MGMT 2001

Managing Innovation and Organizational Change

Dr. Jimi Kim

March 12, 2019

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WEEK 4 Diagnosis, Prescription and

Implementation

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+ Agenda

• Diagnosis, Prescription and Implementation: recognise the various phases in the process framework for managing change

• Diagnostic Tools

• Group work, individual essay

• Quiz debriefing

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Sensing and scoping

Diagnosis

Prescription

Implementation

Assessing readiness for

change

Building readiness for

change

Monitoring and evaluation

Change Process Framework 4

+ Sensing and scoping…

• By sensing and scoping, we seek to make an initial definition of a situation and the change issues, identify the need for change, and make an initial assessment of readiness for change.

• We attempt to answer the following questions: – How is the organisation performing? What are our predictions about

its future performance? What changes are taking place in the organisation’s environment or are likely to take place?

– What are the signs of a need or opportunity for change? 5

+ Sensing and scoping

Acme insurance has a rising incidence of customer complaints, and heavy administrative

costs in processing claims

Venture tech’s sales have declined in the last two quarters while marketing

expenses have increased by a third

Silcom has increased turnover

of “star” performers in the last financial year and growing

problems are occurring when

trying to get teams to work together

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+ Sensing and scoping

– In terms of the organisation’s goals and values, what do these signs indicate about the discrepancy between how things are and how things could be?

– In broad terms, what are the overall goals of change?

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The rising incidence of complaints in Acme insurance is discrepant with the organisation’s values of customer service and the organisation’s goals

of preserving and extending its competitive edge

In Acme’s case, the goals would be a reduced level of complaints, higher levels of customer satisfaction, and a competitive advantage arising from

perceptions of its high customer service

+ Diagnosis

• Diagnosis is concerned with collecting and analysing information to identify the underlying problem or the underlying change issues that need to be addressed.

• Diagnosis seeks to answer the questions:

– What are the specific issues or problems that need to be addressed?

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In Acme’s case, the main issue that needs to be addressed is poor customer relations

+ Diagnosis

– What is the underlying cause of the problem(s) or issue(s)? What needs to be changed in order to achieve the overall goals identified in the scoping process? What is responsible for the discrepancy between how things are and how they could be better?

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The root cause of Acme’s problems are cumbersome and costly processing technology, slow and unresponsive service due to low staff

morale, and staff not being oriented to customer service due to an ineffective and poorly designed pay and rewards system

+ Prescription

• Prescription answers the question:

– What particular changes/solutions will address the change issues and achieve the change goals?

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In Acme’s case, consideration might be given to a range of options including process improvements (e.g., changing the web-based

claims processing system to a faster and newer technology), modifying the HR policies and practices so that people are directly rewarded for customer service in the form of incentives, retraining

staff, etc.

+ Assessing readiness for change

• This involves answering the questions: – Is there the capacity in the organisation to make the changes? Can

the organisation acquire or develop the capacity?

– What is the level of commitment to the particular changes involves in the change strategy? Are there people with the necessary influence and power who will drive and champion change?

– Is there resistance to this particular change and might there be resistance in the future? How much power/potential influence do actual or potential resistors have? What are the sources of their resistance?

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+ Building readiness

• The process of building readiness for change can occur at any all or stages of the change process. Furthermore, the process of diagnosis, assessing readiness, and prescription can all be used to create readiness for change.

• For example, a diagnostic process involving staff and stakeholder interviews, or involving staff in discussions about what needs to be changed, could contribute to creating readiness for change.

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+ Implementation

• Implementing involves putting the prescribed solutions into place.

• E.g., implementing training, changing cultural values by getting leaders to role model new behaviours and values, selecting and recruiting in a new way to change the type of people entering the organisation, etc.

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+ Monitoring and evaluating

• This involves keeping track of the progress of a change program and comparing it to the original goals, expectations, and outcomes.

