WEEK 30

WEEK 30
MANAGING CHANGE AT FASLANE

1.      INTRODUCTION

The HM Navy Base Clyde also known as Faslane located in United Kingdom is the submarine base installed by MOD (Ministry of Defense) but managed by Babcock Marine since 2002, a private company which is a part of Babcock International. Before 2002 Faslane was operated by MOD but they realized that changes were necessary in the organization for cost effectiveness and operational efficiency. Hence, MOD partnered with Babcock and handed over the responsibility to manage and supervise Faslane to Babcock. The transferring of management from MOD to Babcock was a very crucial decision and every step taken by Babcock throughout this change process had to be handled very carefully. This report is entirely based on the case analysis of Faslane, the process of change that took place from 2002 which made Faslane a successful company. In this report the change process has been analyzed using various strategic tools like Change Kaleidoscope, McKinsey’s 7s Model, Kotter’s change steps, Lewin’s Forcefield Analysis and much more.

1.      ANALYSIS OF CASE STUDY

1.1. Type of strategic change process at Faslane.

Intended strategy is the strategy developed by the process of strategic leadership, mission and vision, strategic planning and due to externally imposed strategies. Emergent strategy is a strategy developed due to change in systems of the organization as a response to the environmental factors. The strategic change that took place in Faslane is mixture of both intended and emergent strategy. 

Faslane had the target to deliver $83million of cost savings without hampering the Navy service. They had preplanned this cost saving target which would be achieved in five years and had started working on it after Babcock entered as a management team in the company. Hence, we can say that the strategy used in Faslane is intended.

The strategic change process of Faslane is emergent strategy since their decision was based on the market situation regarding cost saving and improving operational effectiveness. The process of review was re-engineered and minimized from 56days to 6days as well as they cut down the bureaucratic burden and allowed employees to communicate their ideas, views and opinions. Management level was also changed from seven to four layers and also implemented all upfront low level changes as they were easy to implement which enabled them to achieve cost saving of 14million pounds in the first year of strategic change while the target was 3million pounds. They even managed to have allies with their stakeholders as a response to the demand of the environment and in 2009 they planned to create a joint project with customers. (Milica, 2012)

1.1. Strategic Change Context in 2002

The strategic change process conducted by MOD regarding the privatization of Faslane provided the Babcock International with the management authority. This change helped Faslane to achieve their goal of improving operational performance and cost reduction. Since Babcock was private sector firm they operated differently than public companies so had different organizational culture so people of Faslane were focused more than the infrastructure. Along with that there were many changes for instance, changes in systems, changes in employees’ mindset and many other changes. (Esther Boix Cullell, 2013)

1.1.1.       Balogun and Hope Hailey’s Change Kaleidoscope

Change Kaleidoscope model is developed to deal with intended change and strategy. This model deals with existing situations and competencies which should must be considered by organization whichever strategy they plan to implement. Here we are going discuss the analysis of Faslane using Change Kaleidoscope in detail. (Balogun and Hailey).

FEATURES
Time	MOD found out that Faslane urgently needed to lower their cost and increase their operational effectiveness. For this they partnered with Babcock and planned long-term strategic development of 5years. The longer they waited the longer it would take to achieve their objectives. They first implemented changes on all low level upfront as it was easy and took less time. The process of review was re-engineered and minimized from 56days to 14days.
Scope	According to the strategy developed by Babcock in 2002, the goal was to turn the company into most profitable one in UK supporting submarine fleet. Their main scope was to minimize cost and improve operational effectiveness for which they conducted low level changes which changed mindset of employees as well as changed the structure of management to bureaucratic and reduced the layers of management.
Preservation	Babcock had well preserved their relationship with MOD, Navy board and other stakeholders. Even after minimizing costs they were able to maintain same service standard. They need to preserve the service they provide and even some of their assets and aspects.
Diversity	Faslane had population of 7500 and they thought change would negatively affect them so they were more concerned about infrastructures than supporting Navy. Public sector manager didn’t believe in reducing cost while commodore believed it would benefit for everyone. Thus, regarding the change everyone’s views and opinions were diversified.
Capability	The staffs were capable enough to cope with the change as they knew their work very well and were experienced but for management change the staff needed to change their mindset. With the staff support the company had the capability to achieve its target and along with that perform much better than the target they set.  Ø
Capacity	They had the capacity to reach their target though the cash and the time they had was limited. Even after reduction of management level from 7to4 they were capable to perform well. More new skills and ideas would have improved their capacity.
Readiness	The workforce and the management team had people who either believed change was necessary or did not. All of them had their own perception regarding the change in the management. Some were ready for change while some believed it would hamper them negatively but with they were able to change the mindset of the employees and successfully implemented the change.
Power	The authority and power was with Babcock, MOD and Commodore. The employees controlled and had less autonomy. But in Faslane employees were powerful as they were the ones who conducted, supported and went through the changes.

