Managing Change in a Decentralized Organizational Structure Margaret Tam Applied Project (APRJ-699) Word Count: 17,141 Submission Date: March 19, 2017 Academic Coach: Dr. Conor Vibert Applied Project Coordinator: Dr. Angela Workman-Stark

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ABSTRACT

Managing change is a challenging but critical effort for an organization to meet evolving business needs. To successfully lead transformative initiatives, leaders need to consider both the strategic side and human side of a change. While there are multiple influencers, organizational structure can add complexity to any change implementation due to its impact on decision making process. A decentralized organization with dispersed decision making authority can affect how leaders implement an organization- wide transformation.

The purpose of this applied project is to answer the research question: “How can change be managed in a decentralized organizational structure?”. Reviewing contemporary research, industry best practices, and a past project implemented within the University of British Columbia Faculty of Medicine, this paper highlights key lessons learned on how to manage the human side of major organizational transformations and to provide recommendations for managing future changes in organizations with a decentralized organizational structure. As a conceptual paper, the research design of this applied project is mainly based on secondary sources and data, such as academic research papers, industry best practices, books and internal project reports.

The literature review examines insights regarding change drivers, organizational structure, leadership, and change methodologies. Different types of change drivers and change theories with assumptions regarding economic value and organizational capabilities can impact how leaders lay the proper foundation for making organizational change. An organization’s structure can determine the organizational level where decisions are made. In a decentralized organization, decisions are made at the lower level where problems occur. While decentralization supports empowerment, it presents challenges for leaders to mobilize a diverse group of stakeholders to make transformative change. Leaders influence followers with different power bases, such as coercive, reward, legitimate, expert, referent, and information. Referent and expert are the two power bases that attract followers to commit. To undertake transformative change, leaders need to act as change agents while addressing psychological implications and showing results. To systematically implement change, leaders can leverage change management methodologies, such as Kotter’s 8-Step Process for Leading Change and Prosci’s ADKAR Framework.

Following the literature review, three predictions statements are presented regarding how to manage change in a decentralized organizational setting. 1. Insights from Theory E and Theory O will be evident in the management of change in a decentralized organization. 2. Change leaders with referent and expert power bases will be effective change agents in a decentralized organization. 3. Insights from Kotter's Change Model will be well suited to the management of change in a decentralized organization.

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An analysis based on concepts from the literature review and past project experience, Teaching Tracking and Payment, is presented in the results section. The analysis supports the three predictions by applying management concepts to analyze the project lessons learned.

The first insight is to leverage Theory E and Theory O in managing change in a decentralized organization. Theory E and Theory O are two change theories based on economic values and organizational capabilities respectively. A sequence of applying Theory O after Theory E can produce positive impact for implementing change. The second insight is leaders with referent and expert power bases are more effective in managing change. They can act as change agents to mobilize people across the organization. The third insight is to follow a change management framework like Kotter’s 8-Step Process for Leading Change can better equip change leaders to manage organizational transformations.

Following the results, six recommendations are presented: (1) develop and align change vision, (2) combine Theory E and Theory O, (3) enlist leaders as change agents, (4) recruit operational champions, (5) leverage change models in implementations, and (6) sustain a change culture for continuous improvement.

Managing transformative change is challenging for a decentralized organizational structure. As organizations need to evolve, transform and sustain themselves, change management has become a popular management topic for business management research. Future studies in this field will further support, validate or correct the predictions and findings in this report.

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Table of Contents

Abstract ...... 2 1.0 Introduction ...... 6 2.0 Literature Review and Analysis ...... 7 2.1 Change Drivers ...... 7 2.11 Types of Change ...... 7 2.12 Economic Value and Organizational Capability ...... 8 2.13 Analysis ...... 9 2.2 Organizational Structure ...... 9 2.21 Five Types of Organizational Structure ...... 9 2.22 Definitions of Centralization and Decentralization ...... 10 2.23 Management Theories on Decentralization ...... 10 2.24 Change Management and Decentralized Organizational Structure ...... 11 2.25 Analysis ...... 11 2.3 Leadership ...... 12 2.31 Power and Decision Making ...... 12 2.32 Leaders as Change Agents ...... 13 2.33 Analysis ...... 14 2.4 Change Methodologies ...... 14 2.41 Kotter’s Leading Change Model ...... 15 2.42 Prosci Change Management Methodology ...... 16 2.43 Analysis ...... 16 3.0 Predictions ...... 17 3.1 Prediction Statements ...... 17 4.0 Methodology ...... 18 4.1 Research Design ...... 18 4.2 Organization Background ...... 18 4.3 Major Transformation Initiative Background ...... 19 5.0 Results ...... 22 5.1 Prediction 1 – Theory E and Theory O ...... 23 5.11 Types of Change ...... 23 5.12 Organizational Structure ...... 24 5.13 Economic Value and Organizational Capability ...... 25 5.14 Predication 1 Validation ...... 26

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5.2 Prediction 2 – Leadership ...... 27 5.21 Centralization and Decentralization Decision Making ...... 27 5.22 Power Bases ...... 28 5.23 Leaders as Change Agents ...... 30 5.24 Prediction 2 Validation ...... 31 5.3 Prediction 3 – Change Methodologies ...... 31 5.23 Change Management and Organizational Structure ...... 31 5.32 Kotter’s Change Model ...... 32 5.33 Prosci Change Management Methodology ...... 43 5.34 Prediction 3 Validation ...... 43 6.0 Recommendations ...... 43 6.1 Develop and Align Change Vision ...... 43 6.2 Combine Theory E and Theory O ...... 44 6.3 Enlist Leaders as Change Agents ...... 44 6.4 Recruit Operational Champions ...... 45 6.5 Leverage Change Models in Implementations ...... 46 6.6 Sustain a Change Culture for Continuous Improvement ...... 46 7.0 Conclusion ...... 47 Appendices ...... 48 Appendix A: Leadership Capabilities needed to Succeed in a Digital World ...... 48 Appendix B: UBC Faculty of Medicine MD Undergraduate Program Organizational Chart ...... 49 Appendix C: Teaching Tracking and Payment Project Organizational Chart ...... 50 References ...... 51

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1.0 INTRODUCTION

Change is a constant in today’s business world. Organizations need to transform themselves to meet customers’ needs, adapt to an evolving workforce, manage financial situations, achieve process efficiency, leverage the benefits of digitization, and for many other reasons. To successfully lead organizational transformations, leaders need to consider both the strategic side of the change and the human side of the change. An organization’s structure can further complicate how the change is implemented. A decentralized organizational structure with decision making responsibilities delegated to middle management, specific employee groups, or regional leaders can enable agile business operations. However, this structure presents challenges to efforts to unite employees at all levels and achieve buy-in.

Writers on the topic of change management discuss how different types of change efforts can influence an organization. In addition, leadership styles and power bases drive organizational decision making. Reviewing the literature from the perspective of change drivers, organizational structure, leadership power and decision making can paint a clearer picture of how change should be managed when an organization is decentralized.

Reviewing contemporary research, industry best practices, and a past project implemented within the University of British Columbia Faculty of Medicine, this applied project seeks to answer the following research question: “How can change be managed in a decentralized organizational structure?” The purpose of this paper is to highlight key lessons learned on how to manage the human side of major organizational transformations and to provide recommendations for managing future changes in organizations with a decentralized organizational structure.

Change management methodologies are defined and refined in the academic and industry domains. Many organizations start to leverage these practices to manage change to achieve better results. Designing and implementing change is difficult but essential to an organization’s success.

Leaders constantly struggle with implementing and sustaining organizational transformations. Even though leaders set clear vision with well-defined plans and tactics to implement the strategic side of the change, key stakeholders, such as employees, clients and board members, often are not fully immersed into the change culture to support the organization.

This paper proceeds as follows. A literature review of relevant management topics, such as change management, organization theory and leadership theory is offered. The key ideas are highlighted and a set of predictions is presented. The methodology underlying the paper is then put forward. Next, a detailed discussion offers evidence to assess the predictions. The paper then concludes; shortcomings are listed and suggestions for future research provided.

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2.0 LITERATURE REVIEW AND ANALYSIS

Managing change in a decentralized organizational structure is a complex topic and can be approached through numerous lenses. An understanding of this fascinating topic would be incomplete without a brief discussion of four important areas of research. The following literature review examines insight regarding change drivers, organizational structure, leadership, and change methodologies.

2.1 Change Drivers

Organization are created for different reasons. One scholar argued that the purpose is to fulfill a mission, vision, goals and objective. “The purpose of business, is first, to create value for customers, and second, to appropriate some of that customer value in the form of profit – thereby creating value for the firm” (Grant, 2013, p. 35). To grow or even survive, an organization needs to change and adapt to the evolving needs of the customers to create and sustain organizational value.

2.11 Types of Change

Daft (2007) highlighted that “managers can focus on four types of change within the organization to achieve competitive advantage” (pp. 402-405). These four types of changes are technology, products and services, strategy and structure, and culture.

Technology changes can help an organization to improve its production processes to be more efficient with increased productivity. Through knowledge and skill base development, technology changes enable an organization with distinctive competence. Product and service changes involve adaptive changes of existing products and services or completely new lines of products or services. These changes intend to increase market share or venture into new markets. Strategy and structure changes address the need of change for the administrative domain of an organization. Organizational structure, strategic management, policies, reward systems, labour relations, coordination devices, management information and control systems, and accounting and budgeting systems are some of the common changes in this category. “Structure and system changes are usually top-down, that is, mandated by top management, whereas product and technology changes may come from the bottom-up” (Daft, 2007, p. 404). Culture changes relate to changes in the values, attitudes, expectations, beliefs, abilities, and behaviour of employees. This type of change pertains to people’s changes in mindset rather than technology, structure, or products and services.

The above four types of change are interdependent as a change in one often means a change in another because organizations are interdependent systems (Daft, 2007).

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2.12 Economic Value and Organizational Capability

Another perspective to analyze influencers of organizational changes is to understand assumptions that leaders have on the change. Beer and Nohria (2000) researched numerous business change initiatives and suggest that there are two theories based on “very different and often unconscious assumptions by senior executives – and the consultants and academics who advise them – about why and how changes should be made. Theory E is change based on economic value. Theory O is change based on organizational capability” (p. 134). These two change theories drastically differ from each other in terms of the key dimensions of change: goals, leadership, focus, process, reward system, and use of consultants.

“Theory E change strategies usually involve heavy use of economic incentives, drastic layoffs, downsizing, and restructuring. Shareholder value is the only legitimate measure of corporate success” (Beer & Nohria, 2000, p. 134). The primary goals for senior executives leading with Theory E are to maximize shareholder value with a top-down management approach. Leaders emphasize on structure, systems and processes in planning and establishing programs. To motivate employees, leaders leverage financial incentives as the major reward system. Leaders also lean on hiring consultants to analyze problems and develop solutions.

