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Institutional Architectures to Improve Systems Operations and Management (2012)

Chapter: Chapter 3 - Theory on Process-Related Organizations and Change Management

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Suggested Citation:"Chapter 3 - Theory on Process-Related Organizations and Change Management." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Suggested Citation:"Chapter 3 - Theory on Process-Related Organizations and Change Management." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Suggested Citation:"Chapter 3 - Theory on Process-Related Organizations and Change Management." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
×
Page 28
Page 29
Suggested Citation:"Chapter 3 - Theory on Process-Related Organizations and Change Management." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
×
Page 29
Page 30
Suggested Citation:"Chapter 3 - Theory on Process-Related Organizations and Change Management." National Academies of Sciences, Engineering, and Medicine. 2012. Institutional Architectures to Improve Systems Operations and Management. Washington, DC: The National Academies Press. doi: 10.17226/14512.
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Page 30

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26 In this chapter, the contributions from organizational devel- opment theory and change management in the private sector are described for a better understanding of institutions with a real-time operational orientation and to establish a frame- work for change management. There are two key challenges in the development of guid- ance regarding institutional architecture: • Identifying the relationship between effective programs and the process and institutional characteristics that are more versus less supportive; and • Structuring an approach to incremental institutional change based on identification of key change elements and a process to manage the change. As a background to the analysis and related guidance devel- opment, a survey of previous research, in both the transpor- tation and the organizational development literature, was undertaken. From this review, potential contributions from theory and practice were identified in the form of characteris- tics of service versus product organizations. Previous Institutional Research Within the Transportation Arena The unique requirements of SO&M were first recognized within the National ITS Architecture created in the early 1990s, which introduced a framework consisting of three layers: transportation, communications, and institutional. The trans- portation and communications layers are technical layers in which the actual ITS architecture components reside. Most of the earlier efforts with an institutional focus were concerned with barriers to ITS technology-intensive project implementa- tion at a time when the technology itself was a major challenge to staff capacities. Relationships Between Business Processes and Institutional Architecture That “institutional issues pose more of a challenge than tech- nical ones” (DeBlasio, 1994) has been expressed in various studies regarding SO&M. However, the content of this com- mon observation has received only modest investigation and analysis. There have been few systematic analyses of trans- portation agencies—including state DOTs—that looked broadly at the relationships among programs, processes, and institutions. Nevertheless, guidance for the improvement of institutional architecture in support of improved business process and program effectiveness requires the develop- ment of an analytic framework for institutional architecture that highlights considerations relevant to incorporating an operations-oriented function into a capital project develop- ment institutional legacy. While there has been considerable attention to specific business processes (such as systems engineering, procure- ment, and planning), a framework to address the connections among specific processes and institutional elements on a sys- tematic basis has received only modest attention. This layer is recognized in the formal ITS architecture as the “nontechni- cal” layer and designated for policies, funding incentives, working arrangements, and jurisdictional structures that include planning for operations and associated collabora- tions (U.S. Department of Transportation, FHWA, 2009d). After the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), USDOT sponsored a set of investigations of these nontechnical project development barriers in federally funded operational tests and models deployment initiatives. The issues were first addressed in a broad state-DOT context in The Changing State DOT (Lockwood, 1998). The Intelligent Transportation Primer also includes a chapter by Lockwood— The Institutional Challenge: An Aggressive View—that addresses institutional issues (Lockwood, 2000b). At the same time, a set of Case Studies in Project Planning and C H A P T E R 3 Theory on Process-Related Organizations and Change Management

