Managing Transformation at National Computer Operations writing service

Directions: You are to prepare an implementation plan for change that would enable Gar Finnvold to create a fully competitive computer service within two years. You are to use the 75 Checklist Questions and the 7 S Worksheet and Design questions to help you prepare the plan.

 

 

 

Process:

 

1. Based on the information given in the case,prepare a renewal strategy for Gar Finnvold. (5 pts)

 

 

2. Using the 7 S Worksheet,identify the gaps between the desired outcome  and the current situation.

 

 

3. Based on the identified gaps, design a change implementation plan for Gar Finnvold. Be sure to be specific in time (logical sequence), who should be involved,and the purpose and desired outcome for each step. (5 pts)

 

Managing Transformation at National Computer Operations

 

Gar Finnvold knew his organization needed to change, to transform itself over the next two years.25 His 1,000 employees had enjoyed for their entire careers what amounted to monopoly status. They had been the exclusive provider of computer support ser vices to the immense, global enterprises of the U.K.-based National Banking Group. All that was about  to change.  National Bank’s  newly appointed chairman had decreed  that,

starting in two years, all bank operations would be free to purchase their computer ser­ vices from any vendor who could supply excellent value. Finnvold’s operation would be competing against the best in Europe. At the same time, Finnvold would be free to market his computer  operations on the outside,  to build a customer base external to

the bank.

Finnvold ‘s excitement at the challenge of transforming  his National Computer

Operations (NCO) into a truly world-class competitor was matched by his anxiety (see

Exhibit  3-5 for a partial organization cha rt). As the longtime  manager of computer

 

 

Vieuxtemps may have believed that the culture of NCO was fundamentally flawed, but to many of his fellow managers, things were going quite nicely. National Bank, after all, had eliminated the need for NCO to respond to market forces. Think of the situation  in which NCO found itself:  Guaranteed  customers  who would always cover the costs that the computer operation passed along, assured profitability.

It’s little wonder that for most of NCO’s managers, effectiveness was not mea­

sured by organizational  performance or client satisfaction. Their focus turned inward instead. How can I build up my functional domain? Enhance my personal career?

“We were an organization of li ttle empire builders,” Kapok observed. “The more

people you had working for you,  the more likely you were to get promoted. There were few performance measures, and almost no coordination of our efforts.” The func­ tional silos of the organization were so powerful, said Kapok, that NCO’s own staff “didn’t  quite consider ourselves working for the same operation. If someone from one unit went to someone from another to ask for help, they were considered a nuisance. We certainly never considered the impact of any of this on our costs.”

NCO’s high spending, “customer-what customer?” attitude could only lead to resentment ou the part of dient operations within the bank. That resentment finally boiled over into open rebellion. The bank’s  new chairman hired a consulting firm to evaluate internal computer operations. The findings were as disturbing as they were predictable. “They confumed our worst fears,” recalled an NCO manager. “We were moribund.”

Until the consulting report provided irrefutable evidence to the contrary, computer operations managers felt they did an excellent job of providing these services to the bank. “If you had asked us how we were doing,” admitted Gar Finnvold, “we would have said,

‘We meet our customer service levels most of the time. We are improving our unit costs year-on-year. And of course we’re adding value.’ “It was only later that Finnvold came to recognize that customers held a view of NCO’s effectiveness that stood in diametric opposition to the opinion of NCO’s managers. “Our customers were saying, ‘You’re too expensive. Your damn system is always breaking down. And what added value?'”

At the time of the.consulting report, compu ter operations were billing approxi­ mately $240* million annually (within an overall annual informa tion tech nology ex­ penditure of $1.5 billion), almost entirely to internal bank customers. Although NCO offered  myriad  services, including  processing, project  management, and technical support and consultancy, they pointed with pride to two distinct competencies.  The first was facilities management. “NCO can take the responsibility  for all or part of a company’s  Information Technology requirement,” announced their official literature, “which  can include every aspect from  providing the workforce  and premises to the systems  and services.” The  second  vital core  competency was disaster  recovery. “NCO  provides planning and backup facilities for unforeseen crises or disasters such as fire and flood. Planning and backup facilities can be provided either separately  or together and can be offered in either a ‘hot start’ or ‘cold start’ environment.”

