Instructions for Case Study 2 Assignment
1) You will submit a final individual 2500 word paper based on a comprehensive case study which presents a management challenge. The report will address the key management issues in the case study:Purolator Inc.: Launching Innovation, and captures the deliberations of Eric Ragotte, the newly appointed Innovation Manager within the organization.
It also highlights the challenges the communications challenges associated with the implementation of a new enterprise-wide integrated software system associated with the new innovation strategy.
2) Your paper will address the following questions:
a) What is your assessment of Ragotte’s mandate?
b) What should he do to establish leadership and credibility to accomplish his mandate?
3) Ensure you demonstrate that you have a clear understanding of some of the ‘best-practices’ for running a consulting engagement; these include communicating with and positioning your client, and establishing an appropriate and effective client relationship. Additionally, you need to look at the critical aspects of delivering a consulting engagement on sound project management techniques, and ensuring that we bring a clear understanding of change management principles to any engagement.
3) Use the additional information (see below) from the course and incorporate the information to show your understanding of the foundations of management consulting and project management.
4) Use an additional seven sources (between 2011-2016) to support your paper and your assessment and recommendations. Provide 7-10 recommendations.
5) Use APA format and cite your resources.
6) Use appropriate APA first, second, and if applicable third level headings to separate and organize your work into clear, concise areas of thoughts (e.g. Introduction, Body, Recommendations, Conclusion, etc.).

Additional Documents to Review and Include in Case Study 2 Assignment to support your understanding and application of the course material. When citing information from these documents, indicate the heading under which the information is located and the page number.
Without a meaningful and productive client – consultant relationship, the chances of successful outcomes being achieved for the engagement are diminished greatly. It’s not impossible to add some value on the client’s behalf with a less-than-functional working relationship, but the engagement will be much more impactful and beneficial if the consultant has been successful at fostering a strong mutual understanding. Not the least aspect of this may be really clarifying the client’s understanding of why they have hired (or are thinking of hiring) a management consultant.

The Project Management Process Model
So far in this course we have looked at project management in terms of functions. In this Unit we will examine project management from a process perspective. A process can be thought of as a series of actions directed towards a particular result. Project management is an integrative endeavour—an action, or failure to take action, in one area will usually affect other areas. The interactions may be straightforward and well-understood, or they may be subtle and uncertain. These interactions often require tradeoffs among project objectives – performance in one area may be enhanced only by sacrificing performance in another.
Project processes performed by people are generally grouped into one of two major categories:
Project management processes are concerned with describing and organizing the work of the project. The project management processes that are applicable to most projects, most of the time, are described briefly in this chapter and in detail in Chapters 4 through 12.
Product-oriented processes are concerned with specifying and creating the project product. Product-oriented processes are typically defined by the project lifecycle and vary by application area.
Project management processes and product-oriented processes overlap and interact throughout the project. For example, the scope of the project cannot be defined in the absence of some basic understanding of how to create the product.
Project management processes can be organized into five groups of one or more processes each:
1. Initiating processes—recognizing that a project or phase should begin and committing to do so.
2. Planning processes—devising and maintaining a workable scheme to accomplish the business need that the project was undertaken to address.
3. Executing processes—coordinating people and other resources to carry out the plan.
4. Monitoring and Controlling processes—ensuring that project objectives are met by monitoring and measuring progress and taking corrective action when necessary.
5. Closing processes—formalizing acceptance of the project or phase and bringing it to an orderly end.
Project Initiation
Project initiation is about committing an organization to begin a project or to continue to the next phase of a project. Thus, initiating processes are actions to commit to begin or end projects and project phases. The precursor to project initiation is evaluating and selecting projects for implementation.
Initiation is the process of formally recognizing that a new project exists or that an existing project should continue into its next phase. This formal initiation links the project to the ongoing work of the performing organization. In some organizations, a project is not formally initiated until after completion of a feasibility study, a preliminary plan, or some other equivalent form of analysis. Some types of projects, especially internal service projects and new product development projects are initiated informally and some limited amount of work is completed in order to secure the approval needed for formal initiation. Projects are typically authorized as a result of one or more of the following:
• A market demand
• A business need
• A customer request
• A technological advance
• A legal requirement
These stimuli may also be called problems, opportunities, or business requirements.
The central theme of all these terms is that management generally must make a decision about how to respond.
Figure 4-1 Project Integration – Develop Project Charter -Inputs and Outputs

Project Initiation Documents
Project success depends on a clear statement of purpose at the outset, captured in a form that can be reviewed and agreed upon. In many organizations, particularly government organizations, initiating a project involves defining a need or opportunity and estimating resource and budget requirements through what is known as a Project Initiation Document (PID) or Project Charter and obtaining senior management approval.
