M ASTER THESIS 2019

M

ASTER THESIS 2019

Out with the old, in with the new:

Changing mindsets in organizational transformations

Single Case Study

-MSc Business Administration – Change Management

Faculty of Economics and Business

A

BSTRACT

In the world of change management, both in literature and in practice, attention is rising concerning methodologies and approaches that can be placed in the soft paradigm. Currently, most organizations are still working with more traditional methodologies, which can be attributed to the hard paradigm. Where in the past focus lay on the hard paradigm, attention is shifting to the soft paradigm, which brings about significant challenges following this shift. One such challenge revolves around changing the mindset of people involved, which is the focus of this research.

This exploratory, qualitative research adds to the existing literature by studying diverging composite narratives of different groups during an organization-wide transformation from a traditional ‘hard’ way of working towards an agile ‘soft’ way of working. The selected case-site is a Dutch, globally operating financial organization, with headquarters in Amsterdam.

The findings of this research came from 36 unstructured interviews with employees and management located in Amsterdam, throughout different parts of the organization. Analysis, with the use of coding program Atlas.ti led to composite narratives of different organizational groups along two dimensions: Levels of hierarchy and background of participants.

The resulting composite narratives show the extreme challenge of changing from a traditional, ‘hard’ mindset towards an agile, ‘soft’ mindset, aided by the sensemaking circle of Weick and the value triangle of Burnes and Jackson. There is doubt concerning the ability of Senior Management to ‘let go.’ People from ‘leading roles’ find it very challenging to let go of old management thinking and participants in ‘squad roles’ mention the difficulties of working together with people from different backgrounds: Business and IT. All agree that a change in mindset is needed; however, the way towards that change remains ambiguous.

The main managerial and theoretical implications of the research are the insights into the importance of both hard and soft elements of change when transforming towards a soft working methodology such as agile, mainly because the change in mindset is critical to its success.

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ABLE OF CONTENT

INTRODUCTION……….…………..… 7

THEORY……….………….………... 9

Hard and soft change approaches ………...……… 9

The concept of ‘Agile’

……….………… 10

Sensemaking……… 11

Narratives……….………… 11

Narrative analysis

……….………. 12

METHODOLOGY……….…………. 13

Case site selection……… 13

Data collection……….……… 13

Data analysis……… 15

RESULTS………...…………..……… 17

Theme 2 - Agile in practice………..…………..…..……… 18

Organizational climate

…..………..………

18

Employee climate

…..………..………

19

Theme 3 - Transition experience.………...…………..… 20

DISCUSSION………..……….………

27

Sensemaking and mindset change……….………...

27

Hard and soft change approaches and mindset change……….…………

30

Managerial implications……..……….……….…………

33

Theoretical implications………..………..…………

33

Limitations and future research………...………..………

34

CONCLUSION……….…………

35

REFERENCES……….…………

37

APPENDIX A – Participant codes, gender, area of work, and background….………

43

APPENDIX B – Codebook 2

_{order codes……….…………}

₄₅

I

NTRODUCTION

“Change has become both pervasive and persistent. It is normality.” (Hammer & Champy, 1993:23)

This statement from 1993 could not be more accurate in today’s world, where organizations everywhere face challenges that require constantly changing (McKinsey & Company, 2008). In literature, there are many methods and approaches to successfully manage change with a lot of variation among them (Al-Haddad & Kotnour, 2015).

A distinction that is very popular in change management literature, which originated in project management literature, is the one between the ‘hard’ and ‘soft’ paradigm and methodologies (Pollack, 2007). The hard paradigm is associated with deductive reasoning, and quantitative techniques while the soft paradigm revolves around inductive reasoning and qualitative techniques (Pollack, 2007). In essence, “…objectivist, scientific approaches are hard, while subjectivist, social approaches are soft.” (Crawford and Pollack, 2004: 546) Practices based on the hard paradigm emphasize traditional methods, focusing on control and structure (Gustavsson & Hallin, 2014). In contrast, soft practices associate with learning, participation, and social processes (Pollack, 2007).

Even though these paradigms are opposites, they are not mutually exclusive (Yeo & Tiong, 2000). Soft aspects within change, such as leadership style, corporate culture, and employee motivation (Sirkin, Keenan, and Jackson, 2005), can contribute to the success or failure of change, which was underexposed in the past. Wateridge (1999) stated that projects failed because management did not pay enough attention to the soft criteria. The same holds for ‘hard’ elements, for Sirkin et al. explain that, even though soft elements are essential for success, most change projects need hard elements to start a change project successfully. Beer and Nohria (2009) state that “…combining these “hard” and “soft” approaches can radically transform the way businesses change.” (p. 88)

within the context of an organization, Vaara, Sonenshein, and Boje (2016) define ‘organizational narratives’ as “…temporal, discursive constructions that provide a means for individual, social and organizational sensemaking and sensegiving.” (p. 3)

During periods of organizational change, the process of sensemaking is unequivocally present. As Weick, Sutcliffe, and Obstfeld (2005) state: “Sensemaking is about action” (p. 412), meaning that the process of sensemaking leads to change in people. They state: “There are truths of the moment that change, develop, and take shape through time. It is these changes through time that progressively reveal that a seemingly correct action “back then” is becoming an incorrect action “now.” These changes also may signal a progression from worse to better.” (p. 412/413). This statement explains that, through sensemaking, actions that seemed to be right before, might not be in the future. Sensemaking is a process what is essential to change people, a change in their mind.

The process of sensemaking also leads to various organizational narratives. Vaara et al. (2016) speak of an interpretive approach to narrative analysis, leading to composite narratives, meaning “the collective meanings of a group of organizational members” (p.13) These narratives are a focal point in this explorative case study research. The research question is:

How do composite narratives of different groups during an organization-wide transformation diverge, and what are the implications of those diverging narratives for a change in mindset?

This exploratory research will contribute to organizational change literature by looking into composite narratives of different groups in an organization and seeing how those composite narratives diverge. Moreover, the findings will create a more profound understanding of the process of sensemaking when changing from an old to a new ‘desired’ mindset, and the way different composite narratives contribute to this.

