Organisational Change Management: 5D Analysis of D2 Company - Essay Example

5D Analysis of D2 Company Introduction Appreciative Inquiry (AI) model has been emerged as one of the coveted topic among organizational development (OD) researchers and supporters of change management. Bushe and Marshak (2009) have pointed out that Appreciative Inquiry (AI) 5D framework was one of the most important post‐Lewinian Organization Development theory. The model can be classified as the proliferation of dialogic OD intervention. In the first part of this essay, the study will develop theoretical model for Appreciative Inquiry (AI) 5D framework in order to create the silhouette to address the pertinent issues mentioned in the case study of D2 which is a French auto manufacturer. Theoretical Understanding of Appreciative Inquiry (AI) 5D Framework In 1987, David Cooperrider, who is considered as the founder of Appreciative Inquiry (AI) has pointed out that the proposed model can be viewed as the philosophical approach rather than technical process to incorporate change management (Cooperrider & Srivastva, 1987). 15 years later, the scholar has come up with 5D framework which can be used to manage and direct change process (Cooperrider et al, 2008 and Cooperrider and Whitney, 2001). According to the argument presented by Cooperrider et al (2008), it can be said that AI is a multidimensional model which can viewed from both organizational and social perspective. Five dimensions of AI model can be briefed in the following manner. Definition (D1) This is the first phase of AI process. In this phase, organizations try to understand what are the underlying issues in the current business process that need immediate attention of management? Management create a flow map of the pertinent elements which is creating problem in the existing business process and need to be enquired externally. Discovery (D2) This is the second phase of AI process. Cooperrider and Srivastva (1987) have defined discovery as the identification of object concern in the enquiry. In simple words, discovery signifies the urge or the need for changing the existing system and implements a new one. Ludema et al (2003) have called the discovery phase of AI as the “positive core” where organizations assess the need for change on the basis of its strategic capabilities. For example, if French automaker D2 wants to inquire about how to decrease cost of production then they should first identify what are their existing resource capabilities to undergo the change process and decrease the cost of production. Dream (D3) In this phase, participant in the change process are asked to imagine about the best possible solution which can help the organization to address the concerns in the enquiry in successful manner. Imagining the organization at its best will help the change agents to align their action with objective of the change process. Identification of a common system of aspiration among organizational members is the key mantra in the dream phase. For example, French automaker D2 should use symbolic expressions such as graphs, charts, written mission statement etc for helping organizational members to dream about the ideal situation. Design (D4) In the initial stage of the evolution of the AI concept, David Cooperrider has called design as the “provocative propositions” for enquiry process. After placing a common dream among the stakeholders in the change process, organizations ask the participants to develop a concrete proposal which has the potential to bring the change. Mohr et al (2003) and Watkins et al (2011) have pointed out that, organizations should categorize the change proposal into minor elements context to their applications and potentials. Forming groups might help companies to implement the intervention in strategic and systematic manner. For example, if French automaker D2 wants to implement the change process to achieve the state which has been desired commonly by organizational members then it should create a process map and implementation schedule to make this happen. Delivery/Destiny (D5) David Cooperrider has named the fifth vertical of AI model as the delivery process but in later stage, the scholar changed the name to destiny. Although, there is no fundamental collision between the delivery phase of traditional change management process and destiny of AI approach. There is least amount of consensus exist among the AI advocates about using the term destiny to measurable event. In destiny phase, organizations try to understand the limitations and deficiencies that are associated with proposed intervention model and formulate solution which can reduce the magnitude of such limitations. For example, if French automaker D2 identifies some flaws in the proposed design then they should use the gap analysis or establish new targets to eradicate these flaws. After highlighting the theoretical assumptions behind Appreciative Inquiry (AI) 5D framework, the study will try to use this model in order to answer the pertinent issues regarding the strategic change initiative of the French car components manufacturing company which has been referred as D2. The following section will also try to solve the case study by using the concept of strategic change management, environmental drivers for change, resistance to change and leadership style. Definition and Discovery Careful analysis of the D2 case study reveals that environmental pressure has forced them to think about strategic change management. For example, prior to economic recession the French auto maker has maintained a competitive business portfolio but the situation gets worsened after the economic meltdown which has caused inequality in demand supply equation. In such context, auto makers using low cost countries such as India and China (doe to cheap labour force and low cost raw materials) as the manufacturing are able to offer cars at competitive price to customers whose spending capacity has been reduced after the economic meltdown. On the other hand, D2 has the manufacturing plants in France, Spain and UK, although each of this plant is able to deliver cars with superior quality and product driven innovation but these plants are not much useful when the company is planning to manufacture cars in low cost manner due to macro environmental reasons. Hence, D2 is facing problem in reducing the cost of manufacturing and rub shoulder with auto makers using low cost countries as the manufacturing hub. Problem of the D2 can be linked with the theoretical argument of Tichy (1983) that there can be four types of macro environmental pressures such as economic pressure, political pressure, cultural pressure and technological pressure which can influence an organization to go for