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

A Spectrum of OD Roles Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes Basic SkillsCompetent ExpertMaster 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

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

Functional and dysfunctional systems for dispute resolution A Dysfunctional System A Functional System Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes 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

Systems Change --Top Down Concept of Re-engineering – Many meanings, from a pretext for restructuring and downsizing to a systematic review of operations --if its 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 difficult – 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 ForcingSoft Fostering Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes Claiming value Assertive Divide and conquer Creating value Empathetic Internal Consensus

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

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

Support-Function Exercise: Roles Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes 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.

Support-Function Analysis Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes 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.

Sample Activities/Competencies --HR Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes Role Regulator/Enforc er 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

Sample Activities/Competencies --Finance Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes Role Regulator/Enforc er 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

Sample Activities/Competencies – Materials/Purchasing Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes Role Regulator/Enforc er 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

Sample Activities/Competencies --Quality Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes Role Regulator/Enforc er 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

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

Functional Analysis Exercise Materials Developed by Joel Cutcher-Gershenfeld and Thomas Kochan (MIT) for use in ESD.140 Organizational Processes 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 managements 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?