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The Leader’s Role in Managing
Change: Five Cases of
Technology-Enabled Business
Transformation
among 230 of the largest global companies it surveyed, 57 percent had to write off at least one IT
project in the past 12 months, and only 41 percent
were able to determine how much the failure had
cost their organization.
Transformation is critical for any organization to
succeed, and technology-enabled change has become
a widespread means of improving responsiveness to
competition and customer satisfaction. In the current climate of economic uncertainty, the imperatives that are instrumental in pushing organizations
to consider transformation include innovation, business agility to adapt to external changes efficiently
and effectively, the alignment of information technology (IT) and business strategy, and global demand and support for new ideas and new opportunities. The critical success factor for such initiatives lies
in effective leadership to manage the changes associated with both people and processes. A review of the
various aspects of leadership and change management and an analysis of five case studies in technology transformation identify the common leadership
parameters that can lead to the effective and efficient
adoption of change. C? 2015 Wiley Periodicals, Inc.
In most of these cases, failure was attributed to
leadership. The magnitude, urgency, and nature
of the transformation; the capabilities and failings
of the organization; and the personal style of the
leader all influence the nature of a CEO’s role
(Aiken & Keller, 2007). A transformational model
of leadership is gaining prominence in organizations
characterized by geographically dispersed businesses, technological diversity, and a fast-changing
environment.
Change requires creating a new system and then institutionalizing the new approaches (Kotter, 1996).
Research has demonstrated that there is a positive relationship between transformational leadership and employees’ commitment to the organizational change effort (Bass & Riggio, 2005) and to
the leader (Kark & Shamir, 2002). Transformation
efforts inevitably lose steam if leaders fail to create
the desired mind-sets on the part of employees or to
ensure that the right people are spending the right
amount of time on driving necessary changes.
The contemporary globalized business environment demands not just incremental improvements
but periodic transformations, particularly when
a firm relies on technology for its competitive
advantage. Consequently, enterprises increasingly
need to think about fundamental change—business
transformation—to gain or maintain competitive
advantage. Global annual information technology
(IT) expenditure has exceeded $2.5 trillion (Gartner, 2014), yet less than half of large-scale IT transformation initiatives ever come close to realizing
the anticipated benefits. KPMG (2003) reported that
2015 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com)
Global Business and Organizational Excellence ? DOI: 10.1002/joe.21602
Although transformational change management and
leadership are intertwined, there has been little research that focuses on the nature of this
C?
28
KALLOL KUMAR BASU
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March/April 2015
relationship and attempts to identify the characteristics of the leaders who implement such change.
Managing Change
The notion of change can mean different things
to different people. Planned change models assume
that leadership is the primary source of organizational change, and that leaders deliberately initiate
change in response to perceived opportunities. In
contrast, those who argue for emergent change claim
that change cannot be anticipated or planned for
in advance (Mintzberg & Waters, 1985). Similarly,
Orlikowski’s (1996) situated change model claims
that organizational change is grounded in microlevel changes, which are enacted over time as actors
attempt to make sense of the world in which they
act. The focus here is only on planned change.
Change Management Versus Business Transformation
The process of managing some major or minor
change in a business, change management is usually ongoing. Business transformation, however, is
organizational change on a more fundamental scale.
Although the term business transformation can be
applied to a division or function, it is normally
reserved for changes that affect a whole business.
Viewed in this way, business transformation is the
end and change management is the means, while
change management, partnered with project management, provides the engine for its implementation.
Business transformation involves large-scale intervention from senior management, driven by situational factors and technological or internal changes
that affect all dimensions of the organization, with
the long-term goal of increasing the performance of
the entire company. It starts with pivoting the company’s business model to its core competency (which
can be quite different from what the company actually does), and getting rid of everything that does not
contribute to value generation around the reshaped
value generation model through technology. It can
be done in waves—turnaround, stabilization, and
revitalization—over two to three years. The exis-
Global Business and Organizational Excellence
tence of a transformational leader is critical to such a
large-scale transformation, which usually questions
not just the processes but also the fundamental business model.