• More often than not some modifications to the change will be required so this stage can lead to a reiteration of the above processes. Setbacks in the change may require additional diagnosis of the sources of the difficulties, reassessment of the level of readiness for change, and the prescription of modifications to the change program.

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Processes Alan’s Story

Scoping “I received some feedback that people would like me to “listen more”. They explained that they

sometimes get the impression that my mind was on other things when they were speaking to

me”.

Diagnosis “On reflection, I realised that I had been allowing my mind to wander to ‘urgent’ matters while

people were speaking to me”.

Prescribing: Formulating a strategy “I decided on the strategy of either putting the “urgent” matters to one side and fully listening to

people, or adjourning the discussion to a time when I had the head space to listen to them”

Assessing readiness “I reflected that I would certainly be able to give my full attention to the CEO if she walked into

my office, however urgent the other matters on my mind. It was basically an issue of the priority

I give to listening to people. It seemed to be a fairly straightforward change to make”.

“This was an important issue for me, connected to my value about respecting people and my

goal of building their trust in me. I was ready to make the change”.

Prescribing: Implementation plan “To implement the strategy, I needed to notice when I was at risk of being distracted by ‘urgent’

matters, and to remind myself of my strategy and of the importance of listening”.

Building commitment to change “What was needed was a clear commitment to change. I was ready to make this”.

Implementation “Next time someone spoke to me, I remembered my commitment and purpose, and either gave

them my full attention or asked them if we could delay the discussion until a later date”.

Monitoring and evaluating progress “I asked for further feedback about whether people noticed any significant improvement in my

listening skills”.

Consolidating and integrating changes “When I started to make the change I found that there were natural rewards for the behaviour in

the positive responses I got from people. Also, I had a better quality experience (less stress and

internal conflict) in listening to people”.

“After consciously practising the new strategy for a while, I found that it became a habit”.

Evaluating overall outcomes “Overall, it was a low-cost, straightforward process of change. I has had some positive results for

my relationships at work”.

+ Limitations, biases, and perceptual filters

• It is important to be aware of our own perceptual biases and filters when engaging in diagnosis.

• Awareness test: https://www.youtube.com/watch?v=Ahg6qcgoay4 (1 min) • https://www.youtube.com/watch?v=_bnnmWYI0lM (1min: 1:00 – 2:00)

• Our frames of reference lead us to certain conclusions about how organisations function,

about the effects of change efforts, and about the value of different courses of action. - For example, someone with a political frame of reference might look for the cause

of high turnover in power relationships at work. They might conclude that employees leave because of overly controlling supervisors.

- In contrast, someone with a human relations frame of reference might look for the cause of high turnover in the lack of training and development opportunities.

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Diagnostic Tools

Where great ideas start

+ Diagnostic Tools • What are the key issues that you are trying to address? Where in the

organisation are problems occurring? Is the environment in which people operate influencing the problem? These are all questions that should be asked when clearly defining a problem or issue.

• There are a number of tools that you can use to help the questions posed above and to increase the accuracy of your diagnosis.

– SWOT analysis

– Value chain analysis

– 5Ws

– Why-Why diagram

– Fishbone diagrams

• Before we discuss tools used to analyse data, let’s talk about how we collect the data.

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+ Data Collection Methods

• Observation – if you are an external consultant than diagnosis can begin from the moment that you arrive at the organisation. – Size, design, and outfitting of the building can provide information about its

culture and operations. How you are greeted and treated while there, the physical work environment, how meetings are run, how people are addressed and relate to each other, what people say or do not say, all provide clues about an organisation.

– Observation is a very open form of data collection in the sense that it can throw up unexpected issues that we did not initially include in framing the problem. By taking a step back and not controlling the data collection process we find out things we didn’t think we needed to know and weren’t looking for.

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+ Diagnostic Interviews

• Probably the most common form of data collection. The number and design of the interviews will depend on many factors such as the size of the organization and your diagnostic brief. If there appears to be consensus in the organisation about the main problems, then you may not need to conduct many interviews.

