Organizational Processes for TPP: Session 11 Organizational Change and Support Functions Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Session Design • Introduction (5 min.) • Organizational Change (10-15 min.) • Dispute Resolution Systems (30-45 min.) • Systems Change Debates (30-45 min.) • Break (10 min.) • Negotiated Change (10-15 min.) • Cross-Functional Alignment (30-45 min.) • Skill Module(s) (30-45 min.) Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Organizational Change • Large-scale system change initiatives: • Knowledge Management Systems • Team-Based Work Systems • Organizational Re-Design/Re-Structuring • Flow/Lean Manufacturing Systems • New Finance Systems • Joint Ventures and Strategic Alliances • Total quality initiatives • Work/Family Initiatives • Centralized Purchasing/Acquisition Reform • Dispute Resolution Systems Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

The Organizational Development (OD) Role – Selected Competencies • Change management • Organization design • Team effectiveness • Problem solving tools and techniques • Relationship building • Conflict resolution • Decision making processes • Mutual gains negotiations principles • Project management • Constructing shared visions • Strategic planning process • Joint implementation • Leadership development • Stakeholder alignment • Boundary spanning • Feedback and evaluation methods • Sustaining change • Systems thinking Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

A Spectrum of OD Roles Basic Skills Competent Expert Master Facilitator . . . . . . . . . . . . . . . . . . . . . Process Expert Trainer . . . . . . . . . . . . . . . . . . . . . .Trainer of Trainers Mediator . . . . . . . . . . . . . Shuttle Diplomat “Thermometer”. . . . . . . . Moral/Ethical Sounding Board Strategic Planner . . . . . . . . . . . . . . . . . Strategic Visionary Systems Thinker. . . . . . . . . . . . . . . . . . Systems Designer Organizational Assessor . . . . . . Organizational Architect Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Sample OD Wisdom • Resistance to change is not irrational • Training is not the solution to all problems • Disconnects are data • Leadership is necessary, but not sufficient • The big 3: Strategy, Structure, Process Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Selected Aspects of Dispute Resolution Systems • Informal resolution • Complaint systems • Open door policies • Survey and feedback systems • Training interventions • Affinity groups • Coaching and mentoring systems • Ombuds offices • Grievance procedures • Mediation • Arbitration • Adjudicatory processes Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Concurrent Layers of Conflict Resolution External adjudication The grievance procedure and other dispute resolution forums Formal leadership efforts at all levels to anticipate and prevent difficult situations Informal efforts by co-workers, supervisors, union representatives and others to address the issues in these difficult situations Countless inappropriate, disrespectful, complicated, and conflictual situations Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Functional and dysfunctional systems for dispute resolution A Dysfunctional System A Functional System Power Rights Interests Power Rights Interests Source: Getting Disputes Resolved: Designing Systems to Cut the Costs of Conflict, by William Ury, Jeanne Brett and Stephen Goldberg (Jossey-Bass, 1988) Contract Administration Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Systems Change --Top Down • Concept of “Re-engineering” – Many meanings, from a pretext for restructuring and downsizing to a systematic review of operations --if it’s not broke, break it • Roots private and public sectors, including “re-inventing government” • First driven by economic crisis, now seen as a process for system change • GE “workout” process as a proto-type Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

System Change --Bottom Up • Concept of “Kaizen” – Many meanings, from tangible improvement activities to an underlying philosophy and a way of life --you are never done improving • Roots in post WWII Japan – First seen piecemeal --quality circles (QC), statistical process control (SPC), just-in-time (JIT) delivery – Increasingly seen from a systems perspective --Total Quality Management (TQM), Total Preventative Maintenance (TPM), Continuous Quality Improvement (CQI), Toyota Production System (TPS) • Kaizen-teian systems --many small improvements build capability for system change Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Systems Change --Pilot/Diffusion • Concept of “Pilot Experiments” – Many types of pilots • Pilot teams, facilities, business units – Selecting where to pilot • “If it will work here, it will work anywhere” • “Begin with small successes” • “Target bottleneck/priority areas” – Plan for lessons from the pilot experiment to guide subsequent diffusion – Issue of managing multiple concurrent pilots Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Systems Change --Wall-to-Wall • Concept of “Wall-to-Wall” – Requires unfreezing event or bold leadership – System-wide shifts in policy or fundamental changes in external context – Gradual diffusion is not an option – the entire organization must change – Requires substantial planning and resources Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

