Lead the change : how can efficient change management leverage the result of informational system transformation

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Lead the Change

- How can efficient change management leverage the result

of informational system transformation

MBA Company Project

Report by: Maya Kulyabina (11931728) kulyabina.maya@gmail.com

Universiteit van Amsterdam, MBA Fulltime 2017-2018 Supervisor: Dr. Richard Ronay

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ABSTRACT / EXECUTIVE SUMMARY

In my thesis I carry out a study on the change implementation process applied to a particular project on informational system transformation and use those results to shape the change strategy within the company to come up with recommendations on the change process improvement. I research theoretical study of change communication, the methods and processes of transformation and degree of their influence via applying “Leading Change: Why Transformation Efforts Fail” J.P. Kotter framework with its limitations to assess the effectiveness of the change management at TIP Trailer Service B.V. company, as well as apply knowledge I got from the MBA program. I come up with some recommendations to enhance the effectiveness of change management methodologies utilized.

As a result of the research I provide a prescription on strategic vision, transformational acts and influence methodology to be used for a particular type of change to leverage the chance of successful outcome. To describe the results and use those to make predictions moving forward I also focus on the importance on organizational change resistance phenomena. As a recommendation on how to improve the successful change outcome such factors as employees’ motivators to change, corporate culture, ways of making up teams and types of leadership conducive to change mentality are considered.

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I. INTRODUCTION

"There's a question that comes up very commonly: What's going to change in the next five to 10 years? - I very rarely get asked what's not going to change in the next 5 to 10 years."

Jeff Bezos

In the modern world people and organizations face the challenge of constant every day change. A lot of products in a supermarket have a label “new” as clients are constantly looking for fresh ideas and originality. Responding to this demand of a modern world is hard not only because being competitive means constant innovation, but also because applying those innovative approaches to the everyday working process requires employee’s adaptability to highly changing environment.

It is well known that genuinely people are reluctant to change. For any organization who strives to survive in the global world it is an everyday task to create a corporate culture and employees’ mentality which responds to the actual market need or even sets the pace for the industry. In the modern world ability to change means ability to stay flexible and meet or exceed customer’s expectations. The task of a manager today is to find a right leadership style and create an environment where people would feel comfortable enough to come across modifications and apply them willingly and effectively.

This thesis discusses the process of leading change and continuous change approach in the organization and investigates how the result of organizational change is dependent on various internal company factors. The main items examined are the corporate culture, actions and roles undertaken by managers in the transformational period and employees’ reluctance to change. The research is observing change management strategy, actions of managers in a period of change,

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5 mediums of communication used, frequency of communication and methods utilized to influence employees to create positive perception of change process.

The thesis focuses on leading the change process in a transformation period at TIP Trailer Services B.V. (TIP), where the empirical analysis and framework application was conducted for 5 months observation. TIP provides transportation and logistics customers with truck leasing, rental, maintenance and repair solutions. The company head office is located in Amsterdam, the Netherlands, and since 2017 it has started the process of creating and improving its information technology and operational system called Matrix, i.e. is currently facing transformation period. TIP’s corporate culture, leadership style and change methodologies are inspected to analyze the effectiveness of applied change approaches. As a result of the research, recommendations to increase the efficiency of change management are provided. The question on how to make employees motivated and more involved into the change process in the company is responded. The thesis holds some limitations and criticism to the methodology used.

To respond to the designated questions and analysis as well as make an empirical research of this topic I base my research on “Leading Change: Why Transformation Efforts Fail” J.P. Kotter framework (Harvard Business Review on Change, Harvard Business School Press, Boston, 1995). This framework provides the most efficient, according to Kotter, way to implement changes in an organization via implementing consecutive eight transformational stages. In addition to the Kotter framework recommendations, I touch upon the combined role of context and personality in predicting employees’ reactions to organizational changes. This topic is covered to broaden the comprehension of organisational change from an employee perspective as it focuses on both personality and context to consider potential clauses of personal resistance. This findings are based on “”Personality, context, and resistance to organizational change” research offered by S. Oreg (University of Haifa, Israel, 2006).

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The Research question

How can efficient change management leverage the result of informational system transformation?

I. LITERATURE REVIEW

The underlying theories for the framework are reviewed to provide the literature surrounding to the theme. In the literature review section, I elaborate on the necessity of change management in the organization and the utility of being flexible towards highly changing environment; describe the difference in meaning between change management and change leadership and importance of the latter; focus on the change communication within an organization.

A. Change management and change leadership

“Change management has been defined as “the process of continually renewing an organization’s direction, structure, and capabilities to serve the ever-changing needs of external and internal customers” (Moran and Brightman, 2001). Managing the process of change requires directed and long-term development of both managers and organizations. Change is an on-going process. “While change must be well managed — it must be planned, organized, directed and controlled — it also requires effective leadership to introduce change successfully: it is leadership that makes the difference” (Grill, 2003). Change management is the development of the company's new ideas or behaviors. The activity of the organization is a constant reaction to the need for changes coming from both the internal and external environment

Due to the importance of organizational change, its management is becoming a highly required managerial skill (Senior, 2002). Against a backdrop of increasing globalization, deregulation, the rapid pace of technological innovation, a growing knowledge workforce, and shifting social and demographic trends, few

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7 would dispute that the primary task of management today is the leadership of organisational change (Stace and Dunphy, 1996). The importance for any organization to understand and plan where it wants to be in the future means managing the changes required to getting there; that proves the connection of organizational change and organizational strategy (Burnes, 2004). The driving forces of organizational change exist both within and outside the organization. External forces are formed in all sectors of the external environment (consumers, competitors, technology, national economy, international sphere). Internal drivers of change arise from the activities of the organization itself and the management decisions made (growth strategy, workers' demands, trade unions, low performance indicators).