• If the main problems are not obvious, then you may need to conduct a number of rounds of interviews.

• Advantage of interviews – you can explore answers in detail by asking the interviewee to elaborate on them and by testing ideas.

• Group interviews sometimes used to observe interactions between group members. However, one danger is that you come away with a mistaken idea of consensus because group members are unwilling to discuss dissension opinions.

• Like observation, interviews can be a flexible and adaptable process that can throw light on unexpected relationships, influences, etc. 20

+ Surveys

• Surveys are an efficient way of collecting data. A consultant might use a survey to “take the temperature” of an organisation and to reveal areas of satisfaction and dissatisfaction.

• Designing a survey often requires specialist assistance. Need to consider:

– Design of questions

– Formatting

– Length of survey (keep under 15 minutes)

– Reliability and validity of scales used

– Types of questions asked and why

• Advantage of this form of data collection is that having large numbers of respondents increases the reliability of findings. The trade off is a loss of qualitative “rich” data.

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+ Archival Records

• While the previous data collection methods are useful, the data they provide are all to some extent subjective.

• An analysis of the organisation’s records can provide important objective data regarding issues such as:

– Turnover

– Safety

– Absenteeism

– Productivity

– Performance

– Grievances

• Archival data can be a very useful complementary source of data

+ SWOT Analysis • The first two tools that will be discussed are best used to understand

the broad organisational context. These tools are best used early in the diagnostic process. The produce of these tools can be used to more clearly identify the problem

• Identifying strengths and weaknesses is internally focused while identifying threats and opportunities is externally focused.

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Strengths Weaknesses

Opportunities Threats

+ SWOT Analysis

• The information used in a SWOT analysis could be used in various ways – Change issue identification

– Solution generation / prescribing: you could ask • Which of our strengths could we use to solve this problem?

• Improving on which of our weaknesses might solve this problem?

• If we capitalise on our opportunities would be the problem be solved?

– Solution evaluation: if you have already clearly defined your issue and generated some solutions, your list of strengths and weaknesses can also be used to evaluate and prioritise these solutions

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+ Value Chain Analysis

• This is a way of understanding the different activities of the organisation and how they fit together. A value chain helps us assess the value added by each activity and identify where improvements can be made. Therefore, it helps us diagnose the current state of the organisation in preparation for identifying change issues and initiatives.

• There are two parts to a value chain – primary activities and support activities. The primary activities chain represents the sequential stages of a system while the support activities are those that allow the primary activities to take place and improve organisational effectiveness.

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+ Porter’s (1985) Value Chain

• Inbound logistics – supply of any materials, resources, or other input to operations

• Outbound logistics – distribution to the customer including storage and transport

• Firm infrastructure – systems of planning, finance, cost control, organisational design

• Procurement – acquisition of any resources 26

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EXAMPLE: STARBUCK’S VALUE CHAIN ANALYSIS

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VALUE CHAIN ANALYSIS

+ Diagnostic tools: 5Ws, Why-Why, Fishbone

• The next three tools that will be described are useful in pinpointing more clearly what the problem/issue is, or what the change program should address.

• Once you have a broad idea of an issue or problem there is a general tendency to jump straight to a solution.

• Without such analysis, teams can often move into “fix it” mode before they really understand the scope or scale of a problem or issue. Often this means they end up addressing only part of the problem and either the problem remains or it reappears in another guise.

+ 5Ws

• The 5Ws approach provides a structure for clarifying the situation or problem through repeated questioning. The underlying assumption is that all problems can be defined in terms of simple attributes (the What?), location in space (the Where?), and time (the When?), and people who are affected (the Who?) The fifth W is Why? This final question can serve two purposes:

– Can be used to gain some insight into the goals of the change program. For

example, why do we want to improve employee satisfaction?

– The second use of the Why question requires a shift from description of the issue to a focus on what the underlying causes of the problem/issue, or contributing factors are.

