Hard and Soft Aspects of Change
The Implications of Different Narratives in Organization-wide Change Esther Poortstra (3009475)
MSc Business Administration – Change Management Faculty of Economics and Business
University of Groningen Groningen, 01-04-2018
Supervisor: Dr. C. Reezigt Co-assessor: Dr. J.F.J. Vos
Word count: 12542
Abstract
In literature and practice, increasing attention is given to working methodologies and change management approaches consistent with the soft paradigm. However, the majority of organizations is working and changing according to methodologies in accordance with the hard paradigm. In the future, organizations are expected to conduct organization-wide changes in working methodology – from hard to soft – accompanied by a shift in mindset. Research to guide these transitions is relatively scarce. This research adds to existing organizational literature by studying how narratives of groups with various levels of involvement differ in an organization wide change. At the case site, a large financial institution changing from project management to Agile working, qualitative research was conducted. To capture narratives regarding the change, 24 interviews were held. The data were analyzed using Atlas.ti and resulted in composite narratives per group. The results show that even though there were both top-down and bottom-up change initiatives, the differences in narratives caused the change initiatives to hardly reach the out-group and confuse the in-group. Thus, a ‘crack in the middle’ was identified. The Actor – Network theory was used to explain that not recognizing the presence of different organizational narratives hinders the translation process. From the value systems concept and sensemaking cycle it became apparent that the concepts hard and soft were subject to different interpretations and that the ambiguity created by the different narratives was beyond the sensemaking capabilities of the in-group.
The main theoretical implications of this research is the identification of the crack in the middle as a clear barrier to translation and sensemaking. Organizations could benefit from this research by realizing the existence of different organizational narratives.
Keywords: Project Management, Agile working, Hard Aspects of Change, Soft aspects of Change, Narratives, Sensemaking, Actor Network Theory, Organization-wide Change, Value Systems
Table of Content
Introduction………...1
Theory………...3
Hard and soft aspects of projects………...3
Hard and soft change approaches……….………5
Sensemaking and Narratives………6
Methodology……….7
Case site selection……….………7
Research approach………7
Data collection………...8
Data analysis……… ……9
Results……….…………11
Change rationale, vision, goal and approach………...………11
Working methodology………... ……15
Role of management………...……17
Organizational climate……… ………...…21
Composite narratives………..…………22
Discussion………...………24
Actor – Network Theory……….……24
Translation and value alignment……….……25
Sensemaking………..………27
Managerial implications……….………28
Theoretical implications……….………28
Limitations and future research………..…………29
Conclusion………..…………30
References………...…………31
Appendices………..……35
Appendix 1: Interview protocol………..…………35
Appendix 2: Overview Interview Participants………...36
Appendix 3: Overview results: narratives per group, per topic………..……37
Appendix 4: Codebook………...…………38
1
Introduction
In today's rapidly changing world, full of technological developments and disruptions, it is key for organizations to (re)define themselves and learn how to adapt to environmental modifications faster than ever (Burnes, 2005). If an organization falls behind, it can have catastrophic consequences, including bankruptcy (Burnes & Jackson, 2011). Therefore, organizations feel pressure to keep up with the competition, resulting in major demand to change the way they operate. In order to become more efficient and effective, often organization-wide changes need to be conducted (Cummings & Worley, 2007).
However, with the notion that up until today, 70% of organizational change initiatives fail (Burnes, 2005; 2014; Burnes & Jackson, 2011), conducting organization-wide changes seems to be challenging. It is surprising that the majority of the change initiatives fail, considering the large amount of (prescriptive) studies regarding this topic. Burnes and Jackson (2011) relate to this issue as a ‘classic paradox’: organizations have to change, but most of the change initiatives fail (p. 134). Many scholars have addressed this paradox and came up with recipes for change success (Beer & Nohria, 2000; Kanter, Stein & Jick, 1992; Kotter, 1996). However, these scholars all argue that there is ‘one best way’ to change. Simultaneously, other scholars stress the importance of contingency thinking in change management (Burns & Stalker, 1961; Burnes, 2014). Moving from the notion that there is one change recipe for every organization, this research supports the claim that there is a ‘best’ change recipe for each organization.
On the same note, there could be one best way of working for either each, or every organization.
(Burns & Stalker, 1961). The research of Pollack (2007) relates to the use of different working methodologies within organizations by distinguishing two broad organizational paradigms. In the hard paradigm, organizations are believed to be an objective reality with mechanistic processes (Crawford &
Pollack, 2004), using deductive reasoning and one best way of operating and changing. Practice based on the hard paradigm emphasizes on control, efficiency and predictability (Pollack, 2007).
In the soft paradigm on the other hand, organizations are believed to be socially constructed.
Inductive reasoning and contextual relevance are emphasized (Pollack, 2007), implying that the best working methodology and change approach may differ per organization. Practical working methodologies based on the soft paradigm highlight learning and participation (Pollack, 2007).
According to Pollack (2007), organizational literature has a growing emphasis on the soft paradigm.
Subsequently, softer methodologies are becoming increasingly apparent for organizations in order to stay ahead of the competition (Pollack, 2007; Burnes, 2014). This is no surprise: the soft paradigm and accompanying change approaches resonate well with a turbulent environment (Pollack, 2007).
An important and often used soft way of operating is Agile working (Birkinshaw, 2018). Agile working is a way of working which accommodates change well. The method aims at frequent interaction of the ‘business’ and the ‘developers’. Moreover, Agile working stresses that working software enhances
2
agility and constant and continuous reflection leads to more effectiveness (Agile Alliance, 2001). In order to embrace the benefits of Agile working, the organization under research shifts from traditional project management to Agile working. Such a transition implies not only major change in working for the employees, it also requires a paradigm shift (Pollack, 2007), and a shift in organizational culture (Iivari & Iivari, 2011).
Previous research into organizational culture change by Balogun and Johnson (2005) revealed that (cultural) change is unpredictable and leads to unintended outcomes. The cause of this unpredictability lies in the fact that that employees continuously need to make sense of changing circumstances.