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HEORY

In this section, the understanding concerning the central concepts of this research is deepened. As a starting point: The concepts of ‘hard’ and ‘soft’ change approaches within the hard and soft paradigm. Next, will lead to the positioning of ‘agile’ as an approach on the soft side of the continuum. Moreover, more light will be shed on the concepts of sensemaking, organizational narratives, and narrative analysis relating to the research.

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ARD AND SOFT CHANGE APPROACHES

In project management and change management literature, the concepts of ‘hard’ and ‘soft’ change approaches have been gaining popularity and attention. As was explained in the introduction, ‘hard’ and ‘soft’ change approaches originate through the ‘hard paradigm’ and ‘soft paradigm’ in project management (Pollack, 2007). Based on these two different paradigms, methodologies and approaches have emerged.

As stated by Pollack (2007), “Methodologies developed under the hard paradigm consistently assume clear and stable goals.” (p. 6) Within the hard paradigm, goals are seen to be unchanging. Tools and techniques used are mostly quantitative, showing the rational, objective, traditional view of methods within the paradigm (Crawford & Pollack, 2004). Contrast to methodologies under the hard paradigm; the soft paradigm describes methodologies focused more on learning, participation, and social processes (Pollack, 2007). These are, therefore seen as being more qualitative in nature. Soft methods and approaches are less profound in literature so far; however, Pollack does state that “…methodologies associated with the soft paradigm are also starting to appear in the literature.” (p. 7)

What was also touched upon earlier, is that the concepts of ‘hard’ versus ‘soft’ are seen as being separate from one another; however, research shows the potential benefit of focusing on both during change. Wateridge (1999) already stated project failure due to insufficient attention for soft aspects within change. As said before, also Beer and Nohria (2009) find that the combination of hard and soft approaches can drastically alter the way businesses change. However, by the popularity gain of the ‘soft side’ to change, there is also a potential pitfall. Sirkin et al. (2005) explain that “Companies overemphasize the soft side of change: leadership style, corporate culture, employee motivation. Though these elements are critical for success, change projects can’t get off the ground unless companies address harder elements first.” (p. 98) This statement shows again the importance of having a dual focus when it comes to change concerning the hard and soft paradigm.

of projects…” (p. 647) These dimensions show a difference between the hard and soft aspects of projects. These seven dimensions are: ‘Goal/objective clarity,’ ‘Goal/objective tangibility,’ ‘Success measures,’ ‘Project permeability,’ ‘Solution options,’ ‘Degree of participation,’ and ‘Stakeholder expectations.’ Depending on the nature of the project in terms of hard and soft, these dimensions will be looked at differently.

Secondly, Kanter, Stein, and Jick (1992) distinguish between ‘bold strokes’ and ‘long marches’ which can be classified as either ‘hard’ or ‘soft.’ Firstly, ‘bold strokes’ can be seen as ‘hard’ because this is generally a short-term initiative by a small group of a few senior managers. It is seen as being very much a top-down approach, which mostly focusses on structure and strategy. In contrast, ‘long marches’ can be categorized as ‘soft,’ because this is as the name suggests a slower change where the organizational culture is impacted over time. It needs commitment and involvement of the whole workforce, therefore fits better as a soft approach to change. Burnes (2017) states that: “Kanter et al. argue that Bold Strokes and Long Marches can be complementary, rather than alternatives.” (p. 133) This statement coincides with what was mentioned earlier that combining both ‘hard’ and ‘soft’ in change can be very beneficial.

Lastly, Beer and Nohria (2000) explain two fundamental theories of change, which also fall under the ‘hard’ and ‘soft’ distinction. Theory E, they say: “This “hard” approach boosts returns through economic incentives, drastic layoffs, and restructuring.” (p. 87), while Theory O “…a “softer” approach – focuses on developing corporate culture and human capability, patiently building trust and emotional commitment to the company through teamwork and communication.” (p. 87) This can therefore also be compared to Kanter et al. (1992): Theory E can be compared to a ‘bold stroke’ in the ‘hard paradigm,’ and Theory O to a ‘long march’ in the ‘soft paradigm.’ Also, Beer and Nohria mention combining approaches within change.

The concept of ‘Agile’

S

ENSEMAKING

The concept of ‘sensemaking’ is fundamental in this research. Weick et al. (2005) state: “Sensemaking is about the interplay of action and interpretation rather than the influence of evaluation on choice.” (p. 409) It is “…the process of social construction that occurs when discrepant cues interrupt individuals ongoing activity and involve the retrospective development of plausible meanings that rationalize what people are doing.” (Maitlis & Sonenshein, 2010: p. 551)

Weick et al. (2005) speak of a framework for sensemaking where sensemaking “…can be treated as reciprocal exchanges between actors (Enactment) and their environments (Ecological Change) that are made meaningful (Selection) and preserved (Retention).” (p. 414) With this process, it is noted that these mentioned exchanges will only continue when the preserved content, meaning retention, is either believed or doubted. What this means is that this needs to be a continuous process. Through actions, meaning enactments, in the ‘environment,’ a person goes through a process of interpreting meaning from that enactment by either believing or doubting already preserved meanings (retention), leading to either the preserving of the current meaning or the discarding of that meaning and preserving alternative meanings. This can, therefore, be seen as a continuous process of enaction, selection, and retention. This abovementioned process of sensemaking is closely related to narratives, a concept that will be further elaborated on below.

O

RGANIZATIONAL NARRATIVES

Narratives are a way for people to give meaning to their personal experiences (Polkinghorne, 1988). Pentland (1999) explains that narratives focus on discourse with a sequential manner that attributes meaning to events. Gergen and Gergen (1997) describe the sequential structure as such that organizational members understand events in relation to each other over time. In an organizational context, Vaara et al. (2016) define organizational narratives as “…temporal, discursive constructions that provide a means for individual, social and organizational sensemaking and sensegiving.” (p. 3)

“…organizational narratives are often spread without particular intentionality or deliberate action.” (p. 7) This notion is important because the reasons for and means by which narratives arise and spread is, and in the case of organizational narratives, can sometimes be unclear. Fourth, organizational narratives are not an isolated concept but are part of ‘multifaceted’ structures. This means that organizational narratives could also be linked to the macro level or micro level narratives. Fifth, and described as a key challenge in the future, Vaara et al. say that narratives are usually associated with language, but that this can also relate to other forms of communication like visuals and audio. Lastly, “narratives have performative power (i.e., narratives are constitutive acts) and agency (i.e., narratives may bring about change in organizations).” (p. 8) When relating this to organizational change, what this means is that narratives can be present in an organization during a period of change, however dominant narratives could also lead to organizational change in and of themselves. Narratives in an organization, therefore, have the power to bring about change.