“Theory O change strategies are geared toward building up the corporate culture: employee behaviours, attitudes, capabilities, and commitment. The organization’s ability to learn from its experiences is a legitimate yardstick of corporate success” (Beer & Nohria, 2000, p. 135). The primary goals for senior executives leading with Theory O are to develop organizational capabilities. Leaders encourage participation from bottom- up to build a corporate culture that can enhance employees’ behaviour and attitudes. Leaders allow employees to experiment and evolve to improve processes. Employees are motivated through commitment with pay as a fair exchange rather than being the major incentive. The role of consultants in an organization that has adopted Theory O is usually supportive in shaping the solutions rather than leading and directing.

Beer and Nohria (2000) recognized that both theories have their strengths and weaknesses and recommended combining Theory E and O to achieve the best results. However, due to the drastic differences between both theories, leaders can bring the worst of both theories if the melding is not carefully handled. The obvious approach to combine E and O is to sequence them. Beer & Nohria (2000) suggested that “it is highly unlikely that that E would successfully follow O because of the sense of betrayal that would involve” (p. 138). Going from a collaborative culture to a financially focused environment, people may develop resentment.

Ultimately, leaders should apply a combined approach on these two theories to achieve an equilibrium. Combining both Theories E and O simultaneously can enable the benefits of “the E goal of increasing economic value and the O goal of transforming culture” (Beer & Nohria, 2000, p. 140). To successfully perform this combined method, leaders require to collaboratively leverage their strengths and explicitly embrace this

8 | P a g e challenge to find the right balance between economic value and organizational capability. Leaders need to set direction from the top but also engage people bottom-up to gain buy-in and gather input. Leaders need to lead change through both the hard (structures and systems) and the soft (corporate culture) aspects. While having the planning in place, leaders also need to allow spontaneity to adapt to evolving change. To motivate people, leaders can leverage incentives to reinforce change but not to drive it. Leaders should use consulting resources as advisors to empower employees rather than driving the change. “To thrive and adapt in the new economy, companies must simultaneously build up their corporate cultures and enhance shareholder value; the O and E theories of business change must be in perfect step” (Beer & Nohria, 2000, p. 140).

2.13 Analysis

There are multiple drivers for organizational change. Due to the interrelated nature of technological advancement, product and service adjustments, strategy development, and cultural shifts, most transformations impact a wide range of aspects within an organization. Daft (2007) introduced the four types of changes that often drive an organization to go through a transformation. These types of changes can trigger a larger ripple effect due to the interdependency as one change in one area can affect another. Leaders should consider the overlapping impact from different changes happening in an organization to understand the overall change capacity to avoid change fatigue.

Another change driver other than the types of change mentioned by Daft is the change assumptions that leaders have. Beer and Nohria (2000) provided a fresh perspective to investigate what leaders are focusing on when leading change. Theory E and Theory O perfectly capture the two diverse perspectives on economic value and organizational capability. Leaders who choose to apply Theory E tend to focus mainly on economic incentive with a top-down approach. Leaders who choose to leverage Theory O tend to focus on organizational capability with a bottom-up approach. Using just one methodology cannot achieve the optimal result. Blending the two theories can bring out the benefits from both. 2.2 Organizational Structure

Organizational structure has a high impact on how decisions are made and how changes are implemented in an organization.

2.21 Five Types of Organizational Structure

In a well known article, Henry Mintzberg (1992) summarized his “typology of five basic configurations: Simple Structure, Machine Bureaucracy, Professional Bureaucracy, Divisionalized Form, and Adhocracy” (p. 322). He defined each in the following terms.

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Simple Structure is designed like a vertical pyramid concentrated the authority at the top of the organization with direct supervision on staff and a lack of formal support structures. Machine Bureaucracy focuses on high level of standardization creating functions and units that work together like different parts of a machine. With formal lines of authority, power resides within the groups that are responsible for governance. Professional Bureaucracy relies on highly qualified professionals who have high degree of independence. The organization is decentralized with its bureaucracy concentrates on position definition based on capabilities, skills, and qualifications. Divisionalized Form allows large organizations to leverage divisions for managing multiple business lines. Each division has a high degree of autonomy for decision making. This structure also creates duplication of activities. Adhocracy is an adaptive structure that adjust to the flexibility of the business needs, such as a project-based environment. Teams are usually designed in matrix structure to enable both vertical and horizontal authority based on competence.

In Mintzberg’s typology of organizational structure, one important feature is the degree of centralization and decentralization. The distribution of authority is based on organizational design which can influence decision making. This lays the foundation for the relationship between organizational structure and decision making.

2.22 Definitions of Centralization and Decentralization

Centralization and decentralization can be understood in different ways. One relevant definition is as follows. “The degree of centralization in the organization specifies the level at which most decision making occurs” (Andrews & Kacmar, 2001, p. 352). A high degree of centralization indicates decision making is concentrated in the upper hierarchy of the organization while low centralization indicates decisions are made at the lower levels where problems actually occur. High levels of centralization increase the power of the senior leaders with less empowerment occurring at the lower level. In a decentralized organization, senior leaders empower employees with an increased decision making power. However, this approach tends to give senior leaders less direct control over lower level operations. The management styles for centralized and decentralized organizations are different. To achieve organizational results, leaders in centralized organizations leverage command and control systems to manage employees while leaders in decentralized organizations focus on people empowerment and engagement.

2.23 Management Theories on Decentralization

Paskewich (2014) discussed the concept of the role of management from Peter Drucker (1909-2005) and the anarchism philosophy on self-governed entities from Colin Ward (1924-2010). Both concepts share common grounds on decentralization and

10 | P a g e simplification but differ on the role of management. The manager’s theory focuses on empowerment with an emphasis on leader’s character formation. This theory still relies on the role of manager heavily to provide leadership and guidance to “socialize people to work hard and be trusted to do the right thing” (Paskewich, 2014, p. 661). The anarchism philosophy promotes the approach to flatten the pyramids into networks to build a non-hierarchical organization. This organizational structure allows people taking on as much responsibilities as possible and making as many decisions as they possibly can (Paskewich, 2014). To implement such a model, working groups need to be formed to divide roles and responsibilities and they need to practice through trial and error on how to lead and be led. Another key difference between Drucker and Ward is the approach on empowerment. Both courses of thinking recall the logic of “decentralizing an organization and empowering lower layers of management. The difference is that Ward does not seek to empower the lowest managers – which only makes cosmetic changes to a still-intact hierarchy but to empower all workers” (Paskewich, 2014, p. 664). While Ward’s concept of decentralization is more extreme, Drucker also supports smaller and autonomous groups but only with a more modest perspective pointing out semi-decentralized groups cannot coordinate well. His “management by objectives” (MBO) approach allows teams to focus on their broader objectives, as opposed to any one person emphasizing his/her specific contribution” (Paskewich, 2014, p. 666). In a decentralized organization, clarity on responsibilities and decision making is a major hurdle to ensure alignment to the organization’s vision, missions and goals.

2.24 Change Management and Decentralized Organizational Structure

While the empirical evidence of a direct correlation between organizational structure and processes of change is still in contemporary research and development, the degree of centralization is perceived to diminish the likelihood of seeking new and innovative solutions for an organization (Voet, 2014). Weick and Quinn (1999) brought out the key point that classic bureaucracies prevent organizational changes to take place. Burnes (1996) argued that a top-down hierarchy is more suitable for planned changes while a more decentralized and flexible organization can response better to emergent changes.

2.25 Analysis

Mintzberg’s (1992) typology of five basic configurations introduced different organizational structures. Of interest is the varying degree of centralization, where most decision making occurs within each structure. Comparing the management theories from Ward and Drucker on the concept of decentralization provided a new insight on empowerment. As people in decentralized organizations are encouraged to make decisions, problems can be solved at the right level with sufficient operational information rather than waiting for directions from the upper hierarchy. This approach enables an organization to have more autotomy but introduces a challenge on making organizational-wide changes due to the complex decision making structure.

Managing transformative change in a complex environment, such as a decentralized organizational structure, has become an emerging management research field. While

11 | P a g e there is no empirical evidence to indicate a direct correlation between organizational structure and change management, there is an increasing number of research and case studies attempting to investigate the relationship between organizational structure and change management.

2.3 Leadership

2.31 Power and Decision Making

In previous sections, the relationship between organizational structure and decision making is discussed. This section explores how leadership power can influence decision making.

Power refers to the capacity that A can influence B while dependency refers to B’s relationship to A when A possess something that B needs (Langton & Robbins, 2007).

Langton and Robbins (2007) highlighted six different bases of power (pp. 282-285).

Coercive power is dependent on fear as people react to this power base out of fear that failures can bring negative consequences. When leaders use this power base, they control the people through threats of losing the psychological or physical safety. The approach in an organization to executive coercive power can be to dismiss, suspend or demote people to create fear. Reward power is the opposite of coercive power. Leaders will influence people with positive benefits. People find it advantageous to go along with the influencers’ wishes. In addition to financial incentives, rewards, such as friendliness, acceptance and praise, can be considered rewards that people desire for. Legitimate power results from a person’s position in the formal hierarchy of an organization. This power base is broader than the power to coerce and reward as it includes acceptance by members of an organization of the authority of a position. Research indicated that people tend to obey people with legitimate authority, even in questionable circumstances. Expert power is influence based on expertise, special skill, or knowledge. People take advice from subject matter experts, hence being influenced by the expert power on decision making. Referent power develops out of admiration of another and a desire to be like that person. Influence is based on possession by an individual of desirable resources or personal traits. Leaders with referent power leverage individual charisma to influence others. Information power comes from having access or control over valuable information. People can influence others if they have data or information that others are dependent on.

Langton and Robbins (2007) also argued that people generally respond to these power bases in three ways: commitment, compliance and resistance. People usually resist 12 | P a g e coercive power and will likely use tactics, such as refusing, stalling, or arguing to avoid requests and decisions. People will normally comply with reward and legitimate power bases in order to obtain rewards or comply with authority to play safe. However, people will commit to leaders with referent and expert power bases and show enthusiasm about requests and take initiative to persistently carry out the requests.

2.32 Leaders as Change Agents

Leaders may use different power bases to influence people. However, what role should leaders play in managing organizational change when change is a constant at many levels of the organization? Tichy (1997) described the key successes and challenges of a change agent, Bob Knowling, who transformed a telecommunication giant in Chicago. Knowling unleashed his real power of being a change agent when he realized that he should focus on his mission of leading change rather than worrying about his job security (Tichy, 1997). Recognizing the psychological implications from change messages on people is an essential step for implementing change.

Acknowledge Fear: “Fear is part of change. Once people have figured out that something very different is happening, fear permeates the organization” (Tichy, 1997, p. 428). In major transformations, people develop fear. Understanding the root cause of that fear is important for addressing that. Some people may fear the loss of job security. Other may fear the change will generate new workload. For some, they may fear the change of their management that they were used to. The challenge is fear may look different from one employee to another. As Knowling suggested in article, one of the most effective way is to turn fear into accountability. When people are involved, they feel like they are in control and are part of the change. They are in it together.