B. Why should the organization change?

Any organization is operating under pressure from the external world. Management of change is accepted as a necessity in order to survive and succeed in today’s highly competitive and continuously evolving environment (Luecke, 2003). Surroundings might be permanent (for example, on the part of bureaucratic organizations), but can be volatile, uncertain, when an organization needs to sell its goods or services in various sectors. Uncertainty is exacerbated by the fact that each of the sectors of the external environment constantly changes its requirements to the products of the organization, especially if the organization has to operate in competitive markets. Adaptation to a changing external environment requires from the management an organization of flexibility, which is expressed in changes relating primarily to technology, and often the structure and purpose of the organization.

It is now argued that it is of vital importance to undergo continuous change (Burnes, 2004). As per Kotter, no business survives over the long term if it can’t reinvent itself (Kotter, 1995). Obviously, only an organization capable of quickly capturing and using modern knowledge and technologies, applying cultural innovations, introducing new forms of work with personnel and constantly improving the ways of working with information will be able to maintain and

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8 develop relations with the institutional environment, counteract competitors, maintain partnerships and satisfy the requirements of the public. The fulfilment of all the conditions for the survival of an organization is necessarily related to its ability to constantly change.

C. Corporate culture contributing to change communication

To cope with the complexity and uncertainty of the business world it is suggested that organizations need to become open learning systems where strategy development and change emerges from the way a company as a whole acquires, interprets and processes information about the environment (Dunphy and Stace, 1993). In other words, organizational climate and culture should contribute to creating the atmosphere where people are willing to share and come up with innovative ideas; employees can speak openly about their concerns so that only the best ideas are settled down; human values are in favour. The approach stresses a promotion of “extensive and in-depth understanding of strategy, structure, systems, people, style and culture, and how these can function either as sources of inertia that can block change, or alternatively, as levers to encourage an effective change process” (Burnes, 1996).

The attention-based view (ABV) (Ocasio, 1997) which elaborates on channels within the organization to communicate change has highlighted the role of organizational attention in strategic decision making and adaptation - key topics in strategy research (Ocasio, Laamanen, Vaara, 2017). ABV defines a firm’s strategy as the pattern of organizational attention and focus a firm on a set of problems, opportunities, and threats — and on a particular set of action alternatives — skills, routines, programs, projects, and procedures (Ocasio, 1997). Organizational attention is often measured in terms of communication through official texts, letters to shareholders (Cho, Hambrick, 2006), minutes of meetings of the board of directors and observations of informal communications. According to Ocasio, Laamanen and Vaara, acts of communication have most often been seen as measures of relative attention allocation instead of acts themselves; however they might also influence the dynamics of organizational attention; actors of the change

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9 process can engage with organizational and environmental issues (Ocasio, Laamanen, Vaara, 2017).

This observation stresses the importance of employee’s ability to respond to change communication. The agreeable perception of change which can further influence the result of change management initiatives is more likely to appear in the company where employees perceive strong human relations values in their division (Jones, Jimmieson, Griffiths, 2005). Those employees also reported higher levels of readiness for change at pre‐implementation which, in turn, predicted further system usage (Jones, Jimmieson, Griffiths, 2005).

In terms of an inference to observe all the factors influencing the change process in an organization, we can look at the Model of Organizational change and Performance, Ex. 1 (Warner, Litwin, 1992). The model displays the interconnections between various factors inside and outside the organization; as per Warner and Litwin, at a large scale leadership, mission and strategy have more weight in a change process (Warner, Litwin, 1992). Culture change must be planned and aligned with strategy and leader behaviour (Warner, Litwin, 1992).

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Ex. 1 A Causal Model of Organizational Performance and Change, Journal of Management 1992; 18; 523 W. Warner Burke and George H. Litwin

II. WHY DOES ORGANIZATIONAL CHANGE FAIL?

Even though change is a vital part of a company success, a few of these corporate change efforts have been very successful, a few have been utter failures; most fall somewhere in between, with a distinct tilt toward the lower end of the scale (Kotter, 1995). A lot of companies face difficulties while implementing change. Balogun and Hope Hailey (2004) report a failure rate of around 70 per cent of all change programs initiated. The widespread difficulties have at least one common root: managers and employees perceive change differently. Both groups

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11 know that vision and leadership drive successful change, but far too few leaders recognize the ways in which individuals commit to change to bring it about (Strebel, 1996). To close the gap, managers at all levels must learn to see things differently. They must put themselves in their employees’ shoes to understand how change looks from that perspective (Strebel, 1996). As per Feldman, the potential for the on-going change in organizational routines is intrinsic to organizational routines so long as human agents perform them. “People will tend to breathe life into the routines they engage in because of the relationship between their behaviour and their plans and ideals” (Feldman, 2000). So, effect of change is likely to become successful as long as it is treated less formally and has correlation with the personal goals of people imposed to implement them.

In the following section I use TIP Trailer Services B.V. informational system change example along with providing some background information on the company and trends of the sector it is operating. To develop on the change failures and means to avoid them, I apply “Leading Change: Why Transformation Efforts Fail” framework of J.P. Kotter (1995).

III. ORGANIZATION AND MARKET REVIEW

The purpose of this section is to give background information on the company performance and market position and to expand the view of the framework in connection to TIP Trailer Services B.V.

A. Company Background

Transport International Pool (TIP) Trailer Services B.V. is a trailer rental, leasing and sales company founded in 1957. The company's portfolio measures 64,000 in their fleet; it is an industry leader with one of the largest and most diverse trailer fleets in Europe and Canada. In addition to maintaining TIP own

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12 fleet, the company also provides maintenance, repair and other value added services for circa 45,000 equivalent units. TIP began as “Container Leasing, Inc.” in September 12, 1957, so these days it is celebrating 50 years at the market. Today the company operating income is 49 million euros. TIP employs 1700 people in 16 countries in Europe and Canada.

