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Exploring the role of Performance Measurement in integrated Top-Down and Bottom-up ChangeResearch brownbag April 12, 2012
Geert Letens
Kurt Verweire
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Objectives of the Presentation
Introduction and need for this work
Provide an overview of previous research on Integrated Performance Management and Transformational Change
Share the primary results of the ongoing research that investigates the role of performance measurement in integrated Top-Down and Bottom Up Change
Clarify future research goals
Stimulate discussion and reflection
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Integrated Performance Management:
Research Need
An increased number of organizations have attempted to implement more effective integrated performance measurement systems –Kaplan & Norton, 2002
Many have failed to make significant progress in fully implementing and utilizing their measurement system -BSC Collaborative, 2003
Design
Implement
Use
Balanced Scorecard
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Integrated Performance Management and
Transformational Change
“Kaplan and Norton see BSC as a central management concept for the whole organization. This requires a totally different management approach, and a huge organizational transformation”
Verweire & Van den Berghe, 2004
“To achieve an intense strategic focus, organizations had to institute comprehensive,transformational change.”
“They had redefined their relationships with the customer, reengineered fundamental business processes, taught their workforces new skills and deployed a new technologyinfrastructure.”
“The management system provided a mechanism to mobilize and guide the process of change; a new culture emerged, centered on the team effort required to support the strategy”
Kaplan & Norton, 1996
Organizational change literature reports failure rates of change efforts up to 70% -Abrahamson, 2000; Higgs & Rowland, 2005
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Integrated Performance Management and
Transformational Change: a Multi-level
Evolutionary Perspective
Geert Letens
Ph.D. Dissertation Ghent University – Royal Military Academy
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Research Opportunities
Performance management is “the management of a system put in place by an entity with a predetermined socially constructed reality (its context) that has chosen a relevant viewpoint of itself (its objective) towards which it means to progress using a set of recognizable characteristics as its measurement apparatus (performance measurement) to monitor this progress” – Folan, Brown & Fadev, 2007 p. 616.
Study specific contextsLittle research attention has been paid to the implementation of integrated performance management in new product development environments – Jiménez, Martinez and Gonzales, 2006
Investigate the measurement apparatus of organizationsPerformance management should be studied as a mechanism supporting organizational transformation -- Waggoner, Neely & Kennerley, 1999
Explore how organizations change their relevant viewpointsMore research is needed to clarify processes that are of immediate help to practitioners to support the creation of a learning organization - Cummings & Worley, 1997; Örtenblad, 2007.
Part 1
Part 2
Part 3
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Part 1 - Integrated Performance Management and Enterprise Transformation in New Product Development Environments
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Developed by E. Van Aken, informed by literature such as Kotter
Description of a structured approach that combines performance measurement and other improvement methodologies in an integrated
transformation effort in an engineering environment .
Transformation Methodology
(TransMeth)
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Install. new CISs in existing vehicles
Install. CISs in new vehicles or sites
CIS configuration modifications
Requests for study
Requests for installation
Requests for modification
User information
Life Cycle Model
Agreement Processes
Project Management processes
1 3 54 62 7
ISO 15288
Life Cycle Model
Agreement Processes
Project Management processes
1 3 54 62 7
ISO 15288
Engineering
Studyworking groups
Mechanicalprototyping
CAD
Installationworking groups
Integrated project team
Concurrent Engineering
Engineering
Studyworking groups
Mechanicalprototyping
CAD
Installationworking groups
Engineering
Studyworking groups
Mechanicalprototyping
CAD
Installationworking groups
Integrated project team
Concurrent Engineering
HIT!