In academic literature, sensemaking is often captured by taking an interpretive narrative lens (Vaara, Sonenshein & Boje, 2016). This lens allows for different (temporal) perspectives (Buchanan &
Dawson, 2007) and is used in this descriptive study. The purpose of this research is to describe how different groups of people make sense of a change in working methodologies and the accompanying paradigm shift. In line with the research of Brown, Stacey and Nandhakumar. (2008), this research assumes the narratives of actors in an organization differ. According to Vaara et al. (2016) involvement (or inclusion - exclusion) could be an important indicator for differences in narratives. And needs more research. This leads to the following research question: How do narratives of groups with various levels of involvement in an organization-wide change differ, and what are the implications?
This research adds to organizational change literature by identifying possible causes of organizational change failure. As stated before, even though the majority of organizational change initiatives fail (Burnes & Jackson, 2011), there is limited research to the causes of this failure (Burnes, 2014). Since more organizations are expected to undertake the shift from hard to soft methodologies in the near future, this research on how people make sense of a change in mindset adds to the existing literature on organizational change success – and failure. This research describes causes of limited sensemaking and change adoption, by looking at the differences in narratives from an Actor – Network Theory perspective (Callon & Latour, 1981) a value systems perspective (Burnes & Jackson, 2011) and a sensemaking perspective (Weick et al., 2005).
The remainder of the research is set up as follows. In the next section, the theoretical framework, hard and soft aspects of project management and of change approaches will be explained and a brief overview of the related concepts of sensemaking and narratives will be given. The methodology section explains how this research was conducted and how the narratives have been captured. In the results section an overview of this narratives will be given. The different (composite) narratives are presented by dividing the participants into three groups, based on their involvement in the change: an inner-group, an in-group and an out-group. In the discussion section, the differences in narratives are discussed and grounded propositions are presented. Implications for managers and theory are described, as well as the limitations and future research suggestions.
3
Theory
In organizational literature, two broad working methodologies can be distinguished: ‘soft’
methodologies and ‘hard’ methodologies. Both methodologies are in practice often executed as a project (Crawford, 2005). Crawford & Pollack (2004) present a framework to explore projects. Each project has several dimensions which can be either hard or soft. With their framework it is possible to assess these dimensions on their hardness and softness and therefore classify a project in these hard and/or soft terms. Understanding how these dimensions can differ and interact in a project is an important factor for project success. In order to understand interaction of dimensions, it is important to realize that hard and soft paradigms have influenced practice a great deal (Pollack, 2007).A paradigm is described as “a general tendency for thought” (Pollack, 2007, p. 2). Paradigms stem from philosophies such as realism and positivism (hard), and interpretivism and inductivism (soft). Moreover, paradigms influence (organizational) life by guiding people’s view on the world, their values and their understanding of situations. The hard paradigm in practice (Pollack, 2007) clearly resonates with the hard dimensions identified by Crawford and Pollack (2004) and vice versa: the soft paradigm (Pollack, 2007) is in line with soft dimensions in a project (Crawford & Pollack, 2004; Crawford, Costello, Pollack, & Bentley, 2003).
In this section, an overview of hard and soft dimensions of a project and hard and soft change approaches is given. Moreover, this sections provides insights into how the concepts of sensemaking and narratives are closely related
Hard and Soft Aspects of Projects
Crawford and Pollack (2004) break down project management as a working methodology into seven dimensions, based on earlier research. These dimensions are (1) goal/objective clarity, (2), goal/objective tangibility, (3) success measures, (4) project permeability, (5) number of solution options, (6) degree of participation and practitioner role, and (7) stakeholder expectations. Each project has these dimensions, however, the hardness or softness of each dimension differs per project. The main point of Crawford and Pollack (2004) is that projects do not need to be entirely hard, or entirely soft. Hard and soft aspects in projects are not mutually exclusive: both aspects can co-exist in a project. However, a hard project with soft aspects or a soft project with hard aspects is more complicated to manage then a solely hard or solely soft project. It is therefore key to understand these dimensions. Next, each dimension will be explained. Moreover, per dimension will be explained how this dimension would look like in a hard or soft project.
Goal clarity indicates the degree to which goals or objectives are defined at the start of the project. If the goal is predefined and should not be subject of change, this dimension can be rated as hard. This clearly resonates with the Iron Triangle (Atkinson, 1999) in which projects are assessed based on their ability to meet the predefined scope, schedule and cost framing. However, when goals are not
4
clear at the start of the project, the dimension goal clarity is soft. While exploring and executing the project, learning takes place and goals will develop (Crawford & Pollack, 2004).
Another facet of goals in project management is the (in)tangibility of goals. Tangible goals are clear and measurable: quantifiable (Crawford & Pollack, 2004). These are often physical end products such as a machine or buildings. These tangible goals are a typical hard aspect (Crawford & Pollack, 2004). On the other end of the hard-soft continuum are projects with intangible (soft) goals. These goals are likely to be influenced by new information and goals are open to interpretation of stakeholders, and therefore difficult to quantify (Atkinson, Crawford & Ward, 2006).
In order to judge to what extent these goals are reached, success measures are used. Hard success measures are clear and tangible measures. Soft success measures are qualitative, in depth assessments of success. Obviously, the three dimensions regarding goals in project management are interrelated (Crawford & Pollack, 2004)
Project permeability is an aspect which indicates to what extent the project is subject to external influences. If the environment has no influence on the project or is considered to be stable, this dimension can be rated as hard. This means that the environment is predictable and external influences would not affect the project. On the other hand, when the environment is expected to influence the project and is considered to be unstable, this dimension can be examined as soft. This implies that the boundary between what will and what will not influence the change is fuzzy. A soft project permeability is in line with the Open Systems theory (Cole, 2001; Nadler & Tushman, 1980). This theory explains that organizations (and thus projects) are not isolated from their environment: they interact with the environment and with different internal systems. This implies that changes in one area cause changes in other areas.
The number of project solutions can be classified as hard or soft as well. When there is one best solution, feasible and desirable, the project solution can be considered hard. On the other hand, a soft aspect of a project is that there is not one (best) solution: the solution is ambiguous. Stakeholders can debate and participate in the exploration of a project and its solution. Moreover, as indicated before, the project is subject to influences from outside and the solution could also be subject to influences from outside (Crawford & Pollack, 2004; Atkinson et al., 2006).