B. Corporate values

One of the company values, along with integrity, being passionate, respectful and the others (Appendix 1), is innovation and change, which enables the company to “drive and shape the future” (TIP Trailer Services Annual Report 2017). “We see the bigger picture, employing people with vision, who embrace new ideas and have a clear picture of the future; by challenging the norm we can anticipate our customers’ changing needs with new innovative products and services” (P. Beadle, COO, TIP Trailer Services Annual Report 2017). The concept of constant transformation and looking for new ways of optimization and business process development is one of strategic core value. The mission of the company also holds the importance of continuous improvement philosophy stressing progressive approach: “We provide the most complete and innovative solutions for trailer equipment covering the full life cycle and thereby deliver value for our customers” (P. Beadle, COO, TIP Trailer Services Annual Report 2017).

C. Market and trends

The worldwide market for trailers is valued by Business Research Company at 25.3 billion euros in 2017. Asia-Pacific is the largest geographic region accounting for $9.8 billion of that total and China the leading country buying $5.1 billion worth of trailers. Europe is also a major trailer market with trailer registrations exceeding 190,000 in Western Europe in 2017 (www.tipeurope.com).

As for the market trends, according to CLEAR International, the demand for trailers in Western Europe will drop by 4% in 2018 and decline further in 2019,

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13 contributing to a 12% total reduction in the market over two years (www.tipeurope.com). The reason behind is transport companies having rebuilt their trailer fleets to keep up with more buoyant demand after a slowdown triggered by the global financial crisis in 2008. This fact proves that TIP is facing increased competition and has to constantly come up with innovative solutions and proactive approaches to keep afloat (www.tipeurope.com).

D. Information technology and the strategy of growth. Business digitisation

The success of TIP strategy is built upon growing acquisitions and fleet investment, maintenance and repair on the timely delivery and improving the functionality of information technology systems to support everyday operational processes. IT applications to support back office functions have been built within the last few years and have moved many of applications to a cloud based environment. As for the benefits this policy brought, that increased the flexibility to deploy various applications at a speed of growth.

By implementing those changes, TIP is meeting the expectations of customers and the market, as according to the latest independent industry research (Berger, 2018) the transport industry will continue to change towards a digital platform ecosystem (Exhibit 2).

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Ex. 2 Trends in the truck & trailer market, R. Berger, Market Study, Munich, August 2018

TIP is focusing on the core business applications aiming to enhance functionality for leasing, rental and workshop management. The project called ‘Matrix’ was started to drive further digitisation in operational processes. Phase-I of this project, which went live at the end of 2017, is focused on workshop and maintenance management. The continuous objectives of the project are increasing the speed and quality of customer service and sales, driving productivity and efficiency of the operational back-up office process, providing employees with visible intuitive fast reaction digital solutions to improve business intelligence; simplifying integration of acquisitions, positioning TIP to take advantage of the Internet of Things and predictive maintenance for trailers in the future. As a result, the company is aiming at becoming more agile for new product implementation and developments.

The business of the company and the market it is operating in is quite stable. However the digital revolution happening in the last few decades require the company to follow the required market trend of automating the processes from the moment a client is calling to request the rates till collecting the money for the invoice and getting feedback on the business performance. As it can be seen in many transportation companies which were trying to systematize and automate the

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15 working process, different divisions and departments apply their own digital platforms. Those platforms evolve with time; however there is not much coordination among them, which leads to diminished data analysis efficiency, lack of control over performance measurements as well as inability of management to make deliberated decisions due to absence of integrate business picture. Digitization being implemented locally had its benefits anyway. For example, team leaders and employees at workshops were supplied with tablets instead of traditional software installed at their computer desks which increased mobility and helped to improve the quality of service, shortening the time a specialist spends on a decision making process.

A new vision of business operations was created based on the improvements digital revolution brought to the everyday working life; that implied moving to a new software platform called MATRIX. Information system transformation has a goal of making the day-to-day operating processes transparent, simplifying data collection and creating one basis for decision making. The unified platform would consist of different modules covering various business processes.

TIP is operating in a highly competitive environment. It strives to keep the industry leading position by means of progressive applying informational technologies and digital solutions, which is inevitable without going through a period of change.

IV. THE FRAMEWORK APPLICATION

A. What is the framework about

In this section I concentrate on the necessity of a particular framework to be applied to leverage the successful outcome of the change management policy. The question of applying the change approach adequate to the business needs is crucial for the company to plan the change strategy so to keep the competitive edge and sound market position in a period of uncertainty.

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16 In his research, John Kotter provides a deeper look into the reasons of change failures and possible consequences of suffering a setback to implement concrete actions in a change process. Kotter research is based on the example of more than 100 companies from different sectors and countries. Kotter comes up with 8 steps on a way to transform the organization which is recommended to be implemented step by step (Kotter, 1995). Those stages are shown in Exhibit 3 and described further in alignment with TIP company project called Matrix, the goal of which is to eliminate the number of non-value adding activities along the customer journey, make the database up-to-date, responsive and highly adaptable to the increasing customer needs; simplify the process of searching the right customer details in the operational system etc.

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Ex. 3 “Leading Change: Why Transformation Efforts Fail” J.P. Kotter framework (Harvard Business Review on Change, Harvard Business School Press, Boston, 1995)

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18 Diving into the framework, I elaborate on stages and actions to be undertaken to improve the quality of change management process at TIP through mentioning the potential pitfalls at each of 8 stages Kotter identifies. I stress the consequences of not following the recommended stages, which could lead or led to failures in change initiatives. Along the analysis as well as at the end of it I provide recommendations.

B.1. Establishing a sense of urgency

As per the Kotter framework, to transform the organization successfully, a manager has to convince employees that change is necessary and inevitable. It is crucial to announce and formulate the problem so to engage people into the process of change; if the employees do not have the motivation to change, they will not cope with it (Kotter, 1995). Show people a problem, make sure they personally perceive it and understand the need for change. It might seem to be a straightforward non complicated task, but Kotter argues that more than 50% of the companies whose activities he studied during his research failed at this stage (Kotter, 1995). That happens partly because managers fail to estimate the tasks assigned due to lack of patience. To avoid possible risks managers do not conduct themselves actively as they are afraid of being blamed for the crisis in the organization happening due to their stirring change actions. That is happening because the change is introduced by managers, who are intended to avoid risks, while instead changes should be guided by forward looking leaders, who are better at changing mind-sets and behaviours. Without a competent leader, the first step is almost impossible.