1 year20% $
SatisfiedCustomer
Lean
Pilot Project - Reengineering of the
Product Development Lifecycle
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
χConsulting
completed projects
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Periode
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studie 2
studie 1st
Doubled turnover compared to 2001ERM
χConsulting
LOPENDE JOBS STUDIE I
13 14 11 96
0246
81012
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31/12/01 31/03/02 30/06/02 30/09/02 31/12/02LOPENDE JOBS STUDIE II
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31/12/01 31/03/02 30/06/02 30/09/02 31/12/02LOPENDE JOBS STUDIE III
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Reduced inventoryDM
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Eff/Lt St I Mar 02 Eff/Lt St I Jun 02 Eff/Lt St I Sept 02 Eff/Lt St I Dec 020
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Norm:15 %
Eff / Lt LOPENDE PROJECTEN STUDIE I
DM Less waiting
χConsultingLT St II Mar 02 LT St II Jun 02 LT St II Sept 02 LT St II Dec 02
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Norm :450werkdagen
LEADTIM E LOPENDE PROJECTEN STUDIE II
ERM Reduced Leadtimes
Improvement Cycle Between Project Turnover-Project Inventory-Waiting
Time-Project Leadtime
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completed projects
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dec/01 mrt/02 jun/02 sep/02 dec/02
Periode
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studie 2
studie 1st
Doubled turnover compared to 2001ERM
χConsulting
LOPENDE JOBS STUDIE I
13 14 11 96
0246
81012
1416
31/12/01 31/03/02 30/06/02 30/09/02 31/12/02LOPENDE JOBS STUDIE II
1218213030
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101520253035
31/12/01 31/03/02 30/06/02 30/09/02 31/12/02LOPENDE JOBS STUDIE III
1317172121
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31/12/01 31/03/02 30/06/02 30/09/02 31/12/02
Reduced inventoryDM
χConsulting
Eff/Lt St I Mar 02 Eff/Lt St I Jun 02 Eff/Lt St I Sept 02 Eff/Lt St I Dec 020
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Norm:15 %
Eff / Lt LOPENDE PROJECTEN STUDIE I
DM Less waiting
χConsultingLT St II Mar 02 LT St II Jun 02 LT St II Sept 02 LT St II Dec 02
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800
1000
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Norm :450werkdagen
LEADTIM E LOPENDE PROJECTEN STUDIE II
ERM Reduced Leadtimes
Improvement Cycle Between Project Turnover-Project Inventory-Waiting
Time-Project Leadtime
Improvement Cycle Between Project Turnover-Project Inventory-Waiting
Time-Project Leadtime
The identification of complex system characteristics as an important reason for the lack of integrated performance management in
engineering or new product development environments
Progress and Performance Monitoring:
Inter-level Dynamics
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Part 2 - Approaches to Identify Conditions and Processes that Support or Inhibit Integrated Performance Management
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Transformation Methodology
(TransMeth)
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Scoring Dimension Assessment Dimensions/Items Examples of Supporting Tools Approach
- Structured approach for defining metrics - Cross-functional involvement in defining metrics (e.g., leadership team, …) - Use of group process tools to define metrics
Strategy mapping, BSC, Performance prism, etc.
Deployment
- Metrics (scorecard design) deployed to lower levels if applicable - Metrics clearly and consistently communicated: + internal to the organization, promoting accessibility and real-time use + external to the organization - Metrics cover all critical: + functions, processes, and work units in the organization
Visibility boards, email/intranet, newsletters, all-employee meetings, … Stakeholder meetings Audit of metrics deployment
Study
- The scorecard has metrics that are: + focused (the “vital few”) + aligned with:
- burning platform - vision and value-added - higher-level system - desired behaviours - reward system
+ balanced (across dimensions in multiple frameworks) + ….. - Proposed relationships across metrics have been defined. - Metrics can be linked to employees work activities
Audit of metrics to vision, mission, KSFs Metrics Balance Check on System Components Metrics Balance Check on BSC/EFQM Metrics Audit Metrics Deployment Chart
Refinement
- Metrics are refined based on study activities, if environment changes, and/or if are no longer needed
Action reports & follow-up mechanisms
A structured and comprehensive approach to assess
performance measurement systems as part of the overall organizational improvement system
Measurement System Design
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Scoring Dimension 0% 25% 50% 75% 100% Approach How did you create the output?
No evidence or anecdotal
Some evidence Good evidence Significant evidence Complete evidence
Total 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Deployment How did you deploy the output (F/P/WUs)?