Development, developed for FHWA, identified key potential barriers to deployment, including awareness, operations and maintenance burdens, multijurisdictional coordination, staff technical capacity, and public–private partnership issues (U.S. Department of Transportation, FHWA, 2000). An NCHRP report, Incorporating ITS into the Transportation Planning Process (Mitretek and PB Consult, Inc., 2002), was the first comprehensive attempt to look at the need for insti- tutional change. Other publications at this time also addressed specific institutional issues (Berman et al., 2005; Briggs and Jasper, 2001; Gifford, 2003; Horan, 2002; Hyman et al., 2000; Pois- ter, 2004; Sussman, 2005). The cultural dimension of institu- tional characteristics has also been addressed in the article Systems Management and Operations: A Culture Shock (Lockwood, 2005b). Most recently, FHWA’s joint program between the Office of Operations and Office of Planning has focused on arrangements in the form of agreements and organizational structures both within and among transporta- tion agencies, largely in metropolitan areas, as presented in Regional Transportation Operations Collaboration and Coor- dination: A Primer for Working Together to Improve Trans- portation Safety, Reliability, and Security (U.S. Department of Transportation, FHWA, 2002b). Change Management Process Development A separate stream of research has focused on change manage- ment processes in SO&M-related areas. The concept of orga- nizational self-evaluation is well established in the highway arena. FHWA and ITE have sponsored substantial self- evaluation efforts related to incident management, traffic operations and emergency management. By the structure of the evaluation questions, these efforts implied the direction of positive change regarding those activities. AASHTO’s The 21st Century Operations-Oriented State DOT (Lockwood, 2006) and the Guide for Emergency Transportation Operations (Lockwood, 2005a) took a broader, if less detailed, approach— using the concept of self-evaluation and incremental improve- ment, combining several processes and institutional elements. Private-Sector Contributions to Organizational Theory and Process Management Given the modest contribution to identifying institutional architecture relevant to SO&M in the transportation litera- ture, a survey of the organizational development field was undertaken to identify concepts and frameworks that might be relevant to identifying key issues that distinguish service entities (with an operations focus) from product entities (with a project focus). Relationships Between Service versus Product Organizations and Institutional Architecture Most of the existing organizational development literature and case studies relate to private-sector experience with success measured in commercial terms. Therefore, as part of this proj- ect, the differences in characteristics of product-oriented (such as traditional state DOTs) and service-driven (operations) organizations were identified. The purpose of this analysis is to learn from service entities and the institutional characteristics (cultural, leadership, organization, and resource) that differen- tiate the two—as an analogy to the transition that is implied from a product-oriented highway agency to one with a cus- tomer service orientation as per SO&M. Table 3.1 summarizes the differences observed in the private sector between product and service providers. The observations in the private sector appear to accord well with the differences between the legacy context within trans- portation agencies, focused on the capital program, and many of the features observed in such agencies with a greater SO&M orientation. These characteristics provide focus for identifying the key components of transportation agencies that must be addressed. There are important differences between the product- versus service-oriented entities—some of which are reflected in the transportation literature as well. These include the following: • The focus on time (performance) as a feature of service based on outcomes; • The horizontal organization implied by the need to inte- grate several processes; • The importance of close-to-the-service decision making for service provision in a dynamic context; • The need for a flat organizational structure for greater on-the-spot discretion; • The focus on the service customer and accountability; • The need for knowledge sharing; and • An incremental approach. These characteristics supported the development of the key business process and institutional issues to be included in the survey and analysis activities of this project as discussed in the next chapter, and the subsequent development of the Institu- tional Capability Maturity Model framework. Private-Sector Change Management Theory and Methods There is a large body of theoretical literature on process improvement and quality, organizational development, orga- nizational maturity, and change management in the private sector, which has been categorized in various ways by scholars. 27