1.1.1.       Force Field Analysis

Force field analysis is a strategic tool used to identify and evaluate forces and factors which are for and against the strategy. There are two purposes of this tool: first to decide either to apply the intended strategy or not and second to make the strategy successful by making strong the forces which is for the strategy and weakening which are against it. Here we are going to conduct force field analysis of Faslane in the beginning of change process. (Sarah Pavay, 2011)

 Forces for Change or Driving Factors

The driving factors of Faslane which needed change were cost and operational effectiveness. Positive changes were needed in these factors without affecting the services provided to Navy. The amount of cost they saved would have been used hastily so MOD and Babcock targeted to save cost in five years time.

Forces against Change or Restraining Factors

The managers and the employees’ mindset were against the change. Employees’ perspective was that the infrastructures were more important and managers were not interested in educing cost. Other restraining factor was the political intervention regarding the civil servants’ decision and the pressure of the system to force them to use the entire budget within fiscal year and if they wouldn’t then it would be cut down next year.

1.1. Compare and contrast of the internal features when it was run by MOD & Royal Navy and when it was run by Babcock Marine

Till 2001 MOD and Royal Navy were responsible for management of Faslane and they followed organizational culture of public sector. But after 2002 it was managed by Babcock Marine which was part of a private company and had different organizational culture. In the below section internal features of Faslane has been compared and contrasted using Johnson’s Cultural Web and McKinsey’s 7s Framework.

1.1.1.      Johnson’s Cultural Web

Cultural Web is a strategic approach which observes and changes the culture of organization. Below is the table which represents the cultural web of Faslane when it was managed by MOD & Royal Navy and Babcock Marine. The elements are symbol, power structure, organizational structure, control systems, rituals and routiness. paradigm and stories. (Johnson and Scholes, 1998).

ELEMENTS	UPTO 2001 MANAGED BY MOD & ROYAL NAVY	2002-2010 MANAGED BY BABCOCK MARINE
Symbols	v  Home base for only nuclear submarines. v  Avoided changes by staffs. v  Focused more on infrastructures than customer services and Navy. .	v  Home base for entire UK submarines. v  Staffs were more encouraged to participate in change process. v  Focused on effective operation, cost saving and service quality.
Power Structure	v  Limited autonomy to lower level staff. v  Decisions were made by top level management.	v  Certain level of autonomy to the staffs. v  Employees were considered important in change process so their opinions were considered in decision making process.
Organizational Structure	v  7layers management structure. v  Management team of 250 staffs.	v  4layers management structure. v  Management of 125 staffs.
Control Systems	v  Organization entirely controlled by MOD (public sector). v  Decision of civil servant questioned by elected politician.	v  Organization controlled by Private Sector Company. v  Encouraged individual decision making.
Rituals and Routines	v  Review process of 56 days. v  Longer process. v  Budgets needed to be spent within fiscal year or else reduction in it.	v  Review process of 6 days. v  Shorter process. v  Output and performances measured using scorecards.
Paradigm	v  Conservative management team so were slow. v  Not ready to accept changes.	v  Expert and fast management team. v  Willing to tackle with changes.
Stories	v  Ineffective management and review system. v  Changes in cost saving and improving operational effectiveness not readily accepted.	v  Effective management system. v  Employees readily accepted the necessary changes for betterment of the company.

1.1.1.      McKinsey’s 7s Model

McKinsey’s 7s model evaluates the internal factors of the organization. It analyses the performance of the organization by implementing strategies via staffs and skills alongside shared value and also checks the compatibility of systems and structures. (Ovidijus Jurevisius, 2013).