A Project Initiation Document (PID) is a formal statement of the proposed project. The PID provides a high-level business definition of the project and a high-level budget estimate to support the project initiation approval process. The business definition includes:
• project purpose & scope
• business benefits
• consequences of inaction
• project risks
• the project’s impact on other business areas and/or functions
• senior management evaluation criteria met by the project
The PID has several important functions:
• provides a high level understanding of the project and its estimated cost
• establishes an agreement between the business and ITB
• provides the basis for senior management approval to proceed with detailed project planning
• provides a frame of reference for the planning stage
The process of producing a PID, with the correct representation by stakeholders, clarifies scope requirements, sets appropriate expectations, and garners necessary support for the work to be undertaken. The business area is responsible for preparing the PID, but the high-level analysis and budget estimates can be performed by a business or technical analyst. The high-level analysis supports management decision making. Once approved, the PID serves as an agreement between business area stakeholders, the IT branch, and the Information Management Steering Committee that the project will be planned and executed to meet the documented objectives. As the major deliverable of the project initiation phase, the approved PID or Project Charter is a reference source for the project manager.
Project Planning
Project planning involves devising and maintaining a workable scheme to accomplish the business need the project was undertaken to address.
Planning is of major importance to a project because the project involves doing something that has not been done before. As a result, there are relatively more processes in this section. However, the number of processes does not mean that project management is primarily planning – the amount of planning performed should be commensurate with the scope of the project and the usefulness of the in-formation developed.
The relationships among the Project Planning Processes are diagrammed on page 53 of PMBOK © 5th Edition (Figure 3-3).
These processes are subject to frequent iterations prior to completing the plan. For example, if the initial completion date is unacceptable, project resources, cost, or even scope may need to be redefined. In addition, planning is not an exact science – two different teams could generate very different plans for the same project.
Some planning processes have clear dependencies that require them to be performed in essentially the same order on most projects. For example, activities must be defined before they can be scheduled or costed. These core planning processes may be iterated several times during any one phase of a project. They include:
• Develop Project Management Plan – taking the results of other planning processes and putting them into a consistent and coherent document
• Collect Requirements – defining and documenting stakeholders’ needs to meet the project objectives.
• Define Scope – developing a detailed description of the project and product.
• Create a WBS – the process for decomposing major project deliverables and project work into assignable and controllable work packages
• Define Activities – identifying the specific activities that must be performed to produce the various project deliverables
• Sequence Activities – identifying and documenting interactivity dependencies
• Estimate Activity Resources – estimating the type and quantities of material, people, equipment, or supplies required to perform each activity,
• Estimate Activity Durations – estimating the number of work periods, which will be needed to complete individual activities
• Develop Schedule – analyzing activity sequences, activity durations, and resource requirements to create the project schedule
• Estimate Costs – developing an approximation (estimate) of the costs of the resources needed to complete project activities
• Determine Budget – allocating the overall cost estimate to individual work items
Interactions among the other planning processes are more dependent on the nature of the project. For example, on some projects there may be little or no identifiable risk until after most of the planning has been done and the team recognizes that the cost and schedule targets are extremely aggressive and thus involve considerable risk. Although these facilitating processes are performed intermittently and as needed during project planning, they are not optional. They include:
• Plan Quality – identifying which quality standards are relevant to the project and determining how to satisfy them.
• Develop Human Resource Plan – identifying, documenting, and assigning project roles, responsibilities, and reporting relationships.
• Plan Communications – determining the information and communications needs of the stakeholders: who needs what information, when will they need it, and how will it be given to them.
• Plan Risk Management – the process to determine how to approach risk management.
• Identify Risks – determining which risks are likely to affect the project and documenting the characteristics of each.
• Perform Qualitative Risk Analysis – prioritizing risks for further analysis or action by assessing and combining their probability of occurrence and impact.
• Perform Quantitative Risk Analysis – numerically analyzing the effect of identified risks on overall project objectives.
• Plan Risk Responses – defining enhancement steps for opportunities and responses to threats.
• Plan Procurements – determining what to procure, the approach and identifying potential sellers.
The main purpose of project plans is to guide project execution. To do this, the plans must be realistic and useful. Project plans are created to define each knowledge area as it relates to the project at that point in time. To account for changing conditions on the project and in the organization, plans are often revised during each phase of the project life cycle.
Project Charters
(Project Initiation Document) and the Planning Process
The major project management deliverable of the planning process is the Project Charter along with the project plan. The initial project charter is the deliverable out of the initiation phase to provide permission to commence planning. Preparing for project planning means understanding the key components of the Charter and its content requirements. The purpose of the Project Charter is to ensure that all project stakeholders have a clear understanding of:
• Deliverables – what will be produced
• Resources – who will produce it
• Budget – how much it will cost
• Workplan – when it will be produced
The Project Charter for some organizations is developed in two sections—The Business Definition and the Project Charter Workbook or even a Master Project Plan document.
The Charter’s Business Definition provides a common vision of the project based on the information provided by the Project Initiation Document. At the preliminary planning meeting, participants from the project team and IT operational areas are invited to share their IT experience to continue to define the project’s planning parameters:
• links and dependencies
• issues and constraints
• the development approach
• assumptions
• major deliverables
• project review and completion criteria
The Project Charter Workbook is a living document that is updated throughout the project. The Workbook details the management plans that will control and manage the execution of the project. The management plans reflect ITB standards and procedures for:
• risk assessment and mitigation
• internal and external project communications and expectations
• change, issue, documentation, and review management
• quality assurance
• project organization, roles and responsibilities
• resource and work planning
• budget and procurement management
• configuration and infrastructure management
All project team members, clients, steering committees, and sponsors, need to be involved in developing and reviewing the document as set out in the project’s Responsibility Matrix.
