CONTINUOUS IMPROVEMENT FROM A CHANGE MANAGEMENT PERSPECTIVE AT A WATER BOARD

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CONTINUOUS IMPROVEMENT FROM A

CHANGE MANAGEMENT PERSPECTIVE AT

A WATER BOARD

Master Thesis (final draft), MscBA, specialization Change Management University of Groningen, Faculty of Management and Organization

Date, 16 June 2008 JACOB-HANS KINGMA Studentnumber: 1583387 Bedumerstraat 19a 9716 BA Groningen Tel.: +31 (0)6 24642452 e-mail: j.h.kingma@home.nl Supervisors/ university dr. M.P. Mobach

dr. K.S. Prins (Second Supervisor)

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PREFACE

In the autumn of 2007 I visited a meeting about Lean in Groningen. Here I met the Director of the Hunze and Aa’s, who was sitting next to me. He told me that they started with continuous improvement. And I explained that I studied Change Management. A few weeks later I was writing on my thesis in Veendam, the place where Hunze and Aa’s is established.

Many people write how hard the process of writing a thesis was, however, I did not experience this that much. I believe I have gained some experience during other studies and therefore could remain calm. Though, the start was a little frustrating. I wanted to start quickly, however, struggled with the question what I wanted and needed to research. Besides, the finishing touch took a lot of energy. Fortunately, I finished the process of writing a thesis with a positive feeling. Hopefully, it helps at least a little to improve the improvement capability of Hunze and Aa’s.

At last, I want to thank some persons that helped me during this research in one way or another. At first, I’d like to thank Mark Mobach for his support. By responding quickly every time and providing valuable comments, my image of civil servants has changed entirely, and positively. Furthermore, I’d like to thank Arjan van Wilgenburg for the support and useful comments, Karin Prins for her critical notes, Joost de Vries for mental support and delivering me lots of coffee, Johnny and Sander for the final check, all the employees of licensing and maintaining that made time free for interviews, Erica Mosch for allowing me to invite her employees to interview them as well as herself, Harm Kupers for inviting me to do this research, Sjoerd Gardien for drinking some beers with me after work and his support, and at last all employees that made my time in Veendam more amusing. Thanks to all of you!

Kind regards,

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ABSTRACT

At the beginning of 2007 Hunze and Aa’s started with CI (continuous improvement), in which the plan-do-check-act-cycle of Deming is central. Therefore, the PDCA cycle has been studied in this research. Furthermore, another phase has been added; creating readiness for CI, a phase to motivate individuals to change. These phases are supposed to benefit the level of success of CI. This research has a problem-solving emphasis and deals with a management issue; Hunze and Aa’s is having difficulties with the check and act phases. Moreover, this research is interesting for outsiders too, because it examines CI

from a change management perspective.

The research question is: what crucial elements are considered in literature to

produce successful continuous improvement and how does Hunze and Aa’s make use of these elements? To answer this question a literature study and qualitative research have

been carried out. With the use of theories, requirements are set, which made it possible to compare theory with practice. To gather qualitative data, the researcher interviewed eight

individuals who participated in an improvement trajectory. On one hand, this focus made

it possible to take a comprehensive look, which is the strength of this research. On the other hand, it is also the weakness of this study, because the outcome is based on one process. Nonetheless, some internal documents indicated that more departments struggle with comparable issues, which is also confirmed by the internal facilitators.

Results of the research reveal that the fundament of the check and act phases is insufficient. Measurement variables need to be set during the plan phase in order to measure progress later. Furthermore, communication about CI was insufficient. The vision and urgency are unclear to employees. Besides, employees are not aware about the progress or gains resulting from CI. Altogether, it can demotivate individuals and is a missed chance to increase readiness for CI. Besides, the standardisation of improvements needs to be assured. At last, employees should take immediate action to solve problems and new ideas need to be encouraged. This, to assure the continuity of CI and to improve the quality of the improvement. This should benefit the level of success of CI.

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1 INTRODUCTION

This research took place at the water board Hunze and Aa’s. Before some background information about the Dutch water boards and Hunze and Aa’s will be given, the direction of this research will be briefly discussed. At the moment of research Hunze and Aa’s completed their first improvement efforts. They want to improve continuously with the use of the PDCA (plan-do-check-act) cycle. The aim of this research is to discover how Hunze and Aa’s made use of continuous improvement (CI) and what can be improved to benefit future CI efforts.

In the first place, this research has a practical and problem-solving emphasis in order to answer the management problem. Management argued they were having difficulties with the check and act phases of the PDCA cycle. Therefore, a qualitative research has been carried out in order to discover whether there is a problem during CI. This took place at one department that finished its first efforts in CI. The results have been used to indicate where this problem comes from and to assess what can be improved to increase the level of success of CI. Besides the phases of the PDCA cycle, the efforts Hunze and Aa’s made to create readiness for change have been studied as well.

Secondly, for outsiders this research might be interesting too, because it connects theories of the general change management literature, in which the researcher is specialized, with continuous improvement.

1.1Company Background

At first the history of the Dutch water boards will be discussed as well as their reason for existence. After that, more specific information about Hunze and Aa’s, the water

board where this research took place, will be provided1. This in order to provide a better

understanding of what a water board does. Besides, specific attention will be given to the department of facilitators and the department of clean water, because these departments are central in this research.

1.1.1 General History of Water Boards

The water board is the oldest form of democratic governance in the Netherlands. Almost half of the Netherlands lies beneath sea level. As result of this, the water boards

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were introduced to fight against water. The rise of the water boards occurred in the lower parts of the Netherlands during the middle ages. At this time it was often a cooperation between farmers, who had the highest stake in a good running of water for their lands. 150 years ago there were 3500 water boards in the Netherlands that all had different tasks. Some boards where responsible for the flow of water, while others were more concerned about the condition of the dikes near the sea, for example. Therefore, it would be better to cooperate and this resulted in the fact that from 1960 lots of water boards merged till a total of 26 water boards today.