No evidence or anecdotal
¼ of potential ½ of potential ¾ of potential All of potential
Total 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Study How did you assess quality of output?
No evidence or anecdotal
Some evidence Good evidence Significant evidence Complete evidence
Total 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Refinement How did you refine the output?
No evidence or anecdotal
Some evidence Good evidence Significant evidence Complete evidence
Total 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Overall score 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Strengths Points for improvement - A: brainstorming, EFQM sessions, external support - D: Intranet, managers boards, screen above badge clock, competence
matrix, EFQM sessions participated by more people - S: ERM ok for internal processes, ERM in the impact and influence zone
of TW - R: ok for internal processes
- A: not everyone was involved, who needs to be involved (brainstorming by all supervisors – TOS) who had the chance to give input/feedback and how; consistency/linkage between KPA, ERM, DM
- D: Only to the level of TOS; managers boards not consistent and not
enough deployed vertically; more communication to stakeholders; not enough benchmarking
- S: Adjust the scorecard – not everything on the right place; DM don’t have
always an impact on ERM; only PD mostly S no Act - R: Action Reports; Deployment to the floor
To be verified Critical improvement elements
Measurement System Design
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Insights confirm the findings from the literature on integrated performance management with regard to implementation difficulties and reveal even bigger challenges related to performance review.
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Setting agenda and direction Implementation Review
Review Process
Assessment:Analysis of
Performance Measurement
Use
Overall ADSR Assessment Results
Part 3 - The Evolution of Multi-level Organizational Transformation
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We Need a Strategy, a Performance Management System…
And a lot more !
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An Evolutionary Perspective to Performance
ManagementSpiral DynWorldView
Perf MgtFocus
Financial Financial Accounting Cost Financial Financial Anecdotes & ABC Measures Benchmarks
Customer CustomerSLA Satisfaction
Service LT Measurement
Process Internal LT Repair LT
Planning & Control WIP Strategic Value Adding Projects ProjectPerf Meas
Canibalisation Spare parts availability
Purchasing LT
Continuous Improvement Projects
Learning Cross training Cross trainingsindex Competence& ScoreGrowth 5S 5S 5S Score
Communication PersonnalSatisfaction
Teambuilding Events Measures
SocialNetwork
Spiral DynMindCapacities
Obey rightful authority and find meaning insacrifice for later rewardto avoid shame
Dominate other without guilt Communities-Collaborationcompete for influence in life
Test options for greater autonomy and
Orange Green
Red Blue Orange Green
World is full of viable options:There are plenty of alternative choices
Habitat for allHumanity
Individual experts
World is tough:It's eat or be eaten
World is divinely controlled:a distinct right and wrong according to a plan
Red Blue
2004
2005
2006
2007
Crisis Management Basic Operational Strategy Map Expanded Operational Strategy Map
Cross functionalIntegration
Functional Cel
Technical Priorities Process Discipline EntrepreneurshipStrategy Map
Balance
CustomerSupplier
Cooperation
StrategicAlliances
Evolution of purpose
Evolution of social structures: Int > Ext
Improved understanding of the impact of evolutionary thinking systems on integrated performance measurement systems.
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Conclusions Related to
Integrated Performance Management
Integrated performance management implies:
The integration of various organizational levels
The appropriate management of inter-level relationships
To achieve integrated performance management through transformational change, organizations should consider:
The development of different thinking systems
The alignment of the maturity of various organizational systems
Design
Implementation
Use
Corporate
Bu Unit
Process
Function
Blue
Orange
Green
Red
Exp
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Month
Week
Year
internal externalLT ST
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Inte
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Design
Implementation
Use
Corporate
Bu Unit
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Function
Blue
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internal externalLT ST
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Integrated means more than balanced!
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Published Research as a Research Fellow
1. Martínez León, C.H., Farris, J.A., Letens, G. (2012). Improving Product Development Lead Time Performance through Iteration Front-Loading, IEEE T ransactions on Engineering Management, - under review.
