SBL Notes

Sir Hasan Dossani – VIFHE

Chapter 3 -
Innovation, Performance & Change Mgt
Process Improvement & Strategy
Terminologies
Business Process Automation: Manual tasks are automated using machinery or IT

Business Process Rationalization: Already automated tasks are further improved by using latest machinery
or IT. This is part of continuous improvement strategy

Business Process Re-Engineering: Fundamental rethinking and radical redesigning of processes in order to
achieve dramatic results. BPR adopts a ‘clean sheet’ approach whereby the entire process is redesigned
from scratch. - fundamental rethinking - questioning the logic of whole process (why we do this)
- radical redesign - completely restructuring workflows, removing unnecessary steps,
combining tasks, using technology to automate or simplify steps.

Common Problems in Processes

Problems Solutions

▪ Lengthy ▪ Removing unnecessary activities

▪ Some activities unnecessary ▪ Combining activities or roles
▪ Duplication ▪ Changing order of activities in logical flow
▪ Some activities missing ▪ Allocating activities to right department or
▪ Activities in wrong order person

▪ Activities being performed by a wrong ▪ Outsourcing

department or person ▪ Automation

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Sir Hasan Dossani – VIFHE

Harmon’s Process Strategy Matrix

Process High B D
Complexity
Low A C
Low High
Strategic Importance
LOW PROCESS COMPLEXIT Y, LOW STRATEGIC IMPORTANCE

A: Simple / straight forward process but not contributing to company’s core strategy
Strategy: Simple automation using off-the-shelf softwares or outsource (e.g. payroll, office cleaning)

HIGH PROCESS COMPLEXIT Y, LOW STRATEGIC IMPORTANCE

B: Complex process but not contributing to company’s core strategy. Hard to automate.
Strategy: Outsource to a specialist vendor (e.g. taxes, legal)

LOW PROCESS COMPLEXIT Y, HIGH STRATEGIC IMPORTANCE

C: Simple process but important to company’s core strategy

Strategy: Automate or Rationalize in order to increase quality, efficiency and reduce cost (e.g. order
processing system)

HIGH PROCESS COMPLEXIT Y, HIGH STRATEGIC IMPORTANCE

D: Complex, high value process which generates competitive advantage for the organization
Strategy: Careful process designing, employee best experts, best IT solution, etc. (e.g. research and
product development, marketing)

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Projects
▪ Project: a one-off non-routine activity that has a
 Beginning and end
 Clear objectives
 Within time, cost and quality

▪ Project Management: Structure, responsibilities, activities, resources used to control projects

▪ Triple Constraints in Project (PROJECT TRIANGLE)

A project has to the following three aspects at all times:
 Quality
 Timeline
 Cost

▪ Project Stakeholders: people, departments or external parties either involved in the project OR effected
by the project. It includes internal as well as external stakeholders such as:
 Project sponsor
 Project manager
 Project team
 Users / concerned department (s)
 Customers
 Suppliers
 Government
 Society / community

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Project Lifecycle
Project lifecycle is all the stages through which a project passes from start till end.

1. PROJECT INITIATION
This stage covers basic information to enable the Board to approve or reject the proposed project. It
includes the following:
▪ Scope and objective
APPROVAL PHASE
▪ Cost and benefit analysis
▪ Key stakeholders (e.g. project sponsor, project manager, project team, users, etc.)
▪ Project duration / timelines
▪ Risks and constraints
▪ Feasibility, investment appraisal techniques, etc.
▪ Documents used in this phase:
 Project Initiation Document / Business Case
 Project charter
 Benefit realization plan

Project Initiation Document (PID) / Business Case

A PID is a document which details the justification of the project. It documents all the aspects mentioned in the
Project Initiation phase (mentioned in above section) and serves as a formal document for senior management
/ Board to assess the merits and demerits of the proposed project and take a decision.

