Strategic Change Management in the Public Sector

1. Strategic Change Management in the Public Sector Professor David Baker, University College Plymouth St Mark & St John

2. The Necessity for Change • Highly competitive environments • Faster development needed • Private sector – profit • Public sector –added value • Determining that value • Internationalisation

3. Users • Greater choice • Raised expectations = greater demands • Contribution to cost of services • Need to take account of the user as ‘customer’

4. e-University Hefce pulls the plug on UK e-university The UK's £62m e-learning university is being scrapped in its present form after it failed to recruit enough students or attract sufficient private investment in its first year of operation.

5. Competition • ‘After the primary change driver…the customer…the actions of competitors provide a major impetus behind attempts to implement innovation and change practices’ (Solomon, 2001) • Massification and Segmentation

6. Diversity and Diversification • Reflecting diversity • Richness of thinking and approaches • Legal compliance: fundamental shifts in attitude and culture • Diversification of products or services

7. Legislation • Government aspiration • Keeping up to date and staying within the law • Encapsulation of changes within society • Represent shift in culture or public opinion

8. Recent UK legislation • The following have had a significant impact on the ways in which both private and public sector organizations operate: • Telecommunications Act (1984); • Data Protection Act (1998); • Human Rights Act (1998); • Freedom of Information Act (2000).

9. Human resource management • People as core strategic asset • Modernised human resource function • Poor employee relations as a driver for change • Communication vital to improving relations

10. Technology • Revolutionary power • Working patterns • Changes in the nature of work • Relationship between knowledge areas and disciplines • What is a routine procedure? • What is a professional activity?

11. Finance • Requirement to make a surplus • Stay within budgets • Effective use of available resources • Staffing budgets • Financial pressures • Market approaches • Price of services

12. Internal Responses to External Drivers • Re-engineering of processes • Focus on quality management • Financial accounting • Technology transfer • Strategic planning

13. Resulting in: • Shifts from collegial to corporate institutions • Embracing of commercial activities • Emergence of the entrepreneurial public sector organization

14. Key challenge • What to do • When to do it • How to do it

15. Change Management • ‘The process, tools and techniques to manage the people-side of the process, to achieve the required outcomes, and to realise the change effectively’ • Context, content, process • Fit into one coherent whole • Wider environment • Solving longer-term problems by learning lessons • Embedded, fundamental change

16. Strategic Change Management • Clear-defined purpose • Strong set of shared values = • More successful organisation

17. Strategy 1 • Something to work towards • Frames change • Basis of communications • Focus for effort • Integrative tool • Allows delegation • Requires proactive leadership

18. Strategy 2 • Resource allocation • Ability to manage change as a project • Capability assessment • Comparisons with the rest of the sector • Recognise generic change factors • Identifying and engendering attitudes • Key skills development • Fostering culture change

19. Strategy 3 • Systematic, well constructed change management project • ‘Route map’ for change • Identification of requirements • Order and pace • Key opportunities for success • ‘Danger’ areas • Key prerequisites and gaps

20. Key skills • Business – external environment and user demands • Political – Organisational situation, power bases and key influences • Spiritual – vision and values • Emotional – ability to understand and empathise with feelings – self and others

21. Strategic change management:techniques • Means to an end: no single approach • What, how, when, who, what impact, where? • What the organisation has/has not? • Help or hinder? • Drawing up of strategies and plans • Environmental and market forces taken into account

22. High level strategic techniques:Benefits • Improved quality of decision making • Identification and handling of problems and opportunities • Appropriate view taken: broad (strategy); focussed (implementation) • Performance indicators based in environmental factors – comparison and monitoring throughout

23. Foresight • Analysis of broader environmental issues ‘informed by deep insights into trends in lifestyles, technology, demography and geopolitics’ (Hamel and Prahalad, 1994) • Art and science • Create scenarios

24. Delphi • Qualitative forecasting - team approach • Based on iteration of one or more future scenarios • Eventual agreement reached for forecasting purposes • Provides a future framework/set of scenarios for specific analyses • Integrates different data sources

25. Environmental analysis • Analysing and understanding the environment in which the organization operates essential • Determines future strategic direction and what needs to be changed • Broad as possible approach • Early hints of major change not always obvious

26. STEEPLE • Socio-cultural eg population structure, lifestyle choices • Technical eg impact of internet, emerging technologies, technology transfer, R&D • Environmental eg local, national and international • Economic eg stage of cycle, employment levels, income • Political eg type of government, levels of freedom, legislation • Legal eg national and international • Environmental eg ‘green’ legislation