The type of project and the project management Level of Significance rating, determine the degree of rigour to which each section of the project charter is completed. Low significance projects may require only a minimum of comprehensiveness, while projects rated highly significant may require thorough adherence to all project management standards.
The project manager works with the Business Sponsor and project team through the following steps to complete the planning phase:
• Conduct a preliminary planning meeting
• Define the project
• Develop the Project Workbook
• Assemble and receive approval of the Project Charter
Preliminary Planning Meetings
The objectives of the preliminary planning meeting are to define:
• deliverables – what will be produced?
• resources – who will produce it?
• budget – how much will it cost?
• workplan – when can it be produced?
All key players should attend the Preliminary Planning Meeting.
Identifying Participants
Each stakeholder requires a knowledgeable representative at project meetings who is either empowered to make decisions, or has clear access to the person who can make decisions. First consider all the relevant organization functions (e.g., audit, security, privacy, data administration and standards), and then identify a representative from each area. Invite specific resources identified by stakeholders. Each participant needs some background on the project so they know why they are being invited to the planning meeting and so they clearly understand who (or what) they are representing. Provide them with a copy of the Project Initiation Document if they have not already seen it.
Preliminary Planning Meeting Objectives
• Define project documentation deliverables including purpose, format, and content
• Identify resources and include personnel, facilities, materials, equipment, tools, and supplies
• Develop a realistic budget. Include contingency for effort, project management (5-20%), personnel costs, and administrative overhead
Use a work breakdown structure to depict the work plan, and identify deliverables that have inter-dependence with other projects. All key players should agree on overall planning parameters.
Document the minutes of the meeting, and use these minutes to draft the Project Charter and Workbook. Review and revise as necessary to reflect information obtained during development of the Project Workbook.
Charter Business Definition
The Charter’s Business Definition provides a common vision of the project based on information provided by the Project Initiation Document, planning analysis, and the Preliminary Planning Meeting.
The Business Definition defines:
• Purpose
• Background
• Business Benefits
• Objectives
• Scope
• Project Stakeholders
• Links & Dependencies
• Issues & Constraints
• Assumptions
• Project Approach
• Deliverables
• Milestones
• Organizational Structure, Roles and Responsibilities
• Project Review and Completion Criteria

Project Purpose
This is a concise statement of the project’s goal. See the PID.
Background
Provide a brief discussion of the business need for the project, its customers or users, their interest in its completion, and the opportunity that has made the project necessary or viable. Include relevant historical background information; why the project is needed (e.g., to address a corporate objective); who will use the product, how it will be used, and what the expected life-span of the product will be.
Business Benefits
Document how the project deliverables will benefit the business. Business benefits may include:
• new program delivery
• increased service delivery
• improved service delivery
• staff time saving
• operational direct dollar savings
• new corporate direction
• new technology or phase out of old technology
• enhanced accountability and reporting
Objectives
Identify the organization’s strategic objectives supported by the project. State the strategic objectives of the program area with regard to the project. Be succinct and focus on how the project will make a difference. Objectives should be S.M.A.R.T: Specific, Measurable, Attainable, Recorded, and Time-Sensitive. Include Critical Success Factors.

Scope
Use the Work Breakdown Structure performed in the Planning Phase to detail project boundaries in terms of:
• project activities
• the team’s role and responsibilities to the clients or users
• project goals and objectives
• the work to be undertaken
• the processes to be used
• the product(s) to be delivered
Address any constraints that may affect the project’s scope. Clarify items as beyond the scope if they could be misconstrued to be within scope.
Project Stakeholders
List internal and external project stakeholders and their interests in the project. Identify stakeholders (such as data administration, security, functional business groups etc.) by organizational area to minimize the impact of personnel changes. The Business Sponsor and/or Project Manager are responsible for:
• identifying project stakeholders
• selecting the project steering committee from the available stakeholders
• establishing a meeting schedule for the steering committee
• ensuring that all stakeholders have a copy of the approved PID
Links & Dependencies
Describe other projects or initiatives that will affect the outcome of project deliverables or workplan. Identify other projects that depend on the output of this project, and describe the nature of the relationship.
Issues & Constraints
Describe any potential issues or constraints that could have an impact on the success of the project. List barriers to the project as well as activities and deadlines that must be met to ensure its success. Areas of constraint could include:
• budget
• resource availability
• technology
• current applications
• client willingness and readiness
• schedule
• policies
• organization
• external factors
Assumptions
Document all assumptions, including those used to build the Project Charter and project workplan. Typical assumptions might be:
• the use of tried and true technology versus an off-the-shelf solution
• availability of key people
• that a related project will complete its contribution to this project’s work, access to funding, etc.
Note that any change in assumptions will probably result in a change to the workplan and possibly the Project Charter. Assumptions are used to develop the risk management plan.
Project Approach
The Approach is a high level summary of the direction being taken and activities that will be performed to achieve the project’s objectives. This includes:
• who will manage the project (i.e., ITB)
• methodologies that will be followed
• the phases of development: Business Design, Technical Design, Development (including Testing), Implementation (including Acceptance)
This will describe the approach to:
• contract management
• prototyping
• pilots
• training
• sub-projects, etc.
Project Deliverables
Use the workplan to summarize major project deliverables. Provide a detailed list of the project management and system development documents that will be produced to meet the project’s objectives.