ELEMENTS	UPTO 2001 (RUN BY MOD & NAVY)	2002-2010 (RUN BY BABCOCK MARINE)
STRATEGY	v  Improve operational effectiveness and reduce costs. v  Became private company from public by partnering with Babcock.	v  Undertake lower level change. v  Structure and system change. v  Consulting other firms with similar changes.
STRUCTURE	v  7layers of management structure. v  Limited autonomy to lower level staff. v  Functional structure.	v  Management layers reduced to 4. v  Bureaucratic structure.
SYSTEMS	v  Organizational culture of public sector. v  Long and late change process. v  Strict documentation for change. v  Budget to spend within fiscal year.	v  Organizational culture of private sector. v  Faster change process. v  Money used effectively.
SHARED VALUES	v  Supported only nuclear base. v  Avoided change. v  Priority to infrastructure than services.	v  Mindset of all that change is beneficial. v  Focused on Navy services than infrastructure. v  Value of operational effectiveness and customer services.
STYLE	v  Transactional leadership. v  Autocratic leadership style.	v  Transformational leadership. v  Staffs opinions also considered in decision making.
STAFF	v  Diversified views regarding change. v  7500 staffs included security personnel, MOD guards and police.	v  Change was accepted. v  Numbers of staffs was 2000.
SKILLS	v  Knowledge and experience about functional areas only.	v  Knowledge and experience in all areas as a result of working in teams.

1.1.Evaluating change in Faslane using Kotter’s change Steps

STEP 1: Establishing a Sense of Urgency

In this step the organizations identifies the need of urgency for a change. Organization identifies potential threats, develops condition and identifies opportunities for future period. In case of Faslane they urgently wanted bring change in area like management structure to improve operational effectiveness and save cost.

STEP 2: Creating the Guiding Coalition

In this step the key stakeholders of the organization is identified and are motivated to work in teams. For Faslane also it was necessary to change employees’ mindset so that they could save their cost. When it came to operational effectiveness the leaders wanted to mutually bring the coalition of experienced and skilled workforce so that they could achieve their target of operational effectiveness.

STEP 3: Developing a Change Vision

Every organization creates strategic vision before entering business world and even when business wants to change their structures a clear vision should be made which can be adapted easily and should help employees to know organizations’ objectives. In Faslane, they had created the vision to improve operational effectiveness that enabled employees’ to accept the cost saving strategies.

STEP 4: Communicating the Vision

The employee’s positive attitude and mindset is created if they are communicated well about the strategy to be implemented. Faslane created an event “event in tent” where employees and all the members of the organization communicated and shared their vision, opinion and ideas. Communication was able to change the mindset and bring positive attitude of employees in Faslane as the organization comprised of members who supported as well as were against the change.

STEP 5: Remove Obstacles

In this step suitable and effective leader is hired who can bring positive change in the organization. Faslane teamed with Babcock Marine and John Howie was appointed as the managing director who brought positive changes in the organization which improved operational effectiveness and saved costs. Structure of management was reduced from 7 to 4 layers along with that review system was reduced.

STEP 6: Generating Short-term Wins

In this step short-term targets are created which will motivate employees to achieve goals effectively. Faslane re-engineered reviewing process from 56 to 6days which motivated employees to work effectively and achieve their targets.

STEP 7: Build on the Change

In this step, for the betterment of change further goals and objectives are built. Faslane along with the target of change brought some other changes like changing mindset of employees, reduced bureaucratic burden, restructured management level and involved everyone in decision making process.

STEP 8: Incorporating Changes into the Culture

Organization’s corporate culture is determines the vision values. Babcock Marine had to overcome challenges to achieve their target when many members of Faslane were against change.

1.1.Strategic Leadership Style in Faslane During 2002-2010 and comparison of Faslane against the 5elements of successful and effective leadership model using Lynch Model

After teaming with Babcock John Howei was the Managing Director of Faslane and Craig Lockhart succeeded him. Before 2001 Faslane was public sector business but after 2002 it was privatized to achieve set targets. Various changes were conducted after 2002 which are mentioned below.

v  Changed mindset of employees which brought positive attitude and were able to achieve target of operational effectiveness and cost saving.

v  Customer services and Navy were focused more than infrastructures.

v  Members of the organization were able give opinions, views and ideas.

v  Management layers were reduced from 7 to 4.

v  Upfront low level changes were implemented as it was easy.

v  Understood the value of their allies such as of Naval Base Commanders.

v  Working in teams was motivated.