Advantages / Importance of a PID

▪ Projects involves initial costs / investments, hence a detailed analysis is important
▪ Enables the Board to review the proposal and decide whether project is beneficial for Organization
▪ It helps in monitoring the progress of the project
▪ It helps is measuring the success of the project once it is completed
▪ Forces sponsor to “think hard” and be realistic as he/she would be held accountable
▪ In case of limited funds, enables comparison with other project options

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Sir Hasan Dossani – VIFHE

Contents of a PID
▪ Current situation or problem
▪ Project scope and objective
▪ Cost and Benefit Analysis
▪ Key stakeholders:

 Project sponsor  Customers

 Project manager  Suppliers
 Project team  Government
 User or concerned department(s)  Society / community

▪ Project duration / timelines

▪ Risks (e.g. quality, timeline, costs)
▪ Constraints (e.g. human resource / expertise, financial resource, technical resource)
▪ Feasibilities, investment appraisals, etc.
▪ Major assumptions made
▪ Project monitoring and reporting procedures

Project Charter
A Project Charter is a formal approval of the business case and gives authorization for the work to be started
and allocation of funds and resources to be made. It is signed-off by all key stake holders of the project, based
on the Project Initiation Document.

Benefit Realization Plan

The Project Initiation Document contains cost and benefits analysis of the project. It is relatively easier to
predict costs by very difficult to predict benefits. Benefit Realization Plan shows how the benefits have been
calculated, including all major assumptions. It is a supporting document to the CBA and attached as Annexure
to PID. Benefit Realization Plan is the key document which will be used to measure the actual benefits, once
the project is completed.

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2. PLANNING
Once the project is approved by the Board, detailed / technical planning is done in order to execute the
project. It includes the following:
DETAILED PLANNING
▪ Detailed planning for all activities within the project
▪ Project is broken down into many tasks and then detailed planning is done for each task, covering
resources, costs, quality, risks, timing, duration, etc.
▪ Document used in this phase: PROJECT PLAN

Project Plan
A project plan is a document which contains detailed planning about the project, covering resources, timing,
costs, risks, duration, etc. The project is broken down into many tasks and then detailed planning is done for
each task. Detailed project planning is normally done once the Business case is approved.

Importance of a Project Plan

▪ Analyzes in detail what needs to be done
▪ Responsibilities, timelines and budgets are allocated to each person
▪ Acts as a communication and controlling tool
▪ Helps in overall coordination of the project
▪ Focuses on action and outcomes
▪ Sets targets and KPIs at each stage so that actual progress can be monitored

Contents of a Project Plan

▪ Overview of the project (summarized from the business case)
▪ Project management and resources (how proj will be monitored, team, reports, committees, etc)
▪ Detailed plan
▪ Targets and milestones alongwith evaluation KPIs to monitor progress
▪ Risk management
▪ Post project exit plans

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Sir Hasan Dossani – VIFHE

3. EXECUTION & CONTROL

This stage is the execution or implementation phase of the project, based on Project Plan:

▪ Regular meetings are held

EXECUTION PHASE
▪ Work progress is monitored against Project Plan
▪ Project delays and issues are addressed timely
▪ Document used in this phase: PROGRESS REPORT

4. COMPLETION
This stage covers the handing over process, user feedbacks as well as assessment whether the project
objectives were met or not. It includes:

▪ Training of users
▪ Testing by users
▪ Formal handing over / sign off procedures
▪ Taking feedback from users
▪ Assessment whether project objectives are met or not
▪ Documents used in this phase:
 Post Project Review
 Post Implementation Review
 Benefit Realization Review (covered above)

Post-Project Review (PPR)

A PPR is conducted immediately after the project is finished. It focuses on how the project was managed (and
not on the product or outcome from the project). It reviews the performance of the project manager and the
project team. It covers mistakes made in the project management process, which will then be rectified in
future projects. E.g. includes poor cost estimation, project delays, lack of resources etc.

Post Implementation Review (PIR)

A PIR is conducted after few weeks or months of implementation and analyzes the end product or outcome of
the project. It assesses whether the desired product or outcome has been achieved or not. It covers errors in
the ultimate product or outcome, which will then be rectified in future projects of similar nature. E.g. the new
website is working fine.