Related to the way a solution is generated in a project is the degree of participation of team members in a project. In projects with soft participation aspects, team members have room to participate in the project (e.g. by debating about the best solution). Moreover, team members have the freedom to collaborate and are empowered. In hard projects, participation is typically not desired. Top management defines project or change goals and change paths with little to no involvement of lower hierarchical layers. The lower hierarchical levels are told what to do and are not encouraged to contribute themselves (Crawford & Pollack, 2004). Beer and Nohria’s theory E (2000) recognizes this planned, top-down change approach where everyone has to agree with the change designed in the top. Alternatively, Theory O is in line with the soft classification of the degree of participation, as in Theory O there is room for
5
bottom-up change (Beer & Nohria, 2000). These theories will be explained later in this section in somewhat more detail.
The last category of Crawford and Pollack (2004) is about the expectations of stakeholders.
Which stakeholders are considered to be influential depends again on the hardness or softness of this dimension. This dimension is hard if there is limited interaction with stakeholders and if the solution is already designed. Client expectations are only taken into account to a certain extent. The relationships which are there, are transparent and simple. Moreover, the employees working on a project are substitutable. This dimension can be considered soft if project employees are definitely not seen as interchangeable. Cultural habits and a personal management approach are important. Moreover, there is constant interaction with stakeholders: there is two-way, open communication (Crawford & Pollack, 2004).
Even though Crawford & Pollack (2004) examine each aspect individually on their hardness or softness, from their framework it becomes clear that all dimension interact. Thus, a dimension is never on its own, there is a logical coherence between the dimensions. E.g. goal tangibility, goal clarity and success measures are interrelated dimensions. A soft approach on the goal tangibility dimension will certainty influence goal clarity and success measures.
Hard and Soft Change Approaches
The change approach guiding the transition in a working method can be classified along the hard-soft continuum as well. For example, Kanter's (1989) Bold Stroke can be classified as hard as it focuses on rapid, short term changes with senior management in the lead (top-down change). Moreover, Bold Stroke is often a change in strategy and structures, rather than a cultural organizational change. The Long March approach is more on the soft side of the continuum, as this is a slower change approach which focuses on changing organizational culture. As the entire organization is involved, this is a bottom-up change approach (Kanter, Stein & Jick, 1992). Kanter et al. (1992) argued that Bold Stroke and Long March are complementary rather than substitutes.
Theory E and Theory O (Beer & Nohria, 2000) could be classified in the same way. Theory E is comparable to Bold Stroke and therefore a hard change approach: rapid structural change, using financial incentives. Theory O on the other hand, is a soft approach: culture is important, as well as organizational learning. Beer & Nohria (2000) use the same line of reasoning as Kanter et al. (1992) and Crawford & Pollack (2004) and argue that Theory E and Theory O should be used simultaneously, in order to avoid the pitfalls both approaches have and to create change success. Thus, the change approach of executing organization-wide operations transformations can be hard and/or soft as well.
In practice, changes are often executed in a top-down way. This implies that the hierarchical top layer of an organization decides on the truth: one best way. This top-down (hard) change approach becomes obsolete. Rather, bottom-up (soft) change approaches have gained popularity lately (Pollack,
6
2007). In bottom-up change there is no imposed truth which leaves room for multiple realities as actors will compete for a dominant organizational narrative (Vaara, Sonenshein & Boje, 2016).
Sensemaking and Narratives
An organization-wide change in working methodology implies a paradigm shift. In practical terms, this implies a major shift in thinking for the change recipients in an organization wide change: the workforce.
Especially during change events with uncertain circumstances, individuals perceive a difference between the current situation and the expected situation (Sonenshein, 2010). Thus, before and during change processes, the workforce will sense uncertainty and ambiguity. People feel uncertain when they sense a lack of information. Ambiguity on the other hand, is sensed when people are confused and there are multiple and conflicting interpretations of an event (Thiry, 2002).
In order to cope with this major shift in thinking, and with uncertainty and ambiguity, people engage automatically in a necessary and crucial process: sensemaking. Sensemaking is the process of dealing with this uncertainty and ambiguity by giving meanings and interpretations to situations (Weick, 1995; Weick et al, 2005; Thiry, 2002). Sensemaking allows individuals to socially construct and interpret a reality. People try to make sense of the changing circumstances by filtering, constructing and framing situations towards a more tangible state (Weick, 1995; Weick et al., 2005).
Weick et al. (2005) describe the process of filtering, constructing and framing in the enactment – selection – retention sensemaking cycle. Enactment starts when organizational members perceive a situation as novel. There is a discrepancy between the perceived and the expected situation, which leads to ambiguity: there are multiple possible meanings of an event. In an attempt to reduce the ambiguity, people engage in the second step of the cycle: selection. In the selection phase, a number of possible meanings are selected in order reduce the ambiguity and to create a logical story. This logical story becomes less tentative in the third phase: retention. Here an enacted environment is created, the ambiguity is reduced. The plausible story is often related to past experiences and can be used as a future source for interpretation. The experienced ambiguity is reduced and a new reality is created.
The concept of narratives is closely related to the concept of sensemaking. Narratives are a tool for individuals and groups to represent their reality. A narrative is a story - real or imaginary - people create to explain sequenced events, e.g. cause and effect (Oxford Dictionary, 2018). Sonenshein (2010) explains the concept of narratives as a mechanism used to create and form one’s own understanding of events and as a mechanism to influence others’ beliefs. Moreover, it is the primary tool people use to give meaning to their experiences (Polkinghorne, 1988). The concept is especially relevant in change management, as narratives have so called ‘performative power’ and ‘agency’, implying that narratives can change the status quo in organization (Vaara, Sonenshein & Boje, 2016).
In the sensemaking cycle (Weick, 1995; Weick et al., 2005) narratives play an important role.
Contrary to other scholars (such as Sonenshein, 2010 and Weick et al., 2005), Brown et al. (2008) argue that narratives in the sensemaking process (can) differ per individual. People can give personal meaning
7
and interpretation to events and actions. These individuals discover in the enactment phase that there is a discrepancy between the current situation and the expected situation. Individuals form groups and start
‘to plot the narrative’ (Maitlis & Christianson, 2014). This means that they interpret events and create a story that fits the context (Abolafia, 2010). In the selection phase, groups and individuals tell and retell the narratives and create a more convincing interpretation story. People engage in gossiping, negotiations and exchanging stories while looking for meaning (Balogun & Johnson, 2005). During retention, a collective narrative is reached through discussion (Abolafia, 2010). A new interpretation of reality is created, which is supported by most, but often not by all (Maitlis & Christianson, 2014).
