Introduction
The main aim of this paper is to focus on the
strategic changes at Faslane from different perspectives of the Babcock marines
and the MOD (Ministry of Defense). The objective is to understand the change
and the studies of strategic leadership. Taking into consideration a number of
different theories and models to analyze internal and external influences of
the organization.
In
the year 2002 Faslane which was previously managed jointly by the MOD and the
Royal Navy decided to partner with Babcock Marine, a private sector company.
The main aim of such partnering agreement was for the purpose of reducing cost
and improving their services. Babcock Marine was given the responsibility to
save the cost as well as to improve their operational effectiveness. They were
given a target of £76 million saving within five years. With a significant
change Faslane was able to achieve the target and was considered best.
In
this report the analysis is carried out using a variety of strategic tools and
models to describe the strategic change and leadership styles of Faslane. The
Change Kaleidoscope and Lewin’s Force-field Analysis are applied to explore the
strategic change context at the beginning of the change process. The internal
features and strategic leadership styles will be examined to contrast the
difference before and after the Babcock Marines implemented. This will be
carried out using the Mckinsey Seven S framework, Johnson’s Cultural web and
Lynch’s leadership model.
1 The strategic change context at the start of
the change process
1.1
Change Kaleidoscope
The
change kaleidoscope is a diagnostic framework. It can be particularly useful in
a context sensitive change process, which one can argue is the case in this
Faslane project.
.png)
Figure 1.1 Sources: Nixon, R.(2009) Change process,
5th Edition, Prentice Hall,
From
the figure 1.1, we can see that Change Kaleidoscope has been used to analyze
the change process in Faslane. We can clearly observe that change process was
revolutionary because the main objective was to change the mindset of staffs.
There was a huge participation due to participative programs like “the event in
the tent”. During the change period, Babcock tried to increase the efficiency
without affecting the quality of services being provided. This was done through
changing the mindset of people and bringing in skilled employees in the
Faslane.
In
this section we will be discussing about the change process in brief using the
elements of the Kaleidoscope Model.
The contextual features of change in
Faslane , (Kaleidoscope Model )
Time:
Change
is needed relatively quick. There is no sense of urgency as the organization is
not in a crisis. It is more concerned with long term strategic development .
Power:
The
workforce has limited autonomy but the change leader is encouraging
transparency and allowing employees to express their opinions .Objectives are
aligned and the business planning is top down. However the employees have the
power to resist change as previously transformational change has failed in the
past .
Scope:
The
change will affect the whole organization as the hierarchical structure has
been personalized and the organizational structure has been compressed. The
management team has been halved and the financial department has saving
targets. Overall the change is transformational.
Preservation:
The
organization is ring fenced from radical changes, reducing the risk of a
potential crisis. The diverse range of people within the organization creates a
pool of skill sets and innovative change ideas.
Diversity:
The
organization has seven layers, creating many groups and divisions. The change
will force certain group of people for instance the management group has been
halved . There will be groups supporting
change as well as group which opposes change .
Capability:
The
management team has been halved from 250 people. This may result in one of two
things the there won’t be enough managerial capability to implement changes or
the flattened structure will increase efficiency. However there seems
sufficient competence to initiate change. The question is whether they can
deliver change as there are feelings of mutual benefit.
Capacity:
External
linkages such as people from Babcock , networks with trade unions and other
companies who went through similar changes . The firm has delivered a reduction
of 20% in annual running costs. In the second year , the firm has implemented
performance scorecards and other measure outputs .
Readiness:
The
mixed management team believed change was necessary; however those opposed to
partnering were likely to be deprived and less encouraging. The workforce
seemed fearful what change would mean.
Thus,
the change process at Faslane was a revolutionary change strategic as well as cultural
change.
The kaleidoscope does not give
predictable configurations that lead to more formulaic change recipes. The
eight contextual features remain the same but they are constantly reconfigured
to produce different pictures for each organizational change situation
1.2 Force Field Analysis
A
force field analysis identifies forces (for and against change) to restore
equilibrium and establish balance by strengthening driving forces or reducing
the impact of resisting forces. It is as simple yet effective tool to identify
potential blockages to change.
Force field Analysis
Restraining
forces (against change)
Current equilibrium
Driving forces (for change)
Figure 1.2
From the figure 1.2 we can observe
the Force Field Analysis where there are factors which are for and against
change. On the driving forces, MOD was in the need to reduce the cost and
improve operational efficiency with better quality services. There was a great
support from the top level as well as customer were expecting better quality
services. Due to vision for the future, the change was essential.