2. Martínez León, C.H., Farris, J.A., Letens, G., Hernandez, A. (2012). A Risk Management Framework for
New Product Development Projects Featuring Uncertain Iterations, Journal of Engineering and Technology Management, - under review.
3. Letens, G., Farris, J.A., Van Aken, E.M. (2011). A Multilevel Framework for Lean Product Development
System Design, Engineering Management Journal, Vol. 23, No. 1; pp 69 – 85. 4. Farris, J.A., Van Aken, E.M., Letens, G., Chearskul, P., Coleman, G.D. (2011). Improving the
Performance Review Process: A Structured Approach and Case Application, International Journal of Operations and Production Management, - Vol. 31, No. 4, pp. 376 – 404.
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Published Research as a Research Fellow
1. Letens, G., Verweire, K., Slagmulder, R., Van Aken, E.M., and Farris, J.A. (2011). Integrating Top-Down and Bottom-up Change: Lessons Learned from a Longitudinal Case Study, Proceedings of the 32th ASEM Conference. Lubbock, Texas (USA), October 19-22, CD-ROM.
2. Nepal, B., Raghuraman, R., and Letens, G. (2011). Framework for Supplier Selection in Global Sourcing
Considering Supply Chain Costs and Risks, Proceedings of the 32th ASEM Conference. Lubbock, Texas (USA), October 19-22, CD-ROM.
3. Martinez, C., Farris, J., and Letens, G. (2011). Improving Product Development through Front-Loading and
Enhanced Iteration Management, Proceedings of the 2010 Industrial Engineering Research Conference, Engineering Management Track, Reno, Nevada (USA): May 21-25, 2011, CD-ROM.
4. Gandhi, J., and Letens, G. (2010). Towards a better understanding of procurement Risks, Proceedings of the 31th
ASEM Conference. Rogers, Arkansas (USA), October 13-16, CD-ROM 5. Verweire, K., Slagmulder, R., Letens, G., Chearskul, P., Van Aken, E.M., and Farris, J.A. (2010). Towards
customer intimacy: Implications for performance measurement, Proceedings of the 2010 Industrial Engineering Research Conference, Engineering Management Track, Cancun, Mexico: June 5-9, 2010, CD-ROM
The role of performance measurement in
integrated Top-Down and Bottom Up Change
Kurt Verweire
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Performance management from a strategic perspective
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Clear strategic focus
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� Do we have a
winning strategy?
� Do we take the
right actions in line
with our operating
model?
� Do we have the
right organization to
implement all this?
Strategy Alignment Commitment
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Case study
Strategy Implementation and Alignment
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Strategy implementation
Strategy implementation is a hot topic in management
But there is no generally accepted academic framework that explains what it is and what are the dimensions of successful strategy implementation
Integrated Performance Management Framework (Verweire & Van den Berghe, 2004) identifies the five dimensions of strategy implementation
Strategy implementation is about translating strategy in each of those five domains
In line with one of the three operating models identified by Treacy & Wiersema (1995)
| May-2011 | IERC Conference 201126 |
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Strategy implementation
| May-2011 | IERC Conference 201127 |
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Strategy implementation at customer-intimate firms
Strategy implementation is about alignment. It is aligning the different activities of the Integrated Performance Management Framework to the customer intimacy strategy.
This also implies that a strategy implementation model for an operational excellence firm or a product leader looks different.
We have identified 15 crucial actions (from management literature) that customer intimacy firms apply
| May-2011 | IERC Conference 201128 |
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© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Strategy implementation at customer-intimate firms
Direction and goal setting:
Is top management dedicated to explain to employees what customer orientation means and do they lead by example?
Is there a willingness to serve customers differently, with the best customers
getting the best treatment?
Does the company use feedback from its customers as a guideline for the definition of its business objectives?
Operational processes:
Does the company have both the expertise and the experience in a particular business field to deal with customers professionally?
Does the company support a relationship orientation with an in-depth knowledge about the customer?