The concept of sensemaking is in line with the interpretivist paradigm (Vaara et al., 2016) and the soft paradigm (Pollack, 2007), as sensemaking implies that organizations are socially constructed and the different narratives interweave, harmonize, contest, clash, and most importantly: give room for multiple realities. (Rhodes, 2001).
Methodology
Case Site Selection
This research into differences in narratives between inner, in and out group change recipients builds further on previous research done towards the implications of an ambiguous and equivocal composite narrative at this case site. A cooperation between the University of Groningen and the case site made it possible to conduct this study at the same case site. For this study, the case site was appropriate as well, as the case site had to be an organization facing a change. The selected case site was the headquarters of a globally active, large, Dutch financial organization. The institution offers wholesale and retail banking services. One of the branches (wholesale) faces a major change in operations and an accompanying shift in mindset, which will affect approximately 5000 employees. Currently, the employees work according to project management methodologies, an example of a hard change approach. Later in 2018, the switch towards the new way of working in the operations department will be made through a big bang transformation. The organization aims to work in the future according to the Agile way of working, which is a soft methodology. Currently, the organization is in the middle of the practical design of the new way of working, and pilots are running. Since there were already some (top-down and bottom-up) change initiatives regarding the transformation, the sensemaking of change recipients had started, making the selected case site appropriate for this research.
Research Approach
As participants were interviewed at their workplace, this was a field study (Blumberg, Cooper &
Schindler, 2014). In order to capture how people cope with a shift in the way of working, and what goes on in their minds, the researcher conducted qualitative research and was present at the case site for seven weeks. This research uses an interpretivist lens to conduct research into narratives, implying that
8
narratives and reality are socially constructed. The case site looks at the change from a rather modernistic lens and not necessarily recognize the assumption that there may be different notions of reality. The unawareness of the existence of multiple realities is important to take into account when interpreting the results of this research.
Research into the implications of a switch from hard to soft methodologies was rather immature.
The research question this study addresses is a complex question, and calls for the exploration of underlying causes, theory development is therefore the applicable research method (Yin, 2013; van Aken, Berends & van der Bij, 2012). In particular, the grounded theory method was used to explore the research field and develop new theory and a changing solution.
Data Collection
Participants for these interviews were selected through different sampling methods. First of all, at the start of the research, the researcher was not yet aware of power relations and social structures at the department (Blumberg et al, 2014). Therefore, participants who participated in the previous research on this subject (spring 2017) were approached. The convenience sampling method resulted in nine interviews. Moreover, seven potential participants were recommended by the contact person at the case site. The remaining nine participants were approached by the researcher. Five participants were recommended by interviewees, which is snowball sampling (Blumberg et al., 2014). Moreover, the researcher built an own network at the case site which was used: judgmental sampling. This resulted in the last four participants (Marshall, 1996). An overview of the participants can be found in appendix 2.
According to Blumberg et al. (2014), the nature of explorative research as a methodology requires a clear description of the reliability, validity and controllability of the study. Therefore these issues were addressed thoroughly.
Two researchers collaborated closely during the data collection phase to reach intersubjective agreement (van Aken et al., 2012). Next to the interviews, meetings were attended and documents were analyzed in order to capture the usage of hard and soft working methods (Yin, 2013).
For validity reasons, the interviews were kept unstructured. Moreover, in grounded theory, it is of great importance for the emergence of theory that the researcher does not influence or bias the interviewees in any way by steering questions (Willig, 2013). Therefore, only an introductory question was asked: ‘What is [case site name] according to you, and what is your role?’ Participants explained their view on the company and their role, which was an excellent starting point for vivid interviews. In- depth information about what is going on at the case site was gathered through probing by the researchers. Probing was done by the researcher to ask for the how of processes, e.g. ‘you talk about working together, how do you usually collaborate?’ This was necessary in order to gather more details and background information (Yin, 2013).
After each interview, the researchers reviewed the interview and discussed the topics which came up, to help control the researcher’s bias. The reliability and the construct validity of the research
9
was assured by the collaboration of the researchers as well, as the researchers had discussions about the content of the research and the research method.
Since the interviews were held at different moments in time during the seven week presence at the case site, and the interviews took place in a room where the participants could speak freely, the circumstantial bias was addressed. Moreover, participants from all layers, backgrounds and social positions were included in the research to capture as many different views as possible.
Controllability was assured by keeping a structured track of all data collection activities in a logbook. Moreover, different versions of the codebook were saved in order to capture the researchers’
line of thinking and to make sure the research can be replicated.
Data Analysis
Since grounded theory is used, data collection and data analysis were done simultaneously, going beyond pure inductive interpretation of the results (Charmaz, 2008). Also Eisenhardt (1989) recognized the importance of an overlapping data collection and analysis phase. However, it is important that data was not interpreted too early, as humans are poor processors of information. This may lead to blindness and alternative explanations of the data (Eisenhardt, 1989).
All interviews were recorded and transcribed by one of the researchers for construct validity reasons. In order to increase the research reliability, the data analysis was done by using coding software:
Atlas.ti, version eight (van Aken et al., 2012). After the first round of interviews (eleven), the interviews were initially coded inductively. Transcripts were reviewed sentence by sentence. Codes were developed by summarizing passages in one or two words. Rather than coding for topics, the coding was based on actions described, the codes were descriptive (Charmaz, 2008). This resulted in codes such as:
empowerment and side-steering. Both collaborating researchers coded the same six interviews. These were reviewed together and a revised version of the first codebook was conducted. This was also important for the validity and reliability of the research. Hereafter the second round of interviews (thirteen) started. This iterative process of data collection and data analysis was crucial for the emergence of theory.
Second order coding started when all the data was collected. The transcripts and codes were reviewed again to gain more familiarity with the data, and in a search for patterns. The codes were grouped multiple times in several ways, until the grouping made sense. The first order concepts are examples of first order codes. While further grouping, the second order concepts emerged, which are more abstract concepts. As the second order concepts were grouped again, themes emerged. An overview of the grouping can be found below, in figure 1, and the entire codebook can be found in appendix 4.