Table
1: Faslane’s Force Field Analysis
Force
field Analysis
|
|
Driving
Forces
|
Restraining
Forces
|
Need of cost saving
|
Traditional ways of working and
thinking.
|
Improve operational efficiency
|
No perception to save money.
|
Support of change from the top
|
Fear from impacts of change
|
Better quality services
|
Management Structure
|
Expectations from customer
|
Slow organizational process
|
Viewed favorable by management
|
Traditional mindset of staffs.
|
Vision for future
|
Problems due to political
interventions
|
Increased diversity and
unsustainable cost
|
Existence of Bureaucracy
|
External linkages ; people from
Babcock
|
Cultural Challenges and
conservative staffs
|
Aware of development needed in
operations.
|
Limited level of autonomy
|
Implemented low-level changes
early
|
No previous experience of change
|
The
table above illustrates the opposing forces that may impact the change process
at Faslane . The two models interlink, with many aspects of the kaleidoscope
classified as either driving or restraining forces. It could be considered that
the most significant features are power and time, however the readiness of the
staff is also important. Unless there is a high degree of readiness in the
organization it is unlikely to deliver a transformation.
Hence,
the analysis provides a strict indication that the proposed changes at Faslane
are viewed favourable by the management. The concept of power is very important
as it merges with readiness of staff and managerial capabilities .It if often
seen that the staff become fearful to change and oppose any kind of
transformational change. This may have a domino effect impacting the entire
scope of the organization.
2.
Compare and contrast the internal features of the organization when it
was run by MOD and Royal Navy.
2.1 McKinsey 7S Framework
The model is most often used as a tool to assess and
monitor changes in the internal situation of an organization. The model
proposes 7 interdependent factors – 3 hard ‘S’ i.e. strategy, structure,
systems; and 4 soft ‘S’ i.e. shared values, skills, style and staff.
Sources: Lynch, R., (2009) Strategic
Management, 5th Edition, Prentice Hall, chapter 16, pp619
The table below indicates how Faslane acknowledged
the need to change aspects such as the organizational activities structure and
co-ordinate the key value adding processes. Evidence suggests that performing
measures need to be implemented to ensure financial stability and resource
efficiency.
Table2: Faslane run by the Royal
Navy and MOD (up to 2001)
McKinsey’s
Seven S Model
|
||
SEVEN S ( 7S )
|
STRENGTH
|
WEAKNESS
|
HARD
ELEMENTS
|
||
STRATEGY
|
Progressive and customer oriented.
|
Time consuming in decision making.
|
STRUCTURE
|
Clear chain of command
|
Unclear roles and
responsibilities.
|
SYSTEM
|
Good management and improvement in
manpower.
|
Problems in handling customer
complaints and late adaption to change.
|
SOFT
ELEMENTS
|
||
SKILLS
|
As most of the staffs are civil
servants they are experienced.
|
Unfamiliar with modern management
styles and change process.
|
STYLE
|
Leaders are experienced.
|
Leaders are bureaucratic but only
some people will be benefited.
|
STAFF
|
Over 1700 civil service staffs
were engaged in Faslane.
|
Not ready for change. Focused more
on infrastructure and facilities than people.
|
SHARED
VALUES
|
Commitment to provide quality
services to Navy.
|
Ethnocentric beliefs and
resistance to change.
|
Table 3 : Falsane run by the Babcock
Marine (2002-2010)
McKinsey’s
Seven S Model
|
||
SEVEN S ( 7 S )
|
STRENGTH
|
WEAKNESS
|
HARD
ELEMENTS
|
||
STRATEGY
|
Cost saving and good quality
services.
|
Cost saving may lead to poor
quality of services.
|
STRUCTURE
|
Structure is formal but each
individual are able to form team and can present business plans.
Clear roles and responsibilities.
Layers of management reduced to 4
from 7.
|
Excessive freedom may damage the
hierarchy of the organization.
Can arise serious problems.
|
SYSTEM
|
Expert management teams.
Change the mindset of people.
|
Problems in handling customer
complaints.