 

The Challenge

 

The bank’s new chairman quickly recognized that NCO customers and managers held completely different  views of value. He knew that his first task was to force  NCO

 

 

• Figures given in equivalen t U.S. dollars.

 

managers to adopt the customer perspective. The way to do that, he reasoned, was to inject market forces into NCO’s protected, monopoly-like world.

Using the consulting report as a driver, he first designated NCO as a profit cen­ ter. He made clear that NCO would be expected to pare costs severely. Within a year, NCO dramatically downsized  its workforce from 1,500 to 1,000. The chairman then called on Gar Finnvold to oversee more sweeping change, change that would be gov­ erned by two new ground rules:

 

L NCO could actively and aggressively market its services to external customers.

2. In two years, all of the bank’s internal units would be allowed to purchase com­

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puter services from outside vendors.

 

NCO, in other words, would have to become fully competitive in order to survive.

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Finnvold said he welcomed the challenge, particularly the notion of becoming a true market competitor. “I had this gut feel that we should try to sell external from day one,” he said. “If we didn’t, we’d never learn the lesson of what being commercial is all about. It was the way out of our cocooned environment.” He believed that there were external customers waiting to snatch up NCO’s services. The facilities management business was expected to grow 50 percent annually worldwide. NCO planned on being part of that

growth. “We thought we really had things to sell and that we were the best,” said Finnvold.                                                    

!

 

 

 

Endnotes

 

1. Information on this case is from Dean Foust, “What Worked at GE Isn’t Working at Home Depot,” Business Week, January 27, 2003, p. 40; “The Best Managers,” Business Week , January 10, 2005, pp. 56-67; Miriam Gottfried, “Repair Job,” Forbes, December 26, 2005, p. 1 32; Jennifer Reingold, “Bob Nardelli is Watching,” Fast Company, December 2005,  pp. 76-83;  Brian Grow,  “Renova ting Home  Depot,”  Business  Week, March  6,  2006,  pp.  50-58;  Ra m Charan,  “Home Depot’s   Bl ueprint  for  Culture  Change,”  Harvard Business  Review , April  2006,  pp. 60-70;  “Nardelli Out at Home Depot,” Business Week Online, January 4,

2007.

2. Many of the concepts in this chapter are based  on Michael Beer and Bert Spector, “Organizational Diagnosis:  Its  Role  in  Organiza tional  Learning,” Journal    of    Counseling   and    Development   71 (July-A ugust 1993), pp. 642-650.
3. See, for example, Paul E. Lawrence and Jay Lorsch, Developing Organizations: Diagnosis and Action (Reading,  MA:   Addison-Wesley,  1969);   Jay   R. Ga l braith,     Designing     Complex     Organizations (Reading, MA:  Addison-Wesley,  1973); David  A. Nadler  and  Michael L.  Tushma n,  “A  Diagnostic Model  for  Organi zational  Behavior,” in Edward  E.

Lawler and Lyman W. Porter,  eds. , Perspectives on

Behavior in Organizations (New York: McGraw-Hill,

1977);  Michael  B. McCaskey, “A Framework  for Analyzing Work Groups,” in Leonard A. Schlesinger, Robert  G. Eccles,  and John  J. Gabarro,  eds., Managing  Behavior  in Organizations: Text, Cases, Readings (New York: McGraw-Hill, 1983), pp. 4-24.