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Sir Hasan Dossani – VIFHE

Difference between a PIR and a Benefit Realization Review is that a PIR focuses on the product or outcome of
the project whereas Benefit Realization Review focuses more on the financial benefits as a result of that
project. E.g. if the project was to design and implement an online e-commerce website, a successful launch of a
good quality website will be covered under PIR and whether the increases sales revenue are achieved or not
will be covered under Benefit Realization Plan.

Benefit Realization Review

▪ Benefit Realization Review (or Analysis) is done after the project has been completed and actual benefits
have started to realize.
▪ It compares the actual benefits with the expected benefits mentioned in the Project Initiation Document
▪ One of the primary advantages of a Benefit Realization Review is that it will force the project sponsor to
be very careful when quantifying the benefits in the Project Initiation Document, as actual benefits will
be compared with the expected benefits

Cost Benefit Analysis

Benefits
▪ ALL possible benefits should be considered in the business case
▪ Each benefit should be converted into financial terms so that accurate return on investment can be
analyzed
▪ Some benefits may not be quantifiable in financial terms. However, they should be quantified and
measured in some way.

Types of Benefits
▪ Observable Benefits:
These are intangible benefits which cannot be quantified in financial terms, e.g. improvement in staff
morale. These should not be part of cost benefit analysis and can only be included under ‘qualitative’
benefits if important.

▪ Measurable Benefits:
These benefits are measurable but it is difficult to predict by how much they will increase once the
project is completed. For e.g. by how much market share will increase if company implements an online
ecommerce website? These benefits involve high degree of assumptions or estimations.

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▪ Quantifiable Benefits:
These benefits are relatively easy to predict by how much they will increase once the project is
completed. For e.g. by how much wastages will reduce if a new machine is installed.

▪ Financial Benefits:
Once the measurable and quantifiable benefits are quantified, it becomes easy to convert them into
financials. (e.g. increase in sales revenue as a result of increase in sales volume)

Costs
ALL direct and relevant costs should be considered in the business case, including:

▪ Capital / one-time costs

▪ Operational / recurring costs

However sunk costs should not be included.

Investment Appraisals
Once all costs and benefits of the project have been listed, then these are compared to see if the investment in
project is financially beneficial (investment appraisal). In a typical project, there would be substantial cash
outflow in the start in anticipation of long-term cash inflows. Hence careful investment appraisal is done as
huge amounts are involved and it becomes difficult to pull out in the middle.

Following are commonly used investment appraisal techniques:

▪ Payback period
▪ Accounting Rate of Return
▪ Discounted Cash Flows:
 Net Present Value (NPV)
 Internal Rate of Return (IRR)

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Sir Hasan Dossani – VIFHE

Steps for a Successful Project

▪ Formal Project Initiation Document duly approved by the Board
▪ Detailed planning for each task:
 Quality
 Timeline
 Cost
▪ Execution and timely problem solving
▪ Regular project monitoring and reporting
▪ User testing and acceptance
▪ Post project review
▪ Post implementation review

Project Stakeholders
Project Sponsor
Project sponsor is normally a senior person from the management team, responsible for the successful
outcomes of the project. He is the person who will gain the most from the success of the project and who will
lose the most if the project is a failure. He is the person who had initially requested the Board to approve the
project.

Role of a Project Sponsor:

▪ Provide strategic leadership
▪ Arrange all resources required by the project
▪ Monitor the progress of the project
▪ Review the performance of the project manager
▪ Take key decisions
▪ Address issues and constraints which project faces
▪ Report to the Board

Project Manager
Project manager is the person responsible for the entire project and all its activities. i.e. it is his job to ensure
that the project is completed on time, budget and quality

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Sir Hasan Dossani – VIFHE

Role of a Project Manager:

Planning, resources, team building, communication, coordination, monitoring and control, problem solving,
etc.

Skills require from a Project Manager:

Technical skills, leadership skills, team management skills, monitoring skills, personal qualities, problem solving
skills, communication skills, etc.