Immediate change process.
|
SOFT
ELEMENTS
|
||
SKILLS
|
Most of the staffs have experience
of change.
|
Unfamiliar with the operation of
naval base.
|
STYLE
|
Leaders are experienced with
change process.
|
There are risks associated with
the change process in such industry.
|
STAFF
|
Over 2000 civil service staffs
were engaged in Faslane.
Staffs are focused more on people
than infrastructure and facilities.
More involvement of staffs..
|
Reducing the management layers
means loss of job and it may not motivate staffs to work effectively.
|
SHARED
VALUES
|
Commitment to reduce cost without
damaging the quality of services.
|
As a private company, Babcock
Marine may seek
more profit which may hamper its strategy.
|
Babcock implements a clear strategy, encouraging
visibility and transparency. However the process for changing direction is
rigid and the hierarchical structure may hinder change. Nonetheless, Babcock
flattened the organizational structure to a maximum of four layers which
supported the low-level changes. However, Babcock also halved the management
team and this resulted in reduction of staff, but may result in a lack of
management capability and people power to drive towards change.
But
on the other hand, reducing the cost may hamper the quality of services being
provided. Management is formal but individuals can create their own ideas and
implement it. However such flexibility may damage hierarchy of organization and
can be a serious problem. But due to this change process there has been a huge
loss of jobs. This may affect the employees’ performance because of fear.
2.2 Cultural Web
The
Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992, provides
one such approach for looking at and changing your organization's culture.
Using it, you can expose cultural assumptions and practices, and set to work
aligning organizational elements with one another, and with your strategy.
The
Cultural Web identifies six interrelated elements that help to make up what
Johnson and Scholes call the "paradigm" - the pattern or model - of
the work environment
MOD AND ROYAL
NAVY ( upto 2001 )
.png)
Babcock Marines (2002-2010)
Figure 2.2
.png)
From
the figure 1.3 and figure 1.4 we can see the Johnson’s Cultural web up to 2001
and from 2002 to 2010 respectively and figure3.5 and figure 3.6 represent the
McKinsey’s Seven S Model. If we observe the cultural web of these two different
years we can see that positive changes in the management style can really help
to succeed any organization. Babcock managed loyalty, commitment and welfare
which come from the employees’ side. Infrastructures were seen as the assets
before and after people were considered as the most important elements of
organization.
When
the Faslane was managed by MOD and the Royal Navy it was working whether it is
bad or good. The management structure was huge and complex. People used to just
do their job and creativity and business plans were not considered important.
Organizational structure was also huge with seven layers and they were having
traditional management and organizational structure. Perception of change as a
negative or unimportant factor can also be considered. Although
Faslane was customer oriented it was not delivering good services due to time
consuming decision making styles.
In addition, unclear roles and
responsibilities were also obstacles. Late adaption to change was seen from the
management to employee level. Leaders were experienced but
were bureaucratic so only some people were getting benefit from this.
Ethnocentricity behaviors were seen in most of the employees as well as the
management level that they know better than others.
After
Babcock Marine, a private sector company was given the management the face of
Faslane changed. Babcock was able to transfer or change the mindset of people.
Management brought new employees who have already dealt with changes and used
them to successfully implement the change. The change process became
successful because of the active participation of employees. They were asked to
collaborate and emphasized the importance of change. Now management became
strong and staffs were given the power to choose their own team and make
business plan. Now peoples were considered and they were having common
objectives. With this flexibility there was a low power distance and there were
unique management teams having different skills. In the same time, cost was
reduced by reducing the management structure from 7 to 4. In addition,
reduction of review period from 56 days to 6 days was a significant decisions
made by the management. Reappointment of all jobs and cut off in jobs were also
the major factor which helped the company to achieve its goals year by year.
But
on the other hand, reducing the cost may hamper the quality of services being
provided. Management is formal but individuals can create their own ideas and
implement it. However such flexibility may damage hierarchy of organization and
can be a serious problem. But due to this change process there has been a huge
loss of jobs. This may affect the employees’ performance because of fear.
To
sum up with, Faslane has gone through change process and it has totally changed
its management as well as organizational structure. It has been able to achieve
organizational goods within time limits. So, change is in favor of Faslane.
2.3 Internal Perspectives of Faslane
The
resource based view of strategy states that the performance of an organization
is explained by distinctiveness of its capabilities and capacity to maintain
competitive advantage (Johnson, et al. 2011). Resources are defined as the
assets owned by the organization whereas competences refer to the way the
assets are used effectively, such as management and specialized capability.
