Week 30

1.0 Introduction

“The essence of strategy is choosing what not to do”
― Michael E. Porter

Faslane is the domicile of the UK’s nuclear submarines that lugs the Trident weapon system. Till 2002 Faslane was entirely operated by the MOD and Royal Navy. But from 2002 it went for partnership with private firm Babcock Marine for the purpose of cost reduction and improvement in operational effectiveness and service standards.

This case is all about the strategic analysis of change made in Faslane and the analysis part of this case is divided in following sub sections:

       I.            First section explains the strategic change process of Faslane is whether intended or emergent.

    II.            Second section elucidates the strategic change context of Faslane with the use of Balogun and Hope Hailey’s Change Kaleidoscope and Force Field Analysis.

 III.            Third section is the comparison of the MOD and Royal Navy and Babcock Marine with respect to their internal features by using MC Kinsey 7’S model and Cultural Web.

 IV.            Fourth section is the critical evaluation of the Faslane change by using Kotter’s change steps.

    V.            Fifth section is the comparison of the Strategic Leadership Style at Faslane from 2002-2010 with Lynch Leadership Model and Transcendent leadership style.

The main target of this case study is to sharpen the knowledge of student to understand the various reasons and impacts of the strategic change. This case study also guided the students for the proper utilization of various strategic analytical models. The understanding from this case study will help student to utilize the strategic analytical models in real world scenario.

2.0 Analysis.

2.1Strategic Change Process in Faslane:

According to Mintzberg “Emergent strategy is a set of actions, or behavior, consistent over time, "a realized pattern [that] was not expressly intended" in the original planning of strategy. When a deliberate strategy is realized, the result matches the intended course of action. An emergent strategy develops when an organization takes a series of actions that with time turn into a consistent pattern of behavior, regardless of specific intentions.”

Fig: Strategic Change Process.

The strategic change of Faslane can be taken as both intended and emergent. Intended in the sense that the target was predetermined to reduce cost and boost operational effectiveness for five years of time period. They set their target to receive 83 million pound reduction without doing any comprise with the quality of service for Navy.

Nevertheless, the change is also emergent as they fulfilled the target by considering various factors of organization. They changed the mindset of their employee and motivate them for best output. They also decreased the level of management from seven to four and employees were provided with enough freedom and participation in decision making. They significantly decreased the operational time by readjusting 56 days long review time to 7 days and played a important role to reduce the cost.

2.2 Hope Hailey’s and Balogun Change Kaleidoscope (FASLANE)

Change Kaleidoscope was developed by Hope Hailey & Balogun (2002) to be a way of pulling together and codifying the wide range of contextual features and implementation options that require consideration during change. In this sense Change kaleidoscope is more of a model than a method, but it is usable tool for conceptualizing the nature of change. (www.proworkproject.com)

Figure 1: Key contextual features of Faslane

Change Kaleidoscope showing key contextual features of  Faslane:

