Week 30: Managing Change at Faslane

1. Introduction

In today's competitive environment, it is very important to change according to demand to gain competitive advantage. In general, any organisation goes through transition when there is certain problem in current state of an organisation and want desired outcome in future. Researchers have indicated that the key to sustainability and maintaining excellence is to be agile as well as embrace changes (Mattiske, 2012) Reasons behind change may vary according to the nature and type of organisation. The change process must be managed well because it can harm organisation's operation in long term.

This report is prepared to review the change process obtained by Faslane. Faslane is one of the three operating bases in the United Kingdom for the Royal. It is the home for UK's nuclear submarines that carry trident weapon system. It was established by Ministry of Defence (MOD) but because of poor management from MOD it was handed to Babcock International in 2002. Babcock International had the responsibility to handle transition effectively and improve performance in coming years.

2. Case Study Analysis

The main purpose of this report was to demonstrate my understanding about various strategy models by analysing this case study. The case study has given clear idea about how transition in any company can be handled effectively. Likewise, consequences of smooth transition and strategic change in organisation have been discussed precisely. This report compares the way of management by the MOD and Royal Navy (up to 2001) with when it was run by Babcock International (2002-2010). To show the comparison, different strategic models like, Balogun and Hope Hailey’s Change Kaleidoscope, McKinsey’s Seven S model, Kotter's change steps, balanced scorecard framework and key performance indicators (KPI's) has been used. Likewise, Lynch model and Transcendent leadership style were used to analyse strategic leadership style.

2.1 Intended vs. Emergent Strategy

            Figure 1: Determining Intended and Emergent strategy implementation

(Source: Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 12)

I think the strategic change at Faslane was more of emergent strategy implementation. We can say that they had started with intended strategy because most of the governmental activities are well planned and discussed thoroughly within organization but because of some unexpected challenges they had to change to emergent strategic implementation. Emergent strategy is implemented when there is a desperate need of change throughout the organization. Strategies are developed to resolve existing problems and when line managers fail to implement strategic decisions.

In case of Faslane, after when MOD could not manage the organization efficiently it was handed over to private company Babcock International, this is a major evidence to prove that company is implementing emergent strategy. MOD would have never handed to Babcock if they did not want any change and like stated above if any organization wants change then we can understand that they are going for emergent strategy.

The commodore in charge of Faslane was willing to change. He saw that staffs in Navy were more focused on infrastructure rather than naval activities. He thought partnering would be best to change the mindset of staffs and it would be easy to manage people. Likewise, major issues for transition were to reduce the cost and improve functioning of the organization which could have been achieved only if they adopted emergent strategies.

2.2 Balogun and Hope Hailey's Change Kaleidoscope

Change Kaleidoscope is a model which analyses whether the organization requires any change or not. The kaleidoscope contains an outer ring which shows the features which supports limits or remains neutral during change and inner ring which has implementation options to change agents. There are eight contextual features of change kaleidoscope, which are: (proworkproject.com, 2013).

                                                         Table 1: Features of Change Kaleidoscope

On the basis of above features and questions related to it I have explained the required changes.

• Time

At first when MOD and Babcock International established partnership arrangement they had signed contract for five years. Although company was going through crisis MOD had given long period of time to achieve the goal and was looking forward for long term strategic development.

• Scope

It was important to change overall outlook of an organization for Faslane because stakeholders were not supporting organization at all. Customer ethos didn't feel right, staffs were more focused on buildings and infrastructures rather than looking after Navy, managers were more concerned about spending the budget because if they hadn't spent their budget next year it would be cut. So, I think mindset of every stakeholder had to be changed which would result in change in outlook of organization

• Preservation

Babcock International had understood the state of the company very well and knew what should be preserved and what was unwanted. They understood who they want as allies, like Naval Base Commander, commodore has to manage the relationships with MOD and the Navy Board. Likewise, commodore also had good relationship with stakeholders (national security, local community) so Babcock International did not wanted commodore to go out of organization.

•  Diversity

Babcock International didn't have people who understand how to run a naval base, so MOD transferred people to Babcock who knew about naval base, so people who were transferred from MOD were diversified to work under Babcock management and make them work differently.

• Capability

It seems Faslane as a whole is capable to implement change but only thing missing was good management. Individual staffs needed to change their focus on naval activities rather than on infrastructure of an organization and likewise work on their productivity. Managers must work on utilizing the resources of the company in a better way; they must work on financial aspect, human resource management and motivating staffs. Organisation must work on satisfying their stakeholders and be clear about objectives and goal of the company.

• Capacity

The main objective for Babcock International was reducing the cost and increase operational effectiveness. Babcock was opting for re-engineering. They restructured management system by reducing seven layers to four and management team was downsized to half. Likewise, they had sufficient time (5 years) to complete their objectives.