Milestones
Milestones mark the completion of deliverables, or phases. List high-level project milestones from the baseline workplan and their target completion dates, (or link or insert the MS Project Milestone view of the workplan). When milestones change (i.e., are approved via the Change Management process), and a new version of the workplan is developed, the milestones documented in the Project Charter must be updated. Record actual milestone completion dates for reference during Project Wrap-up.
Organizational Structure, Roles & Responsibilities
Project organization includes:
• documenting the membership of people on the steering or advisory committees and other groups involved in the project
• defining roles, responsibilities and reporting relationships
• creating a project organization chart to illustrate formal lines of communication and authority
Identify all project participants and document roles.
Project Review & Completion Criteria
Develop the completion criteria with the client, stakeholders and team members early in the project so that everyone will know when the project is complete. For a long project, periodic interim project reviews should be held. Consider using an exit-survey for each project team member to provide input to the project review process, rather than leaving it all to the end of the project.
A Post-Implementation Review should be held three to six months after implementation to assess the system in full production. The project can be deemed successful when all the objectives have been met. The project can be deemed complete when:
• all tasks in the project workplan have been completed
• all project documents are complete and signed off by the project sponsor
• all project issues have been addressed
• the project evaluation has been completed
• the post implementation review has been scheduled
• all project staff and physical resource release activities have been completed
• all project-related contract finalization activities have been completed
• all project files are completed and documentation archived
Charter Project Workbook
The Project Workbook is the living part of the Project Charter. The project manager uses the Workbook to document the management plans required to successfully see the project to completion. The degree of comprehensiveness required of the management plans developed in the Project Workbook depends on the project management level of significance rating.
The Project Workbook is developed to reflect the project’s Project Management Level of Significance rating. The following management plans are standard for all projects:
• Work plan
• Budget Plan
• Quality Assurance
• Risk Management Plan
• Change Management Plan
• Issue Management Plan
• Communication Plan (Communication Activities Summary)
The following management plans may be considered optional, depending on the organization and the project type. Appropriate substitutions are indicated in brackets where applicable.
• Documentation Management Plan (Responsibility Matrix)
• Human Resource Management Plan
• Procurement Management Plan
• Configuration Management Procedures
• Infrastructure Management Procedures
• Stakeholder Management Procedures (Stakeholder Engagement Plan)
Project Charter Assembly and Approval
At this stage in the planning process detailed information has been drafted in the sections of the Project Charter. Ensure that each section of the Project Charter is complete.
• Complete the project Charter
• Proof the document and conduct an internal review
• Distribute for approval
Attach a Deliverable Acceptance form and distribute the complete, proofread document to the stakeholders and/or Steering Committee members identified on the Responsibility Matrix as approvers.
Beyond Change Management: Advanced Strategies for Today’s Transformational Leaders
by Dean Anderson and Linda Ackerman AndersonThe Drivers of Change
Overview
Organization change doesn’t happen out of the blue. It is catalyzed by a number of forces that trigger first awareness and then action. These signals for change usually originate in the organization’s environment or marketplace. Such signals can include bold moves by competitors, new technology, or shifts in government regulations. Failures in the performance of a leader’s own organization can also signal the need for change. Whatever their source, these events require the organization to respond.
Too often signals for change occur without leaders noticing. Or leaders may receive a signal for change and act on it without fully understanding its implications, or worse, without appreciating what change in the organization the signal is requiring. These shortcomings limit leaders’ ability to define the change needed and the outcomes for it. How do leaders explore these signals and accurately interpret their meaning? How can they be more certain that they are asking their organizations to change in the ways that are really needed?
It is our experience that leaders are becoming much more attuned to reading the trends in their changing environments and, from this, creating new business strategies to respond more appropriately to them. They are making great strides in changing how their organizations are structured and run to fulfill these new business strategies. However, it is also our experience that most leaders are not carrying their required changes far enough. They lack understanding of the scope of change that is required to get the business outcomes they need.
It is critical for leaders to understand what drives change. It is essential that leaders comprehend the entire breadth of today’s drivers for change and be able to respond to each of them appropriately, not just for today, but for the organization’s future success.
The Drivers of Change
The Drivers of Change Model (see Figure 1.1) clarifies what drives the need for change, especially transformational change. The model portrays a sequence to these triggers, with one trigger calling forth change in the next, and the next, and so on. A demand-and-response relationship exists between these various catalysts, although many of the forces are in fact iterative and can have reciprocal influence. The linear sequence shown in the figure, however, is critical to understanding the complexity of change that leaders face today.

The model describes seven drivers, four that leaders are most familiar with and three that are relatively new to their leadership screens. It shows that the drivers move from what is external and impersonal (environment, marketplace, organizations) to what is internal and personal (culture and people).
The Drivers of Change Model illustrates that changes in the larger external domains, such as shifts in the environment or marketplace, demand a response (change) in the more specific domains of business strategy and organizational design, which, in turn, require change in the human domains of culture and people’s behaviors and ways of thinking. The external domains are clearly more familiar to leaders—environment, marketplace, business, and organization—while the internal ones—culture, behavior, and mindset—are new to most, yet equally essential. If leaders do not attend to the internal domains and adapt them to the forces of change exerted by the external domains, then their change efforts fail.