Be Bold: Change is difficult. The change leaders need to be courageous to guide the new direction. Change involves a level of uncertainties. It can lead to a success or a potential failure. However, if the leader is not bold to start with, followers will not be willing to follow. However, leaders need to deal with their own fear first become they can get bolder. “I realized that I couldn't live in fear. Whether or not I change the company, I knew I would change myself. I'd have new skills and capabilities. I'd be a very valuable commodity” (Tichy, 1997, p. 425). Knowling dealt with his own fear first before he got bolder. “Once I got my freedom, I got bolder. As I got bolder, the more invaluable I became to the chairman and to the company's leaders” (Tichy, 1997, p. 425).

Result Oriented vs. Attitude Adjustment: When considering what to change first between results and attitude, Knowling suggested that people want to see results first as results are something tangible that people can grasp on and visualize the success picture. "I've found that you have to be focused on results and deliverables, not attitude, expectations, or emotions. When you've got a burning platform like I've got, I don't care whether people believe it or not. Give me the results" (Tichy, 1997, p. 428). In the early stage of an organizational

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change, the approach of sharing the purpose of the change and showing small successes can reinforce confidence to change people’s attitude, emotions and behavior more effectively in the long run. Ultimately, leaders need to balance achieving results with addressing psychological factors.

In addition to Tichy’s three key points of acknowledging fear, being bold, and balancing results and attitudes, change leaders need to consider a broader perspective for long term success in an evolving business landscape. Abbatiello, Knight, Philpot, and Roy (2017) highlighted three types of transformations for leaders to be successful in this digital world: cognitive transformation, behavioural transformation, and emotional transformation. Please refer to Appendix A for details on leadership capabilities.

These three types of transformation concepts provide a refreshing perspective for leaders to think, act, and react differently for implementing change. Tichy’s suggestions prepared a change agent to face the different challenges with appropriate mindset. Abbatiello et al. (2017) provided change leaders with the “how-to” manual to “build teams, keep people connected and engaged, and drive a culture of innovation, risk tolerance, and continuous improvement”.

2.33 Analysis

Influencing others is a way for making others change their way of thinking and working. The six different bases of power summarized by Langton and Robbins (2007) are key management concepts on how leaders influence followers. While a leader may have a dominant power base of preference, he or she may leverage other power bases in specific situations or as complementary management styles. Leaders also can work with others as a team to access different management styles to influence a wider group of stakeholders. Referent and expert power bases are perceived as more effective styles in generating commitment from followers.

The role of leaders in managing change is critical. They act as change agents to mobilize followers to move in one direction to achieve a common goal. Leaders need to first acknowledge their own fear. They also need to understand the fear from the followers. Change is difficult and it creates uncertainties where leaders need to deal with fear and be bold to lead by examples. Change agents must focus on creating quick wins to demonstrate results for building confidence and trust.

Leaders with the right mix of power bases and attitudes can be successful change agents to lead followers through challenging organizational transformations.

2.4 Change Methodologies

A review of both the academic and industry literature suggests a few popular change management methodologies that can serve as frameworks for leading organizational changes.

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2.41 Kotter’s Leading Change Model

Among the most well known change models is one created by John Kotter and it is labeled the 8-Step Process for Leading Change. This framework is derived through lessons learned from the major corporate change efforts. The most important lesson is that the change process must go through a series of phases that can take a considerable length of time. Skipping steps creates only the illusion of speed without producing a satisfying result (Kotter, 1995).

8-Step Process for Leading Change: 1) Establishing a sense of urgency: • Examining market and competitive realities • Identifying and discussing crises, potential crisis, or major opportunities 2) Forming a powerful guiding coalition • Assembling a group with enough power to lead the change effort • Encouraging the group to work together as a team 3) Creating a vision • Creating a vision to help direct the change effort • Developing strategies for achieving that vision 4) Communicating the vision • Using every vehicle possible to communicate the new vision and strategies • Teaching new behaviours by the example of the guiding coalition 5) Empowering others to act on the vision • Getting rid of obstacles to change • Changing systems or structures that seriously undermine the vision • Encouraging risk taking and non-traditional ideas, activities, and actions 6) Planning for and creating short-term wins • Planning for visible performance improvements • Creating those improvements • Recognizing and rewarding employees involved in the improvements 7) Consolidating improvement and producing still more change • Using increased credibility to change systems, structures, and policies that do not fit the vision • Hiring, promoting and developing employees who can implement the vision • Reinvigorating the process with new projects, themes, and change agents 8) Institutionalizing new approaches • Articulating the connections between the new behaviours and corporate success • Developing the new means to ensure leadership development and succession (Kotter, 1995, p. 61)

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The first three steps create a climate for change while the next three steps engage and enable the organization to adopt, adapt and act on the change. The last two steps focus on sustaining the change through continuous improvement. Kotter’s 8-Step change model can be implemented like a cycle where sustainment can lead to further continuous improvements and new changes.

2.42 Prosci Change Management Methodology

Another framework for change is Prosci’s change management methodology. It was developed based on research from over 3,400 participants in the last two decades (Prosci, 2016). This methodology looks at the individual perspective and integrates with the organizational level to ensure sustainable business results.

The model is named ‘ADKAR’ which stands for awareness, desire, knowledge, ability and reinforcement. It addresses how an organizational change impact a single individual (Prosci, 2016).

• Awareness of the need for change • Desire to participate in and support the change • Knowledge on how to change • Ability to implement required skills and behaviors • Reinforcement to sustain the change (Prosci, 2016).

Prosci change management process has three phases: preparing for change, managing change, and reinforcing change. The first phase “helps change and project teams prepare for designing their change management plans” (Prosci, 2016). Deliverables in the “preparing for change” phase usually include sponsors and stakeholders profiling and change team formation. The second phase “focuses on creating plans that will integrate with the project plan to support people impacted by the project” (Prosci, 2016). The “managing change” phase will focus on communication, sponsor road mapping, training and coaching planning, and resistance management. The last phase of “reinforcing change” helps leaders to create actions plans for sustaining a change. Actions in this phase include measuring and evaluation, corrective plans, success celebrations and after-action review (Prosci, 2016).

The essence of the effectiveness of Prosci’s change management methodology is its uniqueness to “leverage change management activities to drive individual transitions” (Prosci, 2016).

2.43 Analysis

Change management is a relatively new management field with increasing awareness in the last two decades. A few different change management frameworks and methodologies are emerging in the industry with certifications that management professionals can obtain.

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Among the different methodologies, John Kotter’s (1995) 8-Step Process for Leading Change is an award-winning change management methodology. This well known framework proposes the concept of creating a sense of urgency, defining and communicating the vision, enlisting change agents and champions, delivering results, and sustaining the change. This model prepares leaders for making organizational change that can sustain. The perspective from Kotter’s model is organizational-wide.

In comparison, Prosci’s ADKAR framework is much more focused on the tactics of delivering change through one project. It looks at the individual perspective of change rather than a broader organizational level.

In order to achieve a full implementation, leaders should consider leveraging the Kotter’s model to cover the organizational level planning and select elements from Prosci’s ADKAR model to define detailed change tactics. By combining a few change management methodologies, leaders can develop a comprehensive plan for implementing complex change.

3.0 PREDICTIONS 3.1 Prediction Statements

Leaders constantly struggle with implementing and sustaining organizational change. Even though leaders set compelling visions with strategic plans and tactical implementation steps, key stakeholders may not align and adapt into the change culture for supporting the transformative change.

A decentralized organization is influenced by different change drivers, distribution of power, and decision making mechanisms. Key stakeholders face multiple challenges when seeking to adopt a change. A few key common problems include: • not understanding why a change is required; • no clear manager leading the change; • not hearing from management regarding the importance of this change; • not having enough information to prepare for the change; • not being involved to provide input to influence the change; and • not sure regarding “what is in it for me”.

This leads to the following predictions:

Prediction 1: Insights from Theory E and Theory O will be evident in the management of change in a decentralized organization.

Prediction 2: Change leaders with referent and expert power bases will be effective change agents in a decentralized organization.

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Prediction 3: Insights from Kotter's Change Model will be well suited to the management of change in a decentralized organization.

4.0 METHODOLOGY 4.1 Research Design

This applied project is a conceptual paper that analyzes a management topic with a literature review and past project experience at the University of British Columbia Faculty of Medicine.

This paper includes a comprehensive literature review of contemporary research and industry best practice. It focuses on secondary sources. These include: • academic research papers; • books; • industry practice guidelines; • well known change management frameworks; and, • public documents related to the University of British Columbia.

This paper leverages secondary data from the organization include: • internal project reports; and • consolidated project summaries.

Keywords used in the literature review using Athabasca University Library online databases, University of British Columbia Library, and Google Scholar include: • Change Management; • Decision Making; • Employee Engagement; • Organizational Structure; • Organizational Transformation; • Stakeholder Analysis; and • Stakeholder Engagement.

4.2 Organization Background

The University of British Columbia (UBC) is a world leading post-secondary institution. UBC “creates an exceptional learning environment that fosters global citizenship, advances a civil and sustainable society, and supports outstanding research to serve the people of British Columbia, Canada, and the world” (UBC, 2017a).

UBC Faculty of Medicine (FoM) is a world renowned medical school offering undergraduate, postgraduate and other health professions educational programs. In addition to its educational mandate, FoM focuses on medical and health research to advance healthcare locally, nationally and internationally.

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With a provincial mandate, UBC FoM partners with the Ministry of Health, the Ministry of Advanced Education and the six Health Authorities in British Columbia to build and sustain the competitive advantages of a growing economy in the life sciences, with an integrated plan for medical education across a distributed model, a tractable and diverse population for research, and a vibrant innovation culture supported across the Pacific corridor (UBC, 2017b).

On top of its competitive advantages, UBC FoM faces challenges in the evolving landscapes of health, research, and education. From an external perspective, the ageing population, the increase in complex, chronic diseases across the age spectrum, and a need for patient-centered community-based care put UBC FoM in a difficult position to design suitable health education programs and conduct high value and quality research to better the society (UBC, 2017b). From an internal perspective, UBC FoM also needs to deal with fragmented responsibilities in organizational governance, inefficient operational process design, and a lack of integration of process technologies to support evolving organizational needs.

UBC FoM has a decentralized governance model that runs a distributed Medical Doctors (MD) Undergraduate program with four university sites in Vancouver, Victoria, Kelowna and Prince George. This distributed model led to the creation of multiple academic and administrative operations in different locations performing similar functions inconsistently and inefficiently. Please refer to Appendix B for the UBC Faculty of Medicine MD Undergraduate Program Organizational Chart. 4.3 Major Transformation Initiative Background

This applied project leverages a past project experience, the Teaching Tracking and Payment (TTP) project, from UBC FoM to analyze how to manage change in a decentralized environment.

One of the major operations of the MD Undergraduate Program is education delivery and administration. UBC FoM has historically used diverse, largely manual processes to capture and validate teaching information and determine payment eligibility. This has resulted in several issues and concerns related to activity, payment visibility and traceability which existing tools and processes are unable to reliably and consistently address.

