A change model for successful changes in a product
development organization
“A case study on change at the Innovation site of Personal Care (IPC)”
Philips Drachten
Master thesis, Msc Technology Management
University of Groningen, Faculty of Economics and Business
Author: Ing. P.P.J Klomp
Student number: 1921932
Address: Sint-Eustatiusstraat 1
9715 PE Groningen
Telephone: +31(6)42232117
E-mail: p.p.j.klomp@student.rug.nl
Period: May 2011 – August 2011
1st supervisor: Ir. S. van Egmond
Address: Philips Consumer Lifestyle
Oliemolenstraat 5 9203 ZN Drachten
Telephone: 0512-592558
E-mail: Suzanne.van.egmond@philips.com
1st supervisor: Prof. Dr. I.F.A. Vis 2nd supervisor: Dr. J.A.C. Bokhorst
Address: Faculty of Economics and Business
University of Groningen
Preface
This thesis has been written for my Master degree in Technology Management at the University of Groningen. The past four months (May to August) I have conducted this research at Innovation site Personal Care (IPC) Philips in Drachten. This is the innovation centre for shaving, grooming and vitalight products, with well over 250 employees. During these four months, many employees helped me to finish the research successfully.
First, I would like to thank Suzanne van Egmond for giving me the opportunity to perform my research at Philips and providing me with her feedback and insights. Furthermore, I would not have succeeded this research without the help and input of my colleagues at IPC.
From the University of Groningen I would like to thank my supervisor Prof. Dr. I.F.A. Vis for her feedback and our operation during this graduation process. I also appreciate the feedback moments of co-assessor Dr. J.A.C. Bokhorst. Furthermore I want to thank Dr. ir. M.W. Hillen for getting me in touch with Philips Drachten.
Finally I am grateful to the external experts from the University of Groningen, Prof. dr. ir. J. Slomp, Drs. C.I. Quispel and Dr. ir. M.W. Hillen for the validation of my survey results. And the external experts from the consultancy companies for the time to discuss my end results; Sandrine Willemars (Accenture), Joris de Bie (Berenschot) and Marcel Kuhlmann (Pentascope).
Patrick Klomp
Abstract
Change is an ever-present element that affects all organizations. Therefore, the successful management of change is a highly required skill. The failure rate of change projects is around 70% and a critically important contributor to this failure rate is resistance (Maurer, 1996). The objective of this study is to identify all the critical success factors (CSFs) for changes in product development organizations and to answer the following scientific question: “How can change be implemented successfully in a product development environment?” The researcher assumes that there is a difference in CSF and managing change processes between manufacturing and product development organizations.
A case study has beenconducted at Innovation site Personal Care (IPC) of Philips Drachten which develops in a highly dynamic and competitive environment. This is the innovation center for shaving, grooming and vitalight products, with well over 250 employees. Every year IPC has ten improvement projects on the management agenda. These are projects such as: Lean scheduling, consumer centricity and supplier development. The focus in this case study was on the CSFs: management support & commitment, effective communication, employee involvement & commitment and measurement and monitoring of performance. All these factors should increase the success of performed changes in product development organizations and were processed in a general change model. This change model is designed by the research and is divided in three phases: preparation, transition and retaining. The change model describes the activities, way of communication and the required employee behaviour for each phase, shown in figure 11. Finally this change model has been validated externally with three consultants from Accenture, Berenschot and Pentascope. These data combined with the internal interviews and the survey provide the complete list of required CSFs in change processes. Some of these new CSFs are: focus on people, stakeholder management, regular reviews and suitable coach. The complete extended list of CSFs is shown in table 12. Every organization, whether a manufacturing or development organization should try to manage the “black box” of humans. Humans are not comparable with machines that can be programmed by an organization. It is not change management of an organization, but change management of employee behaviour.
Key words: Philips, change model, CSF, stakeholder management, product development organization,
organizational change, change capacity, DICE framework, communication, employee involvement, management support, monitoring and measurement of performance.
Management summary
Management of Innovation site Personal Care (IPC) of Philips Drachten has the feeling that some factors in the organization can be applied better to be more successful with the improvement projects every year. Therefore they asked the following managerial question: “What factors of managing change could be applied better in order to drive the implementation of improvements forward at IPC?”
All the improvement projects are changes that contribute to optimize the product development process. Every project has a responsible owner and sometimes available coaches to implement the change successfully at IPC. However, based on the DICE (Duration, integrity, commitment and effort) framework filled out by the management team only 25% of the projects are in the Win zone, which means 75% is in the risky zone and four change projects are extremely risky not to become successful in the organization. In general the problems are not the skills and willingness of the employees to change, because everybody knows the need for most of the changes. The 8 respondents (middle management) of the semi-structured interviews identify the following CSFs as most important and lacking in performance at IPC: management support & commitment, effective communication, employee involvement & commitment and measurement and monitoring of performance.
The short term advice is based on the internal survey with 80 respondents (middle management & developers) with a response rate of 36.7%. The results of the survey are validated with three external experts of change processes at the University of Groningen. The short term advice points for IPC are:
Management support & commitment: Management should start the project with a clear picture of the reason for the improvement and manner of implementation in the background meeting. Employee involvement & commitment: A coach is needed to help and stimulate the new way of
working (WoW). A coach is intensively and continuously available to monitor and measure the process of the improvement. The coach is an active and dedicated person who pushes and stimulates the new WoW. Management should share the results, status, successes and problems in weekly group meetings to create more awareness and commitment of the employees.
Measurement and monitoring of performance: If coaches intensively monitor the change process, they can automatically measure the progress of the employees in their new behaviour suitable for the change. The employees always have the possibility to give feedback to a responsible coach of the change process in order to adjust the approach if necessary.
And overall the process should be effectively communicated as described above with background meetings, weekly group meetings and small meetings with the coach. However, before starting with a change process it could be categorized to identify the right approach. Because complex improvements require a change in the employees’ behaviour with radical modifications in the employee’s WoW.
