intelligence
Information

Effectiveness
Coordination

Operational
Automation

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ERICSSON: Adaptation Process
Business Model (Strategy)
(Fundaments)

Key Enabler (ITC)

•Decentralized global company

•Decentralized requisition management

•Internal capabilities in each area or
business process

1998-1999

Key Process Characteristics

•Catalogued materials

•SAP & B2B
Procurement

•Centralized management of suppliers.

•Independence.

2001

•Consolidation of support processes in
shared services
•Service culture in back-office
departments

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

•E-p2p (new SAP
version)

•Supplier delivering in more than a
country.

2002-2003

•Global company

+

+

•Reduction of local capabilities

•Common global purchasing process for
MRO

•IBX marketplace

•Consolidation of subsidiaries and
suppliers
•Supplier: global contract and local
deliveries.

•Centralized management of the process.
•Outsourcer: IBX.

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Collaborative network of key
agents/users engaged in
collective action-learning and
knowledge diffusion

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Social learning:

…learning by observing the actions of other people.

Agency Top Manager

Team Leader

Teams or Commitees

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Collaborative network

Element

Intra-unit team

Social network

Org. Scope

Functional or business units

Multi-functional and multi-business

Size and
cohesiveness

Small, closed and tight

Large, open, and loose

Members

Employees affiliated to functional or
business unit

Users across the organization at all
levels.

Perspective

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

Breadth of multi-dimensional
interdependences

Paradigm
Variety

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

High. Paradigms may clash, exposing
conflicts and dilemmas.

Coordination
Role

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

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

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Encouraging learning and
sharing mastery techniques
within the different org. areas

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Leading through an involved and
developmental style of leadership
that creates a supporting
atmosphere for learning &
exploration

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Be a Leader, not a Bureaucrat

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

• Energy management
• Encourage proper
behaviour
• People development
• Humility and impetus

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Changing the collective behaviour
of the group changes the culture…

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Transitioning from traditional
planning and control to
management by directed
incrementalism

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

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Change Program must be based on…

A structured chronological framework

A Development and Learning process

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Element

Description

Strategy

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

Leadership

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

People

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

Organizational
structure

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

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Element

Description

Planning and
Control

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

Motivation

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

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Final Thoughts

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Oswaldo Lorenzo
Professor of Management
Deusto Business School, Spain
Blog: www.longconversation.com
@Lorenzooswaldo

Masterclass on the International Practices of Managing Change - Day 1

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