Narrative analysis

When talking about narrative analysis, there are three main approaches: Realist approaches, poststructuralist approaches, and interpretive approaches (Vaara et al., 2016). With realist approaches, narratives “…are means to study things that exist independently of the narratives themselves.” (p. 8) This approach holds two separate ways of narrative analysis, namely that narratives can be used as data in and of themselves, or as representations of interpretation.

Poststructuralist approaches (Boje, 2014) focus on “…uncovering the complexity, fragmentation and fluidity of narrative representations.” (Vaara et al., 2016: p. 15)

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ETHODOLOGY

The research had an exploratory nature because it looked into the subjective perspectives of the participants of the selected case site. Moreover, all participants were interviewed in their place of work, which is why the approach of a single case study was chosen. Also, this aids the explanation of causal links between the narratives of different groups (Eisenhardt & Graebner, 2007; Yin, 2003). This single case study is used to build on, and refine, existing theory. Furthermore, this qualitative research builds on previous research concerning dominant composite narratives at the selected case site (e.g., de Boer, 2017; Mein, 2018; Poortstra, 2018). Cooperation between the chosen case site and the University of Groningen, the Netherlands, made this research possible.

Below, an elaboration is given about the case site that was used for the research. After that, the ways in which data was collected is discussed, followed by the way the data was analyzed. Also, constant attention was given to means of preventing biases throughout the methodology.

C

ASE SITE SELECTION

The selected case side in this qualitative research was a Dutch, globally operating financial organization, with operations in over forty countries, and headquarters in Amsterdam, the Netherlands. This organization is split up into two branches: Retail- and Wholesale banking. Retail banking provides products and services to individuals, small and medium-sized enterprises, and mid-corporates. Wholesale banking, on which this research was focused, has three main product areas: Lending Services (LS), Transaction Services (TS) and Financial Markets (FM), and provides products and services to corporate, multinational organizations globally. This organization has been going through a massive transformation since 2013, namely a change from a traditional project management structure, towards a new way of working and organizational design: ‘The new agile way of working.’ This change started at Retail banking first, followed by Wholesale banking in 2016. At the end of 2018, the Wholesale branch fully and officially transitioned to ‘agile,’ which has affected around 5.000 employees globally.

D

ATA COLLECTION

misconduct. Because of the nature of the study containing personal perspectives and stories from the employees and management of the organization, these ethical guidelines have been handled with care.

To capture the composite narratives of different groups in the organization going through the transition towards agile working, a total of 36 unstructured interviews were held in two months, starting in April 2019. Because of the explorative nature and for validity reasons, the choice was made to have unstructured interviews. Also, in this type of research, it is of great importance that the researcher does not influence participants in any way with the use of steering questions (Willig, 2013). Interview data has been collected using numerous and highly knowledgeable informants who view the organization-wide transformation from diverse perspectives (Eisenhardt & Graebner, 2007).

Because of the nature of the research, it was imperative to build a network and familiarize ourselves with the day-to-day of the organization, to find participants. As a starting point, a meeting was set up with a former research student, now working for the organization. From this meeting came the first five participants, which created a starting point for the snowball sampling method (Blumberg et al., 2014). Appendix A shows all participants, in combination with the gender, product area where they work, and their background. A conscious choice was made to have only five participants as a starting point that were given by someone working at the case site. The reason for this was to limit potential bias from the case site organization, by providing participants they wanted to be involved.

The beginning of each unstructured interview started with a single question, containing two parts: Could you tell us something about who you are and what your role is within [name organization]? All questions asked after that were a result of what each participant was talking about, which ensured the unstructured nature of the interviews and gave the focus of discovering the ‘how’ and the ‘why,’ leading to more detailed information (Yin, 2003). Each interview was with the presence of two out of three researchers to create a comfortable environment. Moreover, it was essential making sure the environment in which interviews were held was consistent. Every interview that was planned was scheduled by one of the researchers, to make sure that the same rooms were booked as much as possible, thus considering circumstantial bias and reliability. The researcher not present was responsible for transcribing and coding the interview.

After each interview, all researchers discussed the topics that came up, to limit researcher bias. These discussions based on the interviews also aided the reliability of the results and construct validity. Furthermore, each participant at the end of each interview was asked for multiple names as potential new participants. From these names, each time a few were chosen at random. Moreover, the sample was purposefully chosen, meaning that participants were selected through four, predetermined, general criteria, to create a data pool that is as diverse as possible (Guest, Bunce, & Johnson, 2006). These criteria were the following:

- Gender: Male/Female

- Fair distribution over background: Business, IT, Management - As many participants as possible who had previously participated

With permission, all interviews were recorded, and participants were ensured of the confidentiality regarding the relationship between the identity and content of the interviews. After that, interviews were transcribed and coded before analysis, which is discussed below. After transcription, the recorded interviews were deleted, and transcribed documents were only accessible to the research students and the thesis supervisor from the University of Groningen.

This research further made use of secondary data, consisting of the documents of the previous MSc Change Management research students. This data entails lists of former participants and transcripts. This data was used for potential participants who were involved in earlier cycles of this research. In contacting these potential participants, it was made clear that this information stays confidential within the boundaries of the research as a whole, referring to the confidentiality as explained above.

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ATA ANALYSIS

After data collection, all audio tapes of the interviews were transcribed individually, which enabled the process of analyzing. In analyzing the collected data, reliability was increased by using a well-known coding program, Atlas.ti (Richards, 2015; Woods, Paulus, Atkins, & Macklin, 2016; van Aken, Berends, & van der Bij, 2012). Furthermore, most of the coding process was conducted collectively, to ensure a consistent coding process, while also keeping in mind researcher bias.

As mentioned before, two researchers were present at each interview, and the third was responsible for transcribing and coding the interview. This ensured a deep understanding of each interview by each researcher. It meant that each researcher had a leading role in 12 interviews, a supporting role in 12 interviews, and a transcribing and coding job for 12 interviews.

