Case Study: Faslane
1.0 Introduction:
Faslane is a HM Naval Base Clyde
in UK and is best known for the country's nuclear submarines armed with Trident
missiles system. Previously, it was supervised by the Ministry Of Defense (MOD)
and Royal Navy and later in 2002, it partnered with a private sector company,
Babcock Marine. The main aim for such move was for cost/benefit approach, more
effectiveness in the operation of the organization and improve the service
standards.
In this report, the strategic
analysis Faslane is done using various analytical tools. Firstly, Hope Hailey's
Change Kaleidoscope is being used to analyze the strategic changes in Faslane
and Lewin's Force Field Analysis is being done to evaluate the effectiveness of
changes. Likewise, to identify the barriers to change and to examine Faslane's
internal characteristics, MC Kinsey's 7's model and Kotter's 8 step process are
being prepared. Furthermore, to compare the changes in strategic leadership
style, Lynch Leadership Model has been applied.
2.0 Analysis
2.1 Faslane: An emergent strategy.
An emergent strategy is a pattern of action that develops over time in an organization in the absence of specific mission and goals, or despite a mission and goals. (planningskills.com)
In my point of view, the changes
in the strategy of Faslane is an emergent strategy. The strategy is basically a
strategy by discovery which takes place through daily basis decisions according
to the circumstances and the environment. The unstructured strategy has a
fifty-fifty chance for success or failure.
The actions of Faslane are mainly
dependent on the unintended and unplanned decisions. The Babcock Company had a
target that Faslane's cost saving will be £76 million within five
years of time. However, the strategies for the cost saving approach and
improvement in the operational effectiveness are highly influenced by the change
in the ownership on the company. Thus, the cost saving decision was an
unintended strategy.
Likewise, to reduce the
cost, the company changed its organizational structure by cutting down the
management hierarchy from 7 to 4 just to make the communication easy, effective
and fast. Likewise, the number of employees were reduces to create more
openness and better relationship among the workers. The bureaucratic burden
were also decreased and employees were
motivated to join open discussion and idea sharing process. They applied both top-down and bottom-up
leadership styles and allowed workers to work as a team to grow their
productivity. This strategy clearly helped in their cost saving of £14
million in the recent years. Thus, the mentioned strategy of Faslane is
an emergent strategy which made them flexible and helped in cost savings.
2.2 Change Kaleidoscope Model
Change Kaleidoscope helps to
identify the nature of change and assist in designing sensitive change process.
The change Kaleidoscope contains an outer ring which is concerned with the
features of change context that can either enable or constrain change and the
inner ring that contains the menu of implementation options open to change
agents. (Hope Hailey and Balogun 2002).
Faslane: Change Kaleidoscope
Time: Faslane has put up its target of cost saving of £76
million within five years. The time period is too short as per the cost saving
amount. However, the organization was a smooth one without any kind of major
chaos. Thus, there is no urgency for the company to change its strategy to meet
the target.
Scope: The degree of change effects the
organization entirely or partially. The management style of Faslane was changed
and both top-down and bottom-up styles of management were applied. This helped
to make the communication process better and sharing of ideas and information
became easy. Likewise, several number of employees were reduced to minimize the
cost.
Preservation: The asset, cultural practices and resources should be
managed properly during change. Babcock Marine after having to co-work with the
MOD and Naval Base commander, it understood the importance of it relationship
with them. Hence, they took really good care of the relation with them and
other stakeholders too by open communication mainly through meetings on a
regular basis.
Diversity: At first, it was not so easy for Babcock to begin
change. Later, the company became a 4 layers of management hierarchy from 7
with various teams. The groups might prefer change or oppose it. But the less
number of employees make the work more easy and decisions can be made quickly.
Capability: Faslane was able to manage the workers throughout its
revolution. At the time of MOD, people were not ready for change due to lack of
experience. But, positive impression was created among the employees mentality
regarding the company's objective. They were encouraged to participate in open
discussions and share their ideas.
Capacity: The capacity includes available finance, time and human
resource. According to Faslane's
primary objective of cost reduction and increase the operational effectiveness,
it reduced the management level from 7 to 4. After the change, the company
gained the capacity to accomplish its target.
Readiness: At first, the employees of Faslane was confused. The
company had various teams, who either prefer to stay as they are of who prefer
change. The managers from was able to motivate them towards change and promised
for personal development as well.
Power: When Babcock joined hands with MOD to manage Faslane, they
had the power to restructure the strategy and management styles of the company.
However Babcock did not have the full authority to take decision.