• Readiness

Staffs were not happy about naval base being handed to private company because of personal disadvantage and there was no perception of a need to save money which led to a forceful outsourcing of workforce to a private company.

• Power

Babcock International and John Howie (managing director from 2002-2006) had all the power to bring change within organization. He is responsible for re-engineering and restructuring of the organisation.

                                                        Figure 2: Change Kaleidoscope of Faslane

2.3 McKinsey's Seven S Framework

The McKinsey 7S Model consists of seven independent factors that are used to measure the quality of the performance of the firm. It involves 3 hard elements and 4 soft elements. Hard element consists of strategy, structure, systems. Soft element consists of Shared values, skills, style and staff. Hard elements are easier to define where they can be easily influenced by the management. Soft elements are hard to define and are influenced by the culture. This model helps to analyze the current situation, a proposed future situation and to find the gaps between them (Boulton.W, 2013).

HARD ELEMENTS

•  Strategy

Up to 2001, strategy opted by MOD was not working which is why they partnered with Babcock International in 2002. Main objective for the Babcock was to reduce the expenses and increase operational effectiveness. Babcock International strategized very well and was able to meet every target and objectives set by MOD.

• Structure

Up to 2001, structure of organization was centralized and bureaucracy was prevailing. Every new elected politician would influence in decision making process. But after when Babcock took over they reduced 7 layers management structure to 4 layers and people who were not willing to change were outsourced to other private companies.

• System

Up to 2001, management was very poor. People were not focused on naval activities and productivity was very less. For example, the timeline for the process of giving review was 14 days everyone looked at it on thirteenth day so overall processes took very long.

From 2002-2010, Babcock brought in people who had already gone through similar type of transition. They were more focused about structures and processes to figure out how they operated and how that could be done differently.

SOFT ELEMENTS

• Skills

Before 2001, Faslane had skilful employees and resources were also abundant but they were not focused and motivated by management about achieving organization's objectives.

From 2002-2010, Babcock brought people who had already gone through similar strategic change but they had no idea about running naval base, then MOD transferred some people who could run naval base. Babcock also outsourced people who were not accepting the change.

• Style

Before 2001, manager was going for bureaucratic style. Decisions made by manager were influenced by politician. It made decision making process tedious and lengthy.

After 2002, Babcock brought different changes in management structures. They were going for a transformational change and made low-level changes upfront because it was easy.

• Staff

Before 2001, 7500 people were working in Faslane but very few were concerned about delivering the services and achieving the goal.

After 2002, number of staffs was downsized to half of what it was before 2001 and staffs are involved in change process and every aspect like attitude, communication and responsiveness of staff has improved.

•  Shared Values

Before 2001, organization was committed to provide quality services to Navy, but due to lack of good management they could not do their best.

After 2002, organization is focused on minimizing the cost, improve operational effectiveness, and motivate employees to bring new ideas, smooth operating of change process and customer satisfaction.

Figure 3: Comparing and contrasting Internal Features of Faslane before 2001 and after 2002.

2.4. Kotter's change steps

After watching the change process of 100 different companies over a decade, John P. Kotter learned the most general lesson that most successful change process goes through a series of phase that, in total, usually require a considerable length of time. A second general lesson is that critical mistakes in any of the phases can have a devastating impact, slowing momentum and opposing hard-won gains (P.Kotter, 1995). Kotter emphasizes that every capable organization or people often make at least one big error.

                                     Figure 4: Kotter's eight steps of transforming organisation

(Source: P.Kotter, J., 1995. Leading Change: Why Transformation Efforts fail. Harvard Business Review

• Establishing a Sense of Urgency

In Faslane case, MOD was not able to establish sense of urgency within organization. Management team from MOD was not able to get maximum output from their staffs. Later when situation was going out of control they made partnership arrangement with Babcock International which helped Faslane get out of trouble.

• Forming a Powerful Guiding Coalition

When MOD knew they could not manage the organization they made partnership arrangement with Babcock International in 2002. Babcock International had set of objectives like reducing cost, increasing operational effectiveness and motivate staffs to focus on naval activities. MOD helped Babcock when they didn't have people who had experience about running naval base.

• Creating a Vision

The main objective set by MOD for Babcock International was to significantly reduce the cost and improve operational effectiveness of their naval base. As per the objectives Babcock developed change strategies which helped them to achieve every set target and objectives.

• Communicating the Vision

Before Babcock came in partnership, MOD was not clear about their vision and could not explain it to their stakeholders. But after partnership, Babcock increased the motivational level of staffs and led them to change process, encouraged every stakeholder to share ideas required for change process. This way they were effectively communicating with every stakeholder and being precise about the vision.

