Professional Documents
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3-Chp 3 - Innovation, Performance & Change Management
3-Chp 3 - Innovation, Performance & Change Management
Business Process Rationalization: Already automated tasks are further improved by using latest machinery
or IT. This is part of continuous improvement strategy
Business Process Re-Engineering: Fundamental rethinking and radical redesigning of processes in order to
achieve dramatic results. BPR adopts a ‘clean sheet’ approach whereby the entire process is redesigned
from scratch.
Problems Solutions
Lengthy
Removing unnecessary activities
Some activities unnecessary
Combining activities or roles
Duplication
Changing order of activities in logical flow
Some activities missing
Allocating activities to right department
Activities in wrong order or person
Activities being performed by a Outsourcing
wrong department or person
Automation
Harmon’s Process Strategy Matrix
Process High B D
Complexity
Low A C
Low High
Strategic Importance
A: Simple / straight forward process but not contributing to company’s core strategy
Strategy: Simple automation using off-the-shelf softwares or outsource (e.g. payroll, office cleaning)
B: Complex process but not contributing to company’s core strategy. Hard to automate.
Strategy: Outsource to a specialist vendor (e.g. taxes, legal)
D: Complex, high value process which generates competitive advantage for the organization
Strategy: Careful process designing, employee best experts, best IT solution, etc. (e.g. research and
product development, marketing)
Projects
Project: a one-off non-routine activity that has a
Beginning and end
Clear objectives
Within time, cost and quality
Project Stakeholders: people, departments or external parties either involved in the project OR effected
by the project. It includes internal as well as external stakeholders such as:
Project sponsor
Project manager
Project team
Users / concerned department (s)
Customers
Suppliers
Government
Society / community
Project Lifecycle
Project lifecycle is all the stages through which a project passes from start till end.
1. PROJECT INITIATION
This stage covers basic information to enable the Board to approve or reject the proposed project. It
includes the following:
Scope and objective APPROVAL PHASE
Cost and benefit analysis
Key stakeholders (e.g. project sponsor, project manager, project team, users, etc.)
Project duration / timelines
Risks and constraints
Feasibility, investment appraisal techniques, etc.
Documents used in this phase:
Project Initiation Document / Business Case
Project charter
Benefit realization plan
Project Charter
A Project Charter is a formal approval of the business case and gives authorization for the work to be started
and allocation of funds and resources to be made. It is signed-off by all key stake holders of the project, based
on the Project Initiation Document.
Project Plan
A project plan is a document which contains detailed planning about the project, covering resources, timing,
costs, risks, duration, etc. The project is broken down into many tasks and then detailed planning is done for
each task. Detailed project planning is normally done once the Business case is approved.
4. COMPLETION
This stage covers the handing over process, user feedbacks as well as assessment whether the project
objectives were met or not. It includes:
Training of users
Testing by users
Formal handing over / sign off procedures
Taking feedback from users
Assessment whether project objectives are met or not
Documents used in this phase:
Post Project Review
Post Implementation Review
Benefit Realization Review (covered above)
Types of Benefits
Observable Benefits:
These are intangible benefits which cannot be quantified in financial terms, e.g. improvement in staff
morale. These should not be part of cost benefit analysis and can only be included under ‘qualitative’
benefits if important.
Measurable Benefits:
These benefits are measurable but it is difficult to predict by how much they will increase once the
project is completed. For e.g. by how much market share will increase if company implements an online
ecommerce website? These benefits involve high degree of assumptions or estimations.
Quantifiable Benefits:
These benefits are relatively easy to predict by how much they will increase once the project is
completed. For e.g. by how much wastages will reduce if a new machine is installed.
Financial Benefits:
Once the measurable and quantifiable benefits are quantified, it becomes easy to convert them into
financials. (e.g. increase in sales revenue as a result of increase in sales volume)
Costs
ALL direct and relevant costs should be considered in the business case, including:
included.
Investment Appraisals
Once all costs and benefits of the project have been listed, then these are compared to see if the investment
in project is financially beneficial (investment appraisal). In a typical project, there would be substantial cash
outflow in the start in anticipation of long-term cash inflows. Hence careful investment appraisal is done as
huge amounts are involved and it becomes difficult to pull out in the middle.
Project Stakeholders
Project Sponsor
Project sponsor is normally a senior person from the management team, responsible for the successful
outcomes of the project. He is the person who will gain the most from the success of the project and who will
lose the most if the project is a failure. He is the person who had initially requested the Board to approve the
project.
Project Manager
Project manager is the person responsible for the entire project and all its activities. i.e. it is his job to ensure
that the project is completed on time, budget and quality
Role of a Project Manager:
Planning, resources, team building, communication, coordination, monitoring and control, problem solving,
etc.
Reason: The reason / justification for bringing a change should be clear, i.e. why the change is being
made and what will be the benefits
Time: How quickly the change is needed? How much time is available to implement the change? Is there
any urgency to implement this change (Big Bang) or can it be implemented gradually (Incremental)
Capacity / Resources: What kind of resources is required to implement the change. It includes financial
resources, manpower, technology, etc.