2.3 Lewin's Force Field Analysis:
Kurt Lewin's Force Field Analysis is a powerful strategic tool used to understand what is needed for change in both corporate and personal environments. (change-management-coach.com) It helps to take the best decision by evaluating the forces against the changes.
The tool outline the problems and its main factors and maintain the changes in
preferred track. It has two sodes, Driving factors, which helps to promote and
support change, Restraining factors, which makes the change difficult.
Faslane: Force Field Analysis
Table 1: Faslane:
Force Field Analysis
2.4 McKinsey's Seven S Model
McKinsey's 7S model is an analytical tool which helps an
organization to evaluate and monitor
changes internally. The 7S is defines by 3 hard S: Strategy, Structure and
System and 4 soft S; Shared values,
Skills, Style and Staff.
The model involves seven interdependent factors which are categorized as either "hard" or "soft" elements:
"Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems.
"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful. (mindtools.com)
McKinsey's Seven S model of Faslane,
2001.
Seven
Models
|
Strength
|
Weakness
|
The
Hard Elements
|
||
Strategy
|
Focus
on customer and infrastructure.
|
Time
consuming, more budget needed and slow in decision making.
|
Structure
|
Managerial
level chain of command.
|
Unclear
about the roles and responsibilities.
|
System
|
Improvement
in Management system.
|
More time needed for change which created problems
while handling the customer.
|
The
Soft Elements
|
||
Skills
|
Experienced
Navy base staffs.
|
Inexperienced
regarding change.
|
Style
|
Highly
experienced Navy Leaders.
|
Beneficial
for only few bureaucrats.
|
Staff
|
More
than 1700 civil service employees.
|
Focus
less on the employees and their mentality of fear for change.
|
Shared Values
|
Offer
quality service to Navy.
|
Not
enthusiastic to adopt change.
|
Table 2: McKinsey's Seven S model of Faslane , 2001
McKinsey's Seven S model of Faslane,
2002 to 2010
Seven
Models
|
Strength
|
Weakness
|
The
Hard Elements
|
||
Strategy
|
Cost
reduction without effecting
the
service towards Navy.
|
Poor
service quality to the customers due to main focus on the strategy of cost
reduction.
|
Structure
|
Practical
structure with specialized
employees.
Clear
roles and responsibilities and encouraged team work.
Reduction
on the level of management from 7 to 4.
|
Access freedom and teamwork sometimes
hampers the organizational hierarchy.
Problems
regarding loss of jobs.
|
System
|
Excellent management team. |
Inexperienced in the Naval base operational field.
|
The
Soft Elements
|
||
Skills
|
Employees
already practiced the change process.
|
Some
employees still unknown about change with no idea about Naval base operation.
|
Style
|
Leaders
capable to handle the change.
|
Change
is always considered risky.
|
Staff
|
More
than 2000 civil service employees.
|
Job
loss due to reduction in management level.
|
Shared Values
|
Reduce
cost and improve operational effectiveness.
|
Babcock
Marine, being a private company, may seek more profit.
|
Table 3: McKinsey's Seven S model of Faslane , 2002 to
2010
From the analysis above, Babcock faced many problems while
managing Faslane. They were not experienced on the Naval base field which was a
huge difficulty for them. Later, they brought change in the management style.
They applied both top-bottom and bottom -top management system which made every
employees participative. Likewise, the management level was cut down to 4 from
7 and this resulted in higher level of open communication. Leadership was
decentralized among teams. These changes brought 20% reduction in the annual
cost on Faslane.
However, such flexibility brought some serious problems too.
Employees were unwilling to change which reduced their productivity during the
change process. Likewise, many staffs lost their jobs due to reduction in the
management level.
2.5 Kotter's 8 Steps Process for Leading Change:
Kotter developed a list of factors that he believes lead to successful changes, and those that lead to failure. He has devised an 8 step method where the first four steps focus on de-freezing the organization, the next three steps make the change happen, and the last step re-freezes the organization with a new culture. When people need to make big changes significantly and effectively, he says that this goes best if the 8 steps happen in order. (Pat N, merticationmatters.com)
Step 1: Establishing
a Sense of Urgency:
A sense of urgency for change in an organization is created
by this step. Urgency for change in Faslane began after the competitive
position and financial operation was analyzed. The changes were about to be
performed after co-working with Babcock marines. Firstly, they set an objective
to reduce the cost of £76 million within five years, to improve the
operation and to improve the service quality. Various changes in the managerial
level, organizational structure and leadership styles were needed. The
employees were given high level of motivation and frequent communication was
done during the change process.