Contents
Preface
... 1
Abstract
... 2
Management summary ... 3
List of abbreviations ... 8
1
Introduction ... 9
1.1
Problem definition ...10
1.2
Sub questions...10
1.3
Methodology ...11
1.3.1 Delineation of the research ... 11
1.3.2 Literature review ... 12
1.3.3 Case study ... 12
1.3.4 General change model ... 14
1.4
Outline ...14
2
Literature review ... 16
2.1
Background of change management ...16
2.1.1 Resistance to change ... 17
2.2
Models of managing change ...17
2.2.1 Action based transition ... 19
2.2.2 Preventing personal transition ... 19
2.2.3 Preventing relapse in old behaviour ... 19
2.3
Literature review of CSFs...20
2.3.1 Critical success factors (CSFs) ... 20
2.3.2 Pareto analysis of CSFs ... 21
2.3.3 Explanation of the most important CSFs... 22
2.4
Conclusion ...25
3
Case study IPC: Problem phase ... 26
3.1
Method to measure the performance ...26
3.2
Results of performance measurement ...27
3.3
Conclusion ...28
4
Case study IPC: Diagnose phase ... 29
4.1
Method to gather data of problem causes ...29
4.2.1 Other causes of unsuccessful change ... 33
4.2.2 Performance / Importance matrix ... 33
4.2.3 Causes and effect diagram ... 34
4.3
Conclusion ...36
5
Case study IPC: Design phase ... 37
5.1
Methodology of internal survey ...37
5.2
Results of internal survey ...38
5.2.1 Awareness of improvement projects ... 38
5.2.2 Behaviour and opinion towards an improvement project ... 38
5.2.3 Preferred solutions per phase ... 39
5.2.3.1 Preparation ...39
5.2.3.2 Transition ...39
5.2.3.3 Retaining ...40
5.2.4 Communication channel ... 41
5.2.5 Other solutions to increase the success of improvement projects ... 41
5.3
Validation internal survey ...42
5.4
Conclusion ...42
6
General change model ... 45
6.1
Preparation phase ...45
6.2
Transition phase...46
6.3
Retaining phase ...46
6.4
Limitations of change model ...47
6.5
Validation general change model ...49
6.5.1 Methodology of validation ... 49
6.5.2 Results of validation ... 50
6.5.2.1 Different change approaches ...51
6.5.2.2 Interactive strategy...52
6.5.2.3 Human dynamics ...53
6.5.2.4 Stakeholder management ...53
6.6
Conclusion ...55
7
Final change model and complete list of CSFs ... 56
7.1
Complete list of CSFs ...56
7.2
Final change framework ...58
8
Conclusion ... 59
8.2
Managerial contribution ...62
8.3
Scientific contribution ...62
8.4
Further research ...64
9
References ... 65
Appendices ... 69
Appendix I: Overview of articles ...69
Appendix II: Overview of CSFs ...71
Appendix III: Overview of statements related to the CSFs ...72
Appendix IV: Performance overview of improvement projects ...74
Appendix V: FMEA analysis ...75
Appendix VI: Semi-structured interviews diagnose phase ...84
Appendix VII: Causes unsuccessful implementation of FMEA ...85
Appendix VIII: Explanation of internal survey ...86
Appendix IX: Internal survey ...88
Appendix X: SPSS Paired-Samples T Test ...94
Appendix XI: Design phase: Interviews external experts ...96
Appendix XII: Change approaches (Five colours of Caluwé)...97
List of abbreviations
ADKAR Awareness, Desire, Knowledge, Ability and Reinforcement
A-FMEA Application FMEA
BB/GB Black Belts/Green Belts
CI Continuous improvement
CSFs Critical success factors
D-FMEA Design FMEA
DICE Duration, Integrity, Commitment and Effort
ERP Enterprise resource planning
FMEA Failure mode and effect analysis
GWO Group work meetings
IPC Innovation site Personal Care
IT Information Technology
KPI Key performance indicator
PDM Product Data Management
P-FMEA Process FMEA
QMS Quality management system
RPN Risk Priority Number
SPSS Statistical Package for the Social Sciences
TQM Total Quality Management
1 Introduction
Change management is an important management topic in organizations. The costs of change failures are rising as organizations try and fail or make costly and repeated mistakes to implement complex and organization-wide initiatives such as reengineering, globalization, quality and productivity programmes, as well as complex alliances, mergers, and acquisition (McLagan, 2003). Changes need to be managed in advance and not as they occur. For many organizations change is a way of life (McLagan, 2003). This study investigates the ability to change in a product development environment.
Changes in the organization are necessary to reduce waste and improve efficiency and quality to be competitive (Todnem, 2005). However, there are also many reasons for resistance of employees, such as: they may not understand the objectives driving the change or they may not agree with the organizations new direction (Gotsill & Natchez, 2007). Without changes in the organization, the possibility of stagnant organizations increases (Whetten, 1980). Stagnation means declining in the organization and can ensure several problems such as: increases in conflict, secrecy, self-protective behaviours, rigidity, and decreases in morale, innovativeness, participation, and long-term planning (Whetten, 1980; Cameron et al., 1987).
The ability to change is determined by the presence of critical success factors (CSFs). According to (Achanga, et al., 2006; Ahrens, 2006) some of these CSFs are: leadership and management support, employee involvement and communication. There is a higher chance that the change results in failure if some of these factors are not supported enough in the organization (Rubrich, 2004). Balogun and Hope Hailey (2004) report a failure rate of around 70 per cent of all change programmes initiated. This poor success rate indicates a fundamental lack of a valid change model for managing a successful organizational change.
There have been a lot of previous case studies of these above mentioned CSFs that influence the success of change implementations. These studies were mostly provided in a manufacturing environment (Goldstein, 2001; Henderson & Evans, 2000; Vermaak, 2008; Christodoulou, 2008; Aladwani, 2001; Karuppusami & Gandhinathan, 2006). However, there is a lack of CSFs studies in a product development environment where organizational changes are also necessary to fulfill customer demand and develop new or adapt products in the right time-to-market in the dynamic environment. The researcher assumes that there is a difference in CSFs and managing change between manufacturing and product development organizations. This assumption is made, because the education levels in the manufacturing organization are mostly much lower. This can lead to longer learning curves and attention to other CSFs during the change process.
