Institutional Architectures to Improve Systems Operations and Management (2012)

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

59 Nevertheless, this type of change is always occurring— although gradually—as the result of a range of forces relating to education, workforce, political values and issues, and transfer of technology from other fields. An example of this type of gradual change is the increased penetration of formal asset management into the standard transportation agency culture. Managed Change Managed change, in which leadership within an organization makes deliberate changes in program, process, or institu- tional arrangements, represents a departure from the existing legacy arrangements and is openly acknowledged as such. The drivers for these more discrete changes tend to be a com- bination of professional predisposition and agency leader- ship—to articulate the need for change in a way that makes the need more widely apparent, and to oversee a program of appropriate changes (as specified in the transition to a higher level). A description of each of these types of managed change follows. In middle-management-led change, committed profes- sionals can have a significant impact from the inside out and up. There are two versions that have been observed in the SO&M context. The first may be referred to as regionally devel- oped islands of excellence. In several state DOTs where there is significant decentralization, individual regional/district lead- ership has been able to develop strong regional-level SO&M programs without significant support on a statewide basis from central office divisions. Several states exhibit wide varia- tion among districts/regions regarding SO&M programs within the state, even where transportation settings are com- parable. These achievements usually require strong and inde- pendent support from district executives and aggressive district operations leadership. They can serve as models for the entire DOT when statewide operations initiatives are under- taken as a matter of policy. The second version of middle-management-led change may be termed statewide intrapreneurship. This version of change at the statewide level has also been widely observed. It is based on initiatives of individual champion-middle man- 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 improvements, such as deploying basic ITS systems and estab- lishing TMCs, are obvious and nondisruptive. At this stage, the challenge relates to deployment of ITS systems. However, capitalizing on this infrastructure in terms of procedures and partnerships quickly reaches a point where organization and resources from the central office are required—sometimes with statewide implications—and are typically outside the span of control of middle-management champions. In addi- tion, this type of change is extremely fragile owing to its depen- dence on an individual rather than on a program. In several cases, state DOT activities have lost momentum with the departure of champions. Top-management-led change has been observed in the few instances in which SO&M has been encouraged by new CEO leadership that institutes a new policy mandating or author- izing a department wide process to improve SO&M that involves consolidating and strengthening the systems opera- tions functions at a statewide program level, in both the cen- tral office and the key districts. The difficulties faced with a top-down approach are reflected in the slow pace of improve- ments made in many states beyond initial deployments; change is further inhibited by the limited tenure of agency CEOs. In addition, a major strategic reorientation must compete for management attention and agency resources and carries with it the risks of limited stakeholder and legislative support— unless carefully sold. 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.

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

61 public and policy support or imperatives. Immediate action is usually required as a matter of agency credibility, including the need to demonstrate visible change and positive outcomes. Although the response is often limited to a specific activity, there are a few cases where the response to a particular event and location has been extended by management to the statewide program level, and often accompanied by changes in process and institutional arrangements. Constraint-Driven Change In the face of financial or environmental limitations, expen- sive capital projects to increase highway capacity are often infeasible. SO&M then gains credibility as a relatively inex- pensive way to improve the efficiency of the existing roadway. This constraint-driven change becomes most apparent where congestion levels are extremely high and capacity improve- ment opportunity limitations are openly acknowledged by the transportation agency and accepted by traditional high- way stakeholders. Federal Program Incentives Change The use of federal funds has introduced planning and systems architecture requirements and has increasingly focused on performance measurement. FHWA has also promoted research, technical exchange, and definitions of current best practice. FHWA also provides dedicated funding. These actions have increased the visibility and legitimacy of ITS and SO&M within transportation policy and encouraged state and local involvement. New Regional Institutional Configuration A number of substate entities (such as local governments and MPOs) have taken the initiative to establish cooperative regional efforts for interagency collaboration in improving SO&M. State DOTs have been involved as one of several cooperative entities. Building on Change-Driven Momentum In response to some of the major external events, key external stakeholders, policy makers, and the public have developed expectations of a specific transportation agency response: to minimize the potential impact of similar events in the future. It is no surprise, therefore, that major external events have been associated with enabling, if not forcing, change associ- ated with nearly all of the significant progress made by several of the state DOTs with more mature programs. The events reduce the barriers to otherwise difficult or expensive organi- zational changes, increased funding, and changed relationships with external partners (such as law enforcement). Trans- portation change managers—middle or top management— can capitalize on the opportunity to institute such important changes otherwise not possible. However, effectively capitalizing on such events requires that the agency have a general strategy in place to seize these windows of opportunity to extend and standardize specific program and organizational changes into improved day-to- day SO&M across the agency as a whole. Even in constrained contexts, it can be extremely valuable to have an improvement program “on the shelf” for potential utilization as circum- stances permit, focusing on the key elements most directly implicated by any externally driven change, but also using the momentum for more general improvements. Change Management Tactics The Institutional Capability Maturity Model is not the com- plete recipe for change management; it provides a framework for determining what needs to be done and the strategies for making institutional changes in a direction that is more sup- portive to aggressive congestion management. However, the strategies themselves must be managed and carried out by appropriate staff. This report and the guide are not intended to provide general change management tactics. There is sub- stantial existing strategic management literature, including such approaches as process engineering, balanced scorecards, and Baldrige criteria. Each of these approaches includes a ver- sion of the standard, generic steps of change management that would be generally applicable to all the components of guidance. The following steps are typical. First is the joint (consensus) identification of the problem/ opportunity/challenge within the change manager’s span of control or influence to create a sense of urgency. This activity is clearly relevant to institutional maturity for congestion man- agement, as evidenced by the shift of the focus of an agency’s culture toward operations—based on both the constraints fac- ing alternative service improvement options and the potential of congestion management opportunities. An understanding of these technical issues is an essential point of departure. Second is the development of a vision and the definition of the general changes needed, as well as the specifics of the prior- ity components, which may be limited by the change manager’s span of control (see below). This activity corresponds to adopt- ing the Institutional Capability Maturity Model as the template for managed change and developing a commitment to use it on a continuing basis as a component of formal strategic planning. The third step involves creating or building a team of change agents. The team may be composed of individuals with specified responsibilities, or it may be a task force. Appli- cation of the maturity model requires the formation of a team

62 or unit with the responsibility of applying the method with the appropriate units within the agency. The next step is sharing the vision and creating buy-in among the widest possible group of staff that are needed to understand and support the changes. The Institutional Capa- bility Maturity Model is applied in a self-evaluation context. Key management and staff evaluate their current situation with regard to the level criteria and develop their own custom- tailored version of the next steps and strategies to get there, thus developing an internalized understanding and buy-in to the changes required. Fifth is empowering the change agents with the necessary support, resources, and authority to make the necessary changes. Installing the maturity model as a continuing strate- gic change process requires both a broad, shared understand- ing of the objectives and staff capability to manage and monitor the change commitments made for each element in the maturity framework. Each of the level transition strategies is a task to be managed. Finally, it is important to use an incremental approach to create visible, early wins to generate momentum and wider support. This is focused on results, not activities.