28 Table 3.1. Key Institutional Differences Between Product and Service Entities Product-Oriented Entities Service-Oriented Entities Culture Tasks are broken down into specialized, separate parts Time management style: focus on what’s important Leadership More frequent normative leadership styles Businesses typically organized vertically Centralized decision making Organization Multifunction teams are present but managed by leaders in a hierarchy Coordination across functions is easier, given all resources within a unit are supporting the same product Tasks are rigidly defined in most situations Strict hierarchy of authority and control, many rules Most communication is vertical Internal stakeholder accountability Institutionally supported professional growth Resource Allocation Target-driven innovation based on competitive market analysis More readily available outcome-based incentives Source: Thatchenkery, n.d. (b). Employees contribute to the common tasks of the department Time management style: Focus on what’s urgent and important More frequent situational leadership styles Services organized horizontally around linked, end-to-end business processes Decentralized decision making; decisions are made at point of contact by empowered employees Foundation is multifunctional teams, often self-directed and self-managed Coordination across functions is complex because the supporting entities may not always be interlinked Tasks are adjusted and redefined through employee teamwork Less hierarchy and control, fewer rules Frequent horizontal communication External stakeholder accountability Self-generated and informal professional development Incremental innovation based on individual initiatives, technical competence, and knowledge sharing Less readily available outcome-based incentives Engineering, software, and project development have all played a role in developing a framework that identifies the key features needed to improve the efficiency and effectiveness of processes for some product or operations. Efforts to organize these concepts into a systematic frame- work that can be used to manage product or process improve- ment include quality methods, process change theories, and organizational development theory. There are several quality improvement methodologies, such as Total Quality Management and, more broadly, the Baldrige Process, that offer useful and relevant frameworks that identify many of the key features of the process and institutional arrangements. However, most are oriented toward products rather than services. Their structures and emphasis do not correlate completely with the real-time service aspects of SO&M, and certain key institutional issues receive only secondary consideration (e.g., resources and partnerships). Process change theories include approaches such as busi- ness process reengineering and various capability maturity models that focus on process capability and its measurement with regard to product qualities. Capability maturity models have been widely applied to software and have been utilized in other sectors. Organizational development theory focuses on strategies intended to change the beliefs, attitudes, values, and structure of organizations so that they can better adapt to new technolo- gies, markets, and challenges. There are various schemes by which organizations are analyzed for purposes of explaining or facilitating change, such as contingency theory and punctuated equilibrium. Because many of these theories and methods are based on product-oriented organizations, largely in the private sector, they have limited relevance. In addition, most of them do not include issues likely to be important when introducing a new program focus into an existing culture, including introducing

29 new values and norms, changing the functional organiza- tional design or the internal and external relationships, or shifting/modifying the power and locus of decision making. Process Improvement and Maturity Concepts The most relevant of the private-sector change management approaches is the capability maturity model (CMM), devel- oped in the IT industry. The CMM is based on the recogni- tion that specific process features—such as performance measurement and documentation—are essential for pro- gram effectiveness and that they must be present at defined levels of criteria-based maturity to be acceptably effective (based on software quality and a low likelihood of error, for example). In the CMM, organizations that want to optimize their systems must evolve on a self-evaluation basis—via per- formance measurement—toward processes that are increas- ingly consistent, repeatable, reliable, and efficient in support of systemwide effectiveness. The CMM concept was initially developed by Carnegie Mellon University for the U.S. Department of Defense. Sub- sequently, the Project Management Institute (PMI) has adopted organizational maturity as a concept, known as OPM3, for assessing and improving the performance of an organization’s project management capabilities. The OPM3 model and the British Office of Government Commerce’s Project Management Maturity Model (PMMM) have been adapted to numerous different disciplines in both the public and the private sectors, including product development, service delivery, and systems acquisition. The key features of the CMM approach include the following: • Goals: The conditions that must exist for key process areas/ elements to be achieved in an effective and lasting way. • Maturity levels: Levels of achievement, defined by specific criteria, toward a desirable end-state in which processes are managed by continuous improvement, typically struc- tured from the ad hoc through increasing levels of defini- tion and reliability to fully manageable. • Process elements: The related activities that, if performed well, will achieve the goals. • Strategies/practices: The means by which higher maturity levels are achieved for each process area. In the absence of benchmarks, and given substantially dif- ferent points of departure, continuous improvement requires identifying improvements based on self-evaluation. This con- cept has been used as the basis for standardized steps, com- mandments, or stages as problem-solving recipes. Based on the research, general criteria have been identified for incre- mental levels of process capability for each process element. Within this framework, four standard rules of maturity mod- els are applied: • Each incremental level of maturity within a given element establishes the basis for the entity’s ability to progress to the next–higher level of effectiveness. • Levels cannot be skipped. • Each level of technical and business processes needs spe- cific institutional support. • The overall level of maturity for an organization is defined by the lowest level of institutional maturity of any element. Applicability of Maturity Approach to Transportation Agencies In this project, the concept of capability maturity has been extended to fit the transportation service context. Both process and institutional elements are addressed, defined, and struc- tured to fit transportation agency practice and context—with each element definition determined in the survey and research. Incremental levels of improvement are defined for all elements. Importantly, the research identified the apparent correlation between processes improvements associated with increased program effectiveness and institutional configurations (also called levels). Figure 3.1 diagrams this basic concept of the model adaptation to include and relate both process and institutional characteristics. This concept also included a focus on the key elements of the process dimension and of the institutional dimension. These elements (shown as rows in Table 3.2) are presumed to be the key features that make up the dimension and which vary with increased process maturity and with changes in institutional architecture. Specific criteria define the levels, derived from their relationship with program effectiveness as determined in the state DOT survey and analysis. Advantages of the CMM Approach The CMM approach combines many features that make it attractive for application in the public sector SO&M arena, including the following: • Building on the real-world experience of user entities across a range of achievement; • Identification of key features of process that must be addressed to achieve definable performance-related targets; • A self-evaluated point of departure, with clarity about the direction of change; • Provision of clear incremental levels of maturity toward a vision of best practice; • Provision of a standard language and framework for iden- tifying and prioritizing actions;