Water boards are governmental bodies like the province and the council. They are independent and have their own privileges. Citizens need to act conform the rules of the water boards and pay an amount of tax that is raised. Water boards have to find a balance between water management, environmental and spatial planning. Therefore, a close relationship between councils, provinces, farmers and environmental organizations is of general interest. The tasks of water boards are not the same everywhere, however, in general water boards are responsible for:

Embankment: management and maintenance of dikes and dunes;

Water quality: prevent pollution of water, improve quality of surface water, and

cleaning effluent;

Water quantity: control of water quantity and take care of the correct water level;

Land and sail ways.

The main responsibility of water management lies in the hands of the government. Besides, deep groundwater, which is used as drink water, is not the responsibility of the water boards.

1.1.2 The Water Board Hunze en Aa’s

Hunze and Aa’s is a water board that is founded in January 2000 as a result of a merger between five organizations. The district contains the eastern parts of the two provinces Groningen and Drenthe, which encompasses an area of 213.000 hectare. There are 420.000 citizens living in this area. Almost 360 persons are working at Hunze and Aa’s, of whom 200 are working at the headquarter in Veendam.

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2007. This mission is also central in the change processes, that are introduced to transform from the current organization to a lean organisation (more lean about lean in section 1.2). The mission is as follows:

“Hunze and Aa’s: responsible for safety, clean and sufficient water against low costs”

At the same time, the structure of Hunze and Aa’s was changed. The organizational chart of Hunze and Aa’s is shown in figure 1. The secretary-director is the connection between the chosen Board and the organization. This person is director of the organization and secretary of the Boards. Under the director the managers of all distinct departments can be found.

The Board consists of the general committee, the executive committee and the Dike Reeve. The members of the board are chosen after an election and contains a group of 31 representatives. From this group four representatives form, together with the Dike Reeve, the Daily Board, while the others take place in the Regular Board. Their task is to represent the interests of the community and verify if Hunze and Aa’s takes care about these interests.

FIGURE 1

Organizational Chart of Hunze and Aa’s

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1.1.3 Customers of Hunze and Aa’s

As mentioned earlier, many people believe the water boards deliver drinking water that comes into our homes. This is a misunderstanding. As mentioned before, Hunze and Aa’s is responsible for surface water quality and quantity. It is possible to distinct four customers or stakeholders based on the ‘Waterschapswet’ (2007): inhabitants, stakeholders with an interest in nature, companies, and farmers. All inhabitants want to live in an area where they have and will keep dry feet. They want to be protected against water. Moreover, this water needs to be clean and not toxic, otherwise, it can affect their health. Stakeholders in nature have interest in the effects of water management on nature. Farmers have interests in the level and quality of water, that benefits their harvests most. Companies have interest in a smooth relation with water boards to get permission to dump effluents on the water surface.

1.1.4 Important departments for this research

There are in particular two departments that need special attention, namely facilitators and clean water. These departments had an important role during this research. Figure 1, on the previous page, shows the organizational chart in which the departments can be found and located.

At first, the department of facilitators need to be mentioned, because this department is the driving force behind change within this organization. This department exists of three employees who are continuously working on change programs and can be seen as the internal consultants of this organization. Furthermore, there is one controller who spends 50 % of his time on CI. The facilitators started in January 2007 and have two years time to make Hunze and Aa’s more lean and a continuous improving organization (more about lean and CI in section 1.2). Therefore they provide training, workshops and support to help the organization with CI.

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if companies meet the requirements of the license produced by the licensers. Therefore the maintainers had an important role as internal client during CI.

1.2What Is Continuous Improvement

Before the urgency to change and the change process at Hunze and Aa’s will be discussed, some clarification about CI, which is central in this thesis, will be given. This because CI and some other words related to CI will be used frequently hereafter.

The cornerstone of CI can be found in the plan-do-check-act-cycle of Dr W. Edward Deming, who encouraged the Japanese to use a systematic approach for improvements (Likert, 2004). CI can be defined as going through all the stages of the PDCA cycle over and over again (Imai, 2002). The PDCA cycle is central during the CI efforts at Hunze and Aa’s. Therefore, this model is important and will serve as a basis for this thesis. Deming became a legend in Japan, where he provided hundreds of lectures to managers on the vital importance of statistical quality control (Horsley and Buckley, 1990). Evidence about Deming’s fame can also be found in the fact that almost any introductory of operations management books contain a detailed discussion about his philosophy (Hales & Chakravorty, 2005). After the Second World War, Deming was one of the Americans who was send to Japan to help them to overcome their reputation for bitter industrial disputes, shoddy workmanship and poor quality (Burnes, 2004). Together with the help of the Americans, who introduced the total quality programs in Japan, the Japanese further developed the concepts to CI.

CI is also known as kaizen (Cummings & Worley, 2005). Kaizen means improving and is deeply rooted in the Japanese mentality (Imai, 2002: 28). According to Cummings and Worley (2005: 662) “CI is a philosophy of designing and managing all aspects of an organization in a never-ending quest for quality. The notion is that no matter how well things are going, there are always opportunities to make them better, and hundreds of small improvements can make a big difference in overall functioning”.

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practices based on trust and strong personal ties between the individual and the organisation.

One concept of CI that has been further developed by the Japanese is the Toyota Production System (TPS), also known as lean. The heart of TPS is the focus on eliminating waste (Likert, 2002). Toyota described seven wastes: overproduction, waiting, unnecessary transport and conveyance, overprocessing or incorrect processing, excess inventory, unnecessary moving, and defects. In this way the non-value added activities can be discovered and reduced. This activity is also part of the change approach at Hunze and Aa’s. Here the basic principle of Deming can be seen. According to Deming it is important to control the process not the product (Latzko & Saunders, 1995). The idea is that a solid process will result in a solid product.

Although in literature much information can be found about each topic, lean, kaizen or CI, it is not the purpose of this thesis to describe the differences. CI, kaizen and lean are used intertwined and can be used complimentary to reach improvements. Evidence can be found in literature. Lange-Ros (1999) claims that literature about management in Japan, quality circles, total quality management, and lean production resulted in literature on continuous improvements, in which authors started to pay explicit attention to the organisation of ongoing incremental improvements. Another example is the book ‘Lean Kaizen’ a simplified approach to process improvement (Alukal & Manos, 2006). The change approach described in this book seems similar to the one used at Hunze and Aa’s.

