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C H A P T E R 8 Managing Institutional Change The Guide to Improving Capability for Systems Operations and (Within state DOTs, this signifies central office or regional Management indicates what needs to be done institutionally management positions). to provide a supportive basis for more effective SO&M pro- Planned approaches (managed change) are defined as top- grams and processes. However, how these changes will be down and rational processes (such as those undertaken in implemented is an additional challenge that will vary from various agency-level strategic developments), and transfor- context to context and be highly dependent on circumstances mation efforts that may not survive a change in leadership and leadership. In this chapter, alternative change scenarios or in an environment interrupted by external challenges. are addressed. The limits on management span of control are There is a modest literature on managed change, including recognized, and opportunities are noted. various staged models. A change management strategy designed to improve SO&M Contingency models (externally driven) are defined as effectiveness requires adjustments in both the process and changes that occur externally. These may occur as a result institutional dimensions. Changes in process maturity are of these factors: difficult and unlikely without supportive changes in institu- Major events that impact an organization's credibility; tional architecture. However, changes in institutional archi- Being part of a broader shift that includes an organiza- tecture that are supportive of improved SO&M process and tion, such as statewide level performance measurement programs are not likely to happen without a deliberate change initiatives and reduction-in-force measures; management strategy. Legislative mandates, such as privatization; and Initiatives from sources outside the transportation agency, such as PSAs or the private sector. Change Management Modalities: Contribution of Theory Evolutionary Change Within organizational theory (Thatchenkery, n.d. [c]), authors classify change management approaches by the char- Changes in many of the components of maturity may occur acteristics of the change management process itself: temporal without deliberate management. In general, changes in a large pattern (thoroughgoing or incremental), scale (fine tuning or organization's program, process, and institutions take place full-blown transformation), and sources and nature (emer- gradually in small increments. There are important sources of gent, planned, or contingent). inertia in program, process, and institutional structure that For systems operations capability maturity improvement, include defined professional orientations, well-established the incremental nature of the changes and their scale within and widely understood legacy mission, long-standing and the maturity model concept has been indicated. A special well-developed roles and relationships, and considerable exter- challenge is the consideration of how such change is to be nal stakeholder support. Changes at odds with any of these brought about. features occur only gradually, especially if they compete for scarce management time, require new expertise, or are per- Emergent approaches (evolutionary change) are bottom- ceived as diverting resources or introducing risks. The input up, typically introduced via innovative projects or proce- received from the interviews conducted by this project sug- dural improvements in specific program areas (such as gests the range of barriers facing managed change as shown in ITS), and are championed by middle-level unit managers. Table 8.1. 58

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59 Table 8.1. Barriers to Institutional Change Change Elements Barriers Culture/leadership Limited public and elected-leader support. Significant capacity construction program. Limited internal middle management support. Fuzzy legislative authority. Organization and staffing Absence of experienced SO&M manager(s). Shortfall or turnover in qualified staff. Staffing-level constraints. Resource allocation State funding ineligible for SO&M. Competition for resources from other program backlogs. No performance outcome measures. Partnerships Conflicting partner priorities. Nevertheless, this type of change is always occurring-- entire DOT when statewide operations initiatives are under- although gradually--as the result of a range of forces relating taken as a matter of policy. to education, workforce, political values and issues, and The second version of middle-management-led change transfer of technology from other fields. An example of this may be termed statewide intrapreneurship. This version of type of gradual change is the increased penetration of formal change at the statewide level has also been widely observed. It asset management into the standard transportation agency is based on initiatives of individual champion-middle man- culture. agers in central office SO&M divisions. This type of change is often technology led, where SO&M activities are at an early stage of development in which the payoff from modest Managed Change improvements, such as deploying basic ITS systems and estab- Managed change, in which leadership within an organization lishing TMCs, are obvious and nondisruptive. At this stage, makes deliberate changes in program, process, or institu- the challenge relates to deployment of ITS systems. However, tional arrangements, represents a departure from the existing capitalizing on this infrastructure in terms of procedures and legacy arrangements and