• Potential for collaboration within and among agencies and individuals, vertically and horizontally; • Scalable applications that can be viewed and used at vari- ous levels of detail; and • A positive approach that establishes defined benchmarks for future development, as opposed to a backward-looking (problem solving) approach that by its nature seeks to identify causes of past shortcomings. Another key feature of the CMM approach is that it is based on an appreciation of an entity’s strengths—what appears to be working—and how to build on such strengths to reach an improved level of capability. This aspect of the CMM approach also reflects the spirit of the appreciative inquiry approach in the organizational development field and offers the advantage of shifting focus from evaluation of past problems and apportion- mentofblametoexisting strengths, future potential, and oppor- tunities for collaboration (Thatchenkery, n.d. [a]). Such an approachemphasizesidentifyingthechallenge (documentation, performancemeasurement),appreciationofthe positive (build- ing from the current level of maturity) and seeing the improved target ahead by being able to trace a clear path to best practice. 30 Supportive architecture Level 2 Ideal architecture Level 3 Current architecture Level 1 Integrated processes Managed processes Ad hoc processes Figure 3.1. Institutional architecture maturity relationship to increasing process capability. Table 3.2. Relationship Between Process Capability and Institutional Architecture Increasing Levels of Process Capability to Support Effective Programs Process Elements Level 1 Level 2 Level 3 Element A Criteria Criteria Criteria Element B Criteria Criteria Criteria Element C Criteria Criteria Criteria Changes in Institutional Architecture Support of Process Levels Institutional Elements Level 1 Level 2 Level 3 Element A Criteria Criteria Criteria Element B Criteria Criteria Criteria Element C Criteria Criteria Criteria

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TRB’s second Strategic Highway Research Program (SHRP 2) Report S2-L06-RR-1: Institutional Architectures to Improve Systems Operations and Management examines a large number of topics concerning organizational and institutional approaches that might help transportation agencies enhance highway operations and travel time reliability.

The same project that produced SHRP 2 Report S2-L06-RR-1 also produced SHRP 2 Report S2-L06-RR-2: Guide to Improving Capability for Systems Operations and Management.

An e-book version of this report is available for purchase at Google, iTunes, and Amazon.

An article on SHRP 2 Report S2-L06-RR-1 was published in the January-February 2013 issue of the TR News.

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