Project Management Software

▪ Project management softwares automates all the manual tasks of the project manager, such as planning,
graphs, budget monitoring, progress report, etc.
▪ It can be used in planning, estimating, monitoring and reporting aspects
▪ Advantages: Speed, accuracy, documentation, analysis, faster modifications, reporting
▪ E.g. Microsoft Project

Dealing with project slippage / delays

▪ Add more resources (e.g. add one extra labour shift)
▪ Work faster (e.g. existing team works extra, such as overtime / weekends or we can use automation and
technology to speed up things)
▪ Reschedule the deadline (e.g. revise the go-live date)
▪ Change design specification (e.g. implement in phases, important items are delivered on time and rest of
the items are delivered later)
▪ Do nothing (might result in penalty or loss of market goodwill)

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Context of Change - Balogun & Hope Hailey

▪ Scope:
What is the size of the change – is it a small change (realignment) or a big change (transformation) in light
of the organization culture, current business model or core business strategy

▪ Reason: The reason / justification for bringing a change should be clear, i.e. why the change is being made
and what will be the benefits

▪ Time: How quickly the change is needed? How much time is available to implement the change? Is there
any urgency to implement this change (Big Bang) or can it be implemented gradually (Incremental)

▪ Capacity / Resources: What kind of resources is required to implement the change. It includes financial
resources, manpower, technology, etc.

▪ Capability: Do we have expertise for ‘change management’, i.e. expertise to manage and implement the
change, e.g. past experience of various change projects, change agent

▪ Preservation: Strengths from ‘existing environment’ needs to be retained in future as well

▪ Power: How much power does the change leader has. It also involves in identifying people in the
organization who has the ‘real’ power to affect to the change

▪ Diversification: is there diversity (variety) of experience or strategy in the ‘current environment’? Change
will be difficult to implement (hampered) if the organization has been perusing the same strategy for years

▪ Readiness: Are the employees ready to accept the change or will there be significant resistance

▪ Resistance: Who will be the people or stake holders who will resist the change, reason for resistance, how
you would handle those people / stake holders

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Sir Hasan Dossani – VIFHE

Types of Change – JS&W Model

Nature of
Incremental Adaptation Evolution
change
(Speed Of
Change)
Big Bang Reconstruction Revolution

Realignment Transformational

Scope of Change
(Size Of Change)
As compared to existing culture, business model or
core business strategy)

▪ Adaptation: most common, step-by-step gradual speed of change, small size of changes (reallignment)

▪ Evolution: new mindset, re-engineering, step-by-step gradual speed of change, (transformational) size of changes

▪ Reconstruction: rapid and extensive faster speed of change (big bang) and small size of change (reallignment)

▪ Revolution: in case of extreme crisis, very obvious faster speed of change (big bang), transformational size of change

3 Stage Change Model – Kurt Lewin

1. UNFREEZE: convince staff and create motivation

2. CHANGE: implement the new system or process or new change

3. REFREEZE: ensuring that new system or process or new change is now part of the routine through
reinforcement techniques, such as rewards, appreciation, monitoring, etc.

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Sir Hasan Dossani – VIFHE

Organizational Structures
Types of Structure
▪ Functional structure (departments)
 Disadvantage: creates “Silo” effect i.e. each department focuses on their own performance /
objectives and does not coordinate with other departments
▪ Divisional structure (divisions and then departments)
▪ Tall / Flat structure (span of control, i.e. number of subordinates reporting to you)
▪ Matrix / Transnational (see below)

Matrix Structure
▪ Used where there are multiple branches / offices (either in same country or across countries i.e.
multinationals)
▪ Matrix structure develops cross functional coordination
▪ Matrix structure means an employee has two bosses (dual reporting)
▪ Primary reporting (e.g. to functional head such as CFO)
▪ Secondary / dotted reporting (e.g. to administrative head such as branch manager)
▪ Advantages:
▪ Availability of functional expertise and guidance at branches employees can get guidance from experts,

hence improving the quality of decisions.

▪ Cross functional coordination and communication between multiple branches / offices

▪ Disadvantages: faster flow of information and more consistency.

▪ Dual bosses / chain of command

▪ Conflict between bosses
▪ Slow decision making

Choosing appropriate structure depends on functional structure is the most centralised.