Time	When Faslane and Babcock Marine went for partnership, it was the real challenge for the John Howie to show the result as the time was limited i.e. 5 years. It was very important to change and direct the mindset of the employees to increase the efficiency in work. The Babcock Marine first executed all the low level modification upfront because they were simple and less time consuming. They significantly diminished review process from 56 days to 14 days and it beneficial to cut the cost.
Scope	The scope of the Faslane was wide as the changes were to be brought in whole organization. In order to ensure the operational effectiveness and the quality of the service, it was very important to make flexible and reduced level of management.
Preservation	Preservation relates to the extent to which it is necessary to maintain certain ways of working and certain aspects of culture retain particular groups of staff, preserve specific organizational competencies. The Babcock marine understand the importance of their allies such as Naval Base commander, MOD, Navy Board and various stakeholders. They maintain good relationship with them by organizing regular meetings and most important thing was they were able to maintain the standard of their service even by reducing the costs.
Diversity	The diversity the Faslane was very high as there was the combination of employee with assorted skills sets. Babcock marine work was to direct their perception to a dynamic mode. There are three levels of capability: individual, managerial and organizational.
Capability	The individual capability includes the ability to cope with transition that the Faslane that they will have to undertake. Individual employees understood that they had come up with new ideas of how to cut spending. Managerial capability includes the ability of mangers to help their staff through transition period. At Faslane managerial employees accept the change and welcome the new structure followed by Babcock. The organizational capability focus on the existence of organizational resources with the knowledge and ability to manage the change required. The Babcock Marines developed and communicated the organisation’s purpose by encouraging open discussions, for example they held ‘the event in the tent’ session, they changed the mindset of employees, and they clearly explained them what are the company’s objectives.
Capacity	The capacity of organization includes the capital, managerial time and the number of manpower. In case of Faslane, fund and time was limited where the number of employee was less. As the cost reduction was major required thing Babcock reduced the management level from 7 to 4.
Readiness	At first the staffs and people inside the Faslane does not looks happy with change, but after some time they became aware of the change needed in Faslane and committed to make personal changes as well.
Power	As the Faslane was very sensitive place of MOD, Babcock Marine bears the power to make changes in the methods of operation but does not bear an authority to make a elusive decisions and planning’s’.

2.3 Force Field Analysis of (FASLANE):

Force Field Analysis is a method for listing, discussing, and assessing the various forces for and against a proposed change. It helps to look at the big picture by analyzing all of the forces impacting on the change and weighing up the pros and cons. By identifying those factors it facilities to develop strategies to reduce the impact of the opposing forces and strengthen the supporting forces. (www.institute.nhs.uk)

Fig: Force Field Analysis

Following table describes the pushing and resisting factors of change in Faslane

Force Field Analysis
Pushing Factors	Resisting Factors
Requirement for cost diminution	No past experience of any kind of change
Upgrading in operational efficiency	Less approach for cost saving
Enhancing quality of  output	Time consuming operating system
Costing is unsustainable	Traditional mindset of employees
Future vision	Fear of change in mind of employees
Assorted customer expectations	Traditional  management system
Augmentation in diversity	Slow reaction on change

 In Lewin’s force field analysis model there are factors, they are pushing factors and resisting factors. Where there is symmetry between the two sets of forces there will be no change.

In the case of Faslane MOD wanted to bring change to reduce the operating cost and to amplify the operating effectiveness without affecting the quality of service. The decision to bring a change by MOD was very futuristic and was very important to maintain the good pace of the organization. Top – Down management style also cannot give the best out so it also fueled the reasons of change in Faslane.

Beside the pushing factors there were also some resisting factors against the change in Faslane. Major resisting factor was less practice and the experience of change in Faslane. This portrayed the vision of change as a complex and difficult matter with the employee. Traditional thinking and working style of the employee’s were also against the change.

But the change was very crucial for the Faslane as the basic purpose of change was to cut expense and increase operating expenses. As change in Faslane was very profitable and mandatory it was carried on.

2.4 McKinsey’s Seven S Model:

McKinsey`s Seven S framework includes the seven internal aspects of an organization that need to be associated if it is to be successful. The seven aspects are divided into two elements. They are:

1)      Hard Elements (Strategy, Structure and Systems)

2)      Soft Elements (Shared values, Skills, Style and Staffs) (www.mckinsey.com)

Fig: McKinsey’s Seven S Model

Using McKinsey`s Seven S framework model at Faslane up to the period of 2001, when it was run by MOD and after 2001 (2002-2010) for comparison and contrast.

Up to 2001:

McKinsey’s Seven S Model
SEVEN	STRENGTH	WEAKNESS
HARD ELEMENTS
STRATEGY	Entirely focused in infrastructure and customer.	Costly and time consuming operating system.
STRUCTURE	Clear chain of command and centralized bureaucracy system.	Vague roles and responsibilities and seven layer complex management system.
SYSTEM	Management team enthusiastic about betterment by making change	Time consuming decision making and pointless and expensive review process.
SOFT ELEMENTS
SKILLS	Employees were fully loaded with diverse skills and consequential experience.	Less knowledge and experience of modern management style and process of change.
STYLES	Highly experienced top level bureaucrat.	Partial personnel were only benefitted with required services.
STAFF	Including civil servants, Royal Navy personnel, and MOD guard Services there were 7500 staffs in Faslane	Staffs were wholly focused in infrastructure and were anxious with the change
SHARED VALUES	Finest service without compromising in quality for the Navy.	Aversion with change and ethnocentric beliefs.