• Empowering Others to Act on the Vision

When Babcock took over the management some staffs were not happy. They did not want any type of change and were focused on personal advantage. They get rid of these staffs and outsourced many to other private companies. Likewise, management structure wasn't right to deliver change so they reduced 7 layers to 4 layers. They have removed shackles from staffs to come up with their own change ideas.

• Planning for and Creating Short-term Wins

Like discussed above main objective of Babcock was to minimize cost, which they were able to achieve. They saved £14 million in the first year against a target of £3 million. Year 2 target was £12 million they delivered £16 million. By the end of year 5 they had delivered around £100 million against their target of £76 million.

• Consolidating Improvements and Producing Still More Change

In 2009, Babcock held "the event in the tent" sessions and nearly 3000 people went through day-long discussions where they allowed expressing their views about the transformation of Naval Base Clyde. Babcock always told their staffs' honest news, which helped them to trust the management. Babcock had got backing from trade unions also and with associated submarines and nuclear training schools together could bring up to 2000 more jobs at the base by 2014.

•  Institutionalizing New Approaches

Babcock was producing a joint business plan with customer. It's not a Babcock Marine business plan or MOD business plan. It's a plan on behalf of Clyde. They were able to achieve all the objectives and have started working with Commodore and his team of directors by the end of 2009.

2.5 Balanced Scorecard Framework

Balanced Score card is used to check how the strategy obtained can be applied throughout the organization. It can be used by managers to make sure whether employees are executing the task properly or not. The scorecard framework for Faslane has been shown in next page.

Balanced Scorecard framework for Faslane:

2.6 Key Performance Indicators (KPI's)

Key Performance Indicators (KPI's)	Cumulative total savings of £100 million achieved in period of 2002 to 2009
	Every performance target exceeded covering volume, speed and quality of service, measured against levels achieved prior to the partnering agreement
	Commitment to continue reducing the cost of the service for every year of the contract
	Producing a joint business plan with the customer
	Home base for nuclear submarines for the entire UK submarines fleet

2.7 Strategic Leadership Style

Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary. A manager with strategic leadership skills exhibits the ability to guide the company through the new competitive landscape by influencing the behaviour, thoughts, and feelings of co-workers, managing through others and successfully processing or making sense of complex, ambiguous information by successfully dealing with change and uncertainty (I. o. C. A. o., 2010).

In Faslane, during 2002 to 2010 they had two managers. From 2002-2006 John Howie was the managing director of Babcock Marine and after 2006 Craig Lockhart came in place of John Howie. Most of strategic change happened during the control of John Howie and Craig Lockhart continued the process to make change successful in Faslane.

Based on research done with 20,000 executives, strategic leaders should have six skills. These six skills are compared with leadership style in Faslane from 2002-2010.

                             Table 2: Qualities and skills presented by leaders during their reign

Faslane change was successful because of re-structuring of management and re-engineering of operation. When John Howie was managing director he involved almost all the employees in change process. He was taking opinions and ideas from employees about change. John Howie took major step by bringing people who had already dealt with similar type of change before and outsourced who were not accepting to change.

Let's compare the Babcock management leadership style with the five elements of Successful and Effective Strategic Leadership model (Lynch Model). This model has been used to analyse Faslane case also which is discussed below.

            Figure 5: Five elements of Successful and Effective Strategic Leadership model (Lynch Model)

                (Source: Lynch, R., (2009) Strategic Management, 5th Edition, Prentice Hall, chapter 16, pp 619)

•   Developing and communicating organization purpose

Any leader must have a clear view or must understand the organization purpose and make employees work for it. At Faslane, the main purpose of the organization was to reduce the cost and to improve the operational effectiveness of their nasal base. The managing director was able to communicate with his staffs precisely which is why every objectives and targets were achieved.

• Sustaining competitive advantage over time

Leaders are responsible to preserve organization's best aspects. At Faslane, leader's ability to guide organization to achieve every target and objectives was their competitive advantage. There achievement made the Faslane the home base not just for nuclear submarine but for the entire UK submarines fleet.

• Managing Human Resources and Organisational decisions

Leader is someone who knows his employee's key talents and manages them properly. Decision making skill is must for any leader. Babcock management team changed the hierarchy and structure of company, reappointed the jobs and reduced management team to half. Likewise, decision making process of employees was enhanced by reducing the review period to 2 days from 14 days which overall helped to bring operational effectiveness.