PHASE 1 PHASE 2

PHASE 3

PHASE 4 PHASE 5

Figure 1 Process of analysis

After the first-order coding process was completed, all codes were merged into one Atlas project, resulting in 777 codes. These codes were all evaluated, based on similarities and relevance, resulting in 173 merged, first-order codes. For example, ‘physical dispersion,’ and ‘geographical dispersion’ were merged into one code. This led to a basis for the second-order coding process.

The second-order coding went through multiple phases of integration as well, going from 173 codes to 96 codes, with a final number of 47 second-order codes. From these codes, a codebook was created, which can be found in Appendix B. From the second-order codes, 13 categories were established, which are “…a word or phrase describing some segment of the data that is explicit.” (Rossman & Rallis, 2003) These 13 categories were established by reading through the transcripts again, which led to patterns emerging. From these categories, five final themes emerged, which “…is the outcome of coding, [...] and not something that is in itself coded.” (Saldaña, 2009, p. 13)

To analyze the results, the participants have been grouped along two dimensions. The first dimension is divided into: ‘Senior Management,’ ‘Lead’ roles, and ‘Squad’ roles. The group of ‘Senior Management’ consists of three participants. The ‘Leading roles’ group holds 13 participants, which all have leading roles, such as Tribe lead, Circle Lead, and Area Lead. The group of ‘Squad roles’ has 11 participants who are working within squads. In this dimension, 9 participants were not taken into account because these participants did not fit into one of these groups. This dimension will enable results based on ‘hierarchical’ differences and findings.

The second dimension of groups has been divided into ‘Business,’ and ‘IT,’ meaning the background of the participants before the transition to agile. The ‘Business’ group had 25 participants. The ‘IT-group’ consists of 11. Results from this dimension enabled the reveal of possible differences between people with different backgrounds in relation to the organizational transformation.

Individual coding Transcribe audio tapes

Evaluate and merge

96 codes

Evaluate and merge

47 final codes

Codebook

Appendix B

Evaluate and merge codes

173 codes Combine codes into Atlas project _{777 codes}

Evaluation leading to categories

13 categories

Evaluation leading to themes

5 themes

Fist-order

R

ESULTS

In the results, each of the relevant second-order codes of the five themes is discussed individually. What codes are deemed suitable are those codes that give insight into the focus of the research: mindset. With mindset, both indicators of the new desired mindset, and the old mindset are meant. All the categories that will look at the two dimensions of groups, as explained in the methodology: groups in terms of hierarchy and groups regarding the background of participants. After each category belonging to a theme, a table is presented with the dominant narratives related to mindset. At the end of the results section, composite narratives of each group amongst the two dimensions are given, giving an overarching view of the narratives of each group. In Figure 2 below, the data structure can be found, which shows the second-order codes, leading to categories, leading to the five themes. The crossed-out codes/category will not be discussed further, as explained above.

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HEME 2

AGILE IN PRACTICE

Category - Organizational climate

In the category of ‘organizational climate,’ two codes hold perspectives concerned with desired and old mindsets. These are the codes of ‘Business and IT’ and ‘Integration.’ Both contain information concerning the integration of people with business and IT backgrounds in relation to the agile implementation. In terms of a desired agile mindset, this integration is needed to further knowledge sharing and collaboration, both of which are seen as essential to agile. From the perspective of the first dimension, hierarchy, participants in leading roles, in general, feel that the integration has been the right decision, but very challenging. In a leading role, TS-P_09 emphasizes the importance: “So now with

these settings, where business and IT have to talk to each other. Is kind of forces them to share each other’s roadmaps or aspirations or even challenges.” In this statement, the use of the word “forces”

shows the challenge that lies in integrating people from such different backgrounds. This perception concerning the challenge in integrating is widely shared by participants in squad roles. TS-P_11 from a squad role mentions “I think it's the old story, IT versus commerce. And you suddenly try to put that

together.” This same participant mentions the difficulty in a different way, which shows the struggle

between the old mindset, which is not suitable for the new situation:

And frankly, I would have to say that, and this is of course personal, I have a commercial background. So, if a customer calls or a colleague in IT, well then, I would always choose the customer, that is just how it is. You know, this is how I was educated, or indoctrinated, whatever you want to call it.

Looking at the second dimension, background, there is also a difference. Business speaks of the difficulties of integrating into an IT-world:

That still has to get used to. And also, how far do you want to go, because you are quickly immersed in IT if you are in a team with eight IT people and you. Then you will be pushed that way very quickly while that may not be what you want, you know that is not really the intention because you also need someone who looks outside. (TS-T_01).

IT also speaks of these challenges, however, focuses more on the choice being right, but business people are not there yet:

Category – Employee climate

Indications of the desired mindset in this category refer to the importance of autonomy at lower levels of the organization, and better communication. Perceptions revolving around the employee climate show similarities across multiple groups. In terms of autonomy, participants in leading roles speak of the importance for squads to have autonomy and for them to take it. On squad level, this autonomy is either not yet felt, or is something that still needs to grow, which is an indication of the old mindset standing in the way of this. Participant FM_04 in a squad role says:

Well uhm, I have often been in situations where I want to achieve things but where I have no mandate. Because in fact if you are in a different team, if you have to deal with that but you have no mandate. Then it means negotiating. And occasionally pray and beg.

This feeling is actually also felt by someone in a leading role:

Does the senior management of this company also walk the agile walk. Because I wonder if the autonomy that I give to my teams is not always the autonomy that I experience. To think for yourself which choices are wise. And I think that autonomy should also grow. And should be bigger. (LS_04).

This quote shows that this participant in a leading role tries to give autonomy to squads but is not experiencing this for his-/herself as a result of someone in a Senior Management role not giving autonomy away, also an indicator of the old mindset in Senior Management.

Communication is seen as an important aspect of agile working. This is shared by all groups on both dimensions. Communication, when arranged well, is improving. TS-P_01 in a squad role says “So

the communication goes on a much more natural basis at those levels, yes there is much more transparency.”, and TS-P_09 from the leading roles group mentions that “…what I see here in scrum agile is that if you do that as an integrated team, that it is a significant communication improvement.”