From 2002-2010

McKinsey’s Seven S Model
SEVEN	STRENGTHS	WEAKNESS
HARD ELEMENTS
STRATEGY	To deduct cost, increase operational effectiveness and maintain the quality of service provided to Navy.	Full concentration in cutting down cost may also bring decrement in quality of service.
STRUCTURE	Reconstruction of management structure by decreasing its layer from 7-4. Flexibility and freedom were granted for decision making.	Reformation of operating system setting the 250 member’s management squad. If freedom is not handled in healthy manner than it might bring disaster.
SYSTEM	Extremely professional and expert management team prepared to direct the mindset of employee for productive output.	Raid changes were made in short time period which created a problem to make balance with Navy and customers.
SOFT ELEMENTS
SKILLS	Employees were highly professional, skilled and expert on their respective functional areas.	The operating system of Naval base was utterly new for workforce.
STYLES	Management squad is extremely experienced with change process and can lead the change process for effective output.	In the sensitive kind of organization like Faslane the change process increases the risk factors.
STAFF	Highly participative stats delivering the best output and focused for the quality of service than in infrastructure.	Decreasing the number of employee and layers of management may create some question mark in quality of service as the work load is increased.
SHARED VALAUES	Reducing operational cost without hampering the quality.	Babcock Marine is private company and private company is entirely profit motive which can distress the reputation of company.

2.5 Johnson's Cultural web:

The term cultural web comes from Johnson, Gerry, (1987), Strategic Change and the Management Process, Oxford: Blackwell. The web identifies the interrelated elements that help to make up what Johnson and Scholes call the ""paradigm"" - the pattern or model - of the work environment. By analyzing the factors in each, you can begin to see the bigger picture of your culture: what is working, what isn't working, and what needs to be changed. These elements are overlapping and collectively influence the cultural paradigm. (www.createadvantage.com)

The elements of cultural web are:

Ø  Stories

Ø  Rituals and Routines 

Ø  Symbols 

Ø  Organizational Structure 

Ø  Control Systems 

Ø  Power Structures 

Ø  Communications 

Fig: cultural web

 The following table consists of Cultural web analysis of Faslane up to 2001 and from 2002-2010:

Cultural Elements	MOD and Royal Navy (up to 2001)	Babcock Marine (2002-2010)
Symbol	Home for the nuclear submarine in Britain Focused on infrastructure	Home for entire submarine in Britain Focused for cutting down cost and increasing operating effectiveness.
Power structure	Limited power was given for employee. Top level management was only involved in decision making.	Freedom was provided to employee for their productive participation. Decision making is done with participation of all level of employee.
Organizational structure	Seven layer of management. Around 7500 employees were involved in operation.	Management level decreased and made four levels only. Number of employee was also decreased systematically for the purpose of cost reduction.
Control system	Whole operation is controlled by government authority i.e. MOD Some extent of political influence in decision making	Operation is controlled by professional private organization. Encouragement for individual involvement in decision making.
Rituals and routines	56 days long and unprofessional review process. Very costly operating system	Review process time was decreased and decreased operating cost. Performance scorecard measured the outputs
Paradigm	Narrow  minded and slow in performance No support for change process	Highly professional and expert employee. Fruitful adaptation of change process
Stories	Employees were not supportive for change process. Long and costly operating system	Cost reduction and operational effectiveness.