Capability: Do we have expertise for ‘change management’, i.e. expertise to manage and implement the
change, e.g. past experience of various change projects, change agent
Power: How much power does the change leader has. It also involves in identifying people in the
organization who has the ‘real’ power to affect to the change
Diversification: is there diversity (variety) of experience or strategy in the ‘current environment’? Change
will be difficult to implement (hampered) if the organization has been perusing the same strategy for years
Readiness: Are the employees ready to accept the change or will there be significant resistance
Resistance: Who will be the people or stake holders who will resist the change, reason for resistance,
how you would handle those people / stake holders
Types of Change – JS&W
Model
Nature of
Incremental Adaptation Evolution
change
(Speed Of
Change)
Big Bang Reconstruction Revolution
Realignment Transformational
Scope of Change
(Size Of Change)
As compared to existing culture, business model or
core business strategy)
3. REFREEZE: ensuring that new system or process or new change is now part of the routine through
reinforcement techniques, such as rewards, appreciation, monitoring, etc.
Organizational Structures
Types of Structure
Functional structure (departments)
Disadvantage: creates “Silo” effect i.e. each department focuses on their own performance /
objectives and does not coordinate with other departments
Divisional structure (divisions and then departments)
Tall / Flat structure (span of control, i.e. number of subordinates reporting to you)
Matrix / Transnational (see below)
Matrix Structure
Used where there are multiple branches / offices (either in same country or across countries i.e.
multinationals)
Matrix structure develops cross functional coordination
Matrix structure means an employee has two bosses (dual reporting)
1. Primary reporting (e.g. to functional head such as CFO)
2. Secondary / dotted reporting (e.g. to administrative head such as branch manager)
Advantages:
1. Availability of functional expertise and guidance at branches
2. Cross functional coordination and communication between multiple branches / offices
Disadvantages:
1. Dual bosses / chain of command
2. Conflict between bosses
3. Slow decision making
Machine Bureaucracy
Formal procedures
Strict hierarchy
Standardized work processes through technology
Suitable for simple and repetitive task environment
Professional Bureaucracy
Standardized skills of individuals (e.g. doctors, lawyers)
Suitable for service-oriented organizations
Divisional Form
Standardized outputs (of divisions)
Gives autonomy (i.e. independence) to middle level management to run their own divisions
Adhocracy
No standardized processes
Complex and disorderly
E.g. project based teams, etc.
Suitable for research and innovations
Missionary Organizations
Standardized ideology
E.g. NGOs
Talent Management
Talent management means to identify, recruit, engage, retain, and develop the most talented and superior
employees within by the organisation. Key elements of talent management include:
Advantages Disadvantages
Getting specialized expertise
Dependency on 3rd party
Org can focus on its core activities
Loss of direct control
Cheaper
Confidentiality issues
Ease of budgeting
Poor service / quality
Reduces fixed overheads
Chances of disputes
Shared Services
Shared services refer to the centralization of back office / support functions at one location, which were
previously carried out by each business unit independently. Common shared services functions includes IT,
finance, admin, procurement, HR, legal, etc.
Unlike outsourcing, shared services are carried out within the organization and will not require the use of a
third party. The shared service is treated as a separate business unit and its services are charged to other
business units at arm’s length prices. It will have its own targets to achieve and will be expected to produce
continuous improvements.
Advantages Disadvantages
Cost savings / economies of scale
High resistance by individual business units
Better quality and standardization
Redundancies
All talent under one roof
Difficult to standardized all business units
Easier to implement any change
Local requirements and laws still needs to be
complied with
Collaborative Working / Boundaryless Organizations / Business Partnerships
Collaborative working is an extension of the idea of outsourcing. Due to internet / online technologies,
organizations are now able to work together more than ever before for e.g. organizations are working more
closely with their customers and suppliers.
Collaborative working is when two or more organizations work together in a variety of ways, such as JIT,
strategic alliance, joint ventures, networking, joint projects, sharing of resources, etc. It could be a one-off
arrangement or it could be a long-term permanent arrangement.
For e.g. Amazon.com: it only manages online website and e-marketing and heavily relies on various vendors,
courier companies, credit card company, etc. to deliver rest of the customer experience. The customer feels
that he/she is dealing with one organization but in reality, several organization are collaborating behind the
scene.
Advantages Disadvantages
Sharing of expertise and resources
High dependency on each other
Synergies
Conflict of interest
One stop solution for customers
Weak partner may affect all
Disruptive Technologies
Disruptive technology means when technology is used to create a new market or value network and ‘disrupt’
the existing / traditional / physical business model in an Industry, displacing the established market leaders
and alliances. E.g. includes Uber, Netflix, Airbnb, Block Chain, Crypto currencies, etc.
FINTECH: one of the fastest growth sector in disruptive is financial services. Financial Technology (known as
Fintech) is disrupting the traditional banking industry dominated by giant banks. Fintech provides investment
advices, portfolio management, mortgages, exchange currencies, make payments.
Financial: whether org is achieving its financial targets and shareholder needs e.g. ROCE, ROI
Customer: whether org is meeting customer needs e.g. customer satisfaction, feedbacks, complaints
Innovation: whether org is continuing to improve and develop e.g. research, innovation, training
Business Process: whether internal processes are efficient and employees are motivated
Performance Excellence Model – Baldrige
The Baldrige model assesses and organisation across seven categories:
3. Customers: building long lasting relationships with customers and meeting their expectations
4. Workforce: how organization enables and empowers its employees, skilled, motivated, high
performance
Practice Questions
P3 – Dec 2009 Q3: Project Management | Harmon Process Strategy (Lowland
Bank) P3 – Dec 2010 Q1B: Contextual Features of Change (Shoal Plc)
P3 – Mar/Jun 2017 Q4: Harmon | Off the Shelf S/W (Deeland Housing)