Many of the current struggles with transformation are a result of leaders not attending to the cultural, behavioral, and mindset components of transformation or not attending to them in ways that make a real impact. We will provide guidelines for leaders in how to address the more person-focused drivers of change while simultaneously meeting the needs of the external drivers. Of course, it is equally true that attending only to the internal drivers and neglecting the external ones will also cause transformation to fail. The point is that both the external and the internal drivers must be included in the scope of the change. Let’s define the terms in the Drivers of Change Model and then explore the message the model delivers.
Environment. The dynamics of the larger context within which organizations and people operate. These forces include:
• Social,
• Business and economic,
• Political,
• Governmental,
• Technological,
• Demographic,
• Legal, and
• Natural environment.
Marketplace Requirements for Success. The aggregate set of customer requirements that determine what it takes for a business to succeed in its marketplace and meet its customers’ needs. This includes not only actual product or service needs, but also requirements such as speed of delivery, customization capability, level of quality, need for innovation, level of customer service, and so forth. Changes in marketplace requirements are the result of changes in environmental forces. For instance, as the environment is becoming infused with technology that makes speed and innovation commonplace, customers are demanding higher quality, customized products and services and expecting them faster.
Business Imperatives. Business imperatives outline what the company must do strategically to be successful, given its customers’ changing requirements. These can require systematic rethinking and change to the company’s mission, strategy, goals, business model, products, services, pricing, or branding. Essentially, business imperatives pertain to the organization’s strategy for successfully meeting its customer requirements.
Organizational Imperatives. Organizational imperatives specify what must change in the organization’s structure, systems, processes, technology, resources, skill base, or staffing to implement and achieve its strategic business imperatives successfully.
Cultural Imperatives. Cultural imperatives denote how the norms, or collective way of being, working, and relating in the company, must change to support and drive the organization’s new design, operations, and strategy. For instance, a culture of teamwork may be required to support reengineering business processes (organizational imperatives) to drive the strategy (business imperative) of faster cycle time and increased customer responsiveness.
Leader and Employee Behavior. Collective behavior creates and expresses an organization’s culture. Behavior speaks to more than just overt actions: It describes the style, tone, or character that permeates what people do. It speaks to how people’s way of being must change to establish a new culture. Therefore, leader and employee behavior denotes the ways in which leaders and employees must behave differently to re-create the organization’s culture to implement and sustain the new organizational design successfully.
Leader and Employee Mindset. Mindset encompasses the worldview, assumptions, beliefs, or mental models that cause people to behave and act as they do. Becoming aware that each of us has a mindset, and that it directly impacts our behavior, decisions, actions, and results, is often the critical first step in building a person’s and an organization’s capacity to transform. Marilyn Ferguson, in The Aquarian Conspiracy (1987), states, “If you continue to think as you have always thought, you will continue to get what you have always gotten.” Transforming mindset is a prerequisite to sustained change in behavior and culture. A shift of mindset is often required for organizational leaders to recognize changes in the environmental forces and marketplace requirements, thereby being able to determine the best new strategic business direction, structure, or operation for the organization. A change in employee mindset is often required for them to understand the rationale for the changes being asked of them. And almost always, leaders and employees must change their mindset to implement and function in the organization’s new design and strategy successfully.
When the scope of change in the environment and marketplace is minimal, content change usually suffices. When change is required only to business and organizational imperatives (content) and not to culture, behavior, or mindset (people), the type of change is developmental or transitional. (The different types of change will be described in detail in the next chapter.) However, when the magnitude of environmental or marketplace change is large, then it triggers the need for radical content change, which drives the need for change in culture and people. This type of change, which includes all these drivers, is transformational. By definition, transformational change requires that leaders attend to content (external, impersonal) as well as people (internal, personal).
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CASE IN POINT
A brief review of the divestiture of the Bell Operating Companies from AT&T provides a great illustration of the Drivers of Change Model in action. We use this example because it is so widely known and effectively demonstrates how the Drivers of Change work. Jesse L. Brooks, III, and Heddy Pe—a were with AT&T for twenty years before and during the breakup. Providing an overview, they write:
“Pre-divestiture, the old ‘Ma Bell’ was a company of one million plus employees and the largest employer in the private sector. Its ubiquitous presence and its paternalistic/maternalistic culture earned the company its nickname of ‘Ma Bell.’ As the name indicates, the company ‘took care’ of its employees. Given its monopoly status, it had the luxury of doing so. Employment was typically ‘for life,’ and jobs were never high pressure.
“AT&T’s monopoly status gave the company a certain profit that was guaranteed by the government. In 1984, the government pursued the breakup of AT&T, resulting in it keeping its long distance business, while the local service businesses went to the regional Bell Operating Companies.”
Here is an illustration of how the Drivers of Change Model manifested at AT&T. Notice how the forces in the external domains called forth and required the changes in the internal domains. Also notice how the massive “content” changes could not have been implemented or sustained without significant transformation to the organization’s culture and the behavior and mindset of the leaders and employees.
Environmental Forces
• Government Regulations: FCC forced AT&T to form a fully separate utility (first American Bell, then AT&T Information Systems); anti-trust laws created an even playing field for domestic competition.