It is important for the organization to acquire insights from the customer’s world in this product development environment; this can be obtained with observations, surveys and interviews. To fulfill the various requirements of the customer in time, the organization should change procedures, methods and behaviour to be competitive and flexible in the dynamic market. Preventing stagnation and decreasing customer demand, requires an efficient and high quality product development environment. However, not all elements can be changed radically, because this environment is fully dependent of people. People are not machines, thus organizations should be aware of the impact of changes. Changes of procedures, standardization, routines will also ensure a lot of changes in the habits of the employees, which is the most difficult part to deal with (Mann, 2005).
1.1 Problem definition
As mentioned in the introduction, there have been a lot of previous case studies of critical factors that influence the success of change implementations, such as Six Sigma, Lean philosophy or Total Quality Management (TQM). However, most of these studies were conducted in a manufacturing environment. There is lack of case studies about CSFs in a product development environment. The scientific objective of this research is to develop a valid change model that can be used for successful implementation of changes with integration of the relevant CSFs in a product development environment. The main scientific research question is formulated as follows: “How can change be implemented successfully in a product development environment?”
1.2 Sub questions
Eight sub questions have been formulated to answer the main scientific and managerial question. This report consists of theoretical and empirical parts.
1. What are relevant change models and CSFs of change in organizations?
Chapter 2 starts with a discussion of several change models. These models describe the essential steps in the change process and how to realize a successful change. This is followed by a literature review of all the CSFs that influence the implementation of organizational changes, mostly based on manufacturing organizations.
2. What is the performance of the current improvement projects at IPC?
Chapter 3 starts with an explanation of the DICE framework that is used to identify the “reality” of the problem and measure the performance of the current improvement projects.
3. What CSFs cause the lack of success of several previous improvement projects?
The Innovation site Personal Care (IPC) at Philips Drachten was chosen for the case study which is described in paragraph 1.3.3. The CSF list determined by sub question 1 is used as a blue print to identify the causes of unsuccessful projects at IPC. The causes are in general determined through semi-structured interviews with middle management.
The solutions to improve the success of changes are proposed in an internal survey at IPC to determine the most preferred solutions to integrate the lacking CSFs at IPC. Furthermore the preferred solutions are validated with external experts specialized in managing change at the University of Groningen.
6. How should a change model be designed for changes in a product development environment? All the scientific and empirical data are used to design a change model to increase the success of changes in a product development environment.
7. How is this change model accepted or adapted by external experts?
These data are gathered with external consultants specialized in change processes in the form of unstructured interviews. This is the manner of validation of the change model to contribute added value for the science and make it more useful for changes in a product development environment.
8. What is the final change model and the complete CSF list?
This is the overview of the complete change model. Also the extended list of CSFs is explained in this chapter.
1.3
Methodology
The methodology is based on the empirical cycle (De leeuw, 1996). In the empirical cycle the researcher starts with a literature review to create a knowledge base and compares this with a case study. Finally the researcher goes back to the knowledge base to add some new value to the literature. The used methodology contributes to both objectives; scientific and managerial, shown in figure 1. The managerial objective is realized with
the case study at IPC.
1.3.1 Delineation of the
research
The external reality and evaluation phase are not part of this study:
External reality; This research focuses only on the internal environment of IPC. However, the external environment plays also an essential role in the success of changes.
Evaluation; In this phase IPC learns to realize more effectively how to perform and implement changes. IPC has to deal with the “learning curve” of employees. They have to relearn how to work effectively and efficiently within their new situation, the change model (Adler & Clark, 1991).Researcher
Literature review (Knowledge base) External reality
Case study Evaluation
1.3.2 Literature review
The first phase contains a literature review of change management with the following main subjects: Change management models; The change management models describe essential steps to
manage change in the organization. The advantages and disadvantages of several models are discussed and compared together in paragraph 2.2.
Critical success factors (CSFs); CSFs are needed to accomplish every step in the change process. These CSFs are in general soft elements, such as management support, cultural aspects and communication. Several previous studies based on CSFs in change situations are used to determine the most important CSFs of change in paragraph 2.3. The quality control tool, Pareto analysis is used to rank the data in the descending order from the highest frequency of occurrences to the lowest frequency of occurrences (Karuppusami & Gandhinathan, 2006). The list of CSFs is the knowledge base for the case study at IPC.
Thus the first sub question can be answered: “What are relevant change models and CSFs of change in organizations?”
1.3.3 Case study
Action research and a case study are both useful qualitative methods (Cooper & Schindler, 2006). However, in action research the researcher is a participant in the implementation of a system. The process is repeated until a desired outcome is reached and along the way much is learned about the processes and about the prescriptive actions being studied. This research is limited to the descriptive and explanatory part, thus a case study approach is most suitable. The objective of the case study is to obtain multiple perspectives of a single organization at a point in time. Case studies are helpful in identifying the causes that lead to the success or failure in organizational situations (Cooper & Schindler, 2006). This case study focuses on the causes of unsuccessful changes. The main objective is to provide an advice to increase the degree of successful change.
The research area is at the IPC Philips Drachten. This is the innovation center for shaving, grooming and vitalight products, with over 250 employees. The engineers working in this development centre have brought forward best-selling products such as: Senso Touch 3D, Bodygroom and the Philips Wake-up Light. This innovation site is daily engaged in changes to improve the product development process. IPC runs several improvement projects a year. Every
improvement project has a related owner, responsible for deploying, attention, standard operating procedures (SOPs) and awareness of the employees. It depends on the contents of the project if coaches are made available. In general every improvement project is unique and generates extra work next to the daily tasks of the employees if they want to implement it successfully.
In this report changes and improvement projects are considered equal. The distinction between improvement and product development
Improvement projects 1. Consumer centricity 2. Lean scheduling 3. Supplier development 4. Perfect start
5. Design for six sigma 6. …..
Product development projects
Grooming Vitalight Shaving
projects at IPC is as follows, schematic shown in figure 2:
Improvement projects: are new procedures, tools and methods to optimize the product development process;
Product developments projects: are continuously developing new products or adaptations of existing products for the market.