10
First order concepts Second order concepts Themes
Figure 1: Data structure
The results section presents narratives and is structured around the first and second order concepts and themes presented above. In order to present the narratives in a clear and coherent way, the participants were divided into three groups, based on their involvement in the change. As indicated, an overview of the participant groups can be found in appendix 2.
The inner group consists of managers engaged in top-down change efforts and the team which designs practicalities, e.g. how the teams should be composed (six interviews). If the managers and the designers had a different perception, this was indicated as top inner-group (managers) and bottom inner- group (designers). The in-group are participants of all hierarchical layers who are currently working in a pilot of the new way of working (six interviews). The out-group consists of participants who are not yet involved in the new way of working, but who will face the change later this year (twelve interviews).
11
Results
Due to the rather unstructured nature of the interviews, this research surfaced rich data. Encouraged by the nature of the interviews and probing by the researchers, participants explained their perspective on a range of topics.
From a detailed analysis of the transcripts, a pattern emerged. The perspectives of these groups towards the change of these groups differ in most areas, but are similar in other areas. Because the perspectives between the groups vary widely, different narratives can be derived from the data.
This paragraph describes the perceptions of the three groups on several change related topics:
the change itself (rationale, vision, goal and approach); the current and expected working methodology;
the current and expected role of the management and communication; and the current organizational climate and the expected organizational climate during the new working method. A brief overview of the results can be found in appendix 3. The section concludes with an overview of all overall composite narratives per group.
Change Rationale, Vision, Goal and Approach
This section describes the narratives of the different groups regarding the rationale of the change, the vision of the change, the goal of the change and the change approach.
Rationale of the change. Each group of participants has a perception on why the organization needs to change, and what the purpose of the new working method is. All groups argue that the need for change is clear, the environment changes, and it is complex: the organization needs to adapt. It is recognized by the inner, in-, and out-group that the competition is increasing and innovative start-ups with fast service are a threat to a bureaucratic, slow, large institution. The pressure to change was often referred to by participants as ‘change or die’. If the organization does not change now, it will be eaten by other companies. Some participants in the out-group were relatively skeptical about whether the organization is able to change. Out-group participant TS02 compared the organization to a large ship.
“We are too big to survive. And not the fact that we are too big from a financial point of view, but from an organizational point of view. We are too slow. Everything needs to be now, immediately. I compare ourselves with a very big tanker. Big ship, where you know that if you have to stop, then already 35 kilometer before the port you have to get the gear back. And we have to transform us now into speedboats. That is extremely difficult”.
Even though participant TS02 perceived the rationale of the change as a negative one, there were participants who perceived the competitive environment as a positive stimulus for change. They
12
argued that it is exciting to be one of the first large financial institutions which makes this change and that they could be an example for other organizations in the industry.
Narratives on the rationale of the change
Inner group In-group Out-group
Competitive environment Competitive environment Competitive environment
Figure 2: Narratives on the rationale of the change
Vision of the change. The top-down change efforts were initiated by the current CEO, who is an outspoken believer of the new working method, and therefore the required change in organizational culture. The CEO introduced visionary words for inspirational purposes internally and marketing purposes externally. This vision was referred to by the participants as: ‘always be a step ahead’, the desire to be an ‘IT company with a banking license’ and ‘harmonizing the company’. Interestingly, both in-group and out-group participants perceived the CEO’s vision as inspiring and in the ‘right direction’.
The vision was perceived to help the organization to move forward. Previously, each department had its own values which were introduced bottom-up. This vision sets a movement in motion towards one way of working and therefore one organizational culture.
Part of the vision and the transition towards the new way of working is the ‘Orange Code’. A guideline of values of how to behave within the company. Out-group participant LS02 referred to the Orange Code as ‘an important ingredient that makes people understand that it is a greater good to work together’. These newly introduced values resonate well with the new way of working and therefore with the new culture. The out-group saw the Orange Code as a first step towards a new way of working.
Moreover, they saw it as an implicit vehicle to prepare the management and the workforce for the new culture.
However, even though the values and the vision are there, out-group participants do not feel this vision is dripping down through to lower management layers yet. There was a strong feeling that the board - who introduced this vision - is committed, but the lower management layers are not. Moreover, participants argued the vision remained relatively vague. Out-group participant LS02 explained the matter:
“I do believe that there is clear vision. But I am not sure whether that vision is translated into what that means for each and every one. For the change that needs to happen. The change in all of our IT and infrastructure and processes, do not forget the processes around that. I don’t think what we are aiming for is really translated down into all of that. Yes, it will come, I am sure. But it is not there yet”.
13
It was felt that the vision and the code of conduct are on the table, but not really lived (yet).
Nonetheless, according to a large number of participants, the only way this change can be successful, is if it is coordinated top-down and all managers are standing on the forefront promoting this change.
The in-group, on the other hand, did not see the vision as too abstract and not translated into practice. The in-group is already in a pilot, therefore this group has more practical handles to work with.
According to the inner group, the vision is the way to go forward as well. However, the top inner-group did not see the change as disruptive. Moreover, the top inner-group do say they are committed to this change, and that they really want it as well. This is perceived differently by the out- group: the out-group did not see this top inner-group commitment.
Narratives on the change vision
Inner group In-group Out-group
Vision is the right way to go Inspiring vision Inspiring vision, but not
Committed to the change translated into practice
Vision not lived by management
Figure 3: Narratives on the change vision
Goal of the change. The perceptions of the purpose of the change differ. The top inner-group saw the new way of working merely as an increase in efficiency and effectiveness. The bottom inner- group on the other hand, saw the new way of working as an attempt to reduce complexity in the organization. Even though the goals of the change are in principal similar, the narratives are different as the top inner-group did not recognize that creating more efficiency and effectiveness will go hand in hand with slimming down the workforce, while the bottom inner-group expected this.
The amount of work is increasing at such a rapid speed, that the current way of organizing the company in project management teams is not possible anymore. Being complex was perceived as a problem because “the result of being complex is that things take time to do. Because if you want to change something, you need many people to make this happen” (TS07).
Another perception of the new way of working in the bottom inner-group was that the change is merely a vehicle for FTE reduction. This is not meant negatively, as the participant perceives the organization as being very top-heavy.
The purpose of the new way of working perceived by the out-group was that it is implemented to become closer to the customer. To become more customer centric. The out-group looked at the purpose of Agile working in general and based their perceptions on that.