Are customer intimacy efforts supported with incentives that reward loyal
customers?
| May-2011 | IERC Conference 201129 |
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Strategy implementation at customer-intimate firms
Support processes:
Does the company regularly collect and update background information on
the key customers (e.g., needs, attitudes, habits, and behaviors)?
Has the organization clearly defined the responsibilities for the collection, update and analysis of customer information?
Has the company set clear roles and responsibilities in dealing with its customers?
Evaluation and control processes:
Do key performance indicators (KPIs) include a measure of customer
retention?
Is data on customer satisfaction disseminated at all levels in the organization on a regular basis?
Does the company offer a bonus to the employees if certain customer satisfaction objectives are met?
| May-2011 | IERC Conference 201130 |
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Strategy implementation at customer-intimate firms
Organizational behavior:
Does the company pay special attention to attracting and hiring people that
are open-minded, flexible, and people-oriented?
Is the organization held together by a pervasive culture designed to provide superior quality and value for the customer?
Do responsibilities and authorities reside with staff at the local level so that the organization can flexibly deal with each client situation?
Database of more than 100 customer-intimate firms at Vlerick
Companies that expressed they pursued customer intimacy at Vlerick strategy workshops
Questionnaires filled out by at least 4 members of management team of the business unit
Average scores of the firm compared with scores of the benchmark database
| May-2011 | IERC Conference 201131 |
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Becoming customer intimate: Case European Rural Bank
The investigated Rural Bank is one of the bigger local banks within a European cooperative banking group
At the start of the transformation project (March 2001):
Financial problems
Organizational problems (27% turnover of employees; absenteism: 9%)
Strategy: “Grow market share”
Decision to tackle this situation with the help of a performance management consultant
Development of 2 (almost similar) strategy maps (September 2001-March 2002)
| May-2011 | IERC Conference 201132 |
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Becoming customer intimate: Case European Rural Bank
| May-2011 | IERC Conference 201133 |
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Becoming customer intimate: Case European Rural Bank
Invite each of these customers for 1-hour personal talk – listening rather than selling, noting the needs of the customers through FINAPs (‘Financial Needs Analysis Profiles’)
Focus to only serve customers who wanted more than 1 product (mostly an unprofitable current account)
Creation of Customer Relationship Management database (developed by the IT staff in close collaboration with sales and marketing people)
New sales and service culture introduced (Cohen Brown) (April 2002)Branches had to report on Monday morning what they would sell
Debrief on Friday afternoon how much they sold
Focus on learning and identification of best practices
Sales boomed in the branches
Champions League competition – different departments competing with each other – in 2003 and 2004.
| May-2011 | IERC Conference 201134 |
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Becoming customer intimate: Case European Rural Bank
| May-2011 | IERC Conference 201135 |
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Becoming customer intimate: Case European Rural Bank
| May-2011 | IERC Conference 201136 |
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Becoming customer intimate: Case European Rural Bank
| May-2011 | IERC Conference 201137 |
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
Becoming customer intimate: Case European Rural Bank
Financial results:
Absenteism: 9% (2001) � 2% (2004)
Turnover: 27% (2001) � 8% (2004)
Employee survey: 90% indicated that they knew the strategy of the firm
| May-2011 | IERC Conference 201138 |
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Clear strategic focus
Working paper: Verweire K. Ferguson T. Debruyne M. 2007. Toward an integrative framework of strategies that work. (5) : 28p.
Research reports: Verweire K. De Grande J. Greef G. 2011. Operational Excellence: What does it mean? What does it take? 100p.
Verweire K. Carchon S. Escalier J. 2010. Customer intimacy: what does it mean? What does it take? 122p.
Verweire K. Escalier J. 2009. Sustaining competitive advantage through product innovation -How to achieve product leadership in service companies. 115p.
Case studies:Verweire K. Van den Berghe L.A.A. 2006. ING direct: Rebel in the banking industry.
Thibeault A. Verweire K. 2012. ING Direct USA: Asset or liability for ING Group?