▪ Level of control required if tight monitoring and central control is needed - more centralized structure is suitable.

▪ Quality of the team highly skilled and experienced teams can work in more decentralised structures.

▪ Speed of decision making required decision making is faster in flatter and decentralised strcutures.

▪ Accountability increased responsibility, less confusion and more accountability in functional or divisional or tall

structures.
▪ Flexibility
if the environments changes more frequently, flexible structures like matrix structures are better.

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Internal Relationships
▪ Centralization
▪ Advantages: control, standardization, lower overheads, strong leadership
▪ De-centralization
▪ Advantages: local knowledge, flexibility, speed, higher accountability, reduces workload at
corporate level

Stereological Configurations - Mintzberg

Simple / Entrepreneurial Structure
▪ Structure with one man show (normally owner managed business)
▪ Direct supervision by owner who manages almost all aspects of the business
▪ Informal structure with few staff
▪ No significant middle line hierarchy
▪ Suitable for small organization

Machine Bureaucracy highly centralized and rule driven organisation

▪ Formal procedures
▪ Strict hierarchy
▪ Standardized work processes through technology
▪ Suitable for simple and repetitive task environment

Professional Bureaucracy
▪ Standardized skills of individuals (e.g. doctors, lawyers)
▪ Suitable for service-oriented organizations

Divisional Form
▪ Standardized outputs (of divisions)
▪ Gives autonomy (i.e. independence) to middle level management to run their own divisions

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Sir Hasan Dossani – VIFHE

Adhocracy
▪ No standardized processes
▪ Complex and disorderly
▪ E.g. project based teams, etc.
▪ Suitable for research and innovations

Missionary Organizations
▪ Standardized ideology
▪ E.g. NGOs

Talent Management
Talent management means to identify, recruit, engage, retain, and develop the most talented and superior
employees within by the organisation. Key elements of talent management include:

▪ Human resources are seen as a unique resource providing competitive advantage

▪ Recruitment
▪ Effective performance management and appraisal systems are in place
▪ Reward management
▪ High performers are appreciated and rewarded handsomely
▪ Training and development is seen as an investment, not a cost
▪ Retention strategies are in place
▪ Career path and succession planning is done
▪ International growth and exposure are provided

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Sir Hasan Dossani – VIFHE

Working Models for Organizations

Outsourcing
Outsourcing means getting things done through 3rd party supplier, instead of doing it yourself

Advantages Disadvantages
▪ Getting specialized expertise ▪ Dependency on 3rd party
▪ Org can focus on its core activities ▪ Loss of direct control
▪ Cheaper ▪ Confidentiality issues
▪ Ease of budgeting ▪ Poor service / quality
▪ Reduces fixed overheads ▪ Chances of disputes

Shared Services
Shared services refer to the centralization of back office / support functions at one location, which were
previously carried out by each business unit independently. Common shared services functions includes IT,
finance, admin, procurement, HR, legal, etc.

Unlike outsourcing, shared services are carried out within the organization and will not require the use of a
third party. The shared service is treated as a separate business unit and its services are charged to other
business units at arm’s length prices. It will have its own targets to achieve and will be expected to produce
continuous improvements.
resistance coz individual business units will
Advantages Disadvantages loose control over their support functions.

▪ Cost savings / economies of scale ▪ High resistance by individual business units

▪ Better quality and standardization ▪ Redundancies
▪ All talent under one roof ▪ Difficult to standardized all business units
▪ Easier to implement any change ▪ Local requirements and laws still needs to be
complied with

different business units may have different

customer bases, different processes, hence

difficult to standardize.

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Sir Hasan Dossani – VIFHE

Collaborative Working / Boundaryless Organizations / Business Partnerships

Collaborative working is an extension of the idea of outsourcing. Due to internet / online technologies,
organizations are now able to work together more than ever before for e.g. organizations are working more
closely with their customers and suppliers.

Collaborative working is when two or more organizations work together in a variety of ways, such as JIT,
strategic alliance, joint ventures, networking, joint projects, sharing of resources, etc. It could be a one-off
arrangement or it could be a long-term permanent arrangement.