Both speak of improving communication. There is also the mention that it is on a ‘natural basis,’ which indicates an evolving mindset.

Lastly, there is a lot to say about the mindset change that is needed. What is seen is that it is the people in leading roles with a business background that emphasize the change in mindset is necessary; for instance, LS_06 says: “We also have to deal with people there, it is a mindset and people still have

to change that mindset. We are making that change, but we are not there yet.” The importance is also

emphasized, because:

Participants with an IT-background share the same perspective in terms of the importance of a change in mindset, however they take into their perception the concept of “time”: “So that it is good to listen

but difficult, it takes time to make it a new habit.” (TS-P_09), and:

Well, it's not perfect. There are always struggles there. But again, this mindset change is not something that you can do very easily. So, it's always a work in progress kind of thing. So, things are changing but we still have some way to go in this regard. (LS_01).

Table 1

Narratives on Agile in practice

Dimension 1

Hierarchical

Senior Management Leading roles Squad roles

X

- Integration Business & IT good, but challenging because of old mindset

- Squads/teams need to take autonomy

- Importance of communication - Change in mindset is needed

- Integration Business & IT challenging, because of old mindset

- Do not feel autonomy/ need to learn to take it

- Importance of communication - Change in mindset needs time

Dimension 2

Background

Business IT

- We must merge into an IT-world - Need change in mindset

- Integration good, but Business is not there yet - Takes time to change mindset

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HEME 3

TRANSITION EXPERIENCE

Category - Positive experience

In the category of ‘positive experience,’ advantages that are named can be linked to the desired agile mindset. Participants in leading roles mostly speak of improved communication and transparency. In the group of squad roles, advantages are similar but are attributed to benefits for daily work practices. Participant TS-P_11 says:

TS-P_06 also states that “As a team you are responsible for your own delivery, it is much less

hierarchical, which is very nice.”. The aspects that are mentioned are shared across different hierarchical

layers and by participants with diverse backgrounds.

Category – Negative experience

In contrast to the category ‘positive experience’ showing the desired mindset, the category ‘negative experience’ shows the opposite of the desired mindset: Frustration on the floor, issues with trust, and the felt loss of productivity. Participants from the leading roles share the perception that there is a problem around delivery leading to frustration:

What happens is more the frustration. That someone has something negative but has the frustration that they don't deliver what they want. Then you always have the feeling that you are not doing what you would like to do. But also learn to use agile fully so that agile works. (TS-P_05)

Felt by both leading- and squad roles groups is the loss of productivity. TS-T_05 from the leading group says “…there is a lot of productivity, let me say it has been lost in recent months…”, and TS-T_04 from the squad group adds: “…but I think the whole transition us, let’s say, frankly, it has cost 20-25%

productivity. We really took a kick back, and this domain is certainly not unique in that, it happens really broadly.”. This loss of productivity was even shared by one participant of the Senior Management

level, SM_02, who stated: “And a lot of productivity has leaked away during those eighteen months.

Let's be honest.”

Perceptions that are shared amongst participants with squad roles are high pressure and trust issues. LS_02 speaks of troubles with an agile coach when the pressure to deliver is high. The quote below also shows the old mindset of the participant, when agile practices interfere with the daily work of the participant:

I don't ask him that either [feedback on prioritizing problems], because I think he has no role in that. I am responsible for daily work, he is not. And I am judged by that, I think it's fine that he does his thing, but that has to fit within the work at that time.

In terms of problems with trust, this has to do with trust between business and IT: “I think, what I just

said, that business and IT don't yet trust each other that they are doing the right things, there is still some work to be done.” (FM_05) This distrust that is still there, shows that the old mindset is there also.

Category – Ambivalent experience

This category shows that people are falling back into their old mindset. What is also a broadly shared perception is: People are still searching for what their new role entails. This is a very big point of discussion. FM_02 from a leading role states it plainly: “…a lot of people are still thinking what exactly

And everyone has their own thoughts about what makes sense or whatever. But if you do not state clearly what is needed. We actually still don’t know, the question remains: what should a Customer Journey Expert actually do? Still the question with a lot of people. Well that seems pretty late to you if you're already in April.

For these participants, not knowing what their role entails, makes working in an agile way and adopting an agile mindset very difficult. This leads to the following code referred to in this category: ‘old mindset.’ Senior Management looks at this rationally, saying that it is a very human thing to try and hold on to the status quo. From the perspective of leading roles, they personally have trouble letting go of their old (management) roles. TS-P_09 states:

…there are moments when, as part of agile way of working you expect your team to refine your work and tell you when they are ready. That is difficult to accept because in your mind as a leader, as a manager you already have a deadline or a timeline to meet.

In squad roles, falling back to old mindset behaviors when pressures are high:

You now see that people have to get used to themselves, when a person is under pressure, he is very quickly inclined to show his old behavior. The pressure on the organization to deliver is very high. So, you see that people are very likely to step back to their old behavior. […] Everyone is very motivated to work in the new way, but you quickly fall back on an old way that you know has been successful.

(TS-P_03). Table 2

Narratives on Transformation experience

Dimension 1

Hierarchical

Senior Management Leading roles Squad roles

- People like going back to what is comfortable

- Better communication and transparency

- Problems with delivery - Productivity loss - Felt frustration

- People are searching for their new roles

- Difficult to let go of old roles

- Advantages for daily work - Productivity loss

- Trust issues - High pressure - What is my new role?

T

HEME 4

MANAGEMENT

Category - Management concepts

The category concerning management concepts was met with much consensus. What is clear is that in general, there is a feeling that management is still very top-down, which indicates an old mindset. Senior Management themselves state: “And at the same time we sometimes get orders from the top and they

just say execute, cut 10% in costs because we have to, we have to, we have to. Then we also just have to perform.” (SM_01). In the leading roles group, this is shared: “But even from the top leadership of Wholesale Banking, there should still be some more, let's say: trust your team to do the right job and not have to micromanage it.” (LS_01). On the level of squad roles, this feeling intensifies, for participant

TS-P_06 says: “It really felt like ‘we are going agile, figure it out’. Just do it, figure it out.”, or “And

for wholesale banking was more senior management saying look we hear good things about domestic, why don’t we do this in wholesale, so you guys do that as well. So, it was forced upon wholesale.”