14
Narratives on the goal of the change
Inner group In-group Out-group
Top: increase in efficiency and effectiveness To become more customer Bottom: attempt to reduce complexity and FTEs oriented
Figure 4: Narratives on the goal of the change
Change approach. The design team (bottom inner-group) is located at a lower level in the organization. The reason for this relatively low hierarchical level is the knowledge people on the work floor have. Top inner-group participant RP04: You need people from the content who start drafting it.
[...] It is nice on paper but you need people from the content”. So, to make the translation to practical design, people who actually work with the content are needed to draft the design. However, according to bottom inner-group participant FM07, the current position of the design team is an inhibiting factor for the adoption of the change. Moreover, due to the low hierarchical level of the design team, they missed the power positions to make decisions:
FM07: “The people appointed to lead this transition, they come from the lower ranks within the organization. So to say, including myself for example. Which makes it very hard to get something on paper that is approved by everybody above it. Because everybody sees it as a danger to their own environment, to their own role, or even to their own job. So that makes it quite hard. The danger that I see is that once we go to the implementation phase, is that the people that are currently in their roles, they will have the opportunity to apply for the new roles first, and then if top-down the selection procedure takes place, nothing will happen. People will stay at their own current positions. And nothing will change”.
Top inner-group participant RP06 had the same perspective as bottom inner-group participant FM07 and argued that people protect their own area. The only way to change that, is with leadership from the top. The out-group perceived the current culture as having control from the top layers.
Therefore, multiple participants expected a rearrangement in management positions: the replacement of directive managers for Agile minded managers. Besides expecting a rearrangement, out-group participants also saw this as a prerequisite for change success. Out-group participant FM01 stated clearly how this change would look like without management rearrangement according to him: “If you keep the same people who have been in management for quite some time, then mainly titles will change. And if you start to rotate more, you might get a change in mentality”.
However, changes in the top or a solely top-down change approach was not the perceived way to go either. Bottom inner-group participant FM07 perceived that there should be change efforts top- down and bottom-up:
15
FM07: “I think it should be a top-down transition, so it should be guided from the top, with commitment, with presence, with passion. This is the way we are going to do it! And then make people at the bottom part of this journey. And make them build the model together. But now the people at the bottom are trying to build something without strong commitment at the top. So it misses one element, which is quite important”.
In-group participants also argued that the change should start at the top. However, bottom-up efforts would help the adoption. In-group participant FM05:
“We have had sounding board sessions, maybe someone who is higher up the tree should come just once on the floor to enter in a conversation with employees. And hear what plays on what layers, what is needed. And take that with you. And think about all that in their tower. So give a lot of room for that bottom-up. Taking people along, provide clarity”.
Narratives on the change approach
Inner group In-group Out-group
Top: Change from the top, bottom Top-down change works, Change should be top-down, Layers needed for practicalities but involve the bottom but prerequisite for change Bottom: Position of design team layers more adoption is rearrangement in
Inhibits change adoption. Top-down top management positions
And bottom-up change are both required
Figure 5: Narratives on the change approach
Working Methodology
Since the way of working is the subject of the change, it was interesting to find out how participants of different groups would describe the way they currently work in the organization.
Current working methodology. Out-group and bottom inner-group participants described the current way of working as working in silos and unclear roles and responsibilities. Moreover, the organization was described as hierarchical and controlled from the top. Out-group participants hoped this would change in the new working methodology.
The in-group, who is already working according to Agile, still experienced a lot of side steering and long term KPIs that they can hardly plan for. They also argued that the organization is expert driven, which means that there are specialists who know a lot about their own topic but do not see the whole picture. Moreover, working in the new and old way of working simultaneously is perceived to create struggles.
16
TS03: “We have struggled a bit to organize ourselves. [...] And it is a bit strange, because new and old are living together. So as a matter of fact, I am the hierarchical manager of a scrum team where I am a member of. And the PO works in my team as I am the manager of that. So it is a bit complicated”.
The top inner-group describes the current way of working as giving people freedom in content and scope. Next to that, they perceive there is a good collective culture.
Narratives on the current working methodology
Inner group In-group Out-group
Top: Freedom, collective working Operating half in the new Silo working, responsibilities Bottom: silo working, responsibilities and half in the old way of not clear
not clear working is complicated
Figure 6: Narratives on the current working methodology
Expected working methodology. The desired way of working was described by out-group participants as: collaboration, involvement and empowerment. The out-group was very much willing to work in teams, and they thought they are also capable of working in teams. Moreover, out-group participants are curious to the new way of working and took personal initiative to explore what this could mean for the organization and what this could mean for them personally.
An out-group participant referred to a moment where he invited an Agile coach to explore what Agile means and how he could incorporate it in his team. Another out-group participant mentioned that he talked to people from the Domestic branch of the bank (which is already working Agile) and people went to the Domestic branch to take a look at Agility in practice. Moreover, participants already implemented Agile habits in their teams and tried to make the work more collaborative. Despite their efforts, the out-group participants who took personal initiatives to explore the new way of working came to the conclusion that they could not do anything, until the whole organization is working in the new way.
Another expectation of the new way of working by the out-group was that there will be more freedom for teams. Freedom in choosing tasks and deadlines. The out-group expected that they will be self-steering in the future.
As explained, the in-group participants struggled to find their way in the current situation, but they do expect that the in the new situation there would be different KPI’s, less side steering and that the personal communication will become easier once everyone works Agile. Next to that, they expect that transparency will increase. They more or less expect they can continue to work how they do now, but without the hassle due to the different ways of working in the organization.
The top-inner group thought that the workforce had a wrong idea of the new way of working. Top inner- group participant RP02:
17
“Some people confuse the new way of work with “I can just have my own team with my colleagues and I can decide what my agenda is going to be and I am just going to be my own little company within the company”. That is probably not going to happen!”
Moreover, the top-inner group explained that the company will limit what they put in agility, due to the complex environment. Not everything is fit to become agile. Another top inner-group participant argued as well that the out-group probably expects too much of the new way of working.
The teams will become self-organizing rather than self-steering, as the direction, priorities and the tasks are still set by the higher levels in the organization.