IPC develops in a highly dynamic and competitive environment. Being part of Philips Electronics, also externally induced improvement projects are part of the improvement program. It is important to optimize the organization continuously to increase the effectiveness and create high quality products to be competitive. IPC is an appropriate research environment to conduct the case study of the ability to change in a product development organization. It is desirable for IPC to obtain a specific advice of the relevant CSFs in the organization to increase the degree of successful improvement projects.
Change management is an important topic for management. However, it is also a difficult topic to realize successful changes in an organization. There is always resistance against new directions of an organization and many factors influence the success of the changes. For organizations it is important to spend enough attention to the critical factors that influence the success of the changes. The main managerial objective of IPC is to receive a detailed advice that helps to integrate the lacking CSFs more extensively the organization. The main managerial question of IPC is: “What factors of managing change could be applied better in order to drive the implementation of improvements forward at IPC?”
The case study is divided into three phases: Problem, diagnose and design. In every phase different methodologies and tools are used to gather the relevant information. In this case study triangulation is recognizable. Triangulation is the term that describes the combining qualitative with quantitative methods. Qualitative studies may be combined with quantitative ones to increase the perceived quality of the research, especially when a quantitative study follows a qualitative one and provides validation for the qualitative findings (Cooper & Schindler, 2006).
Problem phase; In this phase it becomes clear whether there is a real problem at IPC. Management team consisting of 14 managers has used the DICE framework to rank all the current improvement projects, described in paragraph 3.1. One selected improvement project of the Woe Zone is chosen to analyze the content and confirm the reality of the problem. This provides an answer to the second sub question: “What is the performance of the current improvement projects at IPC?”
Diagnose phase; This phase describes possible causes of the problem. For this research semi-structured interviews are conducted by the researcher. All the data of the semi-semi-structured interviews are used to draw a cause and effect diagram for the problem at IPC in paragraph 4.2.2. This provides an answer for the third sub question: “What CSFs causes the lack of success of several previous improvement projects?”
through a qualitative study with external experts at the University of Groningen. A specific advice for IPC is the result of this design phase. This provides the answers for the fourth and fifth sub question: “Which solutions are preferred to increase the success of improvement projects at IPC?; How are these solutions recommended by external experts?”
1.3.4 General change model
The scientific objective of this research is to develop a valid change model that can be used for successful implementation of changes in a product development environment. The results of the case study and the literature review are combined to develop a general change model. This change model gives IPC also a guideline for managing future improvement projects and provides an answer to the sixth sub question: “How should a change model be designed for changes in a product development environment?”
This change model has been validated with external consultants from Accenture, Berenschot and Pentascope. The data were gathered with unstructured interviews of three external consultants of the above mentioned consultancy companies. This part of the research provides an answer to the seventh sub question: “How is this change model accepted, rejected or adapted by external experts?”
The last part of the research provides an answer to the eighth sub question: “What is the final change model and the complete CSF list?” This part shows an overview of all required CSFs for successful change. And finally a revised change model has been designed according to the advice of the external consultants, gathered by sub question 7.
1.4 Outline
Case study IPC
Literature
Scientific contribution
Target: Change model + complete CSF list Method: Mind mappingSub question 8: What is the final change
model and the complete CSF list?
Literature review
Target: Determine the CSFs + overview ofchange models
Method: Pareto analysis
Sub question 1: What are relevant change
models and CSFs of change in organizations?
Problem phase
Target: Identify the reality of theproblem
Method: DICE framework + Audit
FMEA
Sub question 2: What is the
performance of the current improvement projects at IPC?
Diagnose phase
Target: Determine the causes ofthe problem
Method: Semi-structured
interviews (middle management) + mind mapping
Sub question 3: What CSFs cause
the lack of success of several previous improvement projects?
Design phase
Target: Identify the solutions ofthe problem
Method: Literature review +
Survey (middle management & developers)
Sub question 4: Which solutions
are preferred to increase the success of improvement projects?
Validation RUG experts
Target: Validate results internal
survey
Method: Semi-structured interviews
(external experts RUG)
Sub question 5: How are these
solutions recommended by external experts?
Change model
Target: A change model for successfulchanges
Method: Mind mapping
Sub question 6: How should a change model
be designed for changes in a product development environment?
Validation external change
consultants
Target: Validate change model Method: Unstructured interviews(Accenture, Berenschot, Pentascope)
Sub question 7: How is this change
2 Literature review
This chapter starts with the background of change management. This is followed by a discussion of several existing change management models in paragraph 2.2. Not every organization has the capacity to fulfill a successful change. This is influenced by many factors called CSFs. In paragraph 2.3 is a detailed literature review conducted of these CSFs related to changes in organizations. This provides an answer to the first sub question: “What are relevant change models and CSFs of change in organizations?”
2.1 Background of change management
Successful management of change is accepted as a necessity in order to survive and succeed in today’s highly competitive and continuously evolving environment (Todnem, 2005). Change management is an important management topic in organizations. There are always reasons for change programs. Internal reasons of change are in general increasing efficiency and cost savings (Van Leeuwen, 2009). Definitions of change are described in table 1.
Definitions of change
Moran and Brightman (2001) “change is the process of continually renewing an organizations direction, structure, and capabilities to sever the ever-changing needs of external and internal customer”
Burnes (2004) “change is an ever-present feature of organizational life, both at an operational and strategic level”
This research uses the definition of Moran and Brightman (2001). Change is a continuous process to satisfy internal and external stakeholders. To achieve satisfaction of both stakeholders, many elements need to be changed such as direction, structure and capabilities. The case study described in chapters 3 to 5 focuses on the internal capacity of change. However, the success of change is also influenced by the external environment.