(LS_03) What this shows is that, at least in perception, the transformation and the agile way of working currently, is intertwined with an old mindset of management still.

Table 3

Narratives on Management

Dimension 1

Hierarchical

Senior Management Leading roles Squad roles

- Top-down - Top-down - Agile was forced

- Negative feelings towards SM

Dimension 2 Background Business IT - Top-down - Top-down

T

HEME 5

LEARNING

…I would in any case say that people who have an area of interest that they should become acquainted with other areas of interest. You just have to. Not because they want to, but they just have to know what those others mean to them. That already means that you will get a completely different form of respect. What you are in your own team now. But that other team might also do something for you. But if you understand their problems better, you may also understand your own role better… (FM_04).

Category – Time

The concept of ‘time’ is used a lot as an explanation on different aspects, most of all in behavioral/mindset change. On Senior Management level, SM_01 explains “So, well, we are seeing that

it is being adopted [agile ways], but we are not there yet…”. In a leading role, TS-P_08 states:

In every organization as time goes by, informal structures will take the upper hand in an organization. This is the case in a lot of situations because a lot of people hold on. When it is unclear, falling back to the structure.

Within the group of squad roles, two perceptions are visible. The first: This just takes more time; however, this is perceived as a struggle:

[name] who was just here says yes no that's right indeed we have to give time for that and we are going to do that too, but some things we have to fall back on to make sure we stay in the air […] So I struggle with that myself.

(TS-P_02) What becomes clear here is that people want to give it more time, but it is also said that time is not always a possibility. It also shows that when time is limited, falling back to what you know, old mindset, is what happens quickly.

The other perspective is based on the idea that agile itself takes much time. Participants with a business background mostly state this. Participant TS-P_06 gives an example:

Table 4

Narratives on Learning

Dimension 1

Hierarchical

Senior Management Leading roles Squad roles

- Just needs time - Just needs time - Creating understanding

- Just needs time - Agile takes up time

Dimension 2

Background

Business IT

- Just needs time - Agile takes time

- Understanding of others - Just needs time

C

OMPOSITE NARRATIVES

Dimension 1 – Hierarchy

Table 5

Composite narratives of group: Senior Management

This group has a rational view of the overall transformation with a link to what agile is in theory. Participants in this group rationalize the change process and why they are where they are. Agile is seen as something that you are, or you are not. It is logically explained why people need time and why this is a complex transformation.

Table 6

Composite narratives of group: Leading roles

This group looks at the transformation as being the right choice for the organization. However, challenges that are felt in the lower parts of the organization are either felt or noticed by participants in this group. This results in positive feelings, but they are faced with problems for which there is no solution yet. There is contrast felt between what agile should be in theory, and how agile works in practice.

Table 7

Composite narratives of group: Squad roles

To conclude, composite narratives along this dimension show diverging views concerning the transformation and the agile way of working. The problems and challenges from participants of the ‘Leading roles’ and ‘Squad roles’ groups are concerned with the integration of Business and IT, the search for the new roles that accompany agile, and the ‘desired’ change in mindset that is needed. Also, after implementation, there are issues concerning design that do not fully support the level of collaboration and knowledge sharing that agile prescribes.

Dimension 2 - Background

Table 8

Composite narratives of group: Business

The group of participants with a background in Business shares many difficulties with the agile way of working. These difficulties lie in the search for new roles and the integration of them into a seemingly IT-world. Because of this, the suitability of agile is questioned, and agile is seen as something that takes much time. It is also felt that there is a clear need for a change in mindset to reap the rewards that agile could bring.

Table 9

Composite narratives of group: IT

Participants with a background in IT were working with agile methods before Business was integrated; therefore, there is more familiarity with this way of working. This leads to the perception that a balance is needed between Business and IT, which requires time for this to adjust. People with a background in IT see the advantages of working agile, especially for IT.

D

ISCUSSION

This research was aimed to answer the following research question: How do composite narratives of

different groups during an organization-wide transformation diverge, and what are the implications of those diverging narratives for a change in mindset? To answer this question in the conclusion, the results

will first be discussed with reference to the focus of this thesis: sensemaking and mindset change. Thereafter, the results are discussed in relation to the balance of ‘hard’ and soft’ elements in the transformation to an agile way of working, to examine the possible implications for the change towards the ‘desired’ mindset. In these discussions of the findings, links are made to existing theory, in an attempt to find possible explanations or discrepancies between the results and theory, leading to propositions. Furthermore, attention is given to the managerial and theoretical implications, followed by the limitations and suggestions for future research.

Before the results are discussed through different lenses, there is an overall note of importance. In general, there is a sense of negativity throughout the results. However, there could be a (partial) explanation for this phenomenon, which is called ‘Negativity Bias’ (Rozin & Royzman, 2001). What this phenomenon means that “…there is a general bias, based on both innate predispositions and experience, in animals and humans, to give greater weight to negative entities (e.g., events, objects, personal traits).” (p. 296) One aspect of this negativity bias is called ‘Negativity Dominance,’ in which lies the possible explanation for the negativity found in the results. Negativity dominance means that in the “…perception and appraisal of integrated negative and positive events…” (p. 298), is more negative in total than the values of individual events. Kanouse and Hanson (1972) suggest that the negative overweighs only when negative and positive are found together, meaning, for instance, in one event. If this is linked to the research results, it could be argued that the event of the agile transformation, and the positive potential it holds, in combination with the uncertainty concerning the individual components of agile in practice, leads to the fact that negativity is more present then the positivity of the agile transformation. The concept of ‘loss aversion’ could add to this explanation, for this concept means that in general, losses seem bigger than gains. (Kahneman and Tversky, 1979).

S

ENSEMAKING AND MINDSET CHANGE

“Organizations exist largely in the mind, and their existence takes the form of cognitive maps. Thus, what ties an organization together is what ties thoughts together.” (p. 102-103) Therefore, a connection can be made between sensemaking and mindset. Below, results are discussed through the lens of the mindsets of participants, attributed to either old mindsets or the new, which is part of the process of sensemaking.