RP06: “The ownership is important. People feel owner. They do not want to wait: what is my manager telling me. And if he or she does not tell me anything, I wait. That is very good. The self-steering. I think I like it. It is not self-steering, it is self-organizing. You still get some steering”.
Interestingly, the perceptions of mostly the inner-group and the out-group regarding the expected, or desired new way of working differed significantly.
Narratives on the expected working methodology
Inner group In-group Out-group
Top: self-organizing teams, change Less side steering, more Collaboration, involvement,
is not that big communication and empowerment
transparency
Figure 7: Narratives on the expected working methodology
Role of Management
In the interviews, ‘the management’ in a broad sense came up quite often. The management was seen as important in the organization, since the organization was perceived as hierarchical. Management takes decisions and judges what is right or wrong. This paragraph is divided in three subjects: the current role of the management, the expected role of the management and the communication about the change.
Current role of management. Currently, the most used management style is directive.
Managers tell their subordinates what to do. A manager from the top inner-group (RP03) describes his work as: “I steer”. The bottom inner-group, the in-group and the out-group all perceived the most common style of management as steering, focused on the end result and hierarchy minded.
The in-group and out-group perceived this style of management as unfitting to the new way of working. Therefore, the top-down change efforts are only partially adopted. Members of the in-, and out-group do not actively resist the new way of working, but they remain passive and do nothing to adopt the new working method. This is because the in-group and out-group expected the management in the new way of working to be more coaching and facilitative. As long as there are no signals that
18
there will be a rearrangement in top management positions, these groups remain skeptical about the success of the new way of working.
In-group participants argued that the top management has to give space to the layer below as well, so that the concept can become something of them as well. According to this group, it would be wise for the top management to find out what plays in different layers and enter in a conversation rather than just staying in the tower and talking about the concepts to each other (their current perceived behavior).
The current management style had perceived implications for the out-group. A result of this research is that there are elements of fear in the organizational culture. As a result of management behavior, out-group participants perceived that there is pressure not to make mistakes. Moreover, different out-group participants argued they do not dare to go against their manager in case of a disagreement. Out-group participant TS04 describes the situation lively:
“People are afraid of those guys. [Silence]. People are afraid of those guys. People will not go into the office of [name] and say: [name] I do not agree with it. People – will – not – do –it. Same goes for [name]. People will not do it. [...]. These guys can clearly say: I want it this way or that way. They do not say: ‘self-steering team, what do you think?’ They do not do that. They will make clear what they want. Or what the end result will be. And people do not dare to go against them”.
This does not mean that people are intimidated on a daily basis, however there are elements of fear in the culture. It is not clear what happens if you go against a manager. Out-group participants thought that most probably you will get “a big mouth”, but they do not know. The implication of this management behavior was that top-down change efforts are not often discussed between manager and team since out-group participants did not want to resist and face the consequences of going against their manager. It is up to the teams themselves to make sense out of the available information, which leads to rumors.
Top inner-group participant RP02 described himself as: ”a content oriented person. Quite challenging and impatient, probably in the reverse order”. However, management (top inner-group) was less aware of the perceived fear to go against them. They did not identify it as a problem. They can imagine that people might be a little bit afraid of them though. But, to a certain extent, managers did not see that as a problem. In fact, it helped to get things done.
Clearly, there is a discrepancy between how the top inner-group looks at their management style currently and how the out-group looks at the way they are being managed.
19
Narratives on the current role of management
Inner group In-group Out-group
Top: result-oriented, challenging Directive steering, current Directive, steering. Afraid to Fear is no issue style does not fit the new go against their manager
working method
Figure 8: Narratives on the current role of management
Expected role of management. The in-group and out-group perceived the current management role and management style to not fit the new way of working and not in line with agile values and the desired culture. Out-group participant LS02: “You can’t connect control and fear with wanting to have agile. It is one or the other”. Therefore, the top-down change efforts were not adopted. As described in the section about the change approach, the in-group and out-group expected the management in the new way of working to be more coaching and facilitative. As long as there were no signals that directive, steering managers are replaced by agile minded managers, these groups remained skeptical about the success of the new way of working.
The top inner-group (management) on the other hand, does not see this rearrangement happen.
It is argued that it is impossible to keep the “engine running” when the management is replaced for a large part. Moreover, according to top inner-group participants there is a higher chance of mistakes in the new way of working, therefore leadership should not change. Top inner-group participant RP03:
“We can be more effective, we can be more innovative by changing a few things. To be honest, personally I think we should have more result-focused leadership in the organization”.
Narratives on the expected role of management
Inner group In-group Out-group
Top: No change. Coaching, facilitative Coaching, facilitative Result focused leadership Expected rearrangement Expected rearrangement
Figure 9: Narratives on the expected role of management
Change communication. In March 2017 the new way of working was announced.
Consequently, all kinds of vlogs, blogs and articles were put on the intranet as a source of information for managers and the workforce. Moreover, Agile trainings were provided.
Even though there was communication regarding the new way of working via multiple channels, interestingly, it is not enough according to bottom inner-group participants. A member of the design team (bottom inner-group) (TS07) argued:
“There is tons of material. But that does not mean that people know it is coming. I think the interesting part of this, for me, is that you are only start getting interested once you think: hey, maybe this could
20
affect me. […] And also, to be honest, people are used to the fact that they will be inspired by others. So this is also part of the mind shift. So I think people are used to it”.
This participant argued that even though there was a lot of communication, people did not see the need of getting to know the new situation. Apparently, the communicated information does not reach the target group. This results in an out-group which had the feeling that behind the scenes there is a lot of communication about the new way of working and the design of the organization, but the workers still do not know a thing. The feeling of not knowing anything resulted in rumors and people speculating about the new way of working. However, the perceived work pressure was also a reason why people not look for information regarding the new way of working. People were already busy with their normal tasks and did not have time to go the extra mile and inform themselves about what is coming.
Next to that, the in-group had the feeling that the communication which was there, is too top- down. As argued earlier in this section, according to the in-group it would be wise for the management to get to know what is going on at lower levels of the organization and take that into account while making change related decisions.
Moreover, alongside the transition to the new way of working, a new building is constructed which will be moved into in 2019. In the hallway of the current building were two scale models standing:
one of the current building, one of the new building. From observations and informal conversations it came to the researchers’ attention that this new building is a source of speculation as well. It looks only half the size of the current building and therefore the workforce expected FTE reductions. Even though there are no explicit FTE reductions communicated up until now, a smaller building does send signals.