1.3The Urgency to Change

This section will provide insight into the driving forces behind these CI efforts. The urgency to change can be described by a quote mentioned by the secretary-director in a conversation. “I want to improve Hunze and Aa’s to such a level that if the government wants to close the water boards, the people of his area will go for rebellion”. In 2006 the closing of the water boards was on the governmental agenda, because the current way of managing water was inefficient and too expensive (NRC, 2006). Therefore, the water boards acknowledged the pressure to become the best option to manage water. In order to reach this stage, Hunze and Aa’s wanted to implement continuous improvement (CI) in their organization by making use of lean.

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the accountability of the service, sustainability and water quality and efficiency”. This supports the idea that water boards are the best option to manage water. This is also stated by Kuks (2004) who claims that the Netherlands discovered a way in which water management in the form of a public system delivers an adequate and efficient organised performance. Therefore, privatising is not necessary and it can only harm the system that evolved over the past 200 years, and gained so much appraisal internationally.

Although, water boards can be considered as the best option to manage water, it does not mean that CI is a waste of time. As Senge (2000) states, “there is only one thing that can be said safely: As a living system, the corporation will evolve”. The system of water management evolved and it can be stated it should continue to evolve to be and remain the best option to manage water. Furthermore, knowledge sharing and learning will play a vital role in this process and will contribute to further evolution of this public system.

Another reason to change is that the water boards use money of the community to manage water. Therefore, they need to provide the best quality against respectable prices. According to the Waterschapshuis (2008) citizens desire to organize less issues, better services, more decisive working practices, and social institutions to work together more often. This means that the water boards need to change in order to satisfy citizens demand. Furthermore, a benchmark between water boards has taken place, which might result in some competition between the boards.

At last, consultancy agencies might also stimulate the necessity for governments to change. Visit the internet sites of KPMG or Atos Origin and you will be confronted with the necessity of a transparent public organization, in which they can offer help. Bäcklund and Werr (2004) doubt if management consulting is not a social construction. To take a postmodern2 view, it is possible that consultancy agencies construct a reality in order to sell their knowledge.

This chapter discussed possible influences that create the need to install CI. Since the urgency to improve has been examined, it is time to discuss the change process at Hunze and Aa’s.

1.4The Change Process at Hunze and Aa’s

This section aims to provide insight into the change process. Furthermore, it will show some issues in which this organization is having difficulties with.

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To gain knowledge of lean this organization has chosen to use the assistance of Blom Consultancy. The facilitators received training by this consultancy agency in order to become able to assist the entire organisation during the CI efforts. Blom (2007) argues in their mission that “by, together with our customers, making losses visible and through team-oriented improvement, process-oriented organisation and standardising results, measurably higher effectiveness and efficiency of the company processes is realised”. This mission indicates a very participative and incremental change approach, which will become also visible in the upcoming text.

Makigami Process Mapping is central at the start of the change approach at Hunze and Aa’s. Makigami is a Japanese word, which literally means ‘role of paper’ (Makigami, 2008). This role of paper is used to describe processes in detail (Appendix A contains an example). The purpose is to visualize processes in order to make individuals more conscious about the steps they take to accomplish their work. Therefore, the Makigami helps individuals to analyse their processes and to discover the steps within their process that add value to the process or not. It helps individuals to review their processes critically and think about improvements. The strength of the Makigami is that it makes less transparent processes visible. Therefore, it is an ideal technique in office environments, where processes are often less visible. Consequently, it can be valuable for the headquarter of Hunze and Aa’s with lots of administrative tasks like billing and licensing, because these processes are less visible too.

The improvement trajectory starts with an intensive week, the so called ‘Booster week’. During this week employees receive a one-day-training and review their own process with the help of a facilitator. The training deals with a simulation game which is used to show how lean works. The other days of the week deal with the Makigami

Process Mapping. When executing a Makigami, three steps need to be completed(Blom,

2007):

1. How are we doing now? Visualising the current state.

2. What is our vision? Visualising the ideal state.

3. What is the first step towards our vision? Designing an improved process.

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to provide direction to what needs to be changed, and the team seeks how to realize this goal during the Booster week. The facilitators will provide assistance to the team and have a facilitative role. At the end of the week a 100 day plan needs to be created to achieve the goal. This plan contains the ideas that can be seen as outputs of the Booster week. The ideas out of the Booster week can be seen as inputs for the PDCA cycle,

because the ideas can be realised by going through the phases of plan, do, check and act.

The ideas are processed in a plan that needs to be achieved in 100 days. The 100 day plan contains actions that need to be achieved as well as a deadline and an action owner. This person is responsible for a certain action and needs to be sure it will be accomplished.

In December 2007, the organization has finished the first 100 day plans. At this point the critical stage for CI arrived. The question rises how to continue further with CI. Besides, it is important to know how these 100 days are carried out and what can be improved. It seems that Hunze and Aa’s gained the knowledge of going through the stages of planning and doing, however, there is some ambiguity how to deal with the check and act stages, as managers stated themselves during orienting conversations. These are essential elements to CI, because otherwise the cycle cannot be repeated. Although Blom Consultancy wants continuous change, the Makigami three step model does not take this element into account. These three steps seem to suit the plan and do stages. This consultant agency also uses other tools, obviously, the most central and visible tool is Magikami, which could be the reason why Hunze and Aa’s adhered in this stage.

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An investigation by Maco International (2006), an consultancy agency, addressed an important issue of the management team of Hunze and Aa’s; “the management capabilities are insufficient to realise important strategic options in the future”. Hunze and Aa’s worked to improve management skills, nevertheless, change has impact on their work again. Because of this investigation, recently undertaken, the role of management during CI should not be ignored or underestimated.