2.4 Resource Analysis
Table
4 Resource Based View of Faslane (2002-2010)
|
Resource based
View (VRIN) at Faslane
|
||
|
|
Before 2001
|
2002-2010
|
|
Valuable
|
Buildings,
infrastructures and facilities were valuable.
Resources could be easily copied.
|
Human resources, flexibility and
achieving goals are more valuable.
Resources are hard to copy such as
management skills and change management.
|
|
Rare
|
Lack of rarity in human skills.
|
Employees were brought who already
faced changes.
Heterogeneous
management skills.
|
|
Inimitable
|
Lack of inimitable resources
|
Unique management skills.
Knowledge
about change and adaption.
|
|
Non-substitutable
|
Infrastructures
and facilities were non-substitutable because the organization was a Naval
based industry.
|
Employees were
substituted by Babcok with skilled human resources.
Human
resources and infrastructure are non-substitutable.
|
For
the comparative aspects of the internal features of the organization, it is
clear that Faslane has sufficient resources to initiate change. The MOD first
established partnering arrangements to build on Faslane’s intellectual capital,
whereby Babcock further developed this by creating networks with companies
undergoing similar changes. From a financial perspective, the MD spent the
entire budget by means of routine whereas Babcock initiated a 5 year contract
to encourage savings and improved operational efficiency.
2.5 Competence Analysis of Faslane (2002-2010)
Table
5
|
Competence
Analysis
|
||
|
|
Up to 2001
|
After 2002
|
|
Physical
resources (Tangible)
|
Infrastructures
and facilities were seen more important.
|
After the
reconstruction, improvement in the infrastructure.
Capacity has increased.
|
|
Financial
resources (Tangible)
|
Government budget (taxpayer’s money)
Over spending
|
Government budget.
Able to minimize spending.
|
|
Human
resources (Tangible)
|
Knowledge about running naval base.
|
Expert of
change management.
Heterogeneous
management skills.
|
|
Intellectual
capital (Intangible)
|
Buildings and infrastructures.
Stakeholder relationship.
|
Unique
management and organizational structure.
Home base for
entire UK submarines fleet.
|
The
competence analysis indicates the many developments of Faslane. Babcock
improved the functioning capability by re-engineering the review process,
refining the process from 56 days to 6 days. The improved operational
efficiency and Babcock further enhanced the specialized capability by
re-aligning the workforce to become more autonomous. Similarly, both leaders
saw the importance of internal and external linkages as te MOD transferred people
with the knowledge and skills o running a naval base. The commodore saw
partnering as an opportunity to which Babcock established these arrangements
with industrial firms. These linkages can add value and skills set of the firm.
The
comparison suggests that from 2002-2010, when Babcock ran Faslane, the changes
initiated has encouraged organizational distinctiveness of its capabilities.
Faslane is now in a more financially stable position, due to the savings and
improved operational efficiency. The form now has the ability to maintain
competitive advantage as it offers an improved service, with a better attitude,
communication and responsiveness.
3.
Strategic Leadership Style at Faslane
Strategic
leadership is defined as “the ability to influence others in your organization
to voluntarily make day-to-day decisions that lead to the organization’s
long-term growth and survival, and maintain its short-term financial health”.
The model
determines the four main principles leading to the development and communication
of organizational purpose. It considers ethical standards, competitive
advantage as well as incorporating stakeholder requirements..With the help of
figure 1.5 we can compare the organization against the Five Elements of
Successful and Effective Strategic Model.
Figure 3.1 Five Elements of Successful and effective
strategic Leadership Model
Sources: Lynch, R., (2009) Strategic Management, 5th Edition, Prentice
Hall, chapter 16, pp619
From
2002 to 2006 the Babcock marine managing Director was John Howie and from 2006
the Managing Director was Craig Lockhart. From the period 2002 there has been a
significant change process. The main aim of giving away the management to
Babcock was because it was more competitive, different targets, experienced
management skills which are totally different from that of service sector. With
the help of figure 1.5 we can compare the organization against the Five
Elements of Successful and Effective Strategic Model.
In
this section, let’s examine each elements of successful and effective strategic
leadership Model:
Ø Developing and communicating the
organizations’ purpose:
The purpose to significantly reduce costs and
improve operational effectiveness has been clearly defined and communicated
within the company. Faslane changed their developing and communicating the
organisations purpose by changing the infrastructure, promoting honesty and
open discussions, changing the approach to customer service.