It is important to organizations that people are able to undergo continuous change (Burnes, 2004; Rieley and Clarkson, 2001). Change is an ever-present element that affects all organizations. Therefore, the successful management of change is a highly required skill. According to Michael Hammer (2004), change management is about process and people. But even process is just about people doing stuff… so ultimately it’s all about people and processes that work for people. As also mentioned in chapter 1, the failure rate of change projects is around 70%, and a critically important contributor to this failure rate is resistance (Maurer, 1996), discussed in paragraph 2.1.1.
Managing changes as they occur is not enough these days (McLagan, 2003). Creating a change-friendly organization is a new and still emerging pursuit. According to McLagan (2003), “It’s time to admit that change is a way of life and not an appendage to business as usual.” An organization can be described from the rear and front wheel metaphor. The differences between both “wheels” are (Garvey, 1997):
Rear wheel: The rear wheel of the bicycle is the part that drives the machine forwards, and is a metaphor for an individual’s technical attributes of knowledge, skills and attitudes.
Front wheel: A bicycle is dependent on two wheels to work effectively. The front wheel is analogous to an individual’s personal and interpersonal attributes of knowledge, skills and attitudes.
Dealing with people effectively requires the careful application of the “front wheel”. Managing people is largely about “steering” not “pedalling”. Change is not just something to manage when strategies shift or a crisis occurs. It is an ongoing challenge and condition in organizational life to integrate both wheels efficiently in the organization. Increasingly, success depends on fluidity, openness, learning, and a pervasive capacity to make evolutionary and even radical changes (McLagan, 2003). Therefore it is necessary that in the first place enough capacity is available to the organization in the form of resources to implement the change in the organization. Change management must be an internal and eternal capability, present within the organization at every moment (Gossage et al., 2010)
2.1.1 Resistance to change
Resistance to change has long been recognized as a critically important factor that can influence the success of an organizational change. Resistance is often viewed by managers as the enemy of change, the foe which must be overcome to be successful (Schein, 1988), shown in table 2.
Definition of resistance
Todnem, 2005 “A complex, multi-faceted phenomenon that is caused by a variety of factors.”
As mentioned by Todnem (2005), resistance can have many causes depends on every individual employee. Resistance is mostly linked with negative employee attitudes or with counter-productive behaviours. Once again, the aim was to avoid resistance in order to restore harmony to the organization (Milton et al., 1984). However, resistance can also play a useful role in an organizational change effort, for example:
It can serve as a warning signal directing the timing of technological changes (Judson, 1966) As an influx of energy;
To create a certain level of motivation or energy required to implement change in an organization.
Where energy is lacking, change is often uncreative, sparsely implemented, and inadequately utilized (Todnem, 2005). People do not resist change per se, rather they resist the uncertainties and the potential outcomes that change may cause. Managers must keep this in mind at all times. Resistance can play a crucial role in drawing everyone’s attention to aspects of change that may be inappropriate (Waddell & Sohal, 1998). Not every organization has the capacity to change successfully, because every organization has to deal with different internal and external factors that can influence the success of the changes.
2.2 Models of managing change
The DICE framework is useful to determine the degree of potential success of a change project in the organization, explained in paragraph 3.1. However, to implement a successful change project it needs to be managed in the organization. There are several models and theories available of managing change. This paragraph discusses a few of these models. The most common steps of all the change models are ranked for each model in table 3 and are discussed in sub paragraphs 2.2.1 to 2.2.3.
Change models Lewin’s three stage change process (1943) Prochaska & DiClemente’s model (1977) William Bridges three phase model (1980) Beckhard transition model (1987) Lippitts change model (1987) John Kotter’s 8 change steps (1995) Prosci ADKAR change model (1998) Need of change x x x x Desired future x x x x x Communication plan x x x x
Skills and resources x x x x
Incentive x x x
Coaching of people x x x x
Checkpoint of status x x
Reinforcement to retain x x x
Each of the change models is roughly explained below:
Lewin’s three phase change model (1943): Lewin’s freeze model suggests that change involves a move from one static state via a state of activity to another static status quo and all this via a three-stage process of managing change: unfreezing, changing and re-freezing (Burnes, 2004). Prochaska & Diclemente’s model (1977): this model uses relapse steps to prevent that
employees return to their old habits (Prochaska & DiClemente, 1982).
William Bridges three phase model (1980): this model focuses on transitions and the psychological changes that lie behind significant organizational change (Bridges, 2009).
Beckhard transition model (1987): this model represented a significant shift in management thinking from the "command and control" of the industrial age of change to a human centred approach (Benjamin & Levinson, 1993).
Lippitts change model (1987): the model focuses on forming coalitions in order to produce change in a community. It takes vision, skills, incentives, resources and an action plan to get there and if you possess all five as an organization, you will likely end up with successful change (Thousand & Villa, 2000).
John Kotter’s 8 change steps (1995): this is helpful for understanding and managing change. Each stage acknowledges a few key principles to people’s response and approach to change, in which people see, feel and then change. It helps if a sufficient number of people want it and therefore a sense of urgency is important. If at least 75% of the people want the change it creates a critical mass (Kotter, 1996).
Prosci ADKAR change model (1998): this model is founded on 2 basic ideas; it is people who change, not organizations. And successful change occurs when individual change matches the stages of organizational change (Hiatt, 2006).
In the sub paragraphs 2.2.1 to 2.2.3 these models are compared and discussed on similarities and differences.
2.2.1 Action based transition
Every model has strengths and weaknesses. The strength of Kotter’s change steps is the clear leadership roadmap as he outlines the key steps to build and sustain that momentum (Kotter, 1996). However, it is mostly action based and does not go far enough in the specifics of how to achieve clarity of vision. The personal transition to the desired end state is also lacking in this model. People management is most important as mentioned in paragraph 2.1. Lewin's change model is very rational, goal and plan oriented (Burnes, 2004). This model also lacks the human feelings and experiences. However, this model was developed 1943 and it still forms the underlying basis of many change management theories, models and strategies for managing change. Lippitt’s change model is an extension of Lewin’s freeze model. The focus of Lippitt’s change model is on the change agent rather than the change itself. Also Lippitt’s change model attempts to analyze the forces (driving or restraining) that impact change (Thousand & Villa, 2000). This model is useful for organizations to explain the reasons of some forms of behavior such as confusion and frustration of employees. Also this model explains the building blocks to achieve successful change. However, an evaluation and reflection phase is not present to stimulate ongoing change and embedding the change in the organization.