Furthermore, answers during the orienting conversations to the questions - what is the urgency to change and what is the desired future? - revealed diversity among visions of the management team. These elements were also missing during the Booster week. The desired future state the secretary-director clarified to me, mentioned in the urgency part, is not the one mentioned by managers or employees during the Booster week. Besides, it is hard to find the vision and the urgency behind CI written down at a document. According to Kotter (1995) underestimating the power of the vision is one of the reasons why change programs fail. Another point that is crucial for the success of change, and thus CI, is communicating successes (Kotter, 1995). There is reason to believe that negative rumours about CI are getting into this organization. After listing to employees during informal moments, it became clear the employees did not speak positively about CI. Furthermore, it seems that CI successes are communicated in an ineffective way or are not communicated at all throughout the entire organization. The insufficient communication of successes is shown by the fact that it is hard to discover information about CI and its results. The upcoming paragraph will discuss the relevance of this research.

1.5Relevance of this Research

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quality eventually leads to lower costs. To achieve this goal, continuous improvements need to be carried out successfully. For these reasons, it is important to do research in CI at this water board.

As you will notice, some issues mentioned in the change process section, are part of the management problem. As can be concluded out of this section, the role of managers during CI shows some ambiguity. Moreover, managers themselves even claimed that more insight in their role during CI is welcome. This issue was addressed during orienting conversations with them. They also admitted that this organization was realizing the plan and do phases, however, failed to monitor and evaluate progress in order to respond to it. This was also the concern of the director and facilitators who wanted a better understanding of how to deal with the check and act phases.

Another issue, as mentioned in the previous section, is that the facilitators are assigned to work two years on improvements within this organization. The question is if management is ready to continue CI.

Besides, it can be questioned if Hunze and Aa’s did enough to create readiness for change, as can be concluded from the negative rumours as well as a vision that seems not to be present. The following points summarize the issues that indicate and justify that this direction can benefit CI in this organization.

Management is unsure about their role during CI and would like to have more insight

in this role.

More support of CI by facilitators than management

Are managers ready to continue CI, when facilitators leave?

Check and act are critical missing elements in this organisation according to

management and facilitators.

Underestimation of the vision

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1.6Research Purpose, Research Question and Conceptual Model

Since the relevance of this research has been discussed, the purpose of this research can be drawn. The main purpose of this research is to discover how CI was carried out at Hunze and Aa’s so far and how they can increase the level of success of CI in the future. With this purpose it is also possible to discover if there is a check-act-problem, as mentioned in the previous section. Besides, it is possible to discover if the fundament for these phases is enough. This is processed in the following research question:

“What crucial elements are considered in literature to produce successful continuous improvement and how does Hunze and Aa’s make use of these elements?”

1.6.1 Conceptual model

Figure 2 shows the conceptual model.

FIGURE 2 Conceptual Model

The conceptual model shows that every single phase of CI has an influence on the level of success of CI. It is this part of the model where this research focuses on. The other links are shown to provide a more comprehensive model. These links will be discussed briefly in this section. The other links will be discussed in more detail. Because

1. Create readiness for CI

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been made: elements that are supposed to benefit change, benefit CI as well. This assumption is derived from the fact that CI is a manner to bring about changes. When you improve something, you change something to a better level.

The five phases, presented in figure 2, can be seen as phases of continuous improvement, which can be seen as a process of CI and means something different than CI. As mentioned in section 1.2, CI is a philosophy of designing and managing all aspects

of an organization in a never-ending quest for quality (Cummings & Worley, 2005). The

process of CI is the process needed to improve this quality.

The phases of the CI process are the variables of this research that are supposed to have an influence on the success of CI. However, these variables are at an abstract level and will become clear after reading the theory chapter (see table 1 page 43). The plan phase, for example, contains several variables that are needed to plan properly. These elements are supposed in literature to benefit the success of change and or CI. The level of success itself will not be measured by measuring the impact of each phase or each element within this phase and how far it is successful. The level of success means in this

research to what extent practice meets the requirements out of the theory. These

requirements will become clear after reading the theory chapter.

In addition to the phases of the PDCA cycle, which is crucial in order to improve continuously (Imai, 2002), another phase has been added to the CI process, namely creating readiness for CI. This is derived from creating readiness for change which is aimed to motivate individuals to change (Cummings & Worley, 2005). After reading the theory chapter, the value of this phase as a separate phase will become more clear too.

The conceptual model indicates that there is a coherence between readiness for CI and the level of success of CI. Readiness for change is crucial for the success of change (Coch & French, 1948; Cummings & Worley, 2005). Therefore, it is important that individuals do not resist change. Although, critical opinions should never be ignored, resistance as result of underestimating readiness for change, leads to resistance that is based on fear or rumours. These ungrounded opinions will not benefit the success of CI.

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intention will be reduced. Therefore, the plan phase will benefit to the level of success of CI.

The next step is to implement the improvement, also known as the do phase. Therefore, resources are needed to accomplish the improvement. Insufficient resources will lead to unsuccessful change (Burnes, 2004; Pinto, 2007), and thus to a decrease in the level of success of CI.

After this, the implementation should be checked. Is the improvement really an improvement? Are we still on track? It is even possible that new opportunities arise that can lead to improvements that are better than what was intended. In this way, it is possible to manage the improvement and steer it to the right direction or to redirect it when necessary. This should contribute to the success of CI.

When an improvement has been installed, it is necessary to act. It is important to assure that successful improvements become a standard, because individuals have the tendency to move back to their old habits (Burnes, 2004). When the improvement will not be used, the efforts are a waste of time. Furthermore, it is important to learn from the experiences, both successes and mistakes. In this way, new knowledge can be used for future improvements. Consequently, this will benefit the success of CI.

In conclusion, all the phases can contribute to the level of success of CI. However, there can also be mutual relations between the phases. Since the PDCA cycle is a sequenced approach to change, a mistake in a previous phase, can harm the upcoming phase. For example, if you plan insufficient resources, there can occur a problem during the do phase as result of a lack of resources. However, these relations are not part of this research. The reason is, because this does not contribute in answering what elements are considered in literature to benefit the level of success of CI and how Hunze and Aa’s make use of it. Therefore, the relation between the phases, are not discussed. Nevertheless, the fact that there are mutual relations should not be ruled out.