• Changes in Technology: Expansion of microwave technology and capability; first commercial communications satellite, Telstar 1, in orbit; introduction of electronic components into customer premises and network equipment; computers blurring the distinction between voice and data transmission and between data transmission and data processing.
• Customers: Increased competition allowed by the FCC.
Marketplace Requirements for Success
• Focus on the customer;
• Customers demanded technology that directly served their needs;
• Customization of communication solutions;
• Demand for high-speed transmission;
• Demand for higher quality of service and equipment; and
• Demand for lower costs, despite Bell’s continued tariffs.
Business Imperatives
• Become more competitive and customer focused;
• Lower bottom-line operating costs and improve profitability;
• Tailor equipment and service to customer needs;
• Lower price of service;
• Acquire new companies to expand services (McGaw for wireless; NCR for computers); and
• Shift focus of Bell Laboratories from winning new patents to producing sellable customer products.
Organizational Imperatives
• Downsize to enable lower cost structure;
• Build a strong marketing organization that includes a new sales force and product development functions;
• Shift from blue collar to white collar job focus (high tech, sales and marketing) and develop appropriate skills;
• Restructure company into strategic business units along product lines to reflect the needs of the marketplace; and
• Streamline processes to increase efficiency and cost savings.
Cultural Imperatives
• Shift from family culture to bottom-line orientation;
• Shift from being internally focused to being market and customer focused;
• Shift from communal to competitive orientation;
• Shift from entitlement to empowerment; and
• Shift from laissez-faire to accountability.
Leadership and Employee Behavior
• Focus on results, not just activities;
• Share information and communicate openly;
• Take risks;
• Become more entrepreneurial and innovative;
• Act more quickly and decisively in new marketing environment;
• Become more accountable to Wall Street; and
• Become more collaborative and less autocratic.
Leadership and Employee Mindset
• Leaders:
• Shift mindset from “the customer doesn’t matter” to “the customer is primary”;
• Shift focus from “study and document” to “act and learn”;
• Think like an entrepreneur;
• Shift from a “take it or leave it” attitude toward customers to become more image, brand, and service conscious; and
• Shift from command and control style toward coaching and motivating.
• Employees:
• Shift from “job for life” to “earn my way” through my results and contribution;
• Shift from “family” atmosphere to “look after myself”;
• Shift from “do as your supervisor tells you” to “be empowered to do the job as you see it!”;
• Shift from “cover your arse” to being accountable; and
• Shift from avoiding failure to learning through prudent risk taking.
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Exhibit 1.1 offers a worksheet to assist your assessment of the actual drivers at play in your organization. Fill it out, carefully thinking through each point, and then discuss your conclusions with others to obtain the most benefit.
Exhibit 1.1: What Is Driving Your Organization’s Change?
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Environmental Forces:
Marketplace Requirements for Success:
Business Imperatives:
Organizational Imperatives:
Cultural Imperatives:
Leader and Employee Behavior:
Leaders:
Employees:
Leader and Employee Mindset:
Leaders:
Employees:
The Evolution of Change and the Required Expansion of Leadership Awareness and Attention
Over the past forty years, the nature of organization change has evolved tremendously, increasing the areas of organizational life to which leaders must attend. The Drivers of Change Model both predicts and describes this evolution and the subsequent increase in leadership awareness required.
The History of Organization Change
Before the 1970s, leaders as a whole paid relatively little attention to their external environment, including their customers, competitors, or the marketplace in general. If they had market share, that was all that mattered. Then, during the 1970s, technology, innovation, and deregulation (environmental forces) began to shake up many industries, including automobile, steel, manufacturing, communications, banking, and retail. These environmental forces began to alter the marketplace requirements for success in these industries. As leaders struggled to differentiate their organizations’ strategic advantages, strategy development (business imperatives) became the leadership rave. Led by a few large consulting firms, many of the Fortune 500 began to review and evolve their business strategy systematically and seek to comprehend their business imperatives. As a result, an increase in new products and services was seen during this time.
In the late 1970s, the scope of change increased, further causing leaders’ focus to turn to the organization and how to improve it (organizational imperatives). Productivity improvement, restructuring, downsizing, work redesign, quality, and process improvement swept the country. This focus on organizational improvement intensified in the mid-1980s with the quality movement, then again in the early 1990s with the reengineering craze, and continues today with the information technology movement, enterprise resource planning efforts, and the search for how to master global connectivity via the World Wide Web.
Up to this point, most change efforts focused on external drivers. For the most part, these content changes were relatively comfortable for most leaders. Why? Because most of today’s leaders come from engineering, financial, military, or legal backgrounds. For them, altering the strategy, structure, systems, processes, and technology of the great organizational “machine” is familiar territory. It is tangible, observable, and measurable. And, most importantly, it carries the illusion of control.
Truth be told, many of these “content” changes could be tightly managed. Leaders could command and control many of them to their desired outcomes. This was possible for two reasons. First, leaders could often design and implement changes as separate initiatives, requiring little integration and no special attention to process. Leaders could simply manage these projects using the project management skills and tools they had honed over the years. Second, these changes usually did not require any significant or profound personal change on the part of the leaders or the people impacted by the change. A bit more communication and training in the new systems were usually enough to handle the “people” aspects of these “content” changes.