strategic change intervention. (Source: Tichy, 1983) In case of D2, two prominent environmental pressures can be identified such as economic pressure for decreasing the cost of manufacturing in order to compete with other auto makers and technological pressure to deploy its technological resources to decrease the cost of manufacturing. According to Weick (2000), there can be two types of change such as planned change, where organizations implement the change process in step-by-step manner and emergent change, where organizations focus on immediate issues and adopt change process without having any priori intentions to do so. Weick (2000, p. 237) has defined the characteristics of emergent change as “Emergent change occurs when people re-accomplish routines and when they deal with contingencies, breakdowns, and opportunities in everyday work. Much of this change goes unnoticed, because small alterations are lumped together as noise in otherwise uneventful inertia.” However, problems for D2 are neither operational nor an everyday phenomenon hence it can be said that D2 needs to adopt planned change which is more strategic in nature instead of banking on emergent change process. According to the case study for D2, primary agenda for adopting change process includes two issues, 1- cutting manufacturing cost in earliest possible manner by deciding to stop production of unprofitable components in manufacturing sites and 2- increasing technological integration for improving production capacity of selected components in order to achieve the economies of scale. The proposed changed process for D2 includes initiatives like, expanding the operation and production capacity by integration of state of art technology at Blois (main factory of the French automaker) in order to achieve economies of scale and reduce cost of operation and closing the UK based manufacturing plant whose production quality has been plagued by most outdated technology. Now, the road to implement these strategic change initiatives is not free from challenges. Challenges associated with the strategic initiatives of D2 can be briefed as, 1- closing the UK based manufacturing plant will create large scale redundancies which will subsequently push the panic button among employees working in that plant and there are possibilities that these employees might show subversive attitude towards the management of D2 and 2- investing huge amount of capital on technology integration in Blois plant might not provide expected return to the company and in that case D2 will end up losing margin. The second challenge can be understood by using the concept of probability but the first challenge is related to the change resistance approach. Kinnear and Roodt (1998) have found that showing resistance to participate or accept the change process by certain group of people or and particular department in the organization during the change intervention is quite natural phenomenon because organizational equilibrium displaced during the change or transition phase. King and Anderson (2002) have pointed out that organizational individuals show resistance to change from their fear of uncertainty, job insecurity or social insecurity. In such theoretical context, in the case of strategic change initiative of D2, apart from the workers of UK based manufacturing plant and other plants located in France and Spain might show their resistance to change process in different ways such as, 1- mild agitation about working or getting acclimatize with the technology integration in Blois plant, 2- hostile movement to delay the change implementation process in plants located in Spain and 3- subversive outbursts or strike by the workers in Didcot (UK) plant to oppose the decision of the closure. However, management of D2 need to show the leadership skill to handle the change resistance by workers of the company. According to Nadler et al (2001), managers need to show leadership skill in order to become change agents who can not only direct the change initiatives but also coordinate and encourage activities of organizational members to participate in the change process. The model should work in the following manner; (Source: Kavanagh and Ashkanasy, 2006) According to the model, managers of D2 or the project managers of external consultant should take initiatives to create a culture of knowledge sharing and innovation in order to decrease the change resistance and prepare the organization to go through the change process. In many cases leaders take the initiative to change the organizational structure from mechanical one to organic one in order to incorporate the change. Management of D2 should think about breaking down the organizational structure into small innovation centres in order to improve the process flow in manufacturing plants and decrease the overall cost of operation. Backward integration of the model can be used to understand how managers of D2 can use their leadership skill to eradicate the elements of mistrust among workers in plants located in UK, France and Spain. Managers of the French automakers should visit the plant workers in UK in order to communicate the principal agenda for proposed strategic change intervention process. Top level managers need to communicate the dire situation of the D2 in order to make workers feel the urge for change. Unfortunate fact is that, it is not possible for management to relocate all the workers from Didcot to other plant while closing the UK based plant due to cost factor. In such cases, management should try to retain optimal number of workers along with product development engineers from Didcot and give them proper training to acclimatize with work environment of other technologically advanced plants. This leadership approach will not only increase mutual trust among workers, develop a culture of knowledge sharing but also help the company to increase the production capacity in remaining manufacturing plants and achieve economies of scale. Taking help of the theoretical argument of Bass (1998), it can be said that depending solely on manager’s leadership ability might not help D2 to save their skin due to multidimensional nature of the macro environmental threat rather they should encourage employees to become the change agents to drive the change process. Dream and Design In the dream phase, management of D2 should use the visual elements for engage workers and ask them to imagine about the best possible solution which can help the company to compete with the low cost rival. It has been already mentioned that the recommended change process would be a strategic one which will require team effort. However, the objective of the change process will be to decrease the cost of manufacturing. Mechanical explanation of