Bottom inner-group participant FM07 described the new way of working as “a vehicle for another downsizing”.
The communication streams and the speculations they cause were perceived differently by the top inner-group:
RP02: “What I do want to predict is that this whole conversation about the new way of working…. It is more of a conversation than it should be at this stage. What I am trying to say is that everybody is talking about it, the whole time, the whole day, in every corner of the organization. If you add up all these conversations and the time spend on it, you think we have just basically got ourselves to the next industrial revolution or something. And that is utter nonsense”.
Thus, the top inner-group perceived the current information flow as sufficient, whereas the out- group thought they do not know anything. This is either because the information did not reach the out- group or the out-group could not make sense out of the available information and starts speculating, which inhibits adoption currently.
21
Narratives on the change communication
Inner group In-group Out-group
Top: sufficient, too much rumors Communication too top-down Have the feeling they are not
Bottom: information is there, but told anything
Does not reach out-group
Figure 10: Narratives on the change communication
Organizational climate
Current organizational climate. The out-group described the current organizational climate with two contradicting feelings. On the one hand, they argued they have been through so many reorganizations the last years, they are tired of changing: change fatigue. This leaded to participants who argue they do not bother too much about the future. They will just go through it and expect to find themselves eventually doing the same things as before the reorganization. On the other hand, a part of the out-group participants and the in-group participants sensed uncertainty around them. The cause of the uncertainty could be that out-group and in-group participants expected this change to lead to slimming down the organization, meaning that people are not sure whether they still have a job next year, and if so, what kind of job. Not all out-group participants saw this uncertain situation as a threat.
The uncertainty was also seen as an opportunity to learn more and gain experience in a new role or organization. Most participants argued they themselves see the change as an opportunity, and others around them see the change as a threat to their job.
Bottom inner-group participant FM07 recognized the out-group perception of the organizational climate and described the change tiredness in relation to the uncertainty this brought for employees:
“Change fatigue, or tiredness, that will play a role. Because as I said earlier, we are in a cycle of reorganization after reorganization. Some units are being hit every 18 months. That is quite heavy. And every time your job is on the line. And your mortgage is on the line. That is quite heavy”.
Out-group participant TS04 experienced implications of this uncertainty: “Because now you see when people get insecure about a reorganization or whatever, they will sit on their information, what is what I see as well. To make themselves valuable, unmissable. And that is against everything”.
In-group participants referred to uncertainty in another context. Participant RP07 perceived the human factor as the main impediment in the change to the new way of working. According to her, once in the new way of working, there is still uncertainty: “But then some people do not like that you give them freedom. They still like to be told what to do. But you have to grow, you have to do it yourself because you have the power to do so”.
22
Narratives on the current organizational climate
Inner group In-group Out-group
Bottom: recognizes uncertainty Uncertainty about new role Change fatigue, uncertainty About job
Figure 11: Narratives on the current organizational climate
Expected organizational climate. Out-group participant TS06 found the promises of the new way of working about experimentation hard to believe. He did not see people make mistakes soon:
“Because it is something new. We are not educated or in the environment that allows that kind of freedom or failure, no”. This statement is backed up by out-group participant FM06 who argued: “People need to learn how to play their new role”.
Next to that, out-group participants did not see the current way of working and the current working atmosphere as helpful for the new way of working. What would help in the new way of working is a safe environment where people feel they can make mistakes, share information and cooperate.
However, the current way of working was seen as an impediment to create safety.
LS01: “What is very difficult, in the past few years, we have made a lot of people redundant. We said to a lot of people: we don’t need you anymore. All the remaining people see that, and how it is done. That process, how can you create a safe environment then?”
The top inner-group did not perceive the current environment as being unsafe. They thought that people will love this new way of working, and that working together is not going to be a problem at al.
Top inner-group participants described the current culture already as “collective”. However, that is perceived differently by the out-group who described the current culture with key words as silo thinking, side steering, and control and pressure not to make mistakes.
Narratives on the expected organizational climate
Inner group In-group Out-group
Top: people will automatically like Safety, room to experiment
The new way of working
Figure 12: Narratives on the expected organizational climate
Composite Narratives
All groups identify the pressure from the competitive environment and the need for a shorter time to market. It is interesting that the participants do not share similar narratives about the rest of the categories. The narratives are classified according to the definitions of hard and soft of Crawford &
Pollack (2004).
23
Overall composite narrative top inner-group
The current working methodology, organizational climate and the role of management are perceived as rather soft, thus the new working method, organizational climate and role of management will look like the current situation (soft). Thus, the change is not that big of a deal. Simultaneous bottom-up and top- down change efforts are most effective (mixed).
Figure 13: Overall composite narrative top inner-group
Overall composite narrative bottom inner-group
The current working methodology, organizational climate and the role of management are perceived as hard. The new situation is expected to be soft. To get there, more bottom-up change and real commitment from the top management is necessary. Thus, the current change approach and communication are perceived to be hard, they desire a more soft approach.
Figure 14: Overall composite narrative bottom inner-group
Overall composite narrative in-group
As the in-group is already working in pilots, this group cannot relate to neither the top inner-group narrative nor the out-group / bottom inner-group narratives regarding the way of working, organizational climate and the role of managers (mixed), leading to uncertainty and ambiguity. The change approach and communication is perceived as top-down (hard).
Figure 15: Overall composite narrative in-group
Overall composite narrative out-group
The current working methodology, organizational climate and role of management is described with the hard narrative. The future working situation, organizational climate and role of managers with the soft narrative. This group has the feeling they are not informed and involved well enough in the change, and perceive the approach as hard.
Figure 16: Overall composite narrative out-group
These composite narratives illustrate the difference in narratives between groups with different levels of involvement in the change. It indicates that the top inner group on one hand, and the out-group and bottom inner-group on the other hand perceive the current and the expected situation differently. The in-group cannot relate to one of the narratives and is stuck in the middle.
Due to these differences in narratives, there is a crack in the middle which hinders both the top- down and the bottom-up change efforts from being effective: both change initiatives do not reach the desired goal: change acceptance and adoption. Rather, they hardly reach the out-group and confuse the in-group.