2.2.2 Preventing personal transition
The personal transition and human feeling during the change are well included in William Bridges’ and Beckhard’s transition models. It represented a significant shift in management thinking from the “command and control” of industrial age to a human centred approach (Bridges, 2009; Benjamin & Levinson, 1993). They maintain that the situational changes are not as difficult for organizations to make as the psychological transitions of the people impacted by the change. The models are both based on convincing the employees of the advantages and how to move to the desired future. In this transition phase they help and coach the employees and respond to all the confusion by encouraging them. Prosci’s ADKAR model also shows the people dimension of change. The 70% failure rate mentioned in chapter 1 is caused by the over-emphasis on process rather than people (Hiatt, 2006). Strength of the ADKAR model is that it provides a useful management checklist of the phases of the transition (Hiatt, 2006). However, there is no distinction between incremental and radical changes and the roles and functions of people.
2.2.3 Preventing relapse in old behaviour
In summary the change models make no distinction between management, middle management and employees’ roles and responsibilities during the change. The main purpose is to change the behaviour and routine of the employee in line with the change, as shown in figure 4. The challenge for the organization is to convince the employee that route B is necessary for the organization and has more individual benefits for the employee. However,
route B is not always simple to follow with one training session, thus the organization could be aware that the employee relapses into route A (Wong, 2005).
These above mentioned models of managing changes give a clear overview of the essential steps in the process. Knowing the steps of managing a change does not say anything about the capability to manage it in the organization. This depends on
the presence of the CSFs in the organization. The literature review of these CSFs is used as knowledge base for the case study and is described in paragraph 2.3.
2.3 Literature review of CSFs
This paragraph describes a literature review with the focus on the CSFs in continuous improvement (CI), six sigma, total quality management (TQM), enterprise resource planning (ERP), knowledge management and lean change implementations. These case studies are mostly conducted in the manufacturing or service areas. The selected articles are based on research in various sectors with different kinds of analysis methods. Most of the studies have been published in recognized journals and a selected set of studies in books or university theses, shown in appendix I.
2.3.1 Critical success factors (CSFs)
Schwalbe (2009) emphasizes that not all change project members should have the same goals. Where the goal of the manager could be obtaining higher efficiency, the goal of the project leader can be improving the quality. Conflict situations may arise in defining the goals of a change project, thus it is important to clearly determine the goals before starting a change project. Otherwise the organization cannot measure the degree of success. According to Grit (2005), a successful project must reach the following goals:
Providing the earlier set goals with the desired quality; Finished in time;
Stays within allowable costs.
In general success can be described as: “Achieving determined goals”. Before goals are set in a change project, it is important that all the involved employees speak the same language.
It is also important to have a clear definition of CSFs before starting the literature review. There are different definitions of CSFs, shown in table 4.
Definitions of CSFs
Rockart (1979) “The limited numbers of areas in which results, if they are satisfactory, will ensure competitive performance for the organization”
Figure 4: Relapse model
Brotherton and Shaw (1996) “CSFs are essential things that must be achieved by the company or which areas will produce the greatest competitive leverage”
This research uses the definition of Brotherton and Shaw (1996). In first instance CSFs are essential to achieve some goals. The main goal of organizations is to be competitive and realize profits every year. As discussed in paragraph 2.1 it is essential to change elements in the organization to be competitive in the dynamic environment. CSFs are not static, but depend on a combination of where the organization stands and where it wants to be. In general the CSFs are the factors which are necessary to implement several changes successfully. These soft factors are described in paragraph 2.3 in a detailed literature review of many case studies in different areas of changes in organizations.
2.3.2 Pareto analysis of CSFs
The quality control tool called the Pareto analysis is used to classify the most important CSFs for changes (Herbert et al., 2003). This tool ranks the data in order from the highest frequency of occurrences to the lowest frequency of occurrences (Karuppusami & Gandhinathan, 2006). The CSFs that account for 80 per cent of all CSFs are chosen for further research in the case study. The Pareto analysis of CSFs compiled from selected articles is shown in table 5 and figure 5. This Pareto analysis is a direct part of this research and was conducted by the researcher. An important issue in every research is validity. According to Patton (2001), this means using different kinds of methods and types of data in the research to strengthen the study. Healy and Perry (2000) propose several different data sources in order to realize validity. The great quantity of studies in this literature review assures validity. The literature used describes different studies executed in both the private and public sector and within various companies in different countries. Furthermore, the selected authors are experts in the field of Lean, Six Sigma, CI and TQM. The diversity of different changes is necessary for the research of changes at IPC Philips Drachten, because they implemented many different kind of changes a year. All the changes in the organization differ also as example from “Lean scheduling” to “Failure mode and effect analysis (FMEA)” improvement projects. For this literature study, 18 authors were selected, because of their variation in research method and their variation in company branches in which the researches were executed. Many studies were investigated over long time periods in different areas. Also different research methods were used in these studies such as: in-depth interviews, surveys and observation. The studies provide many literature reviews, mostly in combination with empirical research. An overview of all the studies used is shown in appendix I.
The total number of CSFs from all the 18 studies taken for review was 25 and the total frequency of occurrences was 132. In the “vital few” groups, 10 CSFs accounted for 80 per cent, as shown in figure 5. The remaining 15 CSFs accounted for only 20 per cent of occurrences frequency and were reported as “useful many” groups in appendix II. These CSFs were classified by the researcher, based on his historical experience and all the CSF lists mentioned in the previous research studies by the other authors. The “useful many” groups have not been used in the further case study. The first five CSFs with the highest number of occurrences are: “management support and commitment, effective communication, sufficient training, employee involvement and commitment and a suitable organizational culture”.