A standard technology change adoption cycle
consists of:
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A business preparation stage, focusing on sponsorship and communication;
Deployment, focusing on training and performance support (enablement); and
A sustainability stage, which includes performance management activities (ownership).
Most technology transformations involve resistance
to change, expressed through the behavior of organizational members who refuse to accept a particular
change in the organization.
This can be related to Ruddle’s (1999) fourquadrant change model (see Exhibit 1 on page 30).
The push is created through facilitation, awareness,
and an integrated approach to managing change involving all stakeholders. The pull is created when
top management is fully aligned and mobilized and
stakeholders are involved and/or represented in the
decision-making process.
Most technology transformations involve resistance
to change, expressed through the behavior of
organizational members who refuse to accept a
particular change in the organization (Cheng &
Petrovic-Lazarevic, 2004). Leon (2008) ascribed 69
percent, 28 percent, and 13 percent failure rates of
enterprise systems to people, process, and technological problems, respectively. This shows the importance of people issues in such system implementations. The common areas of resistance of employees
for technology transformation are summarized in
Exhibit 2 on page 31.
DOI: 10.1002/joe
March/April 2015
29
Exhibit 1. Ruddle’s Change Management Model
On Leadership and Change Implementation
Able leadership is critical for enacting a radical
change in an organization. The specific leadership parameters that are associated with successful
change adoption are often unclear, and leadership
style and performance are mediated by the organization’s culture.
Brown and Eisenhardt (1997) identified three key
characteristics of successful managers in continuously changing organizations:
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30
Providing clear responsibility and priorities with
extensive communication and freedom for individuals to improvise and be creative;
Exploring the future using a variety of simulations, which enables leaders to anticipate and
shape the future; and
March/April 2015
?
Linking current projects to the future with predictable time-paced intervals and a synchronized
transition mechanism.
Eisenbach, Watson, and Pillai (1999) further explain
that this last characteristic enables employees to synchronize their energies with one another, creating
a focused flow of attention that enhances performance. Ruddle (1999) combined the change management and transformational approaches to arrive
at four different management styles, each dependent
on the degree of change and the level of uncertainty
about the future (see Exhibit 3 on page 31).
Transformational leadership implies leaders with the
power to motivate, stimulate, and influence the behavior of people to transform the “soft variable”
of transformational rearrangement—that is, an
DOI: 10.1002/joe
Global Business and Organizational Excellence
Exhibit 2. Areas of Change Resistance
Resistance Area
Lack of awareness
Comfort with the status quo and
fear of the unknown
Organizational history and culture
Opposition to the new
technologies, requirements and
processes introduced by the
change
Fear of job loss
Description
Lack of awareness about the change, why it is needed, or how it will affect them. Limited
participation, during program design and build phase, or lack of clarity about the new
roles and responsibilities, or limited or untimely communications about the milestones
of the project, leading to confusion and apprehension among stakeholders.
Mature workforce, tend to be complacent and/or entrenched in the current way of doing
business.
Organization’s past performance with change projects influences the employees’
perception of the current change project. A technology project is often seen merely as
the “flavor of the month” and employees expect it go away like those in the past.
Changes may increase the performance requirements and measurement of employees’
work or employees feel the change would not solve the problems they were
experiencing. Lack of motivation or knowledge to take on the revised roles—perceived
resistance from employees to move to a new platform.
Perceiving the change as a threat to job security; apprehensions of end users moving from
highly customized disparate systems/manual set of processes to a unified system.
Source: Cheng & Petrovic-Lazarevic (2004).
inner qualitative or mental change of the organization, which is the key to the successful management
of transformational changes.