Project Purpose and Justification

Clinical faculty members, who are all practicing physicians, teach a majority of the educational components of the MD Undergraduate Program. This arrangement creates a challenge for UBC FoM to keep track of their teaching activities and paying them on an hourly basis as they are fee-for-service consultants. The original implementation of the human resources management system cannot meet this payment arrangement needs. UBC FoM faces the following three major issues:

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1) UBC FoM is not tracking teaching activities consistently across the MD Undergraduate Program which creates waste in quality, process, transport and other aspects; 2) Administrative staff members across different departments and units interpret the compensation terms differently due to its complexity. Inaccurate payment leads to low clinical faculty satisfaction; and 3) There is no clear record of teaching contributions to support the faculty management processes: reappointment, promotion and recognition. This situation limits the ability of decision makers to manage teaching resources.

All above issues highly impact the ability of academic and administrative leaders to make strategic decisions on teaching resources allocation. These decisions have implications on program quality, costs and administrative efficiency. In addition, administrative staff members struggle to keep up with the workload of the manual process of running this operation. Furthermore, the lack of a clear communication protocol makes the manual process error prone.

Project Initiation

In order to address the above concerns, UBC FoM initiated a major transformation initiative, TTP project, in 2012 to improve transparency, accountability, equity, and administrative simplicity within the business processes for paying clinical faculty members. Additionally, processes were not consistent with the current Compensation Terms for Clinical Faculty Teaching in the MD Undergraduate and Postgraduate Programs. A report to the Ministry of Advanced Education by an external consultant in 2005 further outlined the need for a standardized system and set of business processes to enable accurate tracking, reporting and payment of clinical faculty teaching activities in the MD Undergraduate Program.

The original goals of TTP were to: • Improve clinical faculty relationships and their confidence in the administrative processes that support teaching recognition and compensation; • Ensure province-wide transparency in teaching activity and payment as well as improve accuracy in payment amounts; and • Reduce administrative overhead.

The project team went through initiation, planning, analysis, and implementation phases to develop new business processes and system development. Throughout these project phases, a limited number of business stakeholders were invited for interviews and workshops to provide inputs. However, most of the planning and design work were conducted by consultants.

From 2012 to 2014, there were major leadership changes in the project sponsorship level that the vision of TTP became blurry for both the project team and the faculty community. Due to the significant investment in consulting costs and software

20 | P a g e development costs, FoM leadership asked the project team to continue the change implementation to avoid marking those investments as sunk costs.

In 2015 spring, the project team launched the first pilot of the new Teaching Tracking and Payment System (TTPS) with modified business processes. The outcome was outraged resistance from the end users and business leaders. The modified business processes did not fit the business rules from the operations. Also, the new system had severe performance issues and user interface problems that users deemed not usable.

Project Re-Planning

After facing this significant failure, the sponsorship and project team regrouped for a re- planning. The leadership put this project on pause to evaluate whether TTP should even continue. After validating the project goals with Dean’s executive team’s strategic vision, the TTP project received the go-ahead to continue its implementation. However, the project leadership must seek ways to ensure successful implementation.

The project sponsorship added new executives to form a sponsorship coalition to act as change agents. At the project team level, there were changes in the project leadership including the project director role. This new project director recruited internal resources in place of consulting resources for cost reduction and increase internal business knowledge.

After the project re-planning in 2015, the goals were refined to more accurately reflect the desired administrative and operational outcomes: • Strengthen the ability to coordinate across the MD Undergraduate Program by enabling more consistent administrative processes and improving information management; • Ensure clinical teaching payment information is accurate and accessible and that payments are traceable, resulting in increased confidence in the tracking and payment process; and • Provide greater visibility into teaching activities so that clinical faculty contributions can be recognized.

The project scope was clarified to deliver the following: • A system that captures clinical faculty information, enables teaching tracking, determines payment eligibility, facilitates validation and authorization and calculates payment of clinical faculty teaching activities in the MD Undergraduate Program. The system provides clinical faculty quarterly teaching statements and includes reporting tools for province-wide financial and teaching contribution analytics. Additionally, end-to-end business processes and supporting policies are developed and implemented in order to create standardization of clinical faculty teaching tracking and payment.

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• A change management strategy to gain approval and buy-in from stakeholders on system design requirements, staff and clinical faculty communications, financial processes and system design requirements. • Business readiness and user training session plans and materials and deliver user training to 200+ TTPS users to ensure successful adoption. • A successful transition to operations through the creation of a Business Support Team which provides support to users and assists in system and change sustainment. • Development of tools to assist this transition and ongoing operations, such as a central support space on the FoM intranet including an end-to-end role-based system and business guide, policy and procedures, project background and support information. • A roadmap that reflects the future iterations of the system as recommended by stakeholders and the creation of an Operations Working group which provides oversight and sustainment leadership for the first year of operations.

Project Accomplishment

Project sponsors and project team committed to a bottom-up approach to listen to stakeholders’ concerns. After recruiting operational champions to join the working task forces in contributing their effort to shape the change, the TTP project was well-received by the wider community. As indicated in an informal survey from the TTP Final Report, 80% of the business stakeholders indicated that they would join a similar change team like the TTP project for future initiatives (UBC, 2017e).

The revamped project leveraged a phased-approach for its implementation. The first pilot was successfully launched in April 2016 with all end users joining in July 2016. December 2016 marked the completion of the TTP project as all activities were transitioned to operation with clear business owners.

5.0 RESULTS

A literature review on management topics, such as change drivers, organizational structure, leadership and change methodologies, serves as the foundation for understanding the critical success factors for managing the human side of organization transformations.

As a decentralized organization, UBC FoM implemented transformative initiatives with successes and challenges. These lessons learned from the TTP project provide evidence on repeatable and consistent methods to follow and pitfalls to avoid in future transformations.

The outcome of this research is to identify the key factors to manage the human side of major organizational transformations and to provide recommendations for managing future changes in organizations with a decentralized organizational structure.

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This section provides a comprehensive analysis on how the management topics discussed at the literature review section can influence the outcome of organizational changes.

5.1 Prediction 1 – Theory E and Theory O

Insights from Theory E and Theory O will be evident in the management of change in a decentralized organization.

5.11 Types of Change

An organization needs to constantly and consistently change to meet the evolving business objectives. As discussed in the literature review, Daft (2007) suggested that four types of change are working interdependently to drive an organization to change. These four types include technology, products and services, strategy and structure, and culture.

While there is no specific implementation sequence for the four types of change, one change in an area often leads to a change in another due to the interdependent nature. People in different levels of the organization hierarchy prioritize the need of change for each change type differently. Staff members closer to the front line usually value a change in the process and technology for operational improvement. Executive leaders are interested in product and service change and strategy and structure change for implementing new organizational vision and strategic goals. All these types of change can result in a cultural change as values, capabilities, and expectations are shifting.

For the TTP project, UBC FoM experienced all four change types. As the organization was exposed to financial and reputational risks on not reporting and paying clinical faculty members accurately and consistently, executives were on high stake to implement new technologies to solve this problem. Therefore, they requested the technology department, MedIT, to start a technology project to address these issues. The organization kicked off a transformation with a technology mandate.

However, the technology implementation encountered business operations challenges as existing services could not accommodate technological adaptations. A product and service change was triggered to look at the feasibility and sustainability of existing services offered by the education program team. The sequence of technology change triggering business process change was met with resentment due to the lack of buy-in from operational staff members.

The executives realized the change need to be initialized at the strategy and structural change level to set proper governance with clear vision and objectives from executive sponsors.

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With all the above drivers pulling UBC FoM into a new direction, the organization had also shifted its cultural values, attitudes, expectations and abilities to work more collaboratively in defining a consistent process and system.

The different change drivers pulled and pushed the organization into different directions for adapting new transformation. Throughout the change process, confusions and misalignments happened that created barriers for the organization to move forward with the transformation.

In order to more successfully implement different types of change, the change leader needs to understand where the primary change driver originates to properly sequence and anticipate the change impact. These problems can be particularly acute in an organization where the decision-making body is not centralized. Different leaders can influence the direction with a diverse agenda which can distract the successful implementation of a transformation significantly.

5.12 Organizational Structure

Organizational structure plays a key role in how leaders influence people and make decisions. Henry Mintzberg (1982) introduced five basic organizational configurations: Simple Structure, Machine Bureaucracy, Professional Bureaucracy, Divisionalized Form, and Adhocracy. There is no one structure that can fit all types of organizations. In addition, there is no one size fit all principle for one organization. In many cases, one organization can have multiple organizational configurations due to political power distribution, professional practice culture, and organizational efficiency.

UBC FoM has three primary stakeholder groups: student, faculty, and staff. Providing health education to students is one of the core missions of UBC FoM. Faculty, mostly known as academic leaders, and staff groups, mostly known as administrators, are working together to provide the health education services to students in different education programs.

There are three types of organizational configurations co-existing at UBC FoM. Health care is a highly professional field where physicians, allied health professionals, and heath education experts are highly qualified professionals who work with a high degree of independence. The academic leaders’ structure naturally falls into the Professional Bureaucracy configuration with a decentralized environment that focuses on people’s capabilities, skills, and qualifications. The alignment to the Professional Bureaucracy structure can attribute to the specialized skillsets required of health care professional practices.

However, Professional Bureaucracy is not the only configuration that can be found within UBC FoM. Divisionalized Form is another structure that co-exists with the Professional Bureaucracy configuration. Administrators who aim to increase operational control often look to a model of managing the organization as separate business lines. UBC FoM must serve both education and research mandates. Each division runs the

24 | P a g e business as separate operations. Within the education pillar, there are multiple business lines that support different education programs, such as the MD Undergraduate Program, Post Graduate Program, Continuous Professional Development Program, and Health Professional Programs. The structure is divisionalized with separate decision making process to ensure a high degree of autonomy. This structure is supposed to allow flexibility to generate efficiency. However, the duplication of activities within each business line increases the overall operational cost for FoM. Also, this structure creates confusion in organizational governance. The original intention of achieving operational efficiency through autonomy is not fulfilled.

Due to the struggle to strive a balance between the Professional Bureaucracy and Divisionalized Form, there are areas within the organization that leverage the Adhocracy structure to leverage a project-based environment to achieve evolving business needs. Some examples include a few transformation projects, such as TTP, Curriculum Renewal, and Technology Improvements. These change projects leverage cross-functional team to form a temporary structure in a matrix reporting environment to achieve business goals. TTP project, the main case study for this paper, had a team consisted of academic leaders, administrative leaders, administrative staff members, technology specialists, project and change management resources. This temporary project team had both vertical and horizontal authority. Another major transformation, Curriculum Renewal, also leveraged a similar structure to create cross-functional collaboration to achieve the goal of renewing the MD Undergraduate Program curriculum. Other parts of the organization, such as the technology team, also gradually move into the Adhocracy structure with hope to leverage the adaptive environment in meeting business needs with flexibility.