2.6 Kotter's 8 Steps Process for Leading Change:

The 8 step process of change was developed by leadership guru Dr. John Kotter. By following the 8-Step Process outlined by Dr. Kotter, organizations can avoid failure and become adept at change. By improving their ability to change, organizations can increase their chances of success, both today and in the future. Without this ability to adapt continuously, organizations cannot thrive. (www.kotterinternational.com)

Fig: Kotter's 8 Steps Process for Leading Change

Kotter’s 8 step process analysis of Faslane

Step 1: Establishing a Sense of Urgency

In this process the future threats and losses are identified and the sense of urgency for change is evaluated. It also provides the clear vision regarding the future opportunities. In case of Faslane change was to be made very urgently for cost reduction and increase operational effectiveness.  The change process for Faslane was important to maintain the level of success.

Step 2: Creating the Guiding Coalition

This develops the idea to identify the key stakeholders of the organization and motivate them to work as a team in the organization. The opportunity from cost saving strategy was only possible by changing the mindset of the employees. For a positive change the organization needed to bring together a coalition of influential people whose power and experience could bring political and financial profit.

 

 

Step 3: Developing a Change Vision

A strategic vision is required to be developed for a change, which can be easily adapted by the people. A clear vision helps the employees to understand the objectives of the organization. The vision for improving the operational effectiveness helped the employees to adopt the cost saving strategy in the organization.

Step 4: Communicating the Vision

To implement the change strategy, the employees must be communicated on day to day basis to change the mindset for positive attitude. The session such as "event in tent" was necessary to communicate with the employees to share ideas and vision of the overall members in the organization. With a mix of people who either believed change was necessary and the people who were less supportive for the change, the communication of the vision was easy to change the mindset of the employees.

Step 5: Remove Obstacles

This helps to identify or hire an effective leader whose major roles are to deliver a positive change in the organization. The decision to hire John Howie as a Managing Director of Babcock Marine brought a positive change in the operational effectiveness of the organization. The organization also reduced the review processing system and the level of management structure was also reduced from 7 layers to 4 layers. 

Step 6: Generating Short-term Wins

An organization needs to create short term targets that motivate the employees to work effectively for achieving the goals. The course of re-engineering the review process from 56 days to 6 days helped the organization to complete the session rapidly. This also removed the bureaucratic burden of the employees.

Step 7: Build on the Change

Goals and objectives needs to be built up to continue with the improvement from the changes. The process of bringing positive change in the mind of employees, reducing the bureaucratic burden, involving them in the decision making process, restructuring the management level are some of the examples  that brought continuous achievements in the organization due to the changes.

Step 8: Incorporating Changes into the Culture

The values of the vision should be determined by the corporate culture of the organization. It was a challenge for the organization to implement the cost reduction strategy when many employees had no incentives to adapt the changes.

Strategic Leadership style at Faslane during 2002 to 2010

During the period of 2002 to 2010, Faslane had two managers and both were team of Babcock Management. John Howie was the Babcock Marine Managing Director from 2002 to 2006 and Craig Lockhart takes up from 2006. In order make change process successful both directors followed same etiquette of strategy. The major changes throughout this period are:

Ø  Cost reduction without compromising the quality of service.

Ø  They changed the mindset of employees in productive way.

Ø  They provided freedom and opportunity of participation in decision making for every employee.

Ø  Scientifically decreased the layer of management from seven to four.

Ø  Overall productive reformation of operating system.

2.7 Lynch Model:

Let`s compare the Babcock management leadership style with the Five elements of Successful and Effective Strategic Leadership model (Lynch Model). According to this model, 5 elements of successful and effective strategic leadership listed below:

1)       Developing and communicating organization purpose:

This element states that the management should develop and maintain the proper communication of objectives regarding change. In case of Faslane this process was carried by changing the mind set of employee, giving them freedom and by proving healthy working environment. Like “event for tent” kind of things also helped this process.

2)       Managing human resources and organizational decisions:

They maintain productive and effective management by decreasing its layer from seven to four. They also ensure the freedom for employee and also provided them a opportunity to be a part of decision making which helped give best output.

