pruh_TITL text N:\work\projekty\šablony\sablony\logoC.wmf Change Management Ondřej Částek text pruh_normal pruh_normal www.econ.muni.cz 2 Content §Need for a change §Barriers in change implementation §Reengineering §PDCA, Kaizen §Getting support for a change text pruh_normal pruh_normal www.econ.muni.cz Need for change §Changes in external environment §Changes in internal environment § n(= need for external and internal environment analyses) 3 text pruh_normal pruh_normal www.econ.muni.cz Barriers in change implementation nThe resistance to changes comes out from §the need to invest effort for adaptation to thenew state §the fear of losing position or job §the attitude „if it worked until now, why should it not work further“ § n„Better the devil you know than the devil you don't know“ 4 text pruh_normal pruh_normal www.econ.muni.cz Resistance to changes (Kubíčková, Rais) 1.Fear of unknown 2.Interruption of stereotypes and customs 3.Sense of being manipulated 4.Unclear objective of the change 5.Fear of failure 6.Benefits from the change implementation will not compensate the invested effort 7.Undue satisfaction with the current state 8.The change proposer does not have respect of subordinates 9.The change means higher personal involvement 10.Traditions are valued = permanence 5 text pruh_normal pruh_normal www.econ.muni.cz Business process reengineering (BPR) §“fundamental”, “radical”, “dramatic”, “on a greenfield site” §focuses on a workplace, a process or whole company §started in 1990, boom in ’90s, decline later §founding authors: Hammer, Champy, Davenport § 6 On a greenfield site = from scratch text pruh_normal pruh_normal www.econ.muni.cz BPR: Reasons of BPR adoption (Thorton, G.) 7 Reason % Cost cutting 84 Quality increase 79 Speed (throughput) increase 62 Overtaking the competition 50 Change of organizational structure 35 Other 9 text pruh_normal pruh_normal www.econ.muni.cz Typical characteristics of BPR §Top-down §Greenfield (from scratch) §Reduction of tasks, workplaces, and staff §Creating reengineering teams 8 text pruh_normal pruh_normal www.econ.muni.cz BPR failure factors nSome sources state that may be more than 50 % of reengineering project fail. Reasons are: n nToo ambitious goals nInsufficient involvement of top management nInsufficient communication to affected parties nFailure to engage the middle management nThe project takes too long 9 text pruh_normal pruh_normal www.econ.muni.cz Critique of BPR §Too mechanistic thinking – re-introduction of Taylorism §Too focused on staff reduction §Loss of knowledge base due to middle management reduction 10 text pruh_normal pruh_normal www.econ.muni.cz Continuous improvement - PDCA 11 Time text pruh_normal pruh_normal www.econ.muni.cz PDCA more detailed (another example here) Plan 1 Define an improvement opportunity 1.1 Identify the process 1.2 Identify the customers and resources of the process 1.3 Identify other interested parties 1.4 Describe the current process 2 Visualize the current process 2.1 Describe the ideal output 2.2 Identify differences 2.3 Construct (map of) real and ideal diagrams of inputs and outputs 2.4 Find key start events of tasks and processes 3 Measure the current process 3.1 Ask questions 3.2 Collect data 3.3 Describe variability at chosen check points of the process 3.4 Describe patterns in the observed variability 4 Plan the change 4.1 Propose an improvement 4.2 Summarize the proposed changes 4.3 Suggest person responsible for carrying out the changes 4.4 Suggest a plan of the improvement project 12 text pruh_normal pruh_normal www.econ.muni.cz PDCA more detailed Do 5 Carry out the plan 5.1 Implement the improvement project according to the plan 5.2 Monitor the implementation Check 6 Verify the achieved results 6.1 Verify the methods of collecting data about the new process 6.2 Study the effect of executed changes Act 7 Act based on the findings 7.1 Update documentation 7.2 Build next sequence based on the implemented improvement: was the change successful, keep it, was it not successful, reject it. Will you build another PDCA cycle based on this change or not? Can be this change implemented elsewhere in the company? 7.3 Standardise successful change 13 text pruh_normal pruh_normal www.econ.muni.cz Six Sigma, DMAIC nSigma = standard deviation n nSix sigma = situation, when it is achieved a quality level of 3.4 defects per million opportunities (so called DPMO metric) n nIn other words, the variability of the process compared to set requirements on the process (e. g. quality of the process output) is so low, that twelve standard deviation of the measured characteristic still meets the requirements on this characteristic. 14 text pruh_normal pruh_normal www.econ.muni.cz Variability in a process nRequirement = 10.0 Real average = 9.9933 nUpper limit = 10.1 Standard deviation = 0.109 nLower limit = 9.9 Result? n 15 text pruh_normal pruh_normal www.econ.muni.cz Normal distribution and standard deviation § 16 http://www.intechopen.com/source/html/17405/media/image3.png text pruh_normal pruh_normal www.econ.muni.cz DMAIC procedure 1.Define 2. 2.Measure 3. 3.Analyze 4. 4.Improve 5. 5.Control 17 text pruh_normal pruh_normal www.econ.muni.cz Kaizen §A method or a philosophy? §Continuous improvement §Originated in Japan §Involves all employees at all levels §The goal is to reduce waste of time or material, that means, besides other things, to reduce defective work § 18 text pruh_normal pruh_normal www.econ.muni.cz Kaizen – selected tools §Quality circles § §Stopping the production (line) in case of abnormality § §Rewards for implemented proposals 19 text pruh_normal pruh_normal www.econ.muni.cz Advantages of Kaizen nChanges implemented in the kaizen spirit are better accepted, because: § §those, who are affected by the change, did mostly initiate it (bottom-up) §the changes are small, therefore they do not create such high stress §the changes are continual (allegedly, human brain gets used to it) 20 text pruh_normal pruh_normal www.econ.muni.cz Disadvantages of Kaizen nDisadvantages can be seen in difficult implementation of this system, if the organizational culture is not suitable. For example, consider different typical situations in: 1.Japan 2.USA 3.CZ 21 text pruh_normal pruh_normal www.econ.muni.cz Comparison nA comparison of continuous improvement methods and radical changes methods (Řepa, V., extended) n 22 Level of Change Continuous Radical Starting point existing process from scratch Frequency one-time/continuous one-time Time needed short long Participation bottom-up top-down Typical extent limited, inside one functional area broad, between functions Risk level middle high Primary tool classic – statistical control information technologies Type of change cultural cultural/structural Acceptance high low text pruh_normal pruh_normal www.econ.muni.cz Gaining support for a change §Analysis of impact, attitudes, and support (stakeholder analysis) § §Communication § §Involvement of affected groups (like in Kaizen) 23 text pruh_normal pruh_normal www.econ.muni.cz Methods of gaining support for a change (Kubíčková, Rais) 24 consultation communication bargaining participation active involvement awareness text pruh_normal pruh_normal www.econ.muni.cz Sources nŘEPA, Václav. Podnikové procesy: procesní řízení a modelování. 2., aktualiz. a rozš. vyd. Praha: Grada, 2007, 281 s. ISBN 9788024722528. nTHORNTON, Grant. Motivations to Reengineer. NCMS Focus, September, 1994. nDuBRIN, Andrew. Essentials of Management. 8th edition, 2009, Cengage Learning. 630 s. nHAMMER, M., CHAMPY, J. A. Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business Books, New York, 1993. ISBN 0-06-662112-7. nKUBÍČKOVÁ, L., RAIS, K. Řízení změn ve firmách a jiných organizacích. Grada, Praha, 2012, 136 s. 25