4. David A, Nadler, “Role of Models in Organizational Assess ment,” in  Edward  E. Lawler  III,  David  A. Nadler, and Cortlandt  Cammann, Organizational Assessment:  Perspectives on  the  M easurement  of Organizational Behavior and the Quality of Work Life (New York: Wiley, 1980), pp. 125-126.
5. Ibid.
6. Ibid.
7. 7. Information on  Hewlett-Packard  is’ from   Peter Burrows,   Backfire:   Ca rl y  Fiorina‘s  High-Stakes Battle  for the Soul of Hewlett-Packard  (New  York: Wiley, 2003)  and George  Anders,  Perfect Enough: Carty   Fiorina   and   the   Reinvention  of  Hewlett ­ Packard (New York: Penguin Putnam, 2003).
8. Elizabeth Wolfe Morrison and Frances  J. Milliken, “Organizational Silence:  A Barrier to Change and Development in a Pluralistic World,” Academy of Management Review 25 (October 2000), pp. 706-725.

 

Using the 75 Checklist Questions

 

Step One: Here are some of the questions that you’ll need to explore to help you understand your situation in terms of the 7S framework. Use them to analyze your current {Point A) situation first, and then repeat the exercise for your proposed situation {Point B).

 

Strategy:

• What is our strategy? New
• How do we intend to achieve our objectives?
• How do we deal with competitive pressure?

 

• How are changes in customer demands dealt with?

 

• How is strategy adjusted for environmental issues?

 

 

Structure:

• How is the company/team divided?
• What is the hierarchy?
• How do the various departments coordinate activities?
• How do the team members organize and align themselves?
• Is decision making and controlling centralized or decentralized? Is this as it should be, given what we’re doing?
• Where are the lines of communication? Explicit and implicit?

 

Systems:

• What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage.
• ,Where are the controls and how are they monitored and evaluated?
• What internal rules and processes does the team use to keep on track?

 

Shared Values:

• What are the core values?
• What is the corporate/team culture?
• How strong are the values?
• What are the fundamental values that the company/team was built on? Are they still valid?

 

Style:

• How participative is the management/leadership style?
• How effective is that leadership?
• Do employees/team members tend to be competitive or cooperative?
• Are there real teams functioning within the organization or are they just nominal groups?

 

Staff:

• What positions or specializations are represented within the team?
• What positions need to be filled?
• Are there gaps in required competencies?

 

Skills:

• What are the strongest skills represented within the company/team?
• Are there any skills gaps?
• What is the company/team known for doing well?
• Do the current employees/team members have the ability to do the job?
• How are skills monitored and assessed?

 

Step 2: Using the information you have gathered, now examine where there are gaps and inconsistencies between elements. Remember you can use this to look at either your current or your desired organization.

 

• Start with your Shared Values: Are they consistent with your structure, strategy, and systems? If not, what needs to change?

 

• Then look at the hard elements. How well does each one support the others? Identify where changes need to be made.
• Next look at the other soft elements. Do they support the desired hard elements? Do they support one another? If not, what needs to change?
• As you adjust and align the elements, you’ll need to use an iterative (and often time consuming) process of making adjustments, and then re-analyzing how that impacts other elements and their alignment. The end result of better performance will be worth it.

 

 

 

 

Step 3: Desired Future State:

 

• Identify Key Success Factors (KSFs) for change

 

 

 

 

• Diagnose Organization’s Alignment with Strategy and KSFs

 

 

 

 

• Design a strategically Aligned Organizational Model

 

 

 

 

• Develop a Change Plan:

o      Are members of the organization, especially key managers and opinion leaders,

sufficiently dissatisfied with the status quo-if not how to create this?

 

 

o      Is there a sufficient “sense of urgency” throughout the organization-if not how to create this?

 

o      How will top management and other key employees  and constituencies be involved in the diagnosis and development of the strategically aligned organization?

 

o      What are the sources of resistance  to change and how will these be addressed?

 

o      Given all the elements above, what is the most appropriate change strategy?

 

 

o      Develop a sequence of steps for diagnosing and developing the organization’s capability to implement strategy.

 

7 “S” Worksheet

 

Current Situation: Aligned (A) or Misaligned{M)		Gap: Action Required	Desired State: Aligned (A) or Misaligned	Checklist: A/M
1.    Strategy:
2. Structure:
3.   Systems:
4.    Shared Values:
5.   Style: leader/ employees
6.   Staff:
7.   Skills:
Analysis Current:
Analysis Desired:

 

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