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The previous section discussed the check-act-problem. The conceptual model covers this problem, because it contains all the phases of the PDCA cycle. In this manner, it is possible to discover what causes this problem. In addition to this, the question has been raised how to continue CI after the facilitators leave the organization. The facilitators have influenced the CI process, however, this is not part of the purpose of this research. This research tries to learn from the past experiences with CI. Indirectly, it is possible that we learn from the actions taken by the facilitators. During the interviews for example, it is possible that respondents argue that the facilitator did do this or that, which can be connected to element X. Therefore, ‘this’ or ‘that’ is important, because we can learn from it.

At last, learning is very important during CI. This is shown by Likert (2004) who claims that “the true value of CI is creating an atmosphere of continuous learning”. Senge (1994) even claims that without learning there can be no CI. Therefore, the better learning takes place, the more the level of success of CI will be. Nonetheless, learning is covered in the conceptual model, because the PDCA cycle is a learning cycle. The theory chapter will explain this in more detail and will discuss the importance of learning further.

1.6.2 Investigative question

In order to answer the research question, some sub questions need to be answered as well. These questions are as follows:

1. What are crucial elements during the readiness for change phase that influence the level of success of CI?

2. What are crucial elements during the plan phase that influence the level of success of

CI?

3. What are crucial elements during the do phase that influence the level of success of CI?

4. What are crucial elements during the check phase that influence the level of success

of CI?

5. What are crucial elements during the act phase that influence the level of success of

CI?

1.7Research Overview

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the importance of learning and the PDCA cycle will be discussed. Besides, this chapter will discuss the elements that are part of every phase. Furthermore, the requirements will be presented that are needed to install successful CI.

Chapter 3 contains the methodology used for this research. It explains how this research has been carried out in order to answer the research question.

Chapter 4 will discuss the results that are acquired during this research. These results will provide a basis for chapter 5 in which conclusions will be drawn. This should result in a solid basis that can help to increase the level of success of CI in this organization.

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2 THEORY

Section 1.2 discussed briefly what CI is and provided information about the roots of CI with its range of concepts. This chapter will continue on this topic, moreover it will provide more insight in the role of learning during CI and the role of the PDCA cycle. Both topics have been addressed in the part of the conceptual model. Furthermore, the purpose of this chapter is to describe elements that are supposed to benefit the level of success of CI. Out of that, requirements will be given that are needed in a later stadium to measure to what extent Hunze and Aa’s meets theory. In short, the following questions will be examined in this chapter: Why is learning important during CI and how does

learning take place? Why is the PDCA cycle important for CI and how can it be useful for learning? Which theories (elements) in literature are supposed to benefit CI and what requirements can be made? The questions will be discussed in the same sequence. At the

end it will result in a list with elements that are supposed to benefit CI in theory.

2.1The Importance of Learning

As mentioned earlier, as a living system, the organization will evolve (Senge, 2000). Therefore, it is important how this involvement process takes place. CI can be seen as a change strategy to achieve evolution. “Evolutionary change processes take the current firm as a starting point, constantly modifying aspects through extension and adaptation” (Wit & Meyer, 2004: 173). As this citation indicates, in order to evolve, the organization needs to learn to modify continuously. Therefore, learning is crucial for CI.

As shown above, CI is closely related to learning. Lewin (1947) even stated that “changing is learning”. When improving is changing, this can be formulated as “improving is learning”. The importance of knowledge creation in the kaizen approach even suits organizational learning (Burnes, 2004). Organizational learning is hard to define as can be seen by the variety of definitions Burnes has mentioned in his book. Cummings and Worley (2005) define organizational learning as “a change process that seeks to enhance an organization’s capability to acquire and develop new knowledge. It is aimed at helping organizations to use knowledge and information to change and improve continually”. Out of this, aspects that stimulate learning are essential, since “learning is the basic driver for improving” (Vits & Gelders, 2002).

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in actions that is produced by changes in choices made, not intentions espoused” (2000: 455). Defining a new strategy will not lead to change. Change will only occur if different choices lead to action on the new strategy. Martin continues by stating that there is often a gap between the higher-order choices made by managers and the lower order actions realized by the frontline employees. This is because, management cannot define strategy in such a way that it leaves the frontline employees choiceless. Martin states that “for the optimal set of choices to be made downstream, the chooser must flow the dilemma back upstream to encourage the upstream chooser to reconsider and modify the upstream choice” (2000: 459). What Martin is describing is important and part of the learning process.

The explanation of Martin about the gap between different levels of choice makers, aligns with the occurrence of emergent strategies and emergent change. Mintzberg and Waters (1985) suggest that a distinction should be made between deliberate and emergent strategies. The first one is an intended strategy, whereas, the latter is an unintended strategy. Most of the time it is a combination of both strategies. The occurrence of emergent strategies is the result of the unpredictability of the world. As stated by Senge (2000) the world is a nonlinear dynamic system and such systems are nonpredictive. It is like the weather system, which is also too dynamic to forecast precisely.

The idea of deliberate and emergent strategies, can also be linked to planned change and emergent change. “Organizational change is emergent change laid down by choices made on the front line“ (Weick, 2000: 238). This also suits the idea of Martin. According to Weick “emergent change consists of ongoing accommodations, adaptations, and alterations that produce fundamental change without a priori intention to do so” (2000: 237). The planned activities can alter positively or negatively during the implementation phase. A reason for this is that the intended change can be altered by the employees that implement the change in which the individuals interact with each other and their environment. As result, this can create a gap between intended and realized improvements at management level. Weick even goes further by stating that the role of management is to certify change, where he means the emergent change.

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intentions and act with their governing values”. There are often mismatches between individuals espoused and in-use designs. “Most of us are consistently inconsistent in the way we act” (Argyris, 1999: 232). Hence, Argyris states that it is possible for individuals to learn new theories in action. Out of this perspective, it is important for individuals to reflect their theories-in-use and espoused in order to learn.

Both Argyris and Martin see reflection as important. However, there seems to be a difference between the two. Martin seems to stress the need for information flows upward in order to produce better choices. As Martin (2000: 461) states “managers don’t know what they don’t know”. Argyris seems to stress the need for reflection to reduce the discrepancy between their intentions and what they do. This suits Senge’s (2000) idea that two fundamental gaps occur. The first, theories in use may not match espoused theories. Secondly, our theories in use are inadequate given the dynamic nonlinear world in which we must act.