One of the symptoms that the company is about to change is a bad result of its performance. At the first stage this is good. The loss of money attracts people's attention and becomes an excellent motivation to change, but under such conditions the company initially has fewer resources (Kotter, 1995). On the other hand, if everything looks good in the company and the business is working normally, then it will be more difficult to move things. But you will have more resources. How to understand when you can proceed to the second stage? Kotter

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19 suggests that when about 75% of company executives admit that changes are necessary it is the right time for change. The main mistake here is to underestimate the importance of the first step and its complexity as well as convince insufficient number of employees (Kotter, 1995).

At TIP the urge of organizational change is covered on a monthly basis and townhall meetings, where Chief Executive Office (CEO) and Chief Operating Officer (COO) share the ideas and prospects of the future of the company with the personal. Regular overview of the market situation done by Sales and Marketing Managers as well as representatives from various regions enables to create a sense of urgency when required if the prosperity of the company is under risk. Convincing people on time to focus on the improvement process, which usually implies change, ensures common vision. Matrix is a mandatory topic of the agenda which provides the opportunity to collate market changes to adequate updates and modules in the system. The connection between trends in the outside world and the activities within the organization helps to understand the purpose of change. Continuous updates on the company performance and thier connection to everyday company business helps to convince managers and their subordinates in the need of becoming agile and flexible for the future benefits.

Overall, informing employees on change call is affirmative. However, more information could be visualised in the office on the progress of change management implementation stages. That could help the employees not particularly connected to a specific system change to stay on track of the activities happening in various departments and share the urgency of the task. The responsibility for the update materials preparation could be imposed to Sales and Marketing department, people engaged into the process of change or representatives from various divisions to build the big strategic picture on the coming future.

B.2. Creating a powerful enough guiding coalition

To enhance the results of change a strong, competent team of followers with leadership skills should be created (Kotter, 1995). Change begins with just a few people, and afterwards, if the change is successful, the team grows. In almost

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20 all cases that Kotter observed, this team, at least initially, does not include the entire management of the company. But nevertheless, it is always a team that works together well, if allocated with enough power, resources and information.

At TIP Matrix change management team is sponsored by COO, who is setting the strategic pace for the coming improvement and strategy. Formal and informal leadership of the process is held by European Strategic Projects Director. The professionals at these executive positions are in the company for 25 years or more, which ensures deep understanding of the company values, historical development and systems’ specifications, actual operational process pitfalls and needs.

While the project is led by specialists who are working for the company for a long time, the actual feedback on changes implemented and business needs is expressed by representatives from various regions - assigned Subject Matter Experts (SMEs). European unit consists of 5 divisions: UK and Ireland, Benelux (The Netherlands, Belgium and Luxemburg), MED (Spain, Italy, France), CEE (Austria, Germany, Eastern Europe countries) and Nordic (Denmark, Norway, Sweden and Finland), each having an SME. Geographical separation implicates similarities in company vision due to sameness of customer specifics and demands, employee’s mentality and business law regulations in particular regions. SMEs represent various departments, such as Operations, Finance, and Customer Service or sometimes can act as a country lead (Italy). Participation in change initiatives is usually delegated to specialists with the functional role. Thus a diversified team for the change project is formed. The variability in SMEs background provides a holistic approach to understanding change specifics. An ability to get a feedback on the change initiative from different business angles at a trial stage ensures minimizing mistakes at the implementation phase.

To enhance the professionalism of the team allocated to the transformational project a few SMEs could be drawn from a group that is in no way connected to the affected processes so to have a new perspective on the common processes. An SME role should be established in a company as a role of a “creative thinker”, i.e. a person who can encourage the group to look at a problem from a different perspective or challenge others to break free of the assumptions that

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21 bind their thinking. SME should preferably have a history of contributing constructively to some other change initiatives so to ensure building a stained attitude towards the change.

The head of the Matrix project team is represented by key stakeholders — those who have a very real and direct interest in improving the process. They are apt to be very knowledgeable in the details of the process through long experience. However those with the greatest vested interest can sometimes face difficulties in breaking free of the assumptions and routines that drive their current practices. In that case stability might jeopardize flexibility and innovation. Therefore, it is useful to involve more specialists who can offer an independent view – “creative thinker”.

One more argument in favour of inviting “creative thinkers” to Matrix is connected with the response of project team members. In the beginning it is crucial to create a desire in people’s mind to proceed with changes. To ensure the buy-in, the change should be led by people truly believing in the necessity and urgency of it in the near future. Without the possibility to work in an autonomous environment specialists relatively new to the company will tend to conceal their personal opinion to avoid possible negative consequences to their image. Thus the challenge of the successful change process is to create steady atmosphere for SMEs to feel comfortable to share negative or critical feedback on the system implementation. Team work plays deterministic role; change project team should better not have any hierarchy, but be organized in an agile, self-managed way. The way communication is going through is proposed in Dickinson and McIntyre team work model in Exhibit 4 (Dickinson and McIntyre, 1997).

The model states that explanation of what is expected from the team members, listening to the concerns, helping with mistake corrections, helping others, who cannot perform the task, and verifying information prior to reporting it to the group can help to form the team and contribute to creating productive cooperation along different stages of mutual work. Each component of the model is commented in detail in Appendix 2.

