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

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