Altogether, it can be stated that learning is very important to close the gap between intended choices and unintended outcomes. Furthermore, to discover and learn from both planned and emergent changes that occur in this nonlinear dynamic world. And to become more aware of and learn from each other’s perceptions. All this is needed to create an evolving system. Therefore, identifying gaps and acquiring knowledge is important for CI.

2.2The PDCA Cycle

The PDCA cycle is an important tool for CI. It is a process in which new norms are merely determined to be challenged, revised, and replaced by improved and new ones (Imai, 2002). Hunze and Aa’s wants and tries to make use of this tool to achieve CI. The question is if this tool is useful. As discussed earlier, improving is learning. Out of this perspective the PDCA cycle needs to be a useful learning tool. It needs to benefit the

learning process. Taking a look at the Shewhart cycle3, which the Deming cycle is based

on, it ends with the phases study and learn (Deming, 1991). This shows that the cycle is invented for learning. Wood and Wood (2005) also claim that the PDCA cycle is a learning cycle. They argued that the power of the cycle is that it leaves room for mistakes.

3

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The power is that it forces us to learn from these mistakes, since it stresses the need to review the implementation and to act in a proper way.

There is also other evidence to assume that the PDCA cycle will benefit learning. Looking at the learning cycle of Dewey (1933) the similarities with the PDCA cycle become clear. The learning process consists of four elements: discovery, invention, production, and generalization. Learning starts with discovering the gaps between current state and desired state. After that, invention takes place where the solution to close the gap will be invented. The final steps include implementing the solution and generalizing the solution. Generalization means drawing conclusions of the implementation and use this knowledge in other relevant situations. Taking a look at the PDCA cycle, the steps mean according to Imai (2002): (1) Plan - create a plan aimed at improving existing practices with the use of statistics. (2) Do - implement the plan. (3) Check - analyse if the desired improvement has been achieved. (4) Act - if the experiment has been successful, ensure that the new norm becomes the standard and not the challenged norm.

Here, the similarity is clear. It is about identifying and closing gaps in order to reach the desired future state. To become more conscious about the solutions created and actions taken. The check and act phases are helpful to discover the emergent changes or to discover the differences between the theories- in-use and espoused theories. Moreover, it can help to create better choices, which are stressed to be of great importance by Martin. As Argyris (1999) states, we rarely reflect on what we take for granted. The PDCA cycle can prevent this by helping individuals in the organization to become more conscious about their routines.

Since the PDCA cycle and the process of learning have been clarified, it is possible to provide an answer to the second question in the beginning of this chapter. The PDCA cycle is important for learning given that it forces us to learn in a structured way. If we use it properly it will prevent us from implementing actions without studying and learning what the consequences are. Furthermore, it helps to learn continuously, given that the cycle keeps on rolling to a higher level. In other words, the PDCA cycle is crucial for continuous learning and thus improving. To reflect and become conscious about what actually happened.

2.2.1 How to use Learning and PDCA?

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PDCA cycle will take the most prominent role in this thesis. The theories-in-use and

espoused theories are also useful, but will remain more at the background. Nevertheless,

sometimes there will be referred to this theory.

Although, the relation between learning and the role of PDCA cycle in the learning process has been discussed, this information only does not really help to improve learning or changing in this organization. In order to do this, it is crucial to answer the remaining question of this chapter: Which theories (elements) in literature are supposed to benefit

CI and what requirements can be made? Crucial elements in literature that are supposed

to benefit learning and CI are therefore needed. However, as stated before, changing is learning. But, do elements that benefit change also benefit learning? This might be true and I believe it surely is for a great part. Hence, it will also result in the fact that some elements that will be discussed might not seem to be crucial and benefit learning in the first place.

At first, the final part of this chapter will discuss readiness for CI. Secondly, elements that match a single phase of the plan-do-check-act cycle will be discussed sequentially. Finally, this chapter ends with a table and will shortly discuss the elements that are supposed to benefit CI in literature.

2.3Create Readiness For CI

Cummings and Worley (2005) state that motivating change is important in order to convince people to change. The elements that will be discussed in this part are: the establishment of a sense of urgency, the importance of the vision, role of communication, participation, active listening, and dialogue. All of these are hard to ascribe to a single phase of the PDCA cycle. This will become more clear after reading this chapter, because many times there will be referred to this phase. Nevertheless, they are important and can be seen as elements that create readiness among employees for CI. The upcoming elements are supposed in literature to create readiness for change CI.

2.3.1 Establish a sense of urgency

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organization, in order to change (Cummings & Worley, 2005). Hirschhorn (2000) states that a crisis is needed for the collapse of a moral order. “People impute to an existing structure a moral meaning - the sense that the structure embodies principles of justice and fairness” (Hirschhorn, 2000). People will not relinquish this easily unless there is a crises where people feel uncertain about the organization its future. Because Hunze and Aa’s is not a profit making organization dealing with heavy competition, it is hard to create a sense of urgency, because they do not have to deal with market pressures. Only the government can decide to choose another system to manage water, however, there is not a real pressure for water boards to believe that this will happen at this moment.

A possibility to deal with this, is to create a virtual crisis. This crisis is based on a psychodynamic conception of passion. “Personal passion and its accompanying sense of urgency are build upon a feeling that the individual lacks something profound, that he or she is incomplete” (Hirschhorn, 2000). When this passion is shared by a dominant coalition it can create a drive to change. Imai (2001: 92) provides the next example:

“We’ve walked practically all our lives, repeating the same motion over and over again. It’s an extremely monotonous movement, but there are people such as the Olympic athletes who are intensely devoted to walking faster than anyone has ever walked before. […] Some jobs can be very monotonous, but if we can give workers a sense of mission or goal to aim at, interest can be maintained even in a monotonous job”.

From this point of view, the runner can be seen as a person who creates his own virtual crisis in order to improve his running capabilities. At Hunze and Aa’s the drive to improve needs to be created. To stimulate this process, feedback can be useful. This can help to trigger people to think about their performance and how they can improve it (Burnes, 2004). The PDCA cycle can be helpful to challenge and discover opportunities, which can be seen as new impulses of passion.