is openly acknowledged as such. partnerships quickly reaches a point where organization and The drivers for these more discrete changes tend to be a com- resources from the central office are required--sometimes bination of professional predisposition and agency leader- with statewide implications--and are typically outside the ship--to articulate the need for change in a way that makes span of control of middle-management champions. In addi- the need more widely apparent, and to oversee a program of tion, this type of change is extremely fragile owing to its depen- appropriate changes (as specified in the transition to a higher dence on an individual rather than on a program. In several level). A description of each of these types of managed change cases, state DOT activities have lost momentum with the follows. departure of champions. In middle-management-led change, committed profes- Top-management-led change has been observed in the few sionals can have a significant impact from the inside out and instances in which SO&M has been encouraged by new CEO up. There are two versions that have been observed in the leadership that institutes a new policy mandating or author- SO&M context. The first may be referred to as regionally devel- izing a department wide process to improve SO&M that oped islands of excellence. In several state DOTs where there is involves consolidating and strengthening the systems opera- significant decentralization, individual regional/district lead- tions functions at a statewide program level, in both the cen- ership has been able to develop strong regional-level SO&M tral office and the key districts. The difficulties faced with a programs without significant support on a statewide basis top-down approach are reflected in the slow pace of improve- from central office divisions. Several states exhibit wide varia- ments made in many states beyond initial deployments; change tion among districts/regions regarding SO&M programs is further inhibited by the limited tenure of agency CEOs. In within the state, even where transportation settings are com- addition, a major strategic reorientation must compete for parable. These achievements usually require strong and inde- management attention and agency resources and carries with pendent support from district executives and aggressive it the risks of limited stakeholder and legislative support-- district operations leadership. They can serve as models for the unless carefully sold.

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60 Span of Control change--or a sequence of drivers--that provide impetus for increased focus on SO&M. The types of changes at the levels of higher capabilities may become more difficult within the existing institutional context, at least at the organization level. There is a limit to the span of Event-Driven Change control of a transportation agency's top management. Some of Anticipated major traffic impacts in response to major exter- the operational needs involve other parts of the agency with nal events have been a common stimulus to significant change. varied mission focus or other agencies, and resources that sim- Major one-time or annual sports events (e.g., Olympics, auto ply may not be available in the agency context. In state DOTs, the span of control of an operations division or of district man- races) and conferences are the two most prevalent, for which agement is even more limited. extensive planning has been undertaken to preserve general As illustrated in Table 8.2, initial changes in the institutional mobility and minimize disruption while accommodating architecture may be accomplished with relatively little disrup- the event. These anticipated events have required significant tion of the legacy arrangements and with only modest depen- improvements in operational capacity, including new infra- dence on external support. However, the greater degrees of structure, special procedures, and new relationships. change regarding culture, resources, and partnerships involve actions and commitments in agency- or even state-level policy, Incident-Driven Change as well as action by state legislators and other agencies. Unplanned events causing major disruptions have been the most common cause of across-the-board improvements Externally Driven Change in SO&M. These incidents include natural disasters (earth- Events outside the control of management have been the key quakes, hurricanes, and floods), major weather events such driver of change in SO&M. Several versions have been observed as snow storms, and major traffic incidents, ranging from among state DOTs regarding significant increments in atten- crashes to extensive seasonal recreation congestion. With the tion to SO&M. These include event-driven change, incident- disruption, delay, and loss of system reliability associated with driven change, constraint-driven change, federal program such major NRC events--especially those with high public incentives change, and change resulting from a new regional and policy visibility--the need for specific changes in one or institutional configuration. There are often multiple drivers of more operations activity becomes compelling, with strong Table 8.2. Span of Control for Institutional Change and Relationship to Position Major Level 1 Level 2 Level 3 Dimensions of Ad Hoc Rationalized Mainstreamed Change Program Mixed, Championed/internalized Mobility unfamiliar-- across disciplines committed Middle Manager hero driven Processes Fragmented, Aligning, trained Professionalized Top Manager understaffed Institutional Project level Criteria-based program Sustainable budget line item