3)       Setting ethical standards: 

According to Lynch model, leaders are responsible for setting and monitoring ethical standards and corporate social responsibility. I think is the big reason to bring Babcock in Faslane, to restructure the organization so that they can spend less. It was unethical to spend the tax payer’s money, so they maintain the ethics as well.

4)       Defining and delivering to Stakeholders:

They were able to define and deliver to stakeholders by understanding the importance of god allies, and gaining trust of the organization with better management system. For example, they clearly understood who they need to have as allies, such as the Naval Base Commander. They also considered the wider stakeholders such as MOD, Navy Board, commanding officers, local community, and so on.

5)       Sustaining competitive advantage over time: 

They remain competitive in market because of their far sighted highly professional management team which also directed the vision of employee for best possible output. They are always focused for cost reduction by increasing efficiency of operation. And they also accepted the profitable joint ventures. Like now it’s dwelling for all kinds of submarines. 

2.8 Transcendent Leadership:

Transcendent leadership offers a more inclusive and consensual decision making process for the economic, social, and environmental sectors, moving beyond a singular focus on the bottom line of profits to a multiple focus on the triple bottom lines of profits, people, and planet. (www.integralleadershipreview.com)

Transcendental Leadership is a metaphor which is widely used in organizational development theory to describe a genre of leadership style. The following table explains the Transcendent leadership of Faslane:

Transcendent Leadership in Faslane
Leadership for Self	Ø  John Howie was extremely professional and responsive about necessity for change. Ø  The factors that are liable for cost deduction and operational improvement were successfully implemented. Ø  Employees were given enough freedom and decision was made through all level employees’ involvement.
Leadership of Organization	Ø  Reconstruction of management structure created a easy excess for effective communication of objectives. Ø  The series of review points was also re-engineered. Ø  They also ensured the quality relation with some influential stakeholders.
Leadership of others	Ø  Participative decision making process was practiced. Ø  “The event in the tent” assembly also helped employee to grow in various ways and was also fruitful for the purpose of cost deduction.

3. Conclusion and Findings:

After scrutinizing various analytical strategic models and techniques it is graspable that implementing change process was successful to the Faslane. Faslane strategic change is both intended and emergent. Intended in the sense that purpose of change was to reduce the operational cost and emergent in the sense that they started change process by doing partnership with private organization Babcock Marine for effective operation and to make sure of involvement of highly expert and professional management team.

In 2002 Faslane went for a partnership with Babcock Marine for five years of time period. The main purpose was to reduce cost and increase operational effectiveness. Babcock Marine achieved given target by bringing extensive and productive change in Faslane. First of all they changed the mindset of employee and motivated them for valuable output.  They also decreased the level of management and brought down 56 days long review process to 7 days. They also provided employees freedom and participation in decision making and it eventually increased the efficiency of the operation.

The extremely professional management team of Babcock Marine reduced the 20% of annual cost and was able to give £100 million cost saving within five year time. At last we can state that the Babcock Marine performed their job very effectively and was able to deliver both cost reduction and quality service.

4. References:

Johnson, G. Whittington, R. & Scholes. K. (2011) „Exploring Strategy‟, 9th Edition, Prentice    Hall, p492

Lynch, R., (2009) Strategic Management, 5^th Edition, Prentice Hall, chapter 16.

 Retrieved from www.proworkproject.com: http://www.proworkproject.com/prowork/change-kaleidoscope.html
 Retrieved from www.institute.nhs.uk: http://www.institute.nhs.uk/quality_and_service_improvement_tools/quality_and_service_improvement_tools/force_field_analysis.html

 Retrieved from www.mckinsey.com: http://www.mckinsey.com/insights/strategy/enduring_ideas_the_7-s_framework

Retrieved from www.createadvantage.com: http://www.createadvantage.com/glossary/cultural-web

 Retrieved from www.kotterinternational.com: http://www.kotterinternational.com/our-principles/changesteps

Retrieved from www.integralleadershipreview.com: http://integralleadershipreview.com/1928-transcendent-leadership-pathway-to-global-sustainability/