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Deming’s (1991) opinion, who sees reward systems as an obstruction instead of a way to improve the system.

This topic is hard to describe and not to mention how the reward system should look like. Though, it needs to be mentioned given that it can be a useful tool in change. According to Lawler (2000) it is not an option to ignore the reward system in change processes, because it can help to create readiness for change by rewarding desired behaviour. Moreover, rewarding can be both monetary as well as nonmonetary. Nonmonetary rewards are recognition from peers or praise from a supervisor.

Besides, the intrinsic reward can be of great importance. Ledford and Heneman (2000) describe intrinsic rewards as internally rewarding experiences, such as a feeling of accomplishment, that derive from behaviour such as performing on the job. Job design approaches can stimulate intrinsic motivation. This is closely related to the passion described above, which also aims at intrinsic motivation.

R1.Everybody knows the reason why CI has been introduced. R2.Employees know what benefits can be gained as result of CI.

2.3.2 The importance of the vision

According to Kotter (1996) undercommunicating the vision by a factor of 10 (100 or even 1000) times can result in a failing change effort. “The vision, like the beacon, should shine clearly for everyone in the organization to see, however, so that they can all know where they are heading for, and use it to judge the appropriateness of their actions” (Burnes, 2004: 464). The vision of the future is the conception by a company’s management team of an ideal future state for their organization (Burnes, 2004). Collin and Porras (1997) suggest that compelling visions have two components: (1) a relatively stable core ideology that describes the organization’s core values and purpose, and (2) a strong bold vision of the organization’s future which identifies specific goals and changes. Armenakis et al. (1993) claim that it is important to stress the discrepancy between the desired state and the present state. This should be part of the change readiness message in order to create change readiness.

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claims that the vision can be either negative or positive, which means it is based on fear or passion. The first, will lead to short term changes. The latter is positive and is the source for long-term learning and growth. Thus, the vision is needed to create a passion for employees during CI. This aligns the words of Hirschhorn in the urgency part. Out of this, the vision can be seen as a virtual crisis.

Moreover, the vision does also provide the direction for learning. Kotter (2005) claims that a clear vision can help employees to make better trade-offs. The vision must be clear to all individuals or the change might result far different from what was intended or even fail (Weaver& Farrell, 1997; Kotter, 1995).

Besides, Senge (1990) claims that a shared vision is needed. The true content of a shared vision cannot be dictated. It evolves over time from a coherent process of reflection and conversation (Senge, 1994). Senge (1990) takes a post-modernistic view in the realization of the vision. He states that the vision can be powerful, if individuals really believe they can change towards and shape their future. Change should not solely be seen as a reaction to something, in contrast, it should also be seen as something we can create ourselves as result of our own actions.

R3.Everybody knows what the vision is.

2.3.3 Communication

Communication is an element that almost, if not always, concerns every other element here. Coch and French (1948) state that the resistance to change can be taken away by the use of clear communication about the reason for change. Cummings and Worley (2005: 159) argue that “people resist change when they are uncertain about its consequences”. Lack of adequate communication will lead to rumours and anxiety among employees (Burnes, 2004; Cummings & Worley, 2005). When things are unclear, individuals will create their own reality. Therefore, Atkinson (2005) suggest that it is important to communicate the right reality to people. Pinto (2007) states that a project will succeed or fail by the communication and maintaining strong contacts with stakeholders. “If they know nothing about what you are doing, they assume you are doing nothing” (Pinto, 2007: 121).

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many messages are blasted out of headquarters, it will never be enough” (Larkin & Larkin, 2005). Besides, people earlier adopt information from unofficial sources than official sources (Burnes, 2004). Therefore, Larkin and Larkin (2005) claim face-to-face communication is needed next to formal communication. Formal communication is needed to create awareness. Face-to-face communication is needed to change peoples behaviour and overcoming resistance to change. This suits Burnes (2004) opinion, that much communication is needed in different ways.

In addition to this, to create willingness for change it is vital to create an effective two-way flow of communication (Burnes, 2004). Moreover, McMurray and Rosenke (2005) stress the importance of the presentation of information. It needs to be understandable for its audience. Besides, the terms used are important. Frahm & Brown (2007) claim people prefer “continuous improvement” more than “change”, because the latter seems to be associated with negative feelings. Altogether, clear and different ways of communication are needed to creating willingness to change.

R4.The vision and urgency behind CI are clear to all employees because it is communicated to them several times in different ways.

R5.Employees are aware of CI efforts at other departments because it is communicated to them.

2.3.4 Participation

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the change. In this way, it is possible for individuals to share knowledge. According to Nonaka (1991) knowledge always starts with the individual. Therefore, it is the purpose to get this individual knowledge into the organization. This perspective stresses the importance of participation in order to learn from each other.

R6.Employees are satisfied about their level of involvement during CI.

2.3.5 Active listening

Bennis (2000) states that “new leaders will have, not the loudest voice, but the most attentive ear”. Cummings and Worley (2005) claim that active listening is very important. Employees will be less defensive and are more willing to share fears and perceptions if they have the idea that the person managing change is interested in people and willing to listen to them.

Considering the choice cascade of Martin (2000) it can be concluded that the information flow from the frontline is very important. This information is needed to close gaps between the decisions made at the top and the actions made at the frontline. Listening is important to attain information on which new steering policies can be made and new opportunities can be discovered. In this way, active listening can provide new impulses for the plan stage or important information about the continuity of improvement efforts. It is crucial when you want to discover emergent elements. It is the task of the manager to gather insights and intuitions of employees and communicate it throughout the organization (Nonaka, 1991). Listening, therefore, can help to gain knowledge.

However, listening is a difficult process. Due to the fact that we take listening for granted it is also a very unconsciousness process (Weaver and Farrell, 1997). They claim that three steps are important for active listening. (1) Sensing, using all of your senses to take information. (2) Interpreting, evaluate the meaning of the information. (3) Checking, reflect on what you have heard to gain mutual understanding about a message. Another point to keep in mind is that people have the tendency to listen to the information they are seeking for (Argyris, 1993). As a result, people might not notice important information.