Throughout the results, elements of what the desired agile mindset would be are mentioned by different participants. These elements are concerned with a state of mind that enables knowledge sharing, communication, and collaboration across hierarchical levels or backgrounds — moreover, a mindset that empowers people to be autonomous, when autonomy is offered. However, moving away from a mindset which is wired in a more traditional way towards a mindset as described above, is very challenging and, if not attended to, could lead to failure of adoption (Dikert, Paasivaara, & Lassenius, 2016). Boehm and Turner (2004) emphasize this challenge because changing the mindset of people, in general, is very difficult, however making a shift towards agile methodologies even more formidable.

Proposition 1: With regards to a large-scale transformation from a traditional way of working towards

an agile way of working, changing the mindset of people involved towards an ‘agile’ mindset is a big challenge, which is critical to adoption.

The three participants of Senior Management have a very rational view of the agile transformation. When discussing the change in the mindset of the other groups, there is a rational perception that it is merely natural for people to hold on to what they know. The rational way of speaking regarding the ‘agile way of working,’ could be an indication that the participants do not fully comprehend the importance of the change in mindset for all involved, including the people from this group. Participants from the leading roles- and squad roles groups expressed feelings that possibly confirm this. In consensus, it is stated that both the change and decisions that are currently made are very much top-down, where agile methods ask for a collaborative nature (Dikert et al., 2016). Moreover, Nerur, Mahapatra, and Mangalaraj (2005) state that the biggest challenge in the collaborative nature of agile lies in management that needs to “…relinquish the authority he/she previously enjoyed.” (p. 76)

Also present is a feeling that Senior Management has no belief in agile. Participants of lower levels expressed this by mentioning the sense that agile was only chosen because this would mean that the organization was the first global organization to be agile in the financial industry. Moreover, agile is seen as “window dressing,” and multiple participants expressed that they did not think Senior Management believed in the idea behind agile.

mindset, the diverging perceptions of groups of lower levels can hinder the adoption in those levels. Management support is seen as a success factor in large-scale agile implementations (Dikert et al., 2016), because “Visible involvement of management was reported to motivate and encourage employees to adopt the new way of working [agile].” (P. 99) As Weick et al. (2005) explain, sensemaking regards the continuous process of actions and interpretation of those actions. As a part of the vision that was communicated, Senior Management had a strong message about what they, meaning Senior Management members, needed to do: ‘Letting go.’ Senior Management themselves feel like they are doing this, which is not the case when asking participants from lower hierarchical levels.

Proposition 2: In changing the mindset of employees toward a ‘desired’ agile mindset, visible

management support is a key success factor.

Participants in leading roles, when referencing to their journey to change towards the desired mindset, spoke of the difficulty of letting go of traditional management thinking. The transition is made more difficult when the environment also uses conventional ways of thinking. What was mentioned a lot is that people still come to those that used to be managers to ask them what to do. As part of the ‘traditional’ management mindset, it comes naturally to oblige when people come asking for directions. Moreover, it was expressed that the external environment is not that aware of the new roles and what they mean, resulting in people using their old functional titles when engaging with the external environment. Again, these actions hinder the adoption of an agile mindset, because these actions are interpreted in a way that leads to movements of the familiar: The old mindset. The research from Dikert et al. (2016) mentions similarly: “Managers were reported to need to resist the tendency to command and control and allow room for self-organization, but the change in mindset was difficult to achieve for the people involved.” (p. 98)

The abovementioned difficulties that are experienced by participants in leading roles are also found in another group. Participants in squad roles have explained that, when pressure rises, people fall back to what they know is successful. What that means is that “Stress caused by the combination of schedule pressure and much change at once can pull people back to the old way of working.” (Dikert et al., 2016: p.97) This is a phenomenon that is mentioned by multiple participants.

Proposition 3: Factors beyond individual control, i.e. ‘old’ thinking of others or work pressure, can

lead to a relapse towards an old mindset.

As they explain, adopting the mindset successfully requires proper coaching. What is mentioned by a lot of participants is that there are not enough agile coaches to benefit from having a coach.

The ambiguity surrounding the new agile roles could be an explanation for the challenge in adopting the agile mindset. As explained by Weick et al. (2005), the sensemaking process will continue only when the preserved content is either believed or doubted. When the content is still ‘believed,’ sensemaking continues without alterations. When questioned, changes occur, which lead to a change in thought, meaning mind. The main problem for people concerning their new role has to do with them not understanding their role and what they must do. This indicates a lack of knowledge. When there is not enough new information which could lead to doubting the preserved knowledge, the change will not occur.

Proposition 4: In changing the mindset of employees toward a ‘desired’ agile mindset, a considerable

investment must be made in providing support and knowledge to enable the adoption of working ‘agile.’

Probably the most discussed subject has been the integration of Business and IT. This integration happened after the official implementation of agile, which was January 2019. Before the implementation, most people with a background in IT were already working ‘agile,’ whereas Business was not. This difference in experience in and of itself created a difference when these people were integrated. Moreover, these groups of people are generally very different, as mentioned by multiple participants: People from two different worlds. It also creates a challenge when they start working together. Participants with a background in Business also mention a feeling of being ‘sucked into an IT-world,’ which is not where their interests lie and which they do not understand. Because people from IT were already working in an agile way, their mindset is much more adapted to the ‘desired’ state when comparing this to the people with Business backgrounds. For Business, an explanation could lie in what was said before: The ambiguity concerning the new way of working and accompanying roles. However, the fact remains that there is a gap between people from Business and IT, because of the traditional perceptions of the relationship between the two.

Proposition 5: When transforming towards an agile way of working, which relies on collaboration

between people with different backgrounds, such as Business and IT, taking time to close gaps created by traditional mindsets is a critical success factor for the transformation.

H

ARD AND SOFT CHANGE APPROACHES AND MINDSET CHANGE

2014), while soft is associated with learning, participation, and social processes (Pollack, 2007). What was also mentioned is that the combination of hard and soft elements in change is essential for success (Beer & Nohria, 2009). It is the balance between hard and soft, which is a challenge, but necessary. Sirkin et al. (2005) give insight into this balance: “Companies overemphasize the soft side of change: leadership style, corporate culture, employee motivation. Though these elements are critical for success, change projects can’t get off the ground unless companies address harder elements first.” (p. 98) They, therefore, imply that harder elements should come first; thereafter, soft elements should be included.