Ø Sustaining Competitive Advantage
over time :
The
change in employees' mindset, speedier decision making processes, and more
efficient operations clearly build the ground for sustainable competitive
advantages over time. Improved sustaining competitive advantage over time by
changing employee mindsets, cutting down the management layers, building joint
business ventures. Babcock employed those people who have already faced change
process. The best confirmation is that Babcock being private company has been
successful in transferring culture of private organization to publically owned
organization. With this competitive advantage, Faslane is expected to become
home base for the entire UK submarines fleet.
Ø Setting ethical standards:
A focus on
spending money (people's taxes) to receive the same budget again was turned into
a customer oriented one what finally led to the creation of more jobs (clearly
more ethical in my opinion). Set ethical
standards by changing the money spending, bringing new jobs, building trust and
honesty in the community.
In the case of Faselane, the MOD made a five
years contract with Babcock in order to minimize the spending by restructuring
the organization. As it will be unethical to spend tax payers’ money it has
maintained the standard of ethics. In addition, the management team was able to
convince employs that they are for developing them.
Ø Defining and delivering to
Stakeholders
The parent
company, the MOD, the Navy Board, the commanding officer, security people, the
local community, etc. were defined as stakeholders and the production process
was geared accordingly. Defined and delivered to stakeholders by building trust
of the organization, understanding the importance of good allies and proving
the good management. For example : To the Navy, the service was better than
before. For MOD, Babcock was able to meet the target by which it has satisfied
both the stakeholders.
Ø Managing human resources &
organizational decisions
Management
of HR primarily happened in bringing change specialists from Babcock to sustain
the change process at Faslane and in cutting jobs (mostly management people) to
flatten the organization’s hierarchy. Managed human resource and organizational
decisions by changing layers of management and creating 2000 new jobs.
Hence,
it can be said that they have used the Lynch Model properly and Faslane was
very successful by utilizing all its resources to achieve its goals and
objectives that is cost saving. It has been found that with its good
performance, it was able to meet its target and was able to manage the entire
UK submarines fleet.
3.1 The Transcendent Leadership
Model
The
forms of leadership contains; the organization, self and others. It centralizes
nonhuman elements such as strategy, structure, rules and procedures. Similar to
the Lynch model, it interprets the changing external environments, presenting
the bigger picture to organizational members. This offers a coherent unifying
approach that enables the alignment of strategy: organization and environment.
Transcendent leadership model consists of:
Ø Leadership
of organization
Ø Leadership
of self
Ø Leadership
of others
Figure 3.2
Transcendent Leadership at
Faslane (2002-2010)
Sources: Nixon., (2009)
Strategic Management, 5th Edition, Prentice Hall
3.2
Cultural Influences:
Culture
is the characteristics of a particular group of people, defined by everything
from language, religion, cuisine, social habits, music and arts.
Shaping
the firm’s culture is deemed central to effective strategic leadership. It is
imperative to encourage employee autonomy and entrepreneurial orientation to
sustain further development .However, Johnson,(2011) deems this difficult to
observe and manage , hence why analyzing culture is imperative due to its
influence on strategy .
Figure 3.3
Source:
@2002, Alicia M. Rodriguez , M.A. Execuive Coach.
CONCLUSION
The
case study showed that especially during times of change an exchange of
know-how is vital. This transfer must happen between new and experienced
employees, generalists and specialists, and so on.
In
addition, it became apparent that cost reductions and service improvements are
possible at the same time. What is needed is a clear goal (strategic leader's
responsibility), a certain autonomy for employees (limited autonomy is likely
to be ineffective due to long decision making processes) and the inclusion of
all affected stakeholders in the change process (customers, employees, local
community, etc. in case of Faslane).
Faslane has been able
to comply with all the five elements of Successful and effective strategic leadership.
It was able to communicate organization’s purpose to all the stakeholders. It
was also successful in maintaining ethical standard as well as managing human
resources. With its good performance, it was able to meet its target and was
able to manage the entire UK submarines fleet.
Evidence
for this leadership style being effective can be seen in the decision that
Faslane would become the home base, not just for nuclear submarines but for the
entire UK submarines fleet which means up to 2000 more jobs.
Faslane
was very interesting case study and thought us a lot about organizations
management and how can smart changes affect everything.
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