The “change is manageable” bubble began to burst in the mid-1980s, and by the 1990s it became glaringly obvious that truly managing change was becoming less and less possible. The technological revolution, primarily fueled by information and communication technology, had increased the speed and scope of change so much that the process of change became significantly more complex. Isolated and distinct change initiatives no longer sufficed as organization change became more and more enterprise-wide. Leading change now demanded the integration of numerous cross-functional initiatives, and leaders’ traditional, project management techniques did not provide adequately for complex process integration. New, more evolved approaches were required.
Furthermore, the tangible domain of changing organizational strategy, structure, systems, processes, skills, and technology suddenly required a significant focus on the less tangible domain of culture and people (cultural imperatives). This new requirement for attention to people was captured in an article in The Wall Street Journal on November 26, 1996. It stated, “Gurus of the $4.7 billion reengineering industry like [Michael] Hammer forgot about people. ‘I wasn’t smart enough about that,’ Hammer commented. ‘I was reflecting my engineering background and was insufficiently appreciative of the human dimension. I’ve learned that’s critical.’” Suddenly, change was significantly less manageable and required more attention to people and process than leaders were equipped to give.
Although the change management field had begun in the early 1980s through the work of thought leaders such as Linda Ackerman and Daryl Conner, it was in the mid-1990s that change management began to be seen as absolutely necessary. Overnight, the major “content” change consulting firms began change management practices. However, these early mass-marketed approaches only scratched the surface of the attention to people and process needed. For the most part, they addressed only the complaints surfaced by dissatisfied leaders—how to improve communications, overcome employee resistance, and manage implementation better. Even in these symptomatic areas, the approaches offered were mostly insufficient, as the content consulting firms did not really understand the internal dynamics of people and culture, nor how to design change processes that integrated basic human needs. Most of these early approaches made the mistake of applying change “management” techniques to people and process dynamics that were inherently unmanageable.
A major source of the failure of most of the change efforts of the past decade has been the lack of leader and consultant skill in the internal domain of people. Let’s continue to explore the historical chronology, using the remaining Drivers of Change to demonstrate how profoundly people have been drawn into the change equation in recent years.
Starting in the mid-1980s, the marketplace forces were requiring such significant content change that an organization’s people and culture also needed to change in order to implement and sustain the content changes successfully. Culture change was no longer a “nice to do”; it was now beginning to be recognized as a “must do,” as noted in Michael Hammer’s comment.
The earlier case example of the breakup of AT&T is a great illustration of how the scope of environmental and marketplace-driven change grew from business and organizational imperatives to include cultural imperatives, behavior, and mindset. After the breakup, AT&T required not just a new business strategy, but also a complete overhaul of its organizational structure, systems, processes, and skill base. Yet, none of this could have succeeded without the simultaneous transformation of its entitlement culture, to which AT&T devoted significant resources.
When change in the business and organizational imperatives is relatively small, leaders can ignore culture, because the existing culture simply absorbs the incremental changes. But when the change to the strategy, structure, systems, processes, or technology is significant, and requires a new way of being, working, or relating in order to operate the new organization, then leaders are required to change cultural norms for the change to succeed. With this requirement of leaders to attend to culture and people, organizational change now entered the realm of transformation.
Not surprisingly, in the early 1980s the Organization Transformation movement, which focused heavily on cultural change, was born. Some factions of the organization development profession embraced and explored this new field enthusiastically. Leaders, however, did not take this movement seriously until more recently. The reasons why are inherent in the remaining two Drivers of Change.
In order to change culture, or the collective norm of how people behave, individuals must change their behavior (leader and employee behavior). If the individual behavior change that is required is minimal and simply entails skill improvement or minor adjustment to work practices, then basic skill training or slight behavior modification is all that is required. (Deep personal reflection and self-development can be ignored.) However, when the required behavior and style change are significant, as in most of today’s transformations, then people’s mindsets must also change (leader and employee mindset). If people do not alter the worldview or beliefs that drive their current behavior, then they cannot sustain major behavioral change.
Let us underscore that change in behavior and mindset is required by both leaders and employees. For example, in the AT&T case, both leaders and employees had to engage in more accountable work practices, which required both to alter their mindsets. Both needed to embrace the new world of competition mentally and emotionally in order to really believe that they had to be more accountable. Leaders and employees had to change their fundamental worldview of what was required of them to succeed. They had to embrace the idea that they were not entitled to success, but must earn it through their performance, individually and collectively. Once this new mindset was adopted, more accountable work practices came more easily to both leaders and employees.
Ideally, leaders and employees must change their behavior and mindset simultaneously because key aspects of culture are largely the product of interactive behavior patterns between leaders and employees and the underlying mindsets that drive these behaviors. For culture to change, these patterns must break, which requires change on both sides of the equation. At AT&T, for example, the cultural shift from entitlement to empowerment required leaders to step out of their command and control style while employees stepped into greater self-reliance and responsibility. A shift on only one side of the equation creates conflict; a shift on both sides creates sustainable change.
By the early 1990s, the scope and required focus of organization change had fully evolved and entered the unpredictable and uncertain world of human beings. It is no wonder that empowerment, self-management, emotional intelligence, personal mastery, and learning have become topics of interest over the past ten years. In the 21st Century, however, these must become more than simply points of interest, experiments, or topics of casual conversation; leaders and consultants must actually use them to produce tangible transformation. In today’s business environment, significant transformation cannot happen without the simultaneous transformation of a critical mass of leaders’ and employees’ mindsets and behavior. Conscious transformation means attending to the consciousness of the people in your organization, including your own.