Based on the results that mention the actual transformation process, a lot of ‘hard’ elements can be identified. Participants from all groups explain the transformation to have been top-down, and some even felt forced into the new way of working. Moreover, from the perspective of participants on squad level, the transition was perceived as fast, which led to people having trouble adapting. This is in contrast to what is stated by Senior Management participants, who spoke of the loss of time, due to wanting to ‘do it right.’ Furthermore, problems with support and coaching were addressed, predominantly by participants with Business backgrounds. These participants mention the lack of support and understanding of the new way of working. From the results, it seems that, even though agile is a soft approach (Howell et al., 2010), the focus has mostly been on hard elements. This is, at least, perceived by participants from lower hierarchical backgrounds, in contrast to participants in Senior Management. Burnes and Jackson (2011) explain that to achieve success in change interventions, congruence is needed between different value systems. This value alignment is, according to Burnes and Jackson, needed amongst three factors: “…those involved in the change intervention, the objective of the intervention and the approach of the change…” (p. 137) Thus, it is vital that the values are aligned, aiding the road to successful change. Figure 3 to 7 show the value alignment for each group amongst the two dimensions.

Figure 3 Value alignment group: Business Figure 4 Value alignment group: IT

Figure 5 Value alignment group: Senior Management Figure 6 Value alignment group: Leading roles

Figure 7 Value alignment group: Squad roles

What becomes apparent through the visualizations of value alignment of the different groups, is that narratives concerning the values are not aligned. Between Business and IT (Figure 3 and 4), there is a discrepancy in the organization value. IT, who was already working with agile methodologies, already had a “softer” perception, in contrast to Business, who was still working more traditionally before the implementation. This could be an explanation of the ‘gap’ that was discussed before.

What is seen throughout Figure 3 – 7 is that in all groups, values are not aligned. Burnes and Jackson (2011) explain that the alignment “…may play a significant role in whether change interventions are accepted by members of an organization and in the intention of those members to respond and implement the change.” (p. 158) Therefore, if the change result needs to be ‘soft,’ as argued by Burnes and Jackson, the change approach should be ‘soft’ as well. However, findings show that this is not the case.

To prepare employees for the transformation from a hard, traditional way of working towards a soft, agile way of working, more focus should have been on the soft elements in change. This could explain the challenge that is currently faced concerning changing people’s mindset towards the ‘desired’ agile mindset, because changing people’s mindset and behaviors is a ‘soft’ element as well, which cannot be changed through hard interventions. This again shows the importance of a combination of hard and soft in change, especially when it comes to changes in the soft paradigm.

Values organization Soft

Change result Soft Change approach

Hard & Soft

Proposition 6A: Changing the mindset of employees is a key success factor when transforming from a

hard, traditional way for working towards a soft, agile way of working.

Proposition 6B: In organizational transformations from hard, traditional ways of working towards soft,

agile ways of working, a balance of hard and soft change elements is critical for successful change.

M

ANAGERIAL IMPLICATIONS

From a practical perspective, the findings of this research give the following implications: Firstly, it provides insight into the importance of balancing hard and soft change aspects during an organizational transformation towards an agile way of working. Besides this, when a change towards an ‘agile’ mindset is critical for the transformation, soft aspects are more important. This is because, a change in mindset in itself is behavioral, which takes time, and requires soft interventions focused on learning. Time must, therefore, be given for the sensemaking process, which leads to a change in mindset.

What the findings also show, is the opposing composite narratives concerning the ‘desired’ mindset of Senior Management. This is an essential managerial implication because ‘perception is reality.’ If people from lower levels in the organization perceive the mindset of Senior Management not to be agile, this is a problem. As mentioned above, visible management involvement is key to success in large-scale agile change (Dikert et al., 2016).

T

HEORETICAL IMPLICATIONS

This research was aimed to give insight into diverging composite narratives during organizational transformation, and the implications of those diverging narratives for changing the mindset of the people involved in the change. The results are explained and discussed with the use of multiple theories. First of all, negativity bias theory (Rozin & Royzman, 2001) was used to (potentially) explain the overall sense of negativity throughout the results, as were theoretical concepts of sensemaking (Weick, 1979) and narratives. Also, by using the value triangle of Burnes and Jackson (2011), the importance of value alignment was shown. Lastly, theory surrounding the hard and soft paradigm was used to underline the importance of both hard and soft elements in change and changing mindsets.

and soft elements of change in an organizational transformation were changing the mindset of people is critical for success.

L

IMITATIONS AND FUTURE RESEARCH

This research holds a few limitations, starting with the problem of researcher bias. Even though this bias was avoided as much as possible, it can never be avoided altogether. It is natural to look at data through a particular lens (Willig, 2013). Moreover, because of the exploratory nature of the research, it was necessary to have fully unstructured interviews. Because of this, the level of subjectivity is very high, and also, interpretation of the data is more complex (van Aken et al., 2012). Furthermore, it was the intention to have a sample of participants as broadly spread over the case site organization as possible. Even though this was intentional, this also led to a thin representation of participants from a lot of different layers and groups of the organization. This could, therefore, give a certain biased view on certain groups or levels.

C

ONCLUSION

After finalizing the research, the research question can be answered. This question holds two parts: (1)

How do composite narratives of different groups during an organization-wide transformation diverge, and (2) what are the implications of those diverging narratives for a change in mindset?

In answering the first part of the research question, two differences were fascinating. First, along the hierarchical dimension, there was a striking difference between the composite narratives of the Senior Management group and the Leading roles- and Squad roles groups. This difference is regarding the perceived mindset of Senior Management in the agile transformation. As communicated, Senior Management needed to ‘let go’ when transforming to agile, which they all have claimed to do. However, this is not perceived as such by the other groups.

The other exciting divergence was found in the second dimension of backgrounds. The composite narratives of Business concerning the transformation are more negative than those of participants with a background in IT. This difference is partly because IT was already working with agile methods, but also because participants in Business still feel a substantial lack of knowledge when it comes to the suitability of agile in Business, ambiguity concerning new roles, and the integration of Business into an IT-world. IT-participants also see these challenges; however, are more positive and speak of finding the right balance.

R

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