•  Setting Ethical Standards

Every leader must maintain ethics and monitor whether people around organisation are following ethical standards or not. At Faslane, managing director was able to reduce the overall cost of the organisation and led staffs to change their mindset. There was no any ethical standards before Babcock over took management, staffs were not focusing on naval activities and being government organisation it was unethical to spend tax payer's money.

• Defining and Delivering to Stakeholders

Leader must work closely with its stakeholders and maintain good relationship. At Faslane, managing director was able to understand what their stakeholders wanted. They maintained good relation with Naval Base Commander, national security people and local communities because they knew their importance for their success.

Transcendent Leadership Model

Transcendent Leadership Model allows leaders to motivate and empower his or her followers. Transcendent leadership provides an innovative way of looking human interaction in organisational settings. This model analyses all the aspects of organisation. The model focuses on three main areas which are discussed below.

                                              Figure 6: Traits of Transcendent leaders

(Source: Crossan, M., Vera, D and Nanjad, L. (2008) Transcendent Leadership: strategic leadership in dynamic environments, The Leadership Quarterly, Volume 19, Issue 5, October 2008, Pages 569-581)

•  Leadership of self

In transcendent leadership model, leader must understand own self, he must be self aware and develop human resource strengths that can improve organisation performance. At Faslane, John Howie was aware of what he was doing and about his staff's perception towards naval base. He was able to change staffs mindset and make them focused towards achieving objectives.

•  Leadership of Organisation

It focuses on the non human elements of an organisation. At Faslane, John Howie was concerned towards changing strategy, structure, rules, and procedures. He led the re- structuring of management levels and teams likewise, was involved in reengineering of procedures of collecting review points. The main strategy of reducing cost and improving organisational effectiveness fulfilled within given time frame.

•  Leadership of Others

It is important to maintain good relation with stakeholders or followers. John Howie had good relation with most of the stakeholders' like the commodore, MOD, naval board and local community. Likewise encouraging staffs' to share ideas relating to change and motivating them to focus on naval activities. He was also able to eradicate bureaucratic style of leadership within organisation.

 3. Conclusion and Findings

After using different change analysis tool, it is clear that Faslane has gone through a smooth transition and change strategy implementation was successful. The drastic transformation of Faslane was possible due to good leadership from John Howie. He efficiently changed the organisation by changing people, processes and systems. His attempt for downsizing, restructuring and reengineering helped to achieve all the targets and objectives set by MOD.

With the completion of the report and extensive appliance of different analysis tools, I have come out with some findings which made Faslane change process successful, it is listed below:

• Coordination was major factor for smooth transition, Howie was able to make people do right things at the right time.
• Changing the perception of people to do things at lowest cost
• Communicating plans to every stakeholders
• Restructuring of management levels and downsizing the staffs
• Change in methods and skills to enhance performance
• Improving overall productivity of staffs
• Reengineering of processes

It was very important for Faslane to implement change because MOD was unable to reduce the performance gap and I think MOD made a good decision to partner with private sector company to implement change. It is very important to hold the competitive advantage in such a rapidly changing business environment. And with Babcock International partnering with MOD to manage Faslane will hopefully continue to bring success forever.

 4. References

Boulton.W,2013. auburn university [Online] 

Available at: http://www.auburn.edu/~boultwr/html/strategic_analysis_model.htm [Accessed 2013].

·    Crossan, M., Vera, D and Nanjad, L. (2008) Transcendent Leadership: strategic leadership in dynamic environments, The Leadership Quarterly, Volume 19, Issue 5, October 2008, Pages 569-581

·         Hope Hailey V, Balogun,J., (2002), 'Devising context sensitive approaches to change: the example of Glaxo Wellcome.', Long Range Planning, 35(2), p.153-178

·         India, I. o. C. A. o., 2010. Strategic Management. New Delhi: Sahitya Bhawan Publications.

·         Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 5

·         Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 13

·         Kaplan & Norton. (1996), The Balanced Scorecard. Harvard Business School:9, p.76

·         Lynch, R., (2009) Strategic Management, 5th Edition, Prentice Hall, chapter 16, pp 619

·         Mattiske, C. (2012). Managing Organizational Change. AudioInk. NHS Confederation: The challenges of leadership in the NHS.

·         Operational effectiveness at HM Naval Base Clyde-August 2009 (2009) Babcock International Group PLC.

·         P.Kotter, J., 1995. Leading Change: Why Transformation Efforts fail. Harvard Business Review, p. 59.

·         pro, N., 2013. Balanced Score card Kenya. [Online]
Available at: http://balancedscorecardkenya.com/why-balanced-scorecard/
[Accessed 2013].

·         Schoemaker. P., Krupp, S., and Howland, S. (2013) Strategic Leadership: The Essential Skills, Harvard Business Review, January-February, pp131-134.

·