Verweire K. Meuleman M. Leleux B.F. 2010. Kipling (A) + (B): Monkey Business - Kipling tries to conquer the world/An entrepreneur in stormy weather.
Verweire K. De Grande J. Letens G. Slagmulder R. 2011. Bringing German Cooperative Bank Berlin back on track: Can a rural bank thrive in the city? (A) + (B) + (C) + (D)
PhD project Judith Escalier Revollo
39 |
Case study
Top-Down and Bottom-Up Integration
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Research Need
Organizational success depends on the ability of the organization to adapt to a changing environment
There are several approaches how to manage change
In “Cracking the code of change”, Beer (2001) proposed an integrated approach
The validation of his theory based on ODC literature remains unclear
His theory was only based on change at the corporate level
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Theory E
According to Theory E (Beer, 2001)
purpose of change is the creation of economic value, often expressed as shareholder value.
change should be planned and programmatic
focusing on formal structures and systems.
It is typically driven by the top with the help of specialist consultants and financial incentives.
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Supporting Literature for Theory E
Fayol’s (1949): management as planning, organizing, commanding, coordinating and controlling
Beckhard & Harris (1987): Change from a present state to a desired future state through deliberate management actions
Strategic choice and self-determination (White et al., 1997
Responsibility of the top to align their organization with the changing environment (Rajagopalan and Spreitzer, 1996)
Changes defined by a sequence of steps (Kotter, 1995; Nadler, 1998)
Optimistic view of achieving intentional change (Goshal and Bartlett, 2000)
view aligns to a large extent with contingency models (Huy, 2001), if contextual factors are taken into account
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Theory O
Theory O is characterized by a completely different approach towards change (Beer, 2001):
The purpose is to develop an organization’s capability to implement strategy and to learn about the effectiveness of change from actions taken
Theory O assumes change is emergent and therefore less planned and programmatic
The focus is on the development of a high-commitment culture
Through the high involvement of the bottom, it relies far less on consultants and incentives to drive change
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Supporting Literature for Theory O
French and Bell (1995): Managers as coaches that seek to ‘structure activities to help organization members to solve their own problems and to learn to do that better’
Incremental, developmental change that shapes organizational capabilities through the improvement of organizational problem solving, leadership, visioning and task accomplishments between groups (Waddell et al., 2004)
Socio-technical character of change: goals of both organizational improvement and individual development (French and Bell, 1999)
Change is not predefined, but rather emerges from the positive qualities and capabilities of the organization and its individuals: importance of meaning making (Weick, 2000) and double loop learning (Argyris)
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Theory E and O Combined
There are clear differences between Theory E and Theory O how academics study organizational change (the underlying assumptions in their research)
how practitioners engage in change actions (what they believe they can achieve and how they should approach this)
There is evidence in the literature to support both theories
Ultimate challenge: resolve the tension between Theory E and Theory O in a way to maximize the benefits and to minimize the negative consequences of each theory (Beer, 2001)
Sequential approach
Preferred approach: simultaneous implementation
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Theory E and O Combined
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Source: Beer & Nohria (2000)
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Research Questions
Combined theory should be more than an arbitrary mixing of Theory E and Theory O: in stead of a halfhearted approach, managers might be better off picking a pure theory (Beer, 2001)
Until now there is little or no guidance on when, where and how the mixing of both theories should occur in practice
How did this mixing occur in a Dutch rural bank?