5.13 Economic Value and Organizational Capability

In addition to types of change, leaders place assumptions on the value that changes can bring to an organization. Understanding the value assumption is critical for analyzing how leaders drive changes. Beer and Nohria (2000) discussed about Theory E and Theory O on how leaders place the importance on economic value and organizational capability respectively. There are pros and cons for leaders to consider in implementing each theory. While Theory E brings out the economic value of an organization through drastic changes to focus on financial incentives, this approach can omit the people side of the change that leads to lower employee morale. However, when leaders only focus on Theory O to gain a collaborative momentum for building organizational capability, they can face lost opportunities in short-term financial gains. Therefore, Beer and Nohria (2000) recommended combining the two theories for implementation to realize the benefits from both the economic and organizational standpoints.

UBC FoM has a collaborative culture for involving academic, administrative, and student members in decision-making. The organizational structure is highly decentralized. Dean’s Office is created as a central coordinating unit with finance, human resources, technology, facilities and other shared services to provide coordination, guidance and

25 | P a g e best practices. Other departments, schools, and units all have their own leaders to run day-to-day operations with a reporting line back to the Dean’s Office for coordination. However, leaders in different parts of UBC FoM can have a large latitude in decision making power.

UBC FoM is an environment that focuses on Theory O value. The organizational culture usually encourages bottom-up collaborations. Most staff members feel empowered in their day-to-day operations. However, this collaborative environment allows people to make their own decisions without coordination with the central Dean’s office or other units and departments. This decentralized decision making approach has resulted in process inconsistency and inefficiency in many different operations. In some cases, there are duplicate operations within the organization performing similar or overlapping functions.

As the leaders in the Dean’s Office attempted to standardize the processes and systems in teaching tracking and payment operations, there was a strong desire to leverage more Theory E concepts to promote economic value. Leaders enforced top- down management approach for reaping the benefits of cost and process efficiency quickly. This approach was met with strong resistance from the staff at the operational level. The enforcement of Theory E rapidly into a culture where people are used to Theory O style is not a successful approach.

After the initial approach of enforcing new rules and processes rapidly into the community was met with strong resistance, the TTP project team had to rebuild trust with the community with a bottom-up approach to collaboratively involve people to understand the project vision, objectives, and implementation activities. The project team applied the strengths of Theory O to rebuild the organizational culture to leverage people’s capabilities and commitment. This shift successfully regained buy-in from stakeholders and rebuilt trust to move forward with the TTP transformation until the project was successfully completed in December 2016.

Applying Theory E and Theory O simultaneously can alleviate some of these pressures. When designing how to apply these theories, leaders should take into consideration of the existing organizational culture to ensure successes. Also, leaders need to monitor people’s responses to the implementation and make proper adjustments to tailor the practice accordingly. There is no one formula that can fit all organizations. Leaders need to understand the culture of the organization well to apply these theories to capture the optimal benefits on economic and organizational values.

5.14 Predication 1 Validation

From the above discussion, both the literature review and TTP project experience support Prediction 1: insights from Theory E and Theory O can influence leaders’ ability in managing change in a decentralized organization. By applying Theory O after a challenging implementation of Theory E, the TTP project experience demonstrated a positive effect from Theory O in increasing stakeholders’ engagement level.

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5.2 Prediction 2 – Leadership

Change leaders with referent and expert power bases will be effective change agents in a decentralized organization.

5.21 Centralization and Decentralization Decision Making

Interrelated with the organizational configurations as discussed in the above section, centralization is another key factor that influences the structure and decision making authority. Andrews & Kacmar (2001) suggested that “the degree of centralization in the organization specifies the level at which most decision making occurs” (p. 352). As discussed in the literature review, the higher the degree of centralization, the more decision making is concentrated in the upper hierarchy of the organization. On the contrary, the lower degree of centralization indicates decisions are made at the operational level where problems occur.

Higher education institutions usually have a central office to operate institutional level affairs and connect with faculties, schools and centres for alignment. Deans and unit leaders at the faculties, schools, and centres have a high level of autonomy in decision making as long as the overall institutional policies, guidelines, and reporting are followed. Higher education institutions are usually decentralized organizations.

UBC is home to 18 faculties, 12 schools, and 2 colleges governed by the UBC Board of Governors. The organizational structure shows a separate management structure between the university level operations and the management of the faculties, schools, and colleges (UBC, 2017c). The approach allows different faculties, schools and colleges to tailor the organizational structure to their unique needs. This is a model that can be found in other similar size universities. For example, University of Toronto also has separate management structure for all its different faculties, schools, and colleges (UoT, 2017).

With a highly-decentralized structure at the institutional level, UBC FoM also is a decentralized organization with decision making authorities distributed across the Dean’s Office and different departments, schools, and centres. UBC FoM has 19 departments, two schools, and 21 research institutes and centres (UBC, 2017d). While the Dean is the central authority making decisions for the overall faculty, different department heads, school leaders, and centre directors have complete latitude to make independent decisions for their own respective operations. Most of the departments within UBC FoM have their own administrative units for running human resources, finances, and other programmatic functions. Therefore, there is a lot of duplication of services with the overall structure of FoM. The benefits of having the independent administrative functions within each department is to allow quick decision making and processing. The challenge of this approach is the overhead cost of maintaining a large number of staff members. There are opportunities to streamline the process for consistency and efficiency.

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The TTP project encountered challenges to implement the system and process changes due to the decentralized decision making authority. There was no clear decision maker to implement a consistent approach to track and pay clinical faculty members across all departments within the MD Undergraduate Program.

5.22 Power Bases

Decision making ties closely with the centralization or decentralization of the organization. This influence the broader premise of how decisions are made. However, the leadership style of each decision maker can significantly impact how a decision is made and how people respond to the decision and changes associated with the decision. The leadership and decision making power must be taken into consideration when analyzing the change implementation.

Langton and Robbins (2007) highlighted six different bases of power: coercive, reward, legitimate, expert, referent, and information. All these six power bases influence people differently and generate different responses, such as commitment, compliance, or resistance.

Due to its decentralized governance structure, the power of the decision makers is scattered across FoM with various types of power base.

Academic leaders mostly rely on their legitimate power based on their rights and positions (Langton & Robbins, 2007). Employees follow their instructions because academic leaders can make legitimate requests throughout the university system. However, academic leaders, particularly physicians, also possess expert power base due to their physician status. To influence the clinical community, academic leaders who are also physicians have the highest power and success in getting the clinical faculty to listen. It is not the same for academic leaders who are not Medical Doctors (MD), such as foundational scientists with PhDs, to leverage that same power base. The rationale is that clinical faculty members will only trust their peers who share their medical knowledge and occupational status.

Knowing the special ranking of the physicians’ status, administrative leaders also exert power in their own way because they are aware of their inability to break through the unique physician bonding that others cannot enjoy. Instead, they use their information power (Langton & Robbins, 2007) because they have data and knowledge that others need. For example, the financial executive leveraged unfavourable financial data to urge academic leaders to act on problem resolutions to improve the Faculty’s financial position. The human resources executive mainly used human resources and labour policies to reinforce the importance of compliance.

Due to the collaborative nature, the organization decision making process is slow as the Faculty leaders are more comfortable asking for further analysis and information. However, no one will have complete information for all the different change scenarios. Often, leaders run into analysis paralysis, overthinking a situation without moving

28 | P a g e forward with a decision. Leaders are expected to operate under bounded rationality “to act rationally only to a point” (Hodge, Gales & Anthony, 2002, p. 292). In order to make changes in such an environment, change leaders need to balance power and information available to remove barriers.

Project sponsors with the TTP project firstly leveraged the legitimate power from their positions as executive directors of finance and human resources for FoM. They communicated to the organization on what the new processes should look like and how they should comply to the new processes by leveraging the new systems. Without examining the details of whether processes or systems were feasible, people resisted this change immediately feeling they did not need to comply to these processes as their decision makers, department heads and departmental administrative leaders, did not communicate to them that it was a necessary change to their current operations. The perceived legitimate power met by resistance due to people not being clear about the decision-making process of this decentralized organization.

As the project revamped to address the management issues for implementing this change, the major transformation was to enlist another leader in the education portfolio to carry the mission of making changes in the education business operations. While the executive leaders with accountability on finance and human resources can provide legitimate power on the financial significance and human resource compliance matters, they need to rely on another leader with the legitimate power in influencing education program operations to complete the coalition of legitimate power. In a decentralized environment, decision making is distributed into different parts of the organization. Finding the right leader to complete the picture to form the full understanding of addressing a business change is essential in this scenario.

Another shift in leadership power base is to leverage more than legitimate and information power. There are a few leaders with charismatic nature that can demonstrate the characterises of referent power. The TTP project relied on these leaders to act as change agents. These charismatic leaders communicated to a broad group of stakeholders to reinforce trust and enhance involvement from the community. Referent power was much more effective in getting people’s buy-in in a decentralized environment. Leaders moved away from using the top-down approach to direct and command people with decisions and instructions. Instead, leaders listened to people’s concerns and inputs in crafting the implementation plan for this major change. This approach was well-received by the community on valuing people’s engagement and focusing on the human side of the change. Project stakeholders commented about the shift of leadership style from a command and control approach to an open, honest and collaborative approach was one of the critical success factors (UBC, 2017e).

In addition to referent power, people are also looking upon leaders with expertise and knowledge to guide through challenging changes. For the TTP project, the project sponsors with their financial, human resources, and education program knowledge could guide people in achieving the project goals with their collective knowledge in different subject matters. However, no one leader could play all the different roles to

29 | P a g e execute expert power alone. Due to the decentralized nature, executive leaders and operational leaders all hold different knowledge about the organization, process, and relationships. The project leadership needed to work collaboratively to provide the complete picture to lead the community forward with the common vision.

5.23 Leaders as Change Agents

After analyzing the power bases of leaders, the mindset and behaviour of leaders as change agents are critical to how people perceive whether their leaders are genuine and authentic.

There was a lack of senior leadership presence in the TTP project during the early stage prior to the project relaunch. People impacted by the project were not able to discuss the change with the leaders due to the lack of visibility. Gradually, this became a significant problem for the project as leaders were not change agents and they were not even reachable by people who had concerns for this transformation.

After the relaunch of the project in 2015, executive leaders were equipped by the project team on change management practices. They changed their approach by having more open and transparent communication with impacted stakeholders. Also, leaders acknowledged the fear in the community in terms of their worries on heavier workload, loss of job security and other matters. As Tichy (1997) highlighted the importance of acknowledging fear, this approach was warmly welcomed by the community. People responded to this change a lot better and were willing to take more risks in working through uncertainties together. People were following the lead of the change agents to be bolder in their actions for embracing change like Tichy (1997) recommended.

Due to the numerous starts, pauses, and restarts of the TTP project, people started to lose confidence in whether the project could actually be implemented. Leaders led the project to focus on quick-wins to reinstate people’s confidence in the project outcomes. With seeing incremental changes, people could adapt to new process gradually. This result oriented approach suggested by Tichy (1997) helped the organization to see results in building back trust for a project that was close to failure.

Another key learning from the process of enlisting executive leaders as change agents was to engage leaders at a lower level as well. In order to mobilize change, executives need support from operational level members to act as champions to carry the message across the organization. In this case, the communication channels are open vertically and horizontally broadly in the organization.