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+ 5Ws Process

• The 5Ws tool is designed to clarify the problem before you start thinking of solutions to it

• Step 1. The order of questions. The What? Question should come first and the Why? Last. The other Ws can be asked in any order – What: is the problem here? What is going wrong? What would the ideal situation look

like?

– Where: the physical or structural locations. Example, where does the problem usually arise (e.g., regions or departments)? Where might we expect problems to arise?

– When: timing issues. When do we notice the issues? When does the problem occur?

– Who: stakeholders involved. Who cares about the problem? Who is affected by the problem?

– Why: do we need to solve this problem? Why is it happening? Why do people react that way?

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+ 5Ws Process

• Step 2. While there will be frequent cycling back through the questions, the general approach is to pursue more and more specific questions at each step.

• Step 3. Stop asking these questions when you are confident that you have reached a clear understanding of the issue or problem.

• Step 4. Once you have generated and recorded solutions to the 5Ws, use them to construct a clear problem statement (ie, a sentence that describes the crux of the issue). The clarity and succinctness of this statement is very important.

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+ Root Cause Analysis – the Why-Why? Diagram

• The 5Ws should end with a sequence of “Why” questions sequentially probing to greater depth. This repeated “drilling down” into the problem can provide good insights and is known as roots cause analysis”.

• Root cause analysis is a technique of drilling down into the problem to try and find the essential causes of the problems rather than its symptoms. One tool that may be useful for root cause analysis is the why-why diagram. You can use this at the end of a 5Ws analysis or on its own.

• The Why-Why diagram is simply a tree diagram where causes of a problem are probed.

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+ Fishbone Analysis

• The Fishbone Diagram (sometimes called a cause-and-effect diagram) is used to identify all the factors that have an impact on your problem.

• The process is called Fishbone Diagram because of the way in which the information gathered is arranged visually – like the skeleton of a fish.

• It is sometimes helpful to use a fishbone analysis to organise the output from a Why-Why analysis. Alternatively, a fishbone diagram can be used in isolation to generate a set of possible root causes of a problem.

• It has a head where the main problem is recorded and a set of spines where contain potential causes of the problem. These spines are organised into broad categories or branches.

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+ Fishbone Analysis

• Fishbone analysis has many advantages over other recording methods. They produce a compact, readily understood representation of the generated ideas and they automatically structure responses in broad categories. Once the diagram is complete it provides a basis for analysing categories of ideas.

• Process – Step 1: Some sort of problem statement or question is written at the head

of the diagram. This could be taken from the 5Ws analysis. – Step 2: A straight line in then drawn with branches coming from the

backbone 37

+ Fishbone Analysis

– Step 3: Place broad category labels on or at the end of these branches.

– Step 4: These major issues or problems are then explored further through adding spines to the fish. The main thing is to get as many potential causes listed as possible.

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+ Appendix: Sequencing of activities

• The change process does not necessarily occur in a simple linear sequence because: – Some processes occur in parallel. For example, diagnosis can be used to create readiness

and/or resistance to change. – Some processes may need to be reiterated through various stages of the change process.

Assessing and building readiness for change is likely to be occurring throughout the change. – There are complicated feedback loops between the processes. For example, the assessment of

readiness for change will feed into the implementation plan. On the other hand, the shaping of a change strategy and an implementation plan may influence levels of commitment and resistance in the organisation, and trigger the need for a further assessment of readiness.

– Successfully conducting one of these phases may require some or all of the other processes. For example, before we conduct a diagnosis it may be necessary to assess the willingness of staff to participate in the diagnostic process, and to build commitment to the diagnostic process.

– The cycle of processes may be reiterated. Once implementation starts, monitoring and evaluation may indicate signs of a problem with the change strategy or with the implementation plan. Diagnosis will then be needed to identify the underlying issues driving this problem, and adaptations to the change program may then be prescribed.