the economies of scale objective of D2 can be depicted in the following manner. (Source: Cottyn et al, 2011) According to the model, D2 should plan for two phase manufacturing cost reduction strategy in order to decrease the marginal cost by achieving economies of scale in systematic manner. In the first phase, the French auto maker should use plan to achieve optimal fit by increasing the production to 75% of its capacity and decrease the learning curve and finally achieve the exact fit by increasing the production to 100% of its capacity and decrease the economies of scale to further extent and manufacture automobiles by incurring lowest possible cost. However, this theoretical model of economies of scale might not be achieved if the top level management of D2 fails to encourage all the team members to participate in the change process. Above mentioned learning curve model can be treated as the desired state or dream for D2 in context to current problems. D2 should create a road map for next 30 months of implementing the change process. For example, D2 should try to achieve optimal fit by first 12 months, exact fit by next 12 months and implement the control mechanism in order to restore the benefits of economies of scale. The study will use the concept of organizational development (OD) in order to present the implementation plan for the recommended change management process. Chapman (2002) has pointed out that OD process is the extended version of change management process and the model includes facets like leadership, team building, transformational change and organizational learning. However, Cascio and Aguinis (2005) have criticized the OD process for its broadness and inability to help the organizations to solve decision problems. Holland and Salama (2010) have pointed out that organizations are living object hence it will not be justifiable bank on single aspect of OD intervention. In case of D2, the problem is strategic as well as cultural in nature. There will be two aspects of the strategic initiatives of D2, 1- implementing state of art of technology to achieve economies of scale by concentrating on manufacturing profitable components and 2- infusing a culture of innovation, knowledge sharing and resilience in order to decrease change resistance behaviour. The French automaker should implement the organizational development (OD) intervention by following the McKinsey 7S Framework by integrating both hard factors and soft factors. (Source: Parker et al, 2012) According to the model, D2 should identify the hard factors such as adopting strategy to achieve economies of scale, changing the mechanistic organizational structure into organic one in order to increase the organizational flexibility to implement the new technological system to increase production capacity and develop a business system which can work in responsive manner to address the macro environmental challenges in order to represent the strategic dimension of the recommended change intervention. In the next phase, top management of D2 should show the leadership skills in order to co-align the interest of workers with the value system of the organization. To ensure the creation of shared value system, management of the French automaker needs to take help of human resource division in order to design training and development schedule for the workers to get accustomed with the newly implemented manufacturing facilities, schedule knowledge session for workers to generate awareness among them about the change initiative, encourage them to work in a team which will enhance coordination between workers for achieving a common objective etc. The auto manufacturer needs to take three steps model such as, 1- initiating the change process by creating urgency among workers in different plant of the company, 2- managing the change by developing the strategic capabilities, 3- closing the change initiative after restoring the organizational balance by making all the workers accustomed with the newly implemented system. In the next section, the study will try to understand how D2 can monitor the performance of newly implemented system and balance the limitations associated with the implemented technological intervention. Destiny and Conclusion The study has proposed that D2 should re-deploy product development engineers of Didcot to Blois and other manufacturing plants. However, there are chances that these engineers might fail to deliver the same kind of performance after redeployment due to inadequate training to work in newly implemented system or cultural barriers. This is a small example of limitations associated with the proposed change model but hundreds of other limitations can be found with recommended change management intervention due to its over dependency on probabilistic theory. The study has designed the intervention model by expecting the probabilistic occurrence of results. Although it is very difficult to control all of these limitations but some of it can be identified and balanced by taking help of Interventionist Strategy Model (ISM). According to Palmer et al (2005) and DuBrin (2011), companies need to use both strategic and operational initiatives to reduce the limitations associated with the change intervention process. In such context, the D2 should identify the following performance indicators which can help them to rectify the limitations associated with the recommended intervention model. Using balance score card to measure financial performance of the intervention and adjusting the production capacity in order to manage the learning curve. Periodic market research should be done in order to evaluate the change in customer demand for D2 cars after reducing the price through change intervention. If the demand is still on the lower side then management should go for further strategic interventions to identify contingent variables apart from low cost manufacturing which are altering the balance of supply-demand equation of automobile industry. Table of Contents Theoretical Understanding of Appreciative Inquiry (AI) 5D Framework 1 Definition and Discovery 3 Dream and Design 7 Destiny and Conclusion 10 Table of Contents 11 Reference 12 Reference Bass, B. M., 1998. Transformational leadership: Industrial, military, and educational impact. Hillsdale, NJ: Erlbaum. Bushe, G. R. and Marshak, R. J., 2009. Revisioning OD: Diagnostic and dialogic premises and patterns of practice. Journal of Applied Behavioral Science, 45(3), pp. 348‐368. Cascio, W. F. and Aguinis, H., 2005. Applied Psychology in Human Resource Management. 6th ed. Upper Saddle River, New Jersey: Prentice Hall. Chapman, J. A., 2002. A framework for transformational change in organizations. 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