Case Studies Point to Common Leadership Traits
The following case studies from a variety of industries reflect technology-enabled business trans-
formations. How leaders managed the change with
respect to performance and culture has been analyzed in order to identify the commonalities of leadership behavior that lead to successful change adoption. The sources of the case studies are given in
Exhibit 4 on page 32. A summary of the findings
is presented in Exhibit 5 on page 33. As the case
Exhibit 3. Management Styles
Journey
Operational Improvement (OI)
Evolutionary Learning (EL)
Programmatic Leadership (PL)
Transformational Leadership (TL)
Global Business and Organizational Excellence
Description
Incremental changes with high degrees of certainty, with narrow financial and operational
targets and a centralized and disciplined approach to change. Our study does not
include this.
Characterized by many of the quality management approaches using the transformational
process success factors of involvement and ownership. Huge efforts are expended to
understand consumer needs and competitive improvements. Uncertainty may exist in
the precise direction of these changes.
A radical shift in outcomes is needed, in both strategy and capabilities, and a planned
and prescribed approach might achieve the fastest result since outcome is certain.
A radical shift in strategy and capabilities in an uncertain world. Leadership needs to own
and understand the whole journey and adjust course wherever required. The leadership
processes and capabilities need alignment to the whole reorganization.
DOI: 10.1002/joe
March/April 2015
31
change co-ordination and control with local ownership, and use of balanced scorecards” (Ruddle,
1999, p. 139).
Exhibit 4. Sources for Case Studies
Case Study
A
B
C
D
E
Sector
Source
Utilities
Health Care
Financial Services
Technology
Manufacturing
Ruddle (1999)
McKinsey (2013)
Padmanabhan (2012)
McKinsey (2011)
Motwani et al. (2005)
studies reveal, transformational leadership and
change management are intertwined.
The leaders faced dissatisfaction in the workforce
and lack of consistent ownership and values across
the company. Early involvement of all stakeholders and consistent and continuous communication were the keys to success for the initiative.
Ruddle (1999) summarized the factors influencing
the successful transformation at the company as
follows:
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Case Study A: Business and Technology Transformation in Utilities
In 1994, the management of a leading water service company in the United Kingdom looked to
business and technology transformation to explore
new ways of working with new customers and
to provide greater commercial focus, flexibility,
and growth. The motivation for this was provided
by the global financial crisis and tighter regulatory price control. As with other transformations,
“there are patterns of sequence such as crisis, exploration, awakening, followed by visioning and engagement with the organization” (Ruddle, 1999,
p. 138).
The transformation resulted in fundamental shifts in
processes, behaviors, ways of working, and the enabling mechanisms of the organization. The change
took more than three years and demonstrated both
emergent and intentional change as it evolved. Contextual issues like politics, governance, and organizational structure influenced success at a number of
points. The leadership team remained largely unchanged. The members’ experience was limited to
single large projects but not of such a massive complex scale. The resulting leadership style “meant
more emphasis on factors such as vision, coaching,
empowering the front line to lead change, balancing
32
March/April 2015
?
?
?
?
?
?
Establishing a business case for readiness to
change;
Having a clear, well-articulated, and owned
strategic intent and vision;
Energetic, involved, and visionary leadership
demonstrated in the top team;
Focusing on customer propositions and the core
processes and capabilities to deliver them;
Ownership of the values outlined throughout the
organization;
Alignment of the enabling factors, particularly reward, performance, and structural mechanisms;
Change style that used high-level outcomes across
a spectrum of balanced measures; and
Exploring and experimenting with new ways
of working to shape intent for success of the
program.