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Team Case Presentations

• Output: – Submit using Turnitin – Email me (jimi.kim@unsw.edu.au) the presentation at least 24 hours before class – Practice at least 1 time as a complete group (all team members). – Pls. bring two printouts

• Presentations: 10 -15 minutes • You will be grades on your professionalism (preparedness, style, polish, etc.), analytic

content (use of the frameworks w managerial implications, connections across frameworks to identify root-cause problems, development of options, final recommendations w implementation details), and moderating the discussion and Q&A.

- The rest of the class (top executives) will engage in discussion / debate - Ask relevant questions to the Team members

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+ Case Study Rubric

Clear explanation of key strategic change • The problems, scope, and seriousness was clearly identified in the discussions. • There was a well focused diagnosis of strategic issues and key problems that demonstrated a good grasp of the company’s present

situation and strategic issues.

Valid arguments; analysis of performance with relevant supportive detail (Should be your own analyses) Logically organized, key points, key arguments, and criteria for evaluating business strategies/changes were easily identified Critical issues and key problems that supported the Case Analysis were identified and clearly analyzed and supported.

Appropriate analysis, evaluation, synthesis for the specific industry identified (Should be your own analyses) There was complete data on which to base a thorough analysis Key change drivers underlying the issues were identified. Synthesis, analysis, and evaluations were clearly presented and supported in a literate and effective manner.

Conclusions and recommendations are congruent with strategic change analysis (Should be your own recommendations) Specific recommendations and/or plans of action provided. Specific data or facts were referred to when necessary to support the analysis and conclusions. Recommendations and conclusions were presented and supported in a literate and effective manner.

Proper organization, professional writing, and logical flow of analysis. APA formatting Logically organized, key points, key arguments, and important criteria for evaluating the business logic easily identified. Key points were supported with a well thought out rationale based on applying specific concepts or analytical frameworks to the

data provided in the case. Provided reference.

Individual Essay

Exercise: Your own change leadership journey Preparation Brief: Reflect upon your own past experience in a specific organizational change setting. What did you observe and what was your experience? How successful was the change effort? What led to these particular results? What lessons did you learn from this experience? Use analysis tools, including Fishbone analysis. Guideline: A process of personal change

Marking Criteria for the Change Initiative:

• 1. Integration of MGMT2001 lecture, tutorial, reading and/or other course-related ideas (ie from other sources) into your thinking and planning of (and potential action around) the change initiative project (30%)

Would integrate the course really really well – lectures, tutorials, and/or readings - and then perhaps go beyond them. This does not mean that they stuff everything in

there but flag, justify and effectively use those which they think add the most value and depth to their analysis given their specific thesis. There are also ideas that might be used that we haven’t really explored in much depth in class or put any theory around (like reflective thinking).

• 2. Evidence of critical thinking about the “why” and the “value” of implementing the change opportunity (40%) The change initiative would need to show lots of critical thinking and evidence of great insight about the “why” - why haven't they done this already, why this and not some other personal (or work) initiative, why the plan will work and lead to sustainable change, etc. It would be interesting, powerful, pose some key questions of us all, (probably) well underway, and show evidence of the potential to make a really significant or important change to the way you work or live (which doesn’t have to be huge in scope just important in the journey). There would need to be a planned or implemented approach to ongoing monitoring of progress and some really interesting (actual or potential) measures. Obstacles & aspects of resistance might have been explored and thoughts on how these could be overcome. Other stakeholders could perhaps be mentioned, and what support might be needed explored briefly.

• 3. Quality of your writing (30%) The writing would have to be error free (language and grammar), excellently structured and delivered, with nuanced and deep insights evident, and perhaps even some creative formatting or style. It would make excellent use of our theoretical ideas and readings (all properly referenced) as a way to show the flow of their thinking about their learning and how this change initiative might lead to more profound changes in practice further down the track.

+ Quiz 1

Mean =3.6