Leaders and consultants who place personal mindset change for both themselves and employees at the center of their organizations’ transformations will succeed. Those who refuse to acknowledge this need will fail. The bad news is that most leaders and consultants, up to now, have denied this need. The good news is that more and more leaders and consultants are beginning to embrace this fundamental requirement of organizational transformation.
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CASE IN POINT
In the late 1980s, we worked with a large bank in California and ran smack into this leadership denial factor. This was during the time that the “change is manageable” bubble was just beginning to burst, and most leaders were unaware of the deep personal change being required both for themselves and for employees.
The bank was installing a new computer system throughout its many branches that would revolutionize their tellers’ jobs by putting substantial customer information at their fingertips. Equipped with this information, tellers would then be expected by management to introduce and sell appropriate insurance and investment products to their customers while the customers were at the tellers’ windows making deposits or withdrawals. The technology installation was part of a comprehensive strategy to expand the bank’s service offerings to retain customers and market share, which the bank was quickly losing to large investment brokerages.
Senior management asked us to audit their existing change strategy and to predict how we thought it would proceed. After interviews with senior executives, we realized that they clearly understood that their marketplace had new requirements for success and that they had developed a solid business strategy based on new business imperatives. They had effectively translated that strategy into new organizational imperatives, primarily the installation of new computer technology. However, that was as far as they had gone. They conceived the change as a simple technology installation. But it was much, much more.
The senior leaders had no idea that their new marketplace requirements and business and organizational imperatives were so significant that they were driving the need for a fundamental transformation of their culture, as well as their leaders’ and employees’ skills, behaviors, and mindsets. Their change strategy neglected any attention to culture, behavior, and mindset beyond training the tellers in how to use the new computer system. To the leaders, that was enough. They planned to shut all of their numerous branches down on a Friday, work all through the weekend installing the system and training employees, and re-open the bank on Monday morning without skipping a beat. They were in for a painful surprise.
We issued a loud warning that their plan was going to backfire and cause tremendous upheaval because their strategy neglected any attention to changing their culture or their leaders’ and employees’ behavior and mindset. We suggested that, in the best-case scenario, their change effort would alienate employees and customers; in the worst case, it would cause both to leave in droves.
Here were the key issues as we saw them:
1. Each branch was a fiefdom, run top-down by largely autocratic branch managers who made all significant customer decisions. We suggested that the new technology and the subsequent change in the tellers’ role would create a power struggle between the branch managers and the tellers. The fact that the tellers would now have the power to make significant customer decisions would undermine the branch managers’ historic authority, and the branch managers would be likely to withhold their support, which the tellers would so desperately need, especially during the initial stages of implementation.
2. Many of the tellers had worked for the bank for ten or more years and were hired because of their style and skill at doing accurate and predictable work, that is, helping customers to make deposits and withdrawals. The tellers had no sales training. Most, if not all, were not salespeople by nature, and their communications skills were not highly sophisticated. They took jobs at the bank because they were attracted to the safe and predictable work of making customer transactions.
3. We suggested that employees would learn the new system (they were all good “soldiers”) but not be willing to use it because to do so would be too threatening to them. Not possessing the mindset, behavior, or skills of a salesperson, they would simply not engage their customers in the new sales-oriented conversation that their leaders expected. And, if they did attempt such conversations, their lack of skill might backfire, creating resentment or embarrassment for customers and reducing customer satisfaction.
4. Management planned to change the tellers’ compensation system to drive their new behavior. A significant portion of their compensation was to be based on hitting sales targets. We suggested that installing this new compensation system at startup, before the change was assimilated, would alienate the tellers and that this resentment would further amplify the weakness in their sales skills. We also suggested that the new compensation system would increase the conflict between the tellers and their angry branch managers because the branch managers would pressure or punish the tellers for not hitting their “sales” numbers.
The unfortunate conclusion to this story was that the leaders rejected our concerns and proceeded with their original plan. Given their mindset and lack of desire to address any potential problems, they simply did not want to hear what we had to say about the need to attend to culture, behavior, and mindset as a part of their overall change strategy. The outcome of their change was as we predicted. Over the next eighteen months, the bank lost both market share and many of its top employees, including both tellers and branch managers.
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The point is this: Like it or not, most of the significant changes in organizations today require leaders to attend to culture, behavior, and mindset, including their own. A major focus of change consultants has to be helping leaders in this endeavor. Leaders and consultants must understand at which point they must integrate personal change into organization change and how to accomplish it, for if they do not, they will fail.
Summary
Prior to the 1980s, leaders could limit the scope of their change efforts to business strategy and the redesign of their organizations and be successful. But that’s no longer the case—not today and not tomorrow. Every year, as the demands of the environment increase at astronomical rates, people are forced to change their behavior and mindsets to keep pace. Traditional change management practices are insufficient. The next evolution of change leadership is already here, requiring the integration of organization and personal change into one unified effort. This is a key success factor in leading transformational change. Chapter Two explores this point further by clarifying the unique requirements of transformational change as contrasted to the other types of change occurring in organizations today.