Critical success factors Occurrences Percentage of occurrences
Cumulative percentage of occurrences
1 Management Support & commitment 18 14.63 14.63
2 Effective communication 14 11.38 26.02
3 Sufficient training 11 8.94 34.96
4 Employee Involvement & commitment 10 8.13 43.09
5 Suitable organizational culture 9 7.32 50.41
6 Teamwork 9 7.32 57.72
7 Integrating change within strategy 8 6.50 64.23
8 Satisfaction of employees 7 5.69 69.92
9 Monitoring and measurement of
performance
7 5.69 75.61
10 Empowerment of employees 6 4.88 80.49
11 to 25
Other critical success factors (Appendix II) 24 19.51 100.00
2.3.3 Explanation of the most important CSFs
Further on in this paragraph all the changes such as TQM, Lean, Six Sigma etc. are called ‘change’ to prevent confusion. The top 10 of CSFs are explained in this sub paragraph. This explanation is also based on the researcher’s intuition and experience and his view of CSFs. Most of the input for his decisions in the explanations has been gathered from the previous research studies. The researcher assumes that the following explanations of CSFs best fit the literature.
0 10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 6 7 8 9 10 11 to 25 Occurences Cumalitve percentage of occurences % CSFs Table 5: Occurrence of CSFs
Management support and commitment; Top management commitment has been identified as one of the major factors of successful implementation of several changes (Ahire et al., 1996). Lack of good management support can cause problems of changes in the organization (Worley and Doolen, 2006; Rockart, 1979). If management sufficiently supports the change through clear communication of the benefits and objectives of the change, it will also increase the awareness and support. If management has trust in the goals and objectives of the change, they can transfer this to the whole organization. Management can communicate this information in several ways to the employees. According to Goldstein (2001), as a manager you need to be a visual and active participant and support the change. Management can only create a good mindset in the organization if the change is urgent and if it has a high priority. Creating awareness is one thing, continuous support and commitment, however, are necessary to integrate the change in the organization.
Effective communication; Communication of the determined goals is essential if the organization wants to achieve success with the change. With clear communication employees can be more involved in the process and feel part of the change. In this manner the organization creates support of employees, and if the employee is not involved enough, it will be difficult to gain support and
contribution to the change. Visual communication is a method to reach the majority of the employees
and to create mutual trust of the change (Sila & Ebrahimpour, 2003). There should always be an information exchange in order to influence behaviour of the employees through the desired end state (Kotter, 1996). A shared perception and powerful coalition can only be realized with effective communication during the whole change process. Regular review of the performance status is essential for the organization to speak a common language.
Sufficient training; Training employees and management is essential in order to successfully implement new changes and to develop the change as a well-established tool, method or behaviour in the organization (Wong, 2005). However, people are not machines, therefore watch out what the kind of training programmes are used. Training can be implemented with classroom sessions and with the coaching method. It is important to find the right balance between those types of training sessions (Rother, 2009). Through training programmes, employees will get a better understanding of the change. Also for this factor, training is one thing, the application of the training in practice is more important to keep on the same track and to receive feedback in order to reach the determined goals of the change.
Employee involvement and commitment;
The organization should emphasize that the employees are a major part of the organization decision making process. According to Goldstein (2001), “Leave no employee behind.” Involvement and empowerment of the employees can increase the satisfaction and support the change. Visual controls as also mentioned by the communication CSF can be valuable for realizing more employee involvement. An employee will feel more capable of making the change successful if he or she believes that management also supports the change.
and convince all the employees of the direct benefits of the change. Without a high degree of mutual trust, people will be skeptical about the intentions and behaviours of others.
Teamwork; Teamwork and composition are important throughout the life cycle of a change. The competences of management and the employees are essential to attend the change in the implementation process. The assigned time to the change depends on the impact and uniqueness of the project for the organization. An incentive in the form of compensation can stimulate change teams to reach the determined goals.
Integrating change within strategy; One of the means for driving the success of change is to have a clear and well-planned strategy (Wong, 2005). This strategy is mostly set in a business plan, consisting of benefits, capabilities, costs, risks and needed resources. Closely related to the notion of strategy, is the development of a shared vision. It is essential that employees support this vision and believe that it works, this also creates more urgency of the change in the organization. The value proposition of a change has to be clearly communicated in the strategy to create a mutual trust among management and employees to accomplish the change successfully.
Satisfaction of employees; Organizations must realize that both trust and work satisfaction are important ingredients for effective functioning of an organization and to actively ensure that support systems or structures are adequate and available to mitigate the negative impact (Lee & Teo, 2005). When mechanical skills are required to change the process, reward can stimulate the performance. However, where cognitive skills are required rewards lead to lower performance (Rother, 2009). Rewarding methods are not always necessary to satisfy the employee. When tasks get more complicated, it requires some conceptual, creative thinking and rewards do not work in these situations (Rother, 2009).
Monitoring and measurement of performance; In general employees prefer situations of high control (White, 1992). Milestones and targets are important to keep track of progress of the change. There are several methods to monitor and measure the performance, where interaction with feedback of the change is an important factor. To prevent skepticism against the change, the organization needs to be demonstrating the value of change to the employees. This can only be realized if the organization measures the performance. Measurement acts like a data collection system that gives useful information about a particular situation or activity. Sayings like “you cannot manage what you cannot measure” and “what is measured is what gets done” certainly hold true for change (Wong, 2005).
Empowerment of employees; Employee empowerment is used as an effective strategy by companies like Toyato and Ford (Morgan & Liker, 2006). According to Ahire et al. (1996), “you can lead a horse to the water, but you cannot make it drink”. This means, if the organization empowers employees it is necessary to encourage them to fulfill the tasks.
In the literature an importance/performance matrix has been described by Slack (1994) to rank the CSFs in a specific situation. This matrix, used in sub paragraph 4.2.1, depicts the relation between the importance of the success factors and their performance at IPC. The respondents of the semi-structured interviews can score all the CSFs on these scales to determine the CSFs that need immediate action and improvement to integrate them more in the organization and increase the success of changes.