27. STEEPLE + • Values • Ethics • Education • Demography • Internationalisation.

28. Key stakeholder groups • Primary - Direct interest in the strategy – typically employees, and especially senior managers and those groups and institutions that fund the programme of work that the strategy generates and that have a financial stake in the organization to which the strategy pertains • Secondary - Indirect interest in the strategy – typically those who use the organization whose strategy it is, or who supply goods and services to it • Tertiary - Remote interest in the strategy – typically those who are interested in the key actions of the organization and how those actions are performed, such as government agencies or pressure groups

29. Stakeholder themes • Stakeholders have demands – things that they have to do and which they will need to have satisfied if they are to be supportive • They will have choices and will wish to exercise them • They will be operating under constraints

30. Defining benchmarking • A predetermined set of standards against which future performance or activities are measured • Involves the discovery of the best practice, either within or outside the business, in an effort to identify the ideal processes and prosecution of an activity# • Purpose is to ensure that future performance and activities conform with the benchmarked ideal in order to improve overall performance • Increased efficiency key to the benchmarking process • Leading to a more competitive edge • Determines priority areas

31. Portfolios and Markets • Review products or services • Review market • Product or service development mapping • Enhancements and other changes prioritised

32. Scorecards • Balanced scorecard – summative approach for position and performance • Innovation scorecards – real capacity to innovate • SWOT – tried and tested, still valuable • 7S model – integrative SWOT • Content, Context and Process model – emphasis on fitness for purpose

33. The four perspectives of a balanced scorecard • Financial Analysis: cost-benefit; financial risk assessment; organizational improvement • Internal processes: Identification of organizational performance in relation to customer/user expectations • Learning and growth: Identification of where training and development most needs to be targeted • Customers/users: Analysis of different types of customers/users and their satisfaction with the organization, its products and services

34. Innovation scorecard • 1 No real level of innovation, and no plans to innovate • 2 A basic level of innovation is evident, with a degree of motivation amongst the senior management to change • 3 Innovation is a stated and implemented key objective of the organization • 4 The organization is ‘best of breed’ in innovation and innovatory performance

35. SWOT • Strengths: Areas in which the organization has strong capabilities or a competitive advantage, or areas in which it may develop capabilities and advantages in the time period covered by the Strategic Plan • Weaknesses: Areas in which the organization is lacking the capabilities necessary to reach its goals, or areas that can beexpected to develop within the time period covered by the Strategic Plan. • Opportunities: Situations outside of the organization that, if capitalized on, could improve the library’s ability to fulfill its mission. These may exist now or develop within the time period covered by the Strategic Plan • Threats: Situations external to the organization that exist now or may develop in the time period covered by the Strategic Plan that could damage the library and should be avoided, minimized, or managed(Siess, 2002)

36. 7S model • Strategy • Structure • Systems • Staff • Style • Shared values • Skills

37. Content, Context and Process • Emphasis on organizational fitness for purpose and historical, cultural, economic and political contexts • Environmental assessment • Human resources as assets or liabilities • Linking strategic and operational change • Leading change • Overall coherence

38. Some more specific tools • Force field analysis – facilitates identification of drivers of, and resistance to, change • SIPOC – identifies all relevant elements of a process improvement project

39. SIPOC • Suppliers • Inputs • Process • Outputs • Customers

40. Approaches 1 • Choice of tools and techniques based on assessment of what is appropriate • Each situation is different and dynamic from previous ones • Multi-faceted approach best • Embrace complexities, including internal, external and politic realities

41. Approaches 2 • Gather enough, not too much, information • Combination of ‘hard’ and ‘soft’ approaches likely to work best • Begin with harder techniques to identify imperatives • Soft approaches involve and empower all those who will be affected

42. Techniques at work • What does the future hold? Delphi • What is the core environment? STEEPLE • What do our stakeholders want? Stakeholder analysis • How are we doing relative to others? Benchmarking • Are we offering the right products or services? Portfolio analysis • What do the markets want? Market analysis • Where are we best and worst placed? SWOT • How do we bring it all together into a plan for the future that can be measured against delivery? Balanced scorecard • Is the organization fit for purpose and well integrated? 7S • Is the organization ready for change? SIPOC • What is in the organization’s favour and where will the resistance come from? Force Field Analysis

43. Conclusions 1 • Use influence and strategic thinking to create a vision and identify those crucial, early steps towards it • Recognize the dissatisfaction that exists by communicating [sector] trends, leadership ideas, best practice and competitive analysis to identify the necessary change

44. Conclusions 2 • Whole series of processes, approaches and styles for particular environment • Subtle mix of art and science: directing, navigating, caretaking, coaching, interpreting and nurturing • Develop processes for the strategic management of change • Change will bring continuity