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Ex. 4 The Dickinson and McIntyre teamwork model, Psychology Press, NJ, 1997

The European Strategic Project Director consults SMEs on an on-going basis, before any change or a complete module of the system is introduced. That practice ensures agreement from users on the change implementation and holds a promise of getting commitment on further system usage. This practice helps to encourage change project participation via sharing the responsibility for the outcome. SMEs act as speakers for their countries and information transmitters from Head Office which makes their role respectful, unique and provide an advantage of promotion. The above proves that the group of people assigned to work on a project functions as a team.

B.3. Creating a vision

At this stage the task is to imagine and formulate in a five-minute speech how the future will be different from the present and what needs to be done to achieve this future (Kotter, 1995). The question is how to achieve this vision. As per Kotter, the vision of the future does not occur only based on the analytical review, but also a “little dreaming” (Kotter, 1995). The vision is more emotional than rational and might occur from a single individual (Kotter, 1995). The vision should be simple and clear enough to guide decision making and be flexible to

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23 adapt to changing circumstances. The vision should also provide the ability to respond to various initiatives coming from the employees while the changes are being implemented.

Matrix lacks short and coherent vision. One can find information about the project in slides and on paper; however there is no simple interpretation of the ideas behind the words. Direction of change has ambiguous meaning and the lower the hierarchal level is, the more dispersed is the understanding of the vision. Each module in detail has its benefits; while working on its implementation it becomes clearer for SMEs what role it plays and what benefits brings. However, the advantage of implementing the system overall is quite obscure and is perceived as a long standing unapproachable future.

Matrix should become everyday routine for managers and employees. Benefits of it should be constantly communicated not only at a higher level. So called “ambassadors” of the project could be found within various departments and divisions to link every day activities to how they would look in future. That would simplify the process of change; make it more attractive, comprehensive and clear. As per Kotter, sometimes the first draft comes from a single individual. While the big picture and ambitious idea of a project becomes every day routine, enthusiasts find meaning behind the pathetic words which brings life to phrases and the project starts to live its own tangible life. To make that happen more people should be aware of the details of the coming change so to come up with substantive viewings on the developments.

B.4. Communicating a vision

As per Kotter, “without credible communication and a lot of it, the hearts and minds of the troops are never captured”. Having a clear vision easy to be understood is one part of success. The other part is to make sure that as many employees as possible understand and accept the vision and strategy, clearly enough to make the process of change successful (Kotter, 1995). The great help to leaders in this matter will be the achievements of modern technology as with the help of various kinds of e-mails or advertising brochures and newsletters information will be repeated to the employees on a constant basis. Discussion of

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24 the program of changes at meetings and everyday communication is crucial for change success. Thoughts on the real meaning of the vision during informal meetings will contribute to the change perception.

One of the tools which could help to implement the practice of change statement repetition is a Performance Dialogue (PD), organized on a daily basis within a team. The example of Performance Dialogue Board can be found in Appendix 3. In brief, this tool provides an opportunity for meaningful communication between supervisors and employees about their work and contributions to daily performance. Visualisation of company objectives on a board will attract the attention to the change topic on a daily basis, and provide room for clarifications and asking questions; as a result PDs help employees to speak up and share concerns on the coming changes. For managers PD is a great tool to evaluate and develop staff performance, achieve agreed-upon objectives as well as identify potential high-flyers to lead change initiatives.

Not only words are important, but actions. Role modelling is one of the most powerful tools to get a buy-in form the employees (Kotter, 1995). Representatives of project teams and change project leaders should become an example of adopting a new corporate ideology and culture, live its values and correlate improvements with successful change. While performing an activity, managers should ask and clarify: What is the difference between before and after? How this change contributed to the performance? What processes were improved? How much time do we spent on the same task today? The mistake often committed at this stage as there is lack of examples of a new ideology among management board and there are not enough influential persons in the company. And obviously the initiative can be completely ruined if the change leader’s or manager’s behaviour contradicts to the sense of the change initiative.

At this stage and on forward it might be useful to implement a Key Performance Indicators (KPI) scorecard to track the progress of change implementation as well as implant the culture of continuous improvement. The results of the change process should become visible and clear to understand,

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25 discussing the progress become everyday routine as well as using new lexis get accustomed. Peter Drucker once said “You cannot manage what you cannot measure.”

B.5. Empowering others to act on a vision

As per Kotter, to make the change process effective, change leader should eliminate all possible obstacles to change, so that those who can leverage the change move could work at their best without any impediments. There are often cases when employees are willing to help, they want to achieve a new future, but suddenly they face an obstacle. Often, this phenomena has psychological nature, i.e. is located in the employee’s mind due to natural tendency to be change resistant. In this case manager’s task is to remove this psychological barrier via proper explanations and open discussions.

Does that necessarily mean that at TIP managers can always convince employees to support Matrix and follow the change process? Some studies declare new reasons of change resistance. As per Oreg, resistance is a negative attitude towards change, which includes affective, behavioural, and cognitive components. Oreg study considers both personality and context as potential antecedents of resistance. Oreg claims that “some employees are more likely to experience negative emotions and more likely to act against organizational changes because of their dispositional inclination, independent of the particular nature of the change at hand” (Oreg, 2006). This observation proves inability of all the employees to become successful change followers. However, one of the strongest factors that diminish the stress and change resistance is, as per Oreg, trust in management.

The routes of change denial were observed at Kubler-Ross research “On death and dying” (1969). According to Kubler-Ross change pass “when coping with trauma” consists of a number of stages, among which is a denial, depression, decision and integration (Exhibit 5). Even though comparing organizational change to individual response to traumatic change might me exaggerated, D. Jaffe and C. Scott claim that those stages are applicable to transition in corporate life.