Longitudinal perspective (3 years)
Business unit level
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Methodology
Retrospective case study approach
Unstructured interview with internal change agent (fully transcribed)
Survey instrument (2001 & 2004)
IV: PM use practices*, PM system maturity
DV: Organizational learning, organizational performance
Structured and unstructured interviews with management team + follow-up interview
Collection of documents
Summary of all information in a case study (34 pages, several company documents, video Interviews)
Validation by change agent
Timeline of various initiatives
Delphi approach to assess the change approach, using Beer’s model as a assessment framework
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Theory E – Theory O Assessment
Change interventions Dutch Savings Bank Timing Theory E <--------> Theory OUnderstanding the financial and organizational context of DSB 2001/03 XOIntroduction of external performance management consultant (to support in shaping the solutions)
O X
Better understanding "where are we now" 2001/05 O XCreation of financial reporting system X O
Open communication on "where are we now" 2001/05 XODefinition of three strategic options to solve problems XO
Strategy mapping exercises 2001/09 O XStrategy discussion corporate division XOStrategy discussion retail division XO
Translate strategy conclusions into concrete actions 2001/09 O XDevelopment of financial, commercial, operational and people goals O X
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Change interventions Dutch Savings Bank Timing Theory E <--------> Theory OPresentation of two strategy maps 2002/05 O XMore structured management meetings O X
From financial targets to operational targets 2002/05 XO
Creating a winning team: create the appropriate behavior with managers 2002/05 XO
Encouraging to take actions XOInvestment in training XO
Setting clear marketing goals (developed from the strategy maps): whom to serve - explaining rationale
2002/05 XO
Creation of Customer Relationship Management system 2002/06 O XIntroduction of a new sales management approach O XTarget setting, reporting on results, and sharing of best practices in branches
O X
Structuring of sales process 2002/09 XO
Customer contact center: new role of customer contact center 2002/09 XOEmancipating the back office: introduction of non-negotiable rules XOIntroduction of non-negotiables XO
Change interventions Dutch Savings Bank Timing Theory E <--------> Theory OProcess management initiative 2003 XORolling out of Champions' League competition to all departments O XProviding transparent measurement system XOAllocation of monthly awards XO
Creation of open, transparent performance-oriented culture 2003 XOCoaching leadership style XO
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Theory E illustration
Mission:“Rabobank Den Haag wants to reach a leading position as a broad, financial and cooperative services provider in the heads and hearts of the people in its operating territory, by showing its connection with local society and to stimulate the economic activities in there.”
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• Sell differently :
- proactive instead of reactive
- recognise and understand customer needs
- work with targets
- discuss results openly
Theory O illustrations
• Reinforce main principles through courses and workshops
• Implement best practices in common day processes
Every month trophies are handed out at an informal gathering
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Illustration Theory E & O CombinedSeperate Map for Bussinesses
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Conclusions
Change requires a careful selection of initiatives that seek the balance between Theory E and Theory O
Initial assessment of the organization requires a balanced perspective (financial and organizational capabilities)
Initially Theory E oriented initiatives, quickly followed by Combined E-O approach, ultimately followed by Theory O initiatives
Assessment framework can support change agents in balancing their interventions
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Case study
Performance Measurement Evolution
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Introduction and Literature Review
Organizational success depends on successful strategy formulation and implementation
Customer Intimacy is a strategic choice
Implementation however is key
CI strategies require appropriate Performance Measurement (PM) systems
But this seems to be difficult to implement in practice
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Introduction and Literature Review
Research questions:
How have PM use practices been key in achieving breakthrough performance in the case study organization?
How are PM use practices in the performance review process aligned with a strategy of customer intimacy?
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Methodology
Survey instrument
IV: PM use practices*, PM system maturity
DV: Organizational learning, organizational performance
Retrospective case study approach
Structured and unstructured interviews with management team + follow-up interview
Survey instrument
Insights in documents
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PM System Use Processes
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Key Process Subprocesses Definitions: The action performed or policies instituted pertaining to…
Monitoring
Gathering The process of collecting performance data from different sources to provide input to performance reviewprocess.
Updating The process of preparing visual portrayals, reports and presentations to reflect updated performanceinformation based on new performance data.
Reporting The process of distributing and sharing updated performance information to decision makers.
Evaluating
Clarifying The process of ensuring a common understanding of how performance measures are defined or calculatedand how performance information is prepared.
Analyzing The process of assessing performance levels, trends, variability and comparing them to predeterminedgoals, targets or standards.
Interpreting The process of identifying causes to explain current performance and extracting insights from performanceinformation.
Validating The process of defining and evaluating relationships betweenperformance measures and the relationshipsbetween improvement actions/strategies and performance measures
Forecasting The process of projecting future performance based on current performance and review process findings.