R7.Employees have the idea that the manager listens to them.

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2.3.6 Facilitate Dialogue

Frahm and Brown (2007) suggest that dialogue can increase receptiveness to change. Senge (1993) argues that individuals create meaning to how we perceive the world. All these individual meanings lead to the fragmentation of thought. Dialogue is a strategy that helps individuals to step back from their way of thinking that results in this fragmentation. The aim of dialogue is to reveal the incoherence in our collective thought (Senge, 1990). According to Weick (2000) dialogue is important for people to discover what is on their mind.

To create dialogue, “it is crucial to establish two-way communication, encouraging your audience to interact and keep up a constant dialogue” (Croft & Cochrane, 2005). Important is that people see each other as colleagues (Senge, 1990). Senge stresses that it is important that you see your colleague as a person with a different opinion and not as your enemy. Nevertheless, it will be difficult for a manager to dialogue with subordinates. This is because the effective leader needs to dialogue in the style of the employee (McMurray and Rosenke, 2005).

According to Senge (1990) dialogue is not about winning. This is why it adds value to learning, because it helps to overcome defensive routines. According to Argyris (1993) defensive routines are aimed at winning and therefore block the learning process.

R9.Employees are given the opportunity to dialogue.

R10. Employees reveal no incoherence of thoughts with regard to CI.

2.4Key Elements: Plan

Before implementing a certain improvement, a plan needs to be created. In this phase, goal setting, creating a performance measurement system, managing the expectations, and create a sense of responsibility are crucial and will be discussed.

2.4.1 Goal setting

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locally by people immersed in continual learning this chance is likely to decrease. This process will help people to discover how they can fit into the larger system. Moreover, it is important that people are responsible for the action they like. As Senge (2000) argues, aspiration is needed, given that individuals learn better when they are engaged in things that matters to them. Therefore, it is important that employees also participate in the process of goal setting.

Furthermore, the goal needs to be realistic. This is related to the amount of resources that is available in order to realize the improvement. When a particular resource is unavailable, it is hard to change. This will demotivate individuals to improve as will be explained in section 2.5.1.

R11. Employees know what the goal is and when they have achieved this goal. R12. Employees believe that the goal is realistic.

2.4.2 Create a performance measurement system

In order to provide useful feedback in a later stadium, two activities are important during the plan phase: “selecting the appropriate variables and designing good measures” (Cummings & Worley, 2005: 181). According to Moullin (2004) it is important that the measurement system is focused on CI rather than on a blame culture. The emphasis should not be placed on what went wrong, but on what could have been done better. Blaming will be counterproductive and therefore clear communication about the necessity and use of the measurement system is important.

Atkinson (1994) even states that measuring against previous performance is inadequate. “We need to seek out the best at whatever we do, and compare ourselves with them” (Atkinson, 1994:8). In other words, we need to benchmark ourselves with the best. Nevertheless, I agree that this is a good option, measuring against previous performance remains important. At first, it makes wins visible, which is important to motivate employees as will be explained later. Secondly, there is a possibility that you are the best. To remain the best and to discover the impact of an improvement, you need to measure against previous performance.

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2.4.3 Managing the expectations

Important for the success of change are the expectations of change as perceived by members of the organization, because it will affect their willingness to change. “When members expect success, they are likely to develop greater commitment to the change process and to direct more energy into the constructive behaviours needed to implement it” (Cummings & Worley, 2005). Another important aspect of managing the expectations is communicating the vision. This is the overarching goal; the future the members of the organization aim to achieve. If employees are aware of this future and are aware of the contribution they can make, and might share a passion, then they are more committed to the direction they need to take. It is also crucial that members know and understand what goals they need to achieve.

The most important tool to manage the expectations is communication. Therefore, the part of communication mentioned in the readiness for CI section, is also useful here. Moreover, managing the expectations has even much to do with readiness for CI. Clear communication, facilitating dialogue, and sharing realities are therefore crucial. The difference between these two phases is that during the plan phase the improvement action is more visible and concrete, whereas the readiness for CI phase is at a more abstract level. The difference is that during readiness for CI there is a vision and that during managing the expectation there is a plan, a step toward the vision.

R15. Employees are aware about their role during CI and how it contributes to the realization of the vision.

2.4.4 Create a sense of responsibility

Herzberg (2003) states that increased responsibility leads to higher motivation. From this perspective it seems useful to make employees responsible for a certain CI effort. Taking the words of Senge into account, it is also important that people are responsible for the things that matters them in order to make use of their aspiration. This also fits the ideas of Ledford and Heneman, discussed earlier, about the intrinsic motivation of employees.

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2.5Key Elements: Do

In the do phase the plan will be implemented. To achieve this, elements that benefit this process are needed. These elements are: providing resources, support of management, give change priority, and motivating employees.

2.5.1 Provide resources

“Project resources refer to all personnel and material resources necessary to successfully accomplish project objectives” (Pinto, 2007). According to Cummings and Worley (2005) a part of goal clarification also requires that managers and employees negotiate about the resources necessary to achieve the goal. It is important to think about this during the planning phase, because it is useless to implement improvements if there are not enough resources available. If this is to occur, the CI efforts are doomed to fail. “In an organization with 100 employees, at least two dozen must go far beyond the normal call of duty to produce a significant change. In a firm of 100,000 the same might require 15,000 or more” (Kotter, 1996: 35).

R17. Employees have enough resources to carry out their CI efforts.

2.5.2 Give change priority

Pinto (2007) states that people will adopt a low level of commitment to a project, if they perceive that they are working on a project with low priority. Kotter (1995) suggests that sometimes you need to pressure people to plan change in order to level up the urgency for change. As a result, it becomes clear to people that major change takes a long term and keeps them focused on change. Therefore, it is important that people know that change has high priority so they will not solely continue their regular work.

R18. Employees know that CI has high priority and they do not focus on regular work solely.

2.5.3 Support of management

CONTINUOUS IMPROVEMENT FROM A CHANGE MANAGEMENT PERSPECTIVE AT A WATER BOARD