System Change Debates • Two debates: – Direction of change: Kaizen versus re- engineering – Scope of change: Pilot/diffusion versus wall-to- wall • Debate format: – Opening Statements (1 min.) • Within team consultation (1 minute) – Rebuttal (2 min.) • Within team consultation (1 minutes) – Closing Statements (1 min.) Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Bargaining Strategies Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Strategies for Negotiated Change • Change strategies and negotiation blind sides – Top-down re-engineering • Forcing process makes recovery afterwards difficult – Bottom-up process improvement • Fostering process makes subsequent conflict – Pilot-experiment and diffusion • Diffusion depends on a combination of forcing and fostering Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Risky links between tactics with strategy Hard Forcing Soft Fostering Claiming value Creating value Assertive Empathetic Internal Consensus Divide and conquer Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Promising links between tactics and strategy Robust Fostering and Restrained Forcing Creating value and Claiming Value Empathy and Assertiveness Appreciating internal differences Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Analysis of Negotiation Blind Sides and Process Improvement Initiatives • Discussion of forcing and fostering aspects of implementation • Identification of potential blind sides • Construction of mitigation plans • Reports to the full group and discussion Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Cross-Functional Alignment • What are examples of misalignment across functions in an organization? • What are examples of alignment across functions in an organization? • What experience, if any, have you had with successful efforts to increase alignment across functions? Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Support-Function Exercise: Operating Facilities by Industry • Utilities – Large electric power plant • Aerospace – Rocket engine test and assembly facility • Pharmaceuticals – Pharmaceutical manufacturing plant • IT/Telecom – Production facility for network switching components • Automotive Group 1 – Auto assembly plant • Automotive Group 2 – Fuel cell R&D lab Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Support-Function Exercise: Roles • In your industry cluster, form 5 sub-groups for the following support functions: – Human Resources – Finance – Materials/Purchasing – Quality –Maintenance/Engineering • Assess what you understand to be the “current state” and the “desired state” for this support function in operating settings in this industry – for each the three roles listed in the following support material. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Support-Function Analysis • Three Potential Roles – Regulator/Enforcer • Policies, laws, contractual agreements – Service Provider • Administration of programs and activities – Change Agent • Systems change implementation and procedural fairness Adapted from conceptual framework developed by Russ Eisenstat and further developed by Jan Klein. Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Sample Activities/Competencies --HR Role Regulator/Enforcer Service Provider Change Agent Sample Activities EEO, OSHA, ADA, Collective Bargaining Contract Benefits, Recruiting, Compensation, Technical training Champion for effective Work Groups, OD, Culture change Sample Competencies Legal/technical Detail oriented Risk adverse Procedure oriented Consistent Innovative/flexible Proactive Risk taking Adapted from Jan Klein,“The Evolution of HR Professionals from Traditional Managers to Change Agents in Strategic Partnership for High Performance,” Work In America Institute 1995 Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Sample Activities/Competencies --Finance Role Regulator/Enforcer Service Provider Change Agent Sample Activities Budget compliance, tax and audit regulations Payroll and information systems, financial reports Champion for Total Cost, Linking ERP and process improvement, Work Group analysis of performance data Sample Competencies Legal/technical Detail oriented Risk adverse Procedure oriented Consistent Innovative/flexible Proactive Risk taking Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Sample Activities/Competencies – Materials/Purchasing Role Regulator/Enforcer Service Provider Change Agent Sample Activities Material storage rules and regulations, Global purchasing terms and condition Delivery of parts and materials, Schedule management Champion for Material Flow and Just-In- Time Delivery Sample Competencies Legal/technical Detail oriented Risk adverse Procedure oriented Consistent Innovative/flexible Proactive Risk taking Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Sample Activities/Competencies --Quality Role Regulator/Enforcer Service Provider Change Agent Sample Activities QS 9000 and other quality standards Quality data; Training in quality skills and tools Champion for total quality systems and related initiatives Sample Competencies Legal/technical Detail oriented Risk adverse Procedure oriented Consistent Innovative/flexible Proactive Risk taking Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Sample Activities/Competencies – Maintenance/Engineering Role Regulator/Enforcer Service Provider Change Agent Sample Activities Scheduled maintenance,ISO 14000 Equipment repair Champion for total productive maintenance Sample Competencies Legal/technical Detail oriented Risk adverse Procedure oriented Consistent Innovative/flexible Proactive Risk taking Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Functional Analysis Exercise Current State Daily Operations Activity Time/Resource Allocation Regulator/Enforcer ______ % Service Provider ______ % Change Agent ______ % Total: 100% Future State Daily Operations Activity Time/Resource Allocation Regulator/Enforcer ______ % Service Provider ______ % Change Agent ______ % Total: 100% Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”

Implications • For Support Functions: – What are specific implications for support functions in your industry? – What are the system barriers that will make this difficult for each support function? – What specific skill-building activities would be helpful in this process? – How will you ensure continuity as leaders and staff change? • For Line Management: – What are line management’s reciprocal responsibilities in order for it to be a good “customer” for the support functions? • For Policy Makers: – What are the implications for public policy in your industry? Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 “Organizational Processes”