Decision-Making
Generating The process of identifying potential improvement actions/strategies.
Justifying The process of evaluating potential improvement actions/strategies to identify the best course of action.
Deciding The process of selecting a course of action and specifying action plans.
Taking Action Implementing The process of completing actions to put decisions into practice.
Communication and Knowledge Management
Disseminating The process of distributing performance information and review process findings to communicate tointernal or external stakeholders.
Storing The process of accumulating performance information, reviewprocess findings, and lessons learned fromthe performance review process for future reference and use.
Unlearning The removal of obsolete performance information, decisionsand lessons learned or invalid assumptions tomake way of new ones, if any.
Chearskul, 2010
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Case Application
Transformation in a part of a European bank (2001-2004)
Bad financial results
Towards more intimacy
Balanced Scorecard was the change management tool that transformed the entire organization (implications on communication, HR practices, rewarding, etc.)
The performance review process has changed over the years
Still 2h weekly meetings
But attendance rate reduced
And the number of people involved reduced
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Results
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123456
GatheringUpdating
Reporting
Clarifying
Analyzing
Interpreting
ValidatingForecasting
Generating
Justifying
Deciding
Taking Action
Disseminating
Storing
a) PM Use Sub Process Evolution BeforeAfter
1
2
3
4
5
6
Rate
r Sco
re
PM Use Key Processes
b) PM Use Key Process Evolution BeforeAfter
0
1
2
3
4
5
6
Shared Vision Systems Thinking Team Learning
Rate
r's S
core
Learning Dimensions
d) Learning OutcomesBeforeAfter
1
23
456
Quality of products or
servicesSuccess rate in launching new
products
Customer satisfaction
Level of innovation
Adaptation to the changing
environmentEmployee
satisfaction
Cost performance
Business growth
Reputation in its sector
Overall financial performance
c) Organization's PerformanceBeforeAfter
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Conclusion and Contributions
Successful strategy implementation requires more than a performance ‘review’ process
Maturity of the entire performance review process is correlated with organizational learning and performance – it is more than just setting up a good PM system
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Future Research Opportunities
Geert Letens
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Top-Down and Bottom-Up Change
Develop an assessment framework that can support change agents in balancing their interventions
Project change Initiatives on Transformation Methodology
Investigate the role of Performance Measurement during the different steps of the Transformation Methodology
In particular for evaluation and control (Use Phase)
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Research Design
Quasi Experiment with four Organizations
0 - X - 0
0 - . - 0
. - X - 0
. - . - 0
X stands for Intervention
Strategic Alignment
Balanced Top-Down & Bottom-Up Change
0 stands for measurement of:
Technical performance
Social performance
Strategic Alignment
Organizational Maturity
To be used as selection criteria for case study organizations
To be repeated for different strategic orientations
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Strategy, Performance Management, and Organizational
Learning
Successful strategy implementation requires more than a performance ‘review’ process
Maturity of the entire performance review process is correlated with organizational learning and performance – it is more than just setting up a good PM system
Change in PM system use and other strategy disciplines
Integrated Performance Management
Performance Measurement Meetings:
Evolutionary Performance Measurement
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Organizational Learning, Leadership and Performance
Management in Crisis Environments
Learning in crisis
Organizations operating in difficult environments are required to adapt to their fast changing environments
Pilot project investigates:To what extent deployed military units show more characteristics of learning organizations than territorial units
To what extend these characteristics are correlated with mission difficulty and transformational leadership
Future projects: NGOs, Profit organizations operating under deep uncertainty
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Research Questions
What is the role of Performance Measurement in support of Strategy Implementation and Organization Development and Change?
What is the Interrelationship between Transformational Leadership, Performance Management and Organizational Learning in High Risk Environments?
How are military organizations currently assessing their performance (methodology and measures)? What are potential common measures that would benefit individual nations while addressing the needs of NATO at the same time?
How can we develop metrics, data collection, and data sharing frameworks to support the transition framework in Afghanistan?
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