The TTP project enlisted executive leaders at the Faculty governance level to lead as project sponsor coalition to drive the change with a common vision. Operational leaders at different geographic locations were recruited to represent the MD Undergraduate Program distributed sites. Department administrators were also engaged to contribute into managing this change to gain a departmental perspective and increase buy-in more

30 | P a g e broadly. This approach of change agents leading multi-layered change champions allowed the change message be heard widely, consistently, and clearly.

As Abbatiello et al. (2017) emphasized that high-performing leaders need to build teams by connecting people to drive a culture of change, the TTP project successfully fulfilled this aspect by having the leaders play a coaching role to develop and promote others to achieve results collectively, collaboratively, and consistently.

5.24 Prediction 2 Validation

Based on the literature review and TTP project experience, change leaders with referent and expert power bases are effective change agents as they can mobilize stakeholders through their charisma and capabilities. In a decentralized organizational structure, change leaders must influence people outside of direct reporting lines as decision making authority is complex. This validated prediction 2 on enlisting change leaders with referent and expert power bases to act as change agents in a decentralized organization.

5.3 Prediction 3 – Change Methodologies

Insights from Kotter's Change Model will be well suited to the management of change in a decentralized organization.

5.23 Change Management and Organizational Structure

The direct correlation between organizational structure and change implementation is a topic in contemporary research and development that is yet to be confirmed by more empirical evidence. However, there are more and more studies indicating the higher success rate of implementing major change initiatives by observing organizational structure and how change management practices can enhance the results of managing changes.

Scholars, such as Voet (2014) and Weick and Quinn (1999), suggested that centralization is perceived to diminish the likelihood of seeking new and innovative solutions for an organization because classic bureaucracies can prevent organizational changes to take place. Burnes (1996) argued that a top-down hierarchy is more suitable for planned changes while a more decentralized and flexible organization can response better to emergent changes. Therefore, both centralized and decentralized organizational structures have their merits in managing changes.

For leaders attempting to implement changes at FoM with a decentralized structure, understanding the overall change capacity within the organization can reduce resistance. People resist change due to many factors. One of the main reasons is the fear of the unknown and the potential loss from a change. In addition, people may experience excessive change as “several change programs being carried out within the

31 | P a g e same department simultaneously, or a new change program being introduced before the previous one has been completed, led to important insights in understanding excessive change at different levels in the organization” (Stensaker, Meyer, Falkenberg, & Huang, 2002).

Employees at FoM are facing multiple changes. There were a few leadership transitions, such as a new Dean, Chief Operating Officer and other executive positions. In addition to the TTP change, the MD Undergraduate Program is undergoing a curriculum renewal process and an accreditation process. These changes create fear and fatigue for employees who handle a constant changing landscape.

In addition to normal change resistance, there are resisters that are particularly difficult to work with. These hardened resisters created roadblocks for all types of changes to maintain their status quo to control their own domains. Kotter’s advice in his video regarding hardened resisters is to avoid them and distract them instead of trying to convert them into supporters (Kotter, 2011). Change leaders need to recognize where to spend the effort in recruiting supporters and where to contain the hardened resisters. In general, initiating a change will need to perform assessment of the overall change capacity of the organization to understand the change readiness in terms of people, processes and tools. It is important to take into consideration of the psychological implications of change on people.

5.32 Kotter’s Change Model

Kotter’s 8-Step Process for Leading Change model promotes a phased approach to manage organizational change. It is important to leverage change management practices to assist leaders to drive through challenging changes in a complex organizational environment.

The TTP project was initiated in 2012 without following the proper steps. The implementation of this change was faced with tremendous resistance across the organization where the project leaders needed to step back and re-plan for another initiation. The original project initiation was focused on the technological aspects without taking fully into the account of the human side of the change, such as a lack of stakeholder engagement.

In the project re-planning, the project leaders leveraged Kotter’s Change Model, the 8- Step Process for Leading Change as a framework to implement the TTP process and systems changes. The section below outlines the problems, approach and outcome, and lessons learned.

8-Step Process for Leading Change: (Kotter, 1995, p.61)

Step 1 – Establishing a sense of urgency • Examining market and competitive realities

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• Identifying and discussing crises, potential crisis, or major opportunities

Problem

Initially, the project team focused on implementing actions for addressing problems with technology solutions rather than motivating the community to understand operational process gaps. Stakeholders did not understand the sense of urgency. Most of them found this change a nuisance and others were afraid of this change because of the potential increases in workload for their operational activities.

The lack of understanding of the real problem had resulted in rumours and fears. In addition to the worries of additional workload from administrative staff, academic leaders worried about the potential inconvenience on clinical faculty engagement. The project team was not able to direct people’s attention to understand the need for a change and its sense of urgency during the initiation phase, resulted in adding risks to the project implementation.

Approach and Outcome

Creating a sense of urgency is a major learning for the TTP project. By applying the Kotter’s change approach, the TTP project team reinitiated a financial analysis to paint the urgency picture. Although the project was already in its implementation phase, it was certainly worthwhile to explore the primary reason for this project again when the executives and community were confused about the reasons for this change.

The TTP project director asked the finance team to conduct an analysis that was put off due to an alleged lack of information. With the support of the project sponsor, the project director insisted on the priority and importance of this analysis due to the potential overrun of clinical faculty payment that may contribute to the overall Faculty annual deficit.

The analysis was completed in October 2015 in three days as the top priority for the finance team. The results showed that clinical faculty payment for Fiscal Year 2013-14 and Fiscal Year 2014-15 both incurred significant overruns. The issues of budget overrun immediately raised the concern from the Dean and his executives. They shifted priority to support the TTP project. The Dean specifically indicated that the organization could not allow the payment eligibility policy non-compliance and financial overrun to continue. Users who complained about the technology issues now understood that financial constraint was a major change driver for this project. People needed to adjust their behaviour of working in silos into a coordinated approach to track and pay clinical faculty, aiming to reduce operational errors and financial overrun.

This financial analysis led to the two new executives, who are responsible for financial objectives and educational program administrative respectively, expressing strong interests to join the sponsor coalition to support this change.

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Lessons Learned

Revisiting the urgency of implementing this change allowed stakeholders to have insight into why they need to invest time, money, and effort into making this change happen. Without a sense of urgency, a change can be deemed as low priority and will not gain the momentum to move forward. From the lessons learned, the TTP project was able to regain attention from executive leadership and impacted stakeholders. This was the first step of saving a project that was close to failure and moved it back on track.

Step 2 – Forming a powerful guiding coalition • Assembling a group with enough power to lead the change effort • Encouraging the group to work together as a team

Problem

The project team did not enlist a core change team to act as change agents to start with. Instead, the project team members, mainly composed of project management, business analysis and change management resources, took it upon themselves to lead the change with limited involvement from the faculty community. The decision for this project direction was to avoid distracting the community from their day to day operations.

The project team was focused and able to complete initiation, planning, analysis and design phases of the project. However, the limited stakeholder involvement resulted in design gaps of aligning the new system to realistic business processes. Since the organization is decentralized with no consistent approach, it was close to impossible to design a new process that could fit the multiple ways of conducting business in FoM. The focused approach from the project team resulted in creating deliverables that were not suitable for the organization. There was a clear lack of support from leaders and stakeholders for the project to move forward.

Approach and Outcome

The project team conducted stakeholder analysis to understand who were the helpers, bystanders and resisters. Also, the project team made a careful selection of the change agents who had expert, referent, legitimate and information power bases (Langton & Robbins, 2007) to lead the charge. Since the project touched financial, human resources, and education program changes, three executive leaders were appointed to be the sponsor coalition as they saw the urgency from step 1 on implementing the TTP changes to fulfill the objectives.

After the change leaders at the executive level were enlisted as the powerful guiding coalition, TTP project sponsor coalition, the project team coached and collaborated with the project sponsors to play the change agent roles. A few project sponsors who played the change agent roles longer had matured significantly in their leadership style from the start of the project in 2012 to the time when the project required a revamp in 2015.

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They had referent power as they could “influence people based on their personal traits” (Langton & Robbins, 2007). With the open and honest communication style. the project sponsors were accountable and reliable in guiding the change. People respected and trusted the decisions from the project sponsor coalition.

Besides working alongside the project sponsors, the project team also enlisted supporters in the community to have more people to champion this change. By appealing to the stakeholders on the need for change, supporters were ready to sign up to play the champion roles. A few bystanders also converted into supporters to help with endorsing the change.

Lessons Learned

By forming the powerful guiding coalition as the sponsorship group, the TTP project received sufficient guidance on implementing this change in its key business areas: financial, human resources, and education program operations. This sponsor coalition worked together as a group to make decisions, communicate to stakeholders, and guide change implementation tactics. By having the right leaders with desire, knowledge, and capabilities to implement the change, the TTP project regained confidence from stakeholders at all levels of the organization. This was a major turning point for a project that was hitting rock bottom.

Step 3 – Creating a vision • Creating a vision to help direct the change effort • Developing strategies for achieving that vision

Problem

TTP was originated from a project sponsor with financial responsibility. He saw a clear need for change. Under his guidance, the project team developed the vision and objectives to initiate the project. However, this understanding of the need for change was not widely shared during the first iteration of the project. The initial project sponsor left the organization in late 2014 leaving the project with no clear succession from a project sponsorship level. Another executive director succeeded this role but with limited clarity on the vision, goals, and benefits of this change.

The limited understanding of the need for change resulted in a lack of buy-in. With the turnover from the project sponsorship level to the project team members, the vision for the project was no longer clear to most people. Due to the delivery focus to meet budget, scope and schedule, the project team continued to move forward for implementing the change but faced resistance from stakeholders.

Approach and Outcome

The project sponsor coalition formed in step 2 decided to redefine the vision since it is a critical factor for leading any change initiative. The TTP project team supported this

35 | P a g e decision by pausing the faculty-wide implementation for a re-planning in June 2015. During this period, the project sponsor went back to documents in the past to explore the true vision of the TTP project. Important information was found from a consulting report ordered by the Ministry of Advanced Education in 2005. In the report, it stated that UBC’s FoM was required to operate within the funding provided by the Ministry on clinical faculty payment. To achieve that, the report recommended the Faculty to implement a system to track clinical faculty teaching activities. The purpose of the system would be to provide a clear picture for audit and reporting, and to avoid operational errors or even fraudulent activities.

This report sent a strong message to the executives and the faculty community on the need for change. UBC needs to comply with policies and recommendations from its funding source, the Ministry of Advanced Education.

The vision of this project went beyond the perception of improving administrative functions. This was a ground-breaking moment for the project as both academic leaders and administrative leaders all agreed that they need to operate accurately and ethically.

Lessons Learned

Leaders should define the vision of a major transformation before its implementation. People would take this as a common practice. However, due to the pressure of rapidly implementing changes, particularly technological related, project leaders may take the risk of moving forward a change implementation without fully developing and communicating the vision. From the TTP project, the approach of reverting back to vision definition even from an implementation phase was a required step to ensure the successful continuation of this change. For any new project initiation, project leaders should set the vision before the implementation and regularly revisit the vision to ensure the relevancy to the organizational strategic alignment. With evolving needs from the business, a project vision can become irrelevant as time goes by if it is not adjusted to adapt emerging changes regularly.