1.1.1.      Lynch Model

v  Sustaining Competitive Advantage Overtime

After Babcock Marine teamed with Faslane they adapted private companies’ organizational structures which sustained competitive advantage overtime. In the beginning they reduced the number of days of change process from 56 to 14days. After that they motivated employees to perform well and keep forward their visions, opinions and ideas which helped the company to reduce costs and improve operational effectiveness.

v  Defining and Delivering to Stakeholders

Faslane after entrance of Babcock understood the value of their stakeholders so allied with them so that they could successfully adapt the targeted change.

v  Managing Human Resource and Organizational Decision

Babcock reduced the management layers from 7 to 4 and even the management team members were reduced from 250 to half. This was one of the major steps they took which reduced their costs. Relationships between employee and employers were improved as employees could express themselves. Teamwork was also encouraged which improved the operational effectiveness.

v  Setting Ethical Standards

MOD did not bring the change by them because by doing so they would have gone against the restriction by teaming with Babcock ethically they saved the costs which would have been used recklessly.

v  Developing and Communicating Purpose

Babcock communicated the changes they were planning to bring such as culture, system and structure to their members. They wanted to involve employees in the change process as they knew change would not be successful without their support. They motivated employees to communicate and express their opinions and views.

1.1.2.      Transcendent Leadership Model in Faslane

The organization sets certain goals and objectives which need to be achieved. Leaders are the one responsible to manage employees towards achieving the goals. Hence, they should be the one who can communicate vision and manage everyone. They are also responsible for dealing with business environment changes. Below is the non human aspect of this model. (J.J Gardiver, 2006)

LEADERSHIP OF SELF	v  Howie and Lockhart both realized that there was a need for change so came up with strategies for change. v  They were able to change mindset of the employees and encouraged their involvement. v  Target of cost saving and improving operational effectiveness was successfully carried out.
LEADERSHIP OF THE ORGANIZATION	v  Howie supported intended changes by reducing management layers from 7 to 4, members of management team from 250 to half and also re-engineered review points. v  Removed functional structure and bureaucratic structure was implemented. v  Both the leaders had good allies with the stakeholders.
LEADERSHIP OF OTHERS	v  Employees changed their mindset and positively supported the change that was to be undertaken. v  Employees were motivated and participated in the change process and even kept forward their opinions.

Online References: 

1.   http://artuspoint.com/. 2013. Practical use of tools. [ONLINE] Available at: http://artuspoint.com/change-kaleidoscope/. [Accessed 04 January 14].
2. Kalpan Financial Knowledge Bank. 2012. The context for change (Balogun and Hope Hailey). [ONLINE] Available at:http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Managing%20strategic%20change.aspx. [Accessed 04 January 14].
3. whittblog.wordpress. 2011. McKinsey 7S Model: A strategic assessment and alignment model. [ONLINE] Available at: http://whittblog.wordpress.com/2011/04/24/mckinsey-7s-model-a-strategic-assessment-and-alignment-model/. [Accessed 04 January 14]. 
4.  Royal Navy.(2010). Cylde. Available: http://www.royalnavy.mod.uk/sitecore/content/home/the-fleet/naval-bases/clyde. [Accessed 04 January 14] 
5. Milicia. (2010). Managing Change at Faslane. Available: http://milicabarovic.blogspot.com/2012/04/case-study-7-managing-change-at-faslane.html. [Accessed 04 January 14] 
6.  Write my paper. (2011). Managing Change at Faslane Case Study Essay. Available: http://www.writemypapers.org/examples-and-samples/managing-change-at-faslane-case-study-essay.html#ixzz2UORX9dvR. [Accessed 04 January 14]
7.  Cullel.E. (2010). Managing Change at Faslane. Available: http://prezi.com/a3w5ihl0ftp9/managin-change-at-faslane/?. [Accessed on 04 January 14]

Book References: 
1. Balogun and V. Hope Hailey, Exploring Strategic Change, 3rd edition, Prentice Hall, 2009

2.  Lynch, R. (2008) ‘Strategic Management’, 5th Edition, Prentice Hall, pp 619

3. Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 14 
4. Hofer, C. W., & Schendel, D. 1978.Strategy formulation:Analytic concepts. St. Paul: West.