For e.g. [Link]: it only manages online website and e-marketing and heavily relies on various vendors,
courier companies, credit card company, etc. to deliver rest of the customer experience. The customer feels
that he/she is dealing with one organization but in reality, several organization are collaborating behind the
scene.

Advantages Disadvantages
▪ Sharing of expertise and resources ▪ High dependency on each other
▪ Synergies ▪ Conflict of interest
▪ One stop solution for customers ▪ Weak partner may affect all

Disruptive Technologies
Disruptive technology means when technology is used to create a new market or value network and ‘disrupt’
the existing / traditional / physical business model in an Industry, displacing the established market leaders and
alliances. E.g. includes Uber, Netflix, Airbnb, Block Chain, Crypto currencies, etc.

FINTECH: one of the fastest growth sector in disruptive is financial services. Financial Technology (known as
Fintech) is disrupting the traditional banking industry dominated by giant banks. Fintech provides investment
advices, portfolio management, mortgages, exchange currencies, make payments.

Advantages of Disruptive Technologies:

▪ Seamless customer experience
▪ Better use of data
▪ More personalized products and services
▪ Cheaper
▪ Global reach

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Sir Hasan Dossani – VIFHE

POPIT – Four View Model

In the past, many change initiatives have failed as they only focused on technical aspects of the project. POP-IT
model suggests that for any change project to be successful, the following four elements needs to be
considered. The use of POP-IT model forces the project team to take a more holistic (wider) view of the
business change, identifying those issues which may hinder the success of the project.

Organization: Information & Technology:

are

- Existing Business model sufficient - Hardware & software systems have appropriate

to support IT structure for the

- Existing organizational structure the change. - Technological infrastructure change.

- Resources required for the change. - Information management (MIS)

Process: People:
open and supportive culture, not rigid.
- Existing business processes - Culture
to implement the whether they appropriate skills for the change
- What changes are required - Skills and competencies of employees
change.
that will follow are considered.
- Value chain BPR - business process - Change in roles and job descriptions
re engineering (radical redesign)
what new skills employees need for the
- Process automation, rationalization and BPR - Training needs change.

review all activities to determine , - Communication clearly explaining to employees why

which steps add value, which are change is happening, benefits it will

redundant and how will the chnage bring, how it will affect their roles.

imoact each stage of the value chain. change fails if people are not ready or trained properly.

identifies opprtunities to automate steps, further automate already automated steps and

radically redesigning existing business processes to achieve significant improvements.

Multi Dimensional Performance Analysis

Balance Scorecard – Kaplan and Nortan
The balance scorecard suggests that organization should analyse performance from four perspectives:

▪ Financial: whether org is achieving its financial targets and shareholder needs e.g. ROCE, ROI

▪ Customer: whether org is meeting customer needs e.g. customer satisfaction, feedbacks, complaints

▪ Innovation: whether org is continuing to improve and develop e.g. research, innovation, training

▪ Business Process: whether internal processes are efficient and employees are motivated

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Sir Hasan Dossani – VIFHE

Performance Excellence Model – Baldrige

The Baldrige model assesses and organisation across seven categories:

▪ Leadership: how organization’s leadership governs and motivates

▪ Strategy: how strategies are made, implemented and monitored

▪ Customers: building long lasting relationships with customers and meeting their expectations

▪ Workforce: how organization enables and empowers its employees, skilled, motivated, high
performance

▪ Operations: effectiveness and efficiency of processes and its continuous improvement

▪ Measurement, Analysis & Knowledge Management: how performance is monitored, data is

analyzed, knowledge is shared

▪ Results: performance of the organization relative to its competitors

Practice Questions
P3 – Dec 2009 Q3: Project Management | Harmon Process Strategy (Lowland Bank)
P3 – Dec 2010 Q1B: Contextual Features of Change (Shoal Plc)
P3 – Dec 2011 Q3: Post Project Review and Post Implementation Review (Home Deliver)P3 – Mar/Jun
2017 Q4: Harmon | Off the Shelf S/W (Deeland Housing)

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