Case Study B: Market-Driven Technology Transformation in Health Care
HCA, one of the world’s leading health care facilities operators, embarked on multiple initiatives
over a period of years to deploy technology solutions to improve health care. Significant projects included establishing a clinical data warehouse and
a big data resource to support predictive modeling. The organization’s leaders also aimed to leverage “size and scale to drive cost efficiencies, using our multi-market positions to test new and
innovative ideas, using our collective operating
DOI: 10.1002/joe
Global Business and Organizational Excellence
Exhibit 5. Summary of Case Studies
Construct
Industry Segment
Scope of Change
Transformation
Type
Top Management
Commitment
Driver for
Transformation
A
B
C
D
E
Utilities
Organization;
phase-wise
Business
Health Care
Organization;
single operation
Business
Financial Services
Organization;
single operation
Technology
Technology
Organization;
phase-wise
Technology
Manufacturing
IT only; phase-wise
Yes
Yes
Yes
Yes
Yes
Industry crisis;
reactive
Merger; proactive
Tap new market;
proactive
Navigation to
leadership
Evolutionary
Leadership to
ownership
Transformational
Technology
change;
proactive
Leadership to
ownership
Programmatic
Technology
Journey
Management
Journal
Management
Style
Stakeholder
Management
Vision Clarity
Integrated
Planning
Navigation to
enablement
Programmatic
Responding to
market changes;
proactive
Leadership to
ownership
Transformational
Yes
Yes
Yes
Yes
Adequate
Yes
Yes
Yes
Yes
Yes
Yes
Improvement
Yes
Relentless Impact
Assessment
Leadership and
Accountability
Aligned
Performance and
Culture
Training and
Awareness
Communication
Yes
Yes
Yes
Big challenge to
align IT and
business
Somewhat
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes, fully
accountable
Yes
Collaborative
innovation
No
Yes, semi-cautious
Yes
Yes
Yes
Yes
Medium to high
intellect to drive best clinical and management
practices across the enterprise” (McKinsey, 2013).
They implemented strategic pilot initiatives to ensure people closest to execution could provide input and solutions based on their collective experience to ensure effective skills transfer and planning.
Specialists met with staff to mentor them and transfer knowledge and staff were trained in proven bestpractice processes.
The significant leadership characteristics identified
from this case study are:
Global Business and Organizational Excellence
?
?
?
Identification of improvement opportunities.
Leadership recognized the opportunities in the
industry.
Rightsizing. The right team, with the right skills
was in place to execute the plan with the abilities to adapt appropriately, when circumstances
changed.
Detailed plan. A clear and detailed operating plan
was in place with appropriate metrics and checkpoints (balancing both short-term and long-term
goals) and was communicated across the organization.
DOI: 10.1002/joe
March/April 2015
33
?
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Alignment of technology with business. The operations team was made an integral part of strategic
planning and development.
CEO’s regular interaction with employees. Relationships with people across all levels ensured better buy-in of a new initiative.
?
Case Study C: Industry-Focused Technology Transformation in Financial Services
As in other parts of the world, the banking sector
in India strongly emphasizes technology and innovation. Initially used to provide support for internal
requirements pertaining to bookkeeping and transactions processing, technology soon enabled banks
to provide better quality services at greater speed.
Internet banking and mobile banking made it possible for customers to access banking services from
anywhere at any time.
The banking sector is an example in which IT infrastructures have had implications for economic development. A customer is now empowered to choose
a service from a range of providers. Customers are
increasingly individualistic and choosy and have
started to demand transactions on their own terms.
The predicted entry of nonbanks in retail banking has made this scenario even more competitive
(Padmanabhan, 2012).
Lenovo’s acquisition of IBM’s PC operations implied
a technology transformation to support the new operating model, spread across 160 countries, and the
need for standardization of operations.
The significant leadership characteristics identified
from this case study are:
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34
Planning for increasing customer-centric products and intensifying competition. This may also
imply a change in strategy for marketing high-
March/April 2015
?
technology products that result in a probable
change in mission and vision in some cases.
Achieving a balance among people, process, and
technology involved in the transformation. “This
may also mean that you have to press the pause
button while engaging the top management once
in a while, for effectively bridging gaps between
the IT and business teams,” said G. Padmanabhan, executive director of Reserve Bank of India,
at a conference of the Institute for Development
& Research in Banking Technology in Hyderabad
(Padmanabhan, 2012). The support of top management for IT was crucial.
Technological transformation leaders drive the
scientific and technological innovation processes
in high-technology industries to improve operations by innovatio …
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