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Ex.5 Kubler-Ross Change Curve, Ku bler-Ross, E. (1969). On death and dying. New York: Macmillan Publishing Company

Matrix change management did not begin with Integration phase. To ensure successful implementation, the involvement of management and staff in the project and leadership support was happening at every stage of the curve, especially at Denial and Fustration phases. It was necessary to empower employees from the early stages of the project and SMEs were helping with that locally. The singularity of Matrix is that it consists of modules, each requiring a separate project management approach. For leaders of the project, SMEs and employees that means going via circles of change curve regularly. If proper communication is done upfront, by the time the Integration begins, employees feel secure and Integration brings new change curve to a new level, involving new stakeholders. Thanks to communication with team members, many of them will already be aware of the planned improvements and will become their supporters. This does not mean that when a new module is introduced the Frustration will be completely avoided, but at least some of the managers and employees will already overcome the Shock

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27 or even Depression stages. So to conclude: communication on Matrix upcoming modules should start in advance to eliminate psychological and natural resistance and is better to be repeated every time a new module of the system is implemented.

As per Kotter, quite often it is not only about psychological obstacles, but those which are “physically” observed. This can be, for example, the structure of a company that interferes with changes. Those pitfalls might create disappointment, rejection and distrust in employees’ minds. The environment in the company should enable the employee to apply their motivation, creativity and skills with no barriers. In any case, the obstacles must be eliminated. If a barrier concerns people, then it is necessary to behave fairly and deal in accordance with the new corporate ideology. At this stage, the mistake is that managers neglect the removal of barriers that subsequently interfere with the changes.

B.6 Planning for and creating short-term wins

The process of change can be long or short, depending on the specifics of the particular project or requirement. However, no matter what type of change is concerned, leaders and managers should as soon as possible create small, short-term victories and achievements and show them to the public (Kotter, 1995). This activity has a power of showing the endeavours and brings visible results to maintain the motivation of employees.

Changing the mind set of employees takes the longest time. Celebrating small achievements help people not give up and proof they are moving in the right direction. For example, it might be useful from the very beginning to divide big goals into smaller accomplishments so to celebrate victories regularly. That is the task of a leader to plan the project and its roadmap at the early stage so to help people reach the targets, and reward them. Small wins help to maintain a sense of involvement that drives change. Absence of such small victories might provoke a drop in the enthusiasm.

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Ex.6 Strategies for Managing Change, Scott, C. D., Jaffe, D. T. (1989). Managing organizational

change: A practical guide for managers. Menlo Park, Calif: Crisp Publications.

At the Exploration phase of Strategies for Managing Change D. Jaffe and C. Scott (Ex.6) model there is a point on short-term goals. At TIP, communication on project progress is done on a regular basis. Along with regular e-mail and town hall communications, TIP developed various means to ensure that employees have sufficient contact with each other. This practice emphasizes management on the principle of “open offices” located near their employees; an "open door" policy facilitates contact between employees at different levels; often held public events in groups and companies, quarterly joint meetings of various departments and regular meetings between the main management and department employees also contribute to communication.

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B.7 Consolidating improvements and producing still more change

After the first success, it is very important to build on it, provoking more changes in systems and organization. Initial success helps the vision become a reality. However, the first success should not be celebrated too early (Kotter, 1995). It is better be used for building on it and enhancing the further change process. Admitting the achievements too early might lead to losing the big vision. If the process of change is not complete, the company will gradually return to its original state, while the process of change and continuous improvement is permanent and should never stop.

Appreciation shown to those who share the vision and act as promoters of new approaches are crucial to keep the change mentality in the organization as well as continue the transformation process. Informal leadership plays sufficient role in turning employees into followers of the initiatives. Those who truly believe into the benefits of the coming amendments will bring to life the values of the coming changes much more efficiently and quickly. Moreover, having the supporters of the initiatives among the shop floor workers (not only at the management board) will enable better understanding and expansion of change in the whole company. People leading change should share the success to engage others. As per Kotter, those who succeed in change could use that credibility to tackle bigger issues. The positive interpretation of achievement should be very clear. The contribution of every employee into the process of change should be connected to the positive result the change brings. That is a creative and constructive work to link the collaboration of every employee to an impact the change process. Transparency and clarity play crucial part.

TIP introduces yearly award to those who exceed the expectation of external or internal customers. The culture of learning and development encourages employees. In 2015, retired Deloitte CEO Barry Salzberg mentioned: “When looking at their career goals, today’s Millennialls are just interested in how a business develops its people”. Improvement through learning at a working place is a new opportunity. Via applying it TIP could ensure loyalty of the newcomers by providing them deeper knowledge and experience in and outside the organization. Giving TIP

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30 employees the opportunity to act, train and grow professionally is a strong stimulating factor. This demonstrates that TIP trusts them, respect them and take their interests into account which moves employee and employer cooperation to a higher level.

B.8 Institutionalizing new approaches

The final recommendation Kotter provides is connected with institutionalizing change in corporate culture. Clear connections between efforts made and results achieved will contribute to that. Change adaptation takes time, so those who lead the change process should make sure that management and leaders who are coming to the organization in or after the period of change are well aware of them and start their company journey applying achievements of change management process.

Martix project is not finished yet and there are still a few years to go to make it function in all departments and at all levels. At the same time, the modules which are already implemented should be kept active as well as best practices used for successful change should be structured and kept for further usage purposes. The transfer of experience allows the creation of commercial value. The recording, control and transfer of knowledge play an important role in ensuring the stability of the company and its ability to remain competitive. Constantly improved technologies mean that TIP can acquire, transfer and distribute knowledge faster than ever before. Using suitable tools, employees can get answers to their questions, and colleagues in different parts of the world can learn from each other in real time.

Via analysing eight stages of the framework, I explained the necessity of going through every stage so to successfully lead informational system transformation and leverage the efficiency of change management at TIP. Each stage is described with its pitfalls and in connection with Matrix project. At the last

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31 section I will come up with recommendations on improving change management in the company.