Step 4 – Communicating the vision • Using every vehicle possible to communicate the new vision and strategies • Teaching new behaviours by the example of the guiding coalition

Problem

The project team created a communication plan to inform a small group of impacted business users regarding the change on tracking and paying clinical faculty members. The communication plan focused on process changes and technology training with limited information on why the organization needed the change. However, the impacted community was beyond the anticipated small group.

The incomprehensive communication plan did not take into account a few groups of administrative staff. Also, the vision was distorted through the grapevine as many users

36 | P a g e did not directly hear it from the project sponsor. Most of the communication was conducted by the project team resources, like project managers and business analysts. Business users were not able to relate the message from the project team. They would like to hear from their managers or leaders to reinforce the importance of this change. The project team did not have the credibility for understanding the operational process to influence the business users.

Approach and Outcome

After the re-planning of the TTP project, the project team took a different approach to communicate the vision that focused on balancing the overall faculty perspective while being relevant to individual at different operational levels.

In addition, the project team adopted a training approach that was more interactive to involve business users to act as super users to leverage a “train the trainer” approach. This approach was well received that the final project survey had numerous comments from users mentioned how relevant the training information was (UBC, 2017e). The “train the trainer” approach empowered new champions to spread the message wider into the community. Also, this reinforced confidence in the business community as they turned fear into accountability (Tichy, 1997).

Lessons Learned

In order to get people involved in a change, a clear vision is necessary for people to anchor on. Without a compelling common vision, it is impossible to guide people to contribute collaboratively in a decentralized organization where decision making processes are distributed across the organization. Therefore, creating a clear communication plan to share the vision is a critical success factor for managing organizational change. The TTP project team adopted this important step from Kotter’s Change Model to communicate the vision to stakeholders directly impacted by this change to increase engagement for following up on feedback for adjusting the subsequent project approaches.

Step 5 – Empowering others to act on the vision • Getting rid of obstacles to change • Changing systems or structures that seriously undermine the vision • Encouraging risk taking and non-traditional ideas, activities, and actions

Problem

The project team hired consultants to perform a needs assessment with a small group of senior management. This exercise was almost a closed-door activity that did not reach the right people in the operational level who understood the problems. Therefore, the implementation plan developed did not reflect reality or resonate with the wider community.

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The project objective was to coordinate and enable consistent administrative processes through an improved information management system. The process and system implementation would ensure clinical teaching payment information was accurate and accessible with traceability. Accurate information would support decision making on clinical faculty contributions and promotions.

The project objective defined by the consultants was solely focused on improving administrative efficiency without uncovering the root cause of the challenge in addressing the payment eligibility non-compliance problems that were discovered through the implementation phase.

In addition, the closed-door approach damaged relationships with stakeholders. They considered that as non-decision-making mechanism allowing “the more powerful actors to determine outcomes from behind the scenes” (Hardy, 1994). From there onward, stakeholders began to not trust the project sponsors and the project team. Also, they had strong resentment towards the consultants as they did not have the credibility to propose practical recommendations.

Before the system roll-out, the project team planned a pilot launch for selected user groups to test run the system. During the system pilot, business users were disappointed by the system performance as the project team set their expectations high by promoting administrative efficiency. However, the project team did not communicate user requirements and user interface performance indicators to align users’ expectations. This approach led the project team to face unreasonable demands and subjective measures from the users on what they should expect from the new system.

Approach and Outcome

The hired consultants developed a relatively comprehensive implementation plan for TTP. However, the lack of involvement from business stakeholders eroded trust across the organization regardless of the quality of the implementation plan. People did not have accountability on this change when they were not involved in developing the plan.

During the re-planning, the project team developed a new implementation plan that empowered business stakeholders to drive the change. The project team played facilitator and supporter roles to bridge the gaps for the business stakeholders rather than acted as the drivers. Business stakeholders were recruited through encouragement, motivation, and invitation to join four different task forces based on their business knowledge and capabilities: finance, clinical faculty communication, staff preparation, and system design. Each task force was led by a business director supported by a project team resource, such as a project manager, change manager, or a business analyst. This approach allowed business leaders to directly drive the change and influence their peers and staff within their community. They also partnered with the project resources to perform coordination and complete deliverables. In addition to the four working task forces, there was a business working committee that acted as the overall coordination hub to ensure smooth integration and cohesiveness of process and

38 | P a g e system changes. The business working committee reported to the TTP steering committee consisted of project sponsors and key project leaders. Please refer to Appendix C for TTP Project Organizational Chart.

This step further stabilized the project into the right track of successful delivery. Even though participating and contributing in the different task forces was a time-consuming effort for business stakeholders, they reported that it was a necessary factor for operational success of any major transformation. From the TTP final report, business leaders commented about the project involvement was time well-spent (UBC, 2017e).

Lessons Learned

One of the major obstacle to change is people’s lack of engagement or resistance. People may acknowledge the need for change. However, without the opportunity to involve in the change process, leaders are still going to face with massive resistance from stakeholders.

After shifting the approach from a closed-door approach led by consultants to a bottom- up approach for involving stakeholders from all levels to input into this change, TTP received 180 degree change from how people perceived about this project. The consultant driven methodology resembles the Theory E approach with a heavy top down tone. The shift into the stakeholder engagement approach to focus on organizational value is based on a Theory O concept. While it was difficult to implement Theory O approach immediately following a failed Theory E attempt due to its drastically different nature, it was proven to be an effective method to regain trust from the community as business leaders were seen as the change drivers. The sequence of applying Theory O at this stage was an appropriate choice as stakeholders saw this open and honest engagement approach as a way for the leaders and project team to rebuild trust with the community.

Step 6 – Planning for and creating short-term wins • Planning for visible performance improvements • Creating those improvements • Recognizing and rewarding employees involved in the improvements

Problem

The initial project team jumped into action without spending more time in Kotter’s step 1 to 5. That was the original approach that led to resistance. The project team was busy taking action to analyze business process gaps, recommend process changes and select a technology solution to solve business problems. However, they neglected to sequence the steps appropriate by first engaging stakeholders, and prepare them properly for the change.

The fast track approach led to costly rework on process and system redesign. This approach resulted in a significant loss of confidence. The community was not ready for

39 | P a g e this change in terms of its own psychological implications and business practice alignment. The change was closed to being called off from the academic leaders due to the loud resisters. On one end, people were not ready for this change. On the other end, people resisted the change because they were used to the status quo. During a feedback session, one business user frankly admitted that “if they cry loud enough and long enough, academic leaders who are in decision making positions will finally listen and call off any change. People can get back to their usual way of conducting business in silos” (UBC, 2017e).

Approach and Outcome

Jumping to actions too quickly will end up solving the wrong problems. Even if the change tactic was appropriate, using it too early in change implementation can end up failing to make the change.

The TTP project team took actions too early to define new business processes and build the new system. The requirement gathering phase did not encompass a larger audience to understand the end to end business processes in various departments. Too many assumptions were made in order to meet a tight timeline. However, this schedule driven approach led to rework due to scope changes discovered with the stakeholders.

After the project revamp, business stakeholders involved in task forces guided the change implementation as discussed in step 5. The expanded project team, with project resources and business stakeholders, developed a phased approach for the change implementation to reap benefits from incremental changes. Instead of a big bang approach of rolling out all changes at once, a few small pilots were planned to create short-term wins. This approach was particularly effective for incorporating continuous improvements along the journey. Lessons learned were collected in each pilot implementation for improving the next. Also, the incremental roll-out allowed time to adjust for any emerging business changes from other interdependent projects, such as Curriculum Renewal.

Lessons Learned

The TTP project team initially conducted change tactics without following the proper sequencing to align stakeholders and engage the organization. Without a clear understanding of the need of change, the steps carried out to implement business process redesign and system upgrade generated negative results. Creating short-term wins was an attractive step to executives that swayed the project team to focus on doing rather than planning. The key focus is to plan and then implement to ensure the project team is doing the right steps. After the proper sequence of completing step 1 to 5 to enlist the change leaders to define the vision, the project team plans and creates short-term wins to reinforce confidence, momentum and change benefits. This approach was helpful in keeping the change implementation on the right track.

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Step 7 – Consolidating improvement and producing still more change • Using increased credibility to change systems, structures, and policies that do not fit the vision • Hiring, promoting and developing employees who can implement the vision • Reinvigorating the process with new projects, themes, and change agents

Problem

During the first initiation of the TTP project, it was difficult to consolidate improvement due to the lack of user involvement and feedback. At that time, a few department users found the first iteration of the new system helpful to support decision making. However, soon after the loud resisters’ protest on the challenges, supporters immediately turned into bystanders or even joining the resisters.

Approach and Outcome

After realizing the challenges from the first initiation, the TTP project team made a commitment in the re-planning stage to share the change implementation vision across the organization to ensure leaders take mindful approach in leading organizational transformations. By doing so, the TTP project sponsors and leaders regularly shared project progress, successes, challenges, and other lessons learned to reinvigorate the change momentum.

In order to stay true to the project vision, leaders managed governance process for implementing only relevant process and system changes. Along the project journey, there were numerous requests from a diverse group of stakeholders for adding new scope to the project implementation that were not in alignment with the vision. Leaders needed to make decision on not including those requests that were not part of the project vision. Instead, leaders focused on the requests that aligned with the project objectives to resolve inconsistent processes in tracking and paying clinical faculty teaching. This governance mechanism of having leaders to gate the scope requests protected the project team to implement changes that were promised and beneficial to the community in achieving the TTP common vision.

Lessons Learned

As the project got back on track for change implementation, the project leadership team focused on consolidating improvements to keep the change momentum going. This approach cultivated a healthy culture of change for the TTP project as well as other major organizational transformations ahead. By preparing both the people and the process, the organization has the right elements in place to adapt to evolving needs through change implementations.

Step 8 – Institutionalizing new approaches • Articulating the connections between the new behaviours and corporate success • Developing the new means to ensure leadership development and succession

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Problem

While the TTP project was fully launched in December 2016 and completed all expected requirements, it was challenging to bring the change culture established by the TTP project to other transformations. Due to the decentralized organizational structure, every major transformation need to be endorsed by the departmental and unit leaders before people are interested in participating in the change.

The effort to analyze, involve, and coordinate a large number of stakeholders across different reporting functions can be cumbersome and time consuming. There are limited change leaders within the organization that have the skillset to mobilize complex change initiatives.

Approach and Outcome

To sustain the change that were made within the TTP project, the team created an operational committee to carry on the work for making incremental operational improvements to the TTP processes and system. Business leaders from the TTP project facilitate this operational committee for a continuity reason. The operational committee also reports to the existing governance structure of FoM to ensure clear decision making process in alignment with the broader organizational strategic goals.

To promote a change culture, the TTP project team shared lessons learned with executives, different transformation groups, and other key stakeholders within FoM. This approach can help institutionalize a change implementation approach that can focus on cross-functional improvements rather than specific departmental and unit changes.