2.4 Conclusion
The failure rate of change projects is around 70% and a critically important contributor of this failure rate is resistance. However, changes in organizations are necessary to prevent stagnation and increase efficiency and realize cost savings to be competitive in the dynamic environment.
There are also many models available to manage change in organizations. However, most of the models are based on other industries, changes and organizations. Every organization is unique and has different procedures, cultures and employees to manage. Therefore it is important to analyze an organization independently to identify which change model is most suitable. The essential steps in a change process can be described in advance, but how to fulfill a change exactly depends on the kind of change and the available CSFs in the organization.
According to articles of the literature review that were used, many factors can influence the success or failure of the changes in an organization. This is all based on previous case studies in many different industries and types of change. The top 10 list of CSFs has a lot in common, for example: If management does not support the change it is also not integrated in the strategy. And if the change is not effectively communicated, the employees are not sufficiently involved in the process. The top 10 list of CSFs in paragraph 2.3.2 and the change models in paragraph 2.2 are the answers of the first sub question: “What are relevant change models and CSFs of change in organizations?”
3 Case study IPC: Problem phase
Management of IPC has the feeling that some factors in the organization can be applied better to be more successful with the improvement projects every year. There are several ‘sounds’ in the organization that not all improvements are fully embedded in the organization. Therefore they asked the following managerial question: “What factors of managing change could be applied better in order to drive the implementation of improvements forward at IPC?” However, facts are needed of unsuccessful improvement projects to confirm this feeling. These facts are gathered in this chapter.
This chapter starts with an explanation of the DICE framework that is used to identify the “reality” of the problem. This is followed by an overview in paragraph 3.2 of the performance of all current improvement projects based on the DICE scores. This provides an answer to the second sub question: “What is the performance of the current improvement projects at IPC?”
3.1 Method to measure the performance
The data of this DICE framework are based on quantitative results gathered during a meeting with the whole management team of 14 managers. The DICE framework is used to rank all the current improvement projects. And finally one improvement project from the Woe Zone is analyzed in detail by the researcher. However, this detail analysis of the FMEA improvement project is shown in appendix V.
A research study of 225 companies from 1992 to 1994 by Boston Consulting Group (BCG) developed the DICE (Duration, integrity, commitment and effort) change model. Since 1994 this change model is used at more than 1,100 companies and it confirmed that these factors have some correlation to predict outcomes as well. This helps managers to consciously evaluate projects. However, this change model has also disadvantages such as: determining scores is a subjective process and it does not deal with soft change factors. The DICE framework can still be used for the following applications: track and score of a project over time, comparing scores of projects and managing a portfolio of projects. This is a useful change model to provide a common language to discuss change.
The four factors of DICE framework are (McLagan, 2003):
D: The duration of time until the change programme is completed if it has a short life span; if not short, the amount of time between reviews of milestones.
I: the project team’s performance integrity; that is, its ability to complete the initiative on time. That depends on members’ skills and traits relative to the project’s requirements.
C: The commitment to change of top management (C1) and employees affected by the change (C2) display.
Win Zone (Scores between 7 and 14): the project is very likely to succeed
Worry Zone (Scores higher than 14 but lower than 17): risks to the project’s success are rising
Woe Zone (Scores over 17): the project is extremely risky
As discussed in this paragraph, there is a soft and hard side that influence the success of changes in the organization. Both sides are critical in some way to achieve the success of a change. According to
Rubrich (2004) if some CSFs are not supported sufficiently the chance of implementation failure will increase.
3.2 Results of performance measurement
The results of this performance is calculated with the above mentioned formula: D + (2 x I) + (2 x C1) + C2 + E. Also the priority axis is added to this change model. If the priority is high (score =10) and low (score=0). Both scores are shown in an overview in figure 7, see appendix IV for the detailed scores. The lowest priority score is 5, because if management does not see the priority in an improvement it is also not placed on the management agenda as an improvement project. The scores between win and worry zone differ mostly at the following factors: Performance integrity (I) and commitment of management (C1). The score of performance integrity depends on: if the objectives are realistic and clear to all team members, if team members have sufficient time to focus properly on the project and if there is sufficient time for a coach to manage both the process and the content of the team's deliverables. The score of
commitment of management depends more on demonstrating commitment to the employees and the change project. The high score can also be explained with the formula, where these two factors are multiplied by 2. This means that the BCG has the experience with this change model of 225 companies that these two factors influence the performance more than the other three. It can be concluded that
Figure 7: Overview performance improvement projects
only 25% of the projects is in the Win zone, which means that 75% is in the risky zone and four change projects are extremely risky of becoming successful in the organization.
A rough explanation why some projects are in the Win zone and others in the Worry and Woe zone is: Win zone; “Consumer centricity” and “software development” are complex changes that are
driven by a small team. The managers of these teams have high attention for the improvements and make them important to the team’s success. And “knowledge on China” is a just do type of project.
Worry zone; “Grow future leaders” is mostly impacting the middle management layer. Involvement of middle management is rather high. However, in general these managers have many other priorities, which make the improvement worrying. “PIM, PDM, Peaks” are imposed information technology (IT) projects by the organization. The management commitment is rather low because some of the projects are dragging along.
Woe zone; “FMEA” and “requirement management” are in the Woe zone because they were not receiving sufficient attention at this time and then were also not yet included in the top 10 of the management agenda. The same goes for design process, an additional complexity is present, because the improvement is for a large part outside IPC. The urgency of “QMS” is not felt by a large part of the organization and therefore there is a lot of resistance. And finally lean scheduling requires a behavioural change of managers and employees, thus it requires more attention than is now explicitly planned and reserved for it.
3.3 Conclusion
If an improvement project is not embedded and deployed enough, the organization needs to watch out that an improvement project transfers to the Woe zone and finally to the Worry zone. The “FMEA” improvement project of the Woe zone is analyzed in detail. This improvement project was chosen because it is an important and not consistently used tool in the organization. Therefore it is necessary to analyze such a project on the level of detail to identify the reality of the problem. The reality of the problem of unsuccessful improvement projects is confirmed with the FMEA analysis, shown in appendix V.