V. RECOMMENDATIONS

Matrix is in the middle of its implementation period and it will take around 2 years more to implement it in full. In addition to recommendations provided at the framework application section, I recommend a few actions which could be done in a short – term, i.e. immediately (starting from the next day) as well as provide a long-term advice. Balancing immediate actions along with correcting long-term implementation plan will help the company to enhance the existing usage of the system. I provide recommendations based on the findings via analysing the current change management process through the prism of Kotter framework and research from Literature Review section, as well as include a few recommendations and comments on the change of working processes I observed while being employed at TIP as an intern in Strategy and Programs Department from February to June 2018.

A. Short-term plan

Short-term, immediate actions are useful because they can be implemented straight ahead, without any additional approvals, solutions or resource allocations. It is harder to measure the impact of them and make them more structured; however they might bring instant result. Surprisingly, small changes can impact the big picture very substantially and even though this might not be observed in a short-term, the effect will be noticed after looking back at the amendments implemented in a 3-6 months period time.

In a short-term I would recommend TIP to create interest to Matrix and the advantages the system will bring. More information on the boards, in the canteen area, more informational letters and leaflets on the system at public areas could

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32 help to attract more attention to the topic. While making coffee employees usually have a few spare minutes to look around – that is the right time to remind about Matrix. A picture of the current or coming Matrix stage behind the coffee machine could help to spread the idea in the company.

SharePoint platform could be used to collect ideas and feedback on the system improvements. Currently all the comments on the tools are sent to dedicated specialists, while there is no common platform to share ideas, presentations, opinions, concerns etc. Implementing this option is easy, while it can bring sufficient time savings to the leads of the project, as they have to reply regularly to the requests of the same nature coming from different regions. A new procedure can be implemented: once an SME or someone from a region has a question, he can first look at the SharePoint site. If there is no answer, the question should be posted there so that in case the same concern appears again users could check the answer up independently.

Just like any other service, product or idea, Matrix should be “sold” within the company. Selling it implies gaining interest and expertise of potential followers and ambassadors of the system. Finding those people is very much about communication and willingness to share information. The more the subject is discussed at and out of work, the more will people remember about it and get excited about the idea. Not everyone will get fully involved; however employees from various departments can bring different benefits. Having a pool of people with hard and soft skills will help in case the project needs additional support in a certain business area.

Learning and Development team is working on creating training for Matrix usage. So far there is no obligation to pass those trainings and no strict follow up on the number of people in the team who passed them. In my opinion that should be changed. It is hard to understand the advantages if basics of the new process are not clear. As an option supervisors could pass the trainings together with their employees so that everyone stays on the same page regarding the benefits and innovations the system brings.

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B. Long-term plan

As for the long-term recommendations, usually they require additional financial enclosures. Though, if thoroughly described in business cases and proven in cost and benefit analysis, resources can be allocated as TIP is ready for changes and open to improvements judging from its mission. There are some which might not seem to be directly connected to the transformation; however I find them valid as changing the approach to everyday work process organization positively contributes to the efficiency of overall company performance.

Currently TIP is employing a lot of interns form 6 -12 months period. Interns are helping in almost all the department, from Finance to Business Integration. Even though internship might seem a cheap and easy option in short-term, it brings a lot of disadvantages to the working process, especially for those, who are assigned to guide the interns, teach them, and explain company background and required ways of work. Interns are rarely coming to the company having previous experience; it is also hard to find an intern coming from a particular industry. Usually interns are just graduates with Bachelor or Master Degree, quite often from abroad, which means they do not know local market specifics and will leave afterwards. The perspective of staying in the company after the internship is finished is very vague. The compensation is also not that high. In average it takes a manager about 1 month to set up a working place, introduce an intern to colleagues, take him around subsidiaries, and explain the rules of communication and task purposes. That can also be done by a previous intern to a new comer; however that does not happen often as a new person is not always found well in advance. Finally, the time and effort invested by manager into someone leaving soon is enormous. And as long as this person is quite new to the field and to the industry, the return on this investment is suspicious and not always as great as expected due to unforeseen or predictable reasons. Taken into account all the above, I would recommend TIP to invest and focus on long-term full-time employment contracts. In relation to Matrix, which is going to be implemented for a long period of time, it is much more efficient to work with the same specialists along the way as they gain experience and come to a new phase change with

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34 background and knowledge from pitfalls of the previous module implementation. Long-term win-win relations between the company and employee will build trust, respect, and mutual benefit and create a back-bone of the organization which becomes essential in a period of unstable situation on the market.

Long-term full-time employee’s commitment allows managers and supervisors to delegate more, which spares their time for new ideas and improvements. One of the LEAN types of waste – Non-utilized talent – not fully tapping the experience, knowledge, creativity and capabilities of all employees, or delegating tasks to those with inadequate training – can be eliminated as people with strategic view and power to leverage change for the better will have more time and resource to make their ideas come true.

Organization structure at TIP was historically hierarchical with regard to the position, rights and approvals of certain employees with fixed roles. A role itself plays an important part, while some tasks along the change management process are too complicated to be framed into a particular job description or organizational role. I would recommend the company to move towards a more flexible and agile approach of organizing the working process, especially with regards to Matrix implementation. Since not long ago the agile approach is being implemented and applied at Business Integration Department; this practice should be scaled up so that application of agility methods could help adjusting working processes. Agility as a tool specifies the instruments needed to be applied at a high level of uncertainty for the company to cope with the highly changing environment. In an agile environment it is not a role, but sense of actions undertaken that counts. Hard to imagine TIP having no job titles, but cultivating responsibility sharing and equal contributing to the result will gradually change the company view on leadership.

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VI. LIMITATIONS AND CONCLUSION

In my thesis I carried out a study on the change implementation process applied to a particular project on informational system transformation and used those results to come up with recommendations on the change process improvement. That was done via mainly applying “Leading Change: Why Transformation Efforts Fail” J.P. Kotter framework using the empirical example of TIP Trailer Service B.V. company project called Matrix. As a result of the research I provided a set of concrete actions to be implemented in short and long term, as well as covered a few improvements areas in the company overall.