Lessons Learned

It was difficult to implement change in a decentralized environment when the project team started off with the wrong sequence in neglecting proper business stakeholder involvement. However, it is even harder to institutionalize a change culture in multiple transformation initiatives. Even though confidence in the change culture is reinstated in TTP, people do not have the faith that implementing the same steps can generate positive results in other transformations. This trust problem is a result of lack of opportunities to coordinate and collaborate when the organization is decentralized with unit leaders being the ultimate decision makers for their areas. A significant effort in stakeholder engagement in every major transformation is anticipated for FoM’s organizational design.

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5.33 Prosci Change Management Methodology

Another change management best practice is Prosci that features the ADKAR Framework with five building blocks: awareness, desire, knowledge, ability and reinforcement (Prosci, 2016).

While the TTP project followed the Kotter’s 8-Step Change Model, the project team also took into consideration a few practices from the Prosci ADKAR framework.

The project team leveraged the concept of change management plan to define a comprehensive deliverable that include sponsor road mapping, stakeholder analysis, communication and change tactics, manager’s coaching plan, and resistance management.

Combining the high-level approach from Kotter’s Change Model and the tactical details from ADKAR Framework, the project team formed an overall picture on how to implement the TTP change.

5.34 Prediction 3 Validation

Kotter’s Change Model is a comprehensive framework that can enable the management of complex change in a decentralized structure. The discussion from the literature review and the results from the TTP project experience validated Prediction 3 on leveraging Kotter’s Change Model is well suited to mange transformative change in a decentralized organization.

6.0 RECOMMENDATIONS

After consolidating the results from analyzing the literature review and validating project experience from the TTP project, this section applies the learnings to provide six recommendations for managing change in a decentralized organizational structure.

6.1 Develop and Align Change Vision

There are many types of change that can drive a major transformation of an organization. For example, technological advancement can introduce new ways of conducting business that can replace existing operational lines. Even though the change is technology driven, people and processes within the organization are going to be impacted significantly.

For people to acknowledge the need of change, they need to understand the compelling vision of this change. As discussed in both the literature review and results sections, developing a vision is an early step that highlighted by both the Kotter’s Change Model and the Prosci ADKAR framework.

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From the TTP project experience, the stakeholders did not understand the goals and objectives of the change. The vision of the TTP project became blurry even to the project team as the direction was not clearly aligned to the organizational strategic goals. Until the re-planning phase where the vision of TTP was redefined clearly, people were struggling to see the need for a change.

To initialize a new transformation program, leaders must develop a compelling vision that aligns to the organization’s strategic directions with clear benefits defined for followers to embrace this change.

6.2 Combine Theory E and Theory O

When making organizational changes, leaders often have assumptions about the change environment and culture. The Theory E and Theory O concepts are defined based on the assumptions of leaders’ focus on economic value vs. organizational capability (Beer & Nohria, 2000).

While both theories have their merits, the sequence or combination of them can generate different results in change implementations. Beer and Nohria (2000) suggested that applying Theory E immediately after Theory O can bring a sense of betrayal. This challenge was validated by the TTP project experience. UBC FoM has a culture more geared towards valuing collaboration and organizational capabilities. The initiation of TTP in 2012 brought a shift in focusing on Theory E for financial results and improvements. This drastic change was met with confusion and resistance from the stakeholders. Since the project re-planning time, Theory O was applied to rebuild trust from bottom-up. However, some elements of Theory E still remained to remind people on financial significance and results oriented approach. Applying Theory O as the primary change theory with E elements seemed to achieve the optimal results in the TTP scenario.

Sequencing Theory O after Theory E can generate a more successful result in managing major transformation. However, the shift should not be completely one way or the other in applying these theories. Leaders should consider using some elements from both theories to ensure people can adapt to the change. However, one theory needs to play the dominant role to ensure a holistic culture without confusing people that an organization is trying to be too many objectives. This balance approach can optimize benefits from both theories.

6.3 Enlist Leaders as Change Agents

Having the right leaders to guide a major transformation is a critical step. However, it may not be easy to have one leader who can cover all aspects of a major change in terms of business knowledge, leadership capabilities, and personal influence. Forming a powerful guiding coalition with leaders that have referent and expert power bases can score a higher success rate.

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The TTP project was originally left with limited sponsorship for guidance. After enlisting leaders with business knowledge in financial, human resources, and education program, the project started to get back on track. In addition to the expert power base that these leaders possessed, some of them were leaders with referent power base that influenced stakeholders to follow naturally.

Referent and expert power bases are two key leadership styles that are well suited for leading major change initiatives. However, the guiding coalition can also have a combination of other leaders with different power bases, such as information and legitimate, to complement each other. The key to find the right leaders to act as change agents is to ensure complementary skillsets to form a full picture and bridge gaps. The critical success factor is that the leadership team needs to work cohesively as one team challenging and respecting each other to find better improvements to mobilize a major transformation. 6.4 Recruit Operational Champions

In a major transformation, the project team needs more than effective leaders at the executive level to form powerful guiding coalition. Recruiting change champions at the operational level not only add horsepower to the team but also create positive momentum to motivate others. According to Prosci’s findings, staff members like to hear the message about a major change from their direct supervisor as he or she is the trusted messenger (Prosci, 2016).

After the re-planning of the TTP project, business stakeholders from different distributed sites and departments joined task forces to contribute into the project. In addition to completing project deliverables, these business stakeholders acted as operational champions to spread the message about TTP. This proper communication channel reduced the grapevine where inaccurate information about the project was exchanged. Faculty and staff members being impacted by the TTP changes were directly hearing the update from their trusted parties on the progress. Also, some resisters turned into engaged champions as they finally felt their concerns were heard by the leaders. The approach of engaging operational champions helped reinforced messages that were sent from the mass communication channels such as newsletters or town halls. The operational champions were a critical success factor in building trust across the organization.

As leaders guiding through the major transformation in an organization, they should survey for supporters to join as operational champions. With champions represented in major areas of the organization, people can better understand the change to increase the overall buy-in.

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6.5 Leverage Change Models in Implementations

Change management allows the organization to assess the overall impact of a change. Leveraging a change model to manage organizational transformations can reduce time, lower risks, increase effectiveness, and enhance engagement. There are numerous change management models in the industry, such as John Kotter’s 8-Step Change Model and the Prosci ADKAR framework.

The TTP project team leveraged Kotter’s 8-Step Change Model as a way to steer this change implementation back on track after a failed first launch. Following Kotter’s 8- Step Process, TTP was gradually moving back on track with a redefined vision, promising leaders, and engaging operational champions. With the right people, the project started to witness short-term wins and eventually completed the project successfully in December 2016. TTP project has provided UBC FoM with a new value- added service to accurately track and pay clinical teaching activities.

Leveraging a change model to manage and implement major transformations allow leaders to follow clear process to executive change steps in the proper sequence. Kotter’s 8-Step Process for Leading Change is a change model that encompass the full life-cycle of a major change from initiation to implementation. This model also covers the sustainment concept in building a change culture. It is an effective model for organizations requiring to implement changes regularly in meeting evolving business needs.

6.6 Sustain a Change Culture for Continuous Improvement

After a change is implemented, it is not the end of the effort yet. Leaders need to recognize that change must be sustained to reinforce the new behaviours, processes and approaches. Creating an effort to maintain a culture of continuous improvement can help the organization to truly transform into the new state.

After the successful implementation of the TTP project, an operational committee was created to ensure continuous improvements with the new business processes and system to meet future needs. In addition to sustaining the change culture within this specific change, the project team also conducted knowledge sharing for other areas within the organization to learn about the lessons from TTP. This approach helped reinforce a broader change culture within the organization. However, this is an ongoing effort to ensure a decentralized organization like UBC FoM can continue to evolve collaboratively.

Change leaders need a broader mindset in change sustainment to foster a culture of continuous improvement across the organization. Leaders should look for opportunities to collaborate cross-functionally to optimize change capacity. It is difficult to make massive change in one instance. Leaders need to promote incremental changes to continuous evolve the organization by engaging people vertically and horizontally.

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7.0 CONCLUSION

Managing transformative change is challenging for a decentralized organizational structure. This paper studies how change drivers, organizational structure, leadership and change methodologies can impact organizational change delivery. A literature review of relevant management topics, such as change management, organization theory, and leadership theory, key management concepts are highlighted. From this, a set of predictions is presented on how change theories E and O, change leaders with referent and expert power bases, and Kotter’s Change Model are critical to the successful management of change in a decentralized organization. With concepts from the literature review and lessons learned from TTP, a past UBC FOM project experience, predictions are validated in the results section. Six recommendations are provided for managers in considering for leading future organizational transformations.

This paper is prepared with the best knowledge from the author with the available research and selected project experience. There are short comings of this paper that should be considered. The paper only discusses about one project experience from UBC FoM. This may limit the paper’s applicability to other transformations within or outside the higher education sector. With only one institution being examined, there is also limited coverage of different organizations and their organizational structures. This paper mainly leverages one change management methodology for its analysis. There is a limitation in our understanding of the effectiveness of Kotter’s Change Model in comparison to other change models in the industry. As change management is still an emerging topic in business management research, new concepts can further inform this paper as more research undertaken in this field.

Change is difficult but essential to help an organization to keep up with the evolving business needs. Leaders are struggling to find ways to implement and sustain organizational transformations. By following the approaches outlined in the predictions and results, leaders can see better results in managing change in a decentralized organization. However, every change is different and no one organization is the same. Leaders need to tailor their approach to fit their business sector, organizational culture, skills and capabilities, and other aspects when implementing changes.

As organizations evolve, transform and sustain themselves, change management has become a popular management topic for business management research. Future studies in this field will continue to evolve to support and validate the predictions and findings in this report. Future research projects can incorporate experiments to collect empirical data from multiple project experiences in different organizational structures to compare and contrast differences. In addition, researchers should consider collecting project experience data from organizations in different industry sectors to determine if the correlation between organizational structures and change management efforts is a constant across sectors or there is a varying factor. With the increasing popularity of organizational change initiatives, future research may further inform, support, or correct information provided by this applied project.

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APPENDICES

Appendix A: Leadership Capabilities needed to Succeed in a Digital World

Abbatiello, Knight, Philpot, and Roy (2017).

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Appendix B: UBC Faculty of Medicine MD Undergraduate Program Organizational Chart

Dean, Faculty of Medicine

Executive Executive Director, Department Heads Executive Director, Associate Dean, Finance and (19 departments) Faculty Affairs Education Operations

Regional Associate Senior Direction, Regional Associate Regional Associate Regional Associate Dean, Vancouver Education Program Dean, Island Dean, Nothern Dean, Southern Fraser Medical and Services Medical Program Medical Program Medical Program Program

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Appendix C: Teaching Tracking and Payment Project Organizational Chart

TTP Steering Committee

TTP Project Team

Business Working Team

Clinical Faculty Finance Task Staff Preparation System Design Communication Force Task Force Task Force Task Force

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