The organizational change frameworks applied to the research is based on theory and might lack empirical evidence. Due to lack of statistical information and complexity and variability of factors influencing the degree of change efficiency, there was no defined method of collecting information rather than personal observations and studying through the data the author had access to during the internship. As long as interns are not getting access to all the files and time spent in the company was limited by the internship period, conclusions and recommendations of the research are subjective. Questions on the project implementation were addressed mainly to the head of the project team, which narrows the scope and independence of the conclusions made.

The research is also limited by the multiplicity of irrelevant, disturbing factors, such as the role in the organization, complexity of observed situation, lack of information on the previous periods of the system implementation; the one-time nature of the observed circumstances, leading to the inability to make a generalization conclusion on the basis of single observable facts. The generalized impression of the observer leads to a rough perception of behaviour, ignoring the subtle differences factors.

“Therefore, the successful management of change is a highly required skill. However, the management of organisational change currently tends to be

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reactive, discontinuous and ad hoc with a reported failure rate of around 70 per cent of all change programmes initiated” (Balogun and Hope Hailey, 2004).

e x

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VII. APPENDIX

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38 Appendix 2 The Dickinson and McIntyre teamwork model

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39 Appendix 3 Example of Performance Dialogue Board

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VIII. BIBLIOGRAPHY

1. Balogun, J. and Hope Hailey, V. (2004) Exploring Strategic Change, 2nd edition, (London: Prentice Hall)

2. Brannick, Michael T., Ed.; Salas, Eduardo, Ed.; Prince, Carolyn, Ed. (1997). Team Performance Assessment and Measurement: Theory, Methods, and Applications, Psychology Press, NJ, 1997, pp. 19–43

3. Berger, R., (2018). Trends in the truck & trailer market, Market Study, Munich

4. Burke, W., Litwin George H, (1992). A Model of Organizational Performance and Change, Journal of Management 1; 18; 523

5. Burnes, B. (2004). Managing Change: A Strategic Approach to Organisational Dynamics, 4th edn (Harlow: Prentice Hall)

6. Burnes B., (1996). "No such thing as … a “one best way” to manage organizational change", Management Decision, Vol. 34 Issue: 10, pp.11-18 7. Dickinson, T. L., & McIntyre, R. M. (1997). A conceptual framework for

teamwork measurement. In M. T. Brannick, E. Salas, & C. Prince (Eds.), Series in applied psychology. Team performance assessment and measurement: Theory, methods, and applications (pp. 19-43). Mahwah, NJ, US: Lawrence Erlbaum Associates Publishers.

8. Dunphy D., Stace D. (1993). Human relations, The Strategic Management of Corporate Change Volume: 46 issue: 8, page(s): 905-920

9. Feldman , Martha S., (2000) Organizational Routines as a Source of Continuous Change, Feldman School of Public Policy, 454 Lorch Hall, The University of Michigan Organization science

10. Garvin, David A., and Michael A. Roberto (February 2005) "Change through Persuasion." Harvard Business Review 83, no. 2: 104–112.

11. Grill, R., (2003). Change management or change leadership, Vol. 3, 4, 307– 318 Journal of Change Management, Journal of Change Management

12. Kotter, J.H., (1995) Leading Change: Why Transformation Efforts Fail, Harvard Business Review on Change, Harvard Business School Press, Boston 13. Ku bler-Ross, E. (1969). On death and dying. New York: Macmillan Publishing

Company

14. Luecke, R. (2003). Managing Change and Transition, Boston, MA: Harvard Business School Press)

15. Moran, J. W. and Brightman, B. K. (2001) ‘Leading organizational change’, Career Development International, 6(2), pp. 111 –118

16. Ocasio, W., Laamanen, T., Vaara, E. (2018). Communication and attention dynamics: An attention-based view of strategic change. Strategic Management Journal; 39:155–167

17. Ocasio, W. (1997). Towards an attention-based view of the firm. Strategic Management Journal, 18, 187–206

18. Okumus, F. and Hemmington, N. (1998). ‘Barriers and resistance to change in hotel firms: an investigation at unit level’, International Journal of Contemporary Hospitality Management, 10(7), pp. 283–288

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41 19. Oreg, S (2006), Personality, context, and resistance to organizational change, University of Haifa, Haifa, Israel EUROPEAN JOURNAL OF WORK AND, ORGANIZATIONAL PSYCHOLOGY, 15 (1), 73 – 101

20. Renae, A., Jones, Nerina L., Jimmieson, Andrew Griffiths (2005). The Impact of Organizational Culture and Reshaping Capabilities on Change Implementation Success: The Mediating Role of Readiness for Change, Journal on Management studies, Volume42, Issue2, Pages 361-38

21. Senior, B. (2002). Organisational Change, 2nd edn, London: Prentice Hall 22. Garvin, David A., and Michael A. Roberto (February 2005) "Change Through

Persuasion." Harvard Business Review 83, no. 2: 104–112.

23. Scott, C. D., & Jaffe, D. T. (1989). Managing organizational change: A practical guide for managers. Menlo Park, Calif: Crisp Publications

24. Strebel, P., (1996) Why Do Employees Resist Change, Harvard Business Review, Harvard business review

25. Warner,B., Litwin George H, (1992). A Model of Organizational Performance and Change, Journal of Management 1; 18; 523

Internet resources:

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TIP Trailer Services Annual Report 2017

Lead the change : how can efficient change management leverage the result of informational system transformation

Lead the Change

- How can efficient change management leverage the result

of informational system transformation

ABSTRACT / EXECUTIVE SUMMARY

TABLE OF CONTENTS

I.

INTRODUCTION

I.

LITERATURE REVIEW

II.

WHY DOES ORGANIZATIONAL CHANGE FAIL?

III. ORGANIZATION AND MARKET REVIEW

IV. THE FRAMEWORK APPLICATION

V.

RECOMMENDATIONS

VI. LIMITATIONS AND CONCLUSION

VII. APPENDIX

VIII. BIBLIOGRAPHY