Step2:
Creating the Guiding Coalition:
The change process needs to be guided properly. For this,
the manager must allocate the influential people to motivate and encourage
others. Babcock employed team of skilled personals who had the ability to
handle change and the participated employees during change.
Step 3: Developing a
Change Vision:
The vision of an organization must be simple and clear and
must be understood by the employees and all the stakeholders. When a vision is
clear, the employees and stakeholders will have a clear understanding of what
changes are required to achieve it. Thus, a clear vision will make everyone
ready to face the change.
Step 4: Communicating
the Vision:
Communication of the vision of an organization must be
frequently done. Babcock marine encouraged open and participative communication
among the management and employees. They used to put up an event like 'the
event in the tent' where the objectives of the company was comprehended and
also, employees were allowed to the ideas and values.
Step 5: Remove
Obstacles:
Obstacles must be removed to make the vision and objective
clear and understandable. John Howie was able to identify the obstacles and
barriers in the structure of the management on Faslane. It was the complexity of seven level of management which he later
reduced into four and it was a good decision. The company had a slow decision
making process because of the lengthy review of 56 days which also he decreased
to 6 days.
Step 6: Generate
Short-term Goals:
Short-term goals must be developed to uphold the working
environment of an organization and also to keep everyone focused and
enthusiastic. In the first year, Babcock's short term goal was to achieve £3
million cost saving and it was able to accomplish £4
million. Likewise, in year two, £16 million cost reduction was done against the
target of just £12 million. This made the employees motivated for change.
Step
7: Build on the Change:
The objectives and goals must be build up to maintain the
gains from the changes made. This
includes the actions taken by Faslane to restructure the management levels,
encourage participation and open
communication, reducing the bureaucratic trouble etc. Due to this, continuous
achievements were gained by the organization.
Step 8: Incorporate
Change into the Culture:
The value of the vision of an organization is replicated by the corporate culture.
Culture of sense of belongingness was created within the organization.
Service towards the Navy was improved.
In 2009, joint business with the customer was performed. Thus, Faslane became
home base for the entire UK submarines in 2010.
2.6 Faslane: Strategic Leadership Style (2002-2010)
Strategic leadership is the way of applying well considered
plans and the ability to
influence people around you to willingly participate in decision making process
and make a joint effort to achieve long term goal of the organization.
Implementing this strategy leads and organization to achieve its long term
goal, deliver high value over time and change within the organizational
structure.
In 2002, after Faslane was managed by the MOD and Babcock,
John Howie was selected as the managing director. His focus was mainly on the
internal part of the organization including the management style, structure of
the organization , changing responsibilities, cost savings and maintain good
relationship with the customers.
In 2012, Craig Lockward became the Managing Director of
Faslane and his focus was mainly on the operational improvement and quality
service. He had low concern on the organizational structure and relationship
with the stakeholders. We can compare the company with:
2.6.1 The Lynch Five
Elements of Successful and Effective Strategic Model.
i.
Developing
and communication the organizations' purpose:
The main purpose of Faslane to improve the operational effectiveness and
cost saving was clearly defined properly comprehended to all the employees of
the company. They developed and communicated the organization's purpose by
keeping an open
discussions, changing infrastructure and changing the move towards
customers.
ii.
Sustaining
competitive advantage overtime:
Babcock recruited the employees
who have already experienced the change process. This was one of their main
competitive advantages which became very helpful for other employees while undergoing
the change process.
iii.
Setting
ethical standards:
The tax received by Faslane was spend unethically to receive budget.
Later, it was spent on the CSR and improved quality service to the customers.
They also minimized their spending by restructuring the organization. Moreover,
they always supported their employees while in their difficulties during
change.
iv.
Defining
and delivering to Stakeholders:
Leaders need to maintain good relation with stakeholders. (Lynch).
Faslane always took care of its stakeholders and was able to maintain a good
relationship with them.
v.
Managing
human resource and organizational decisions:
The entire Faslane human resource
experienced the change process brought by Babcock. More than half jobs were cut
down, organizational structure became a flat one and staffs were encouraged to
work on teams.
2.6.2 The
Transcendent Leadership Model
This model focuses on:
Conclusion
To sum up, the above done analysis have made it clear that
Faslane has been successful in executing change. The changes on Faslane
included the organizational system, employees, and other stakeholders. They
were also able to maintain the continuous changes in their system and had clear
focus on achieving the long-term as well as short-term goals. The change
process made the company more flexible, effective and was considered as
evolutionary transformation of public sector into private sector.
They first implemented the management structure of the
organization. It helped them to gain 14 million pound cost saving within five
years of time. Management team was reduced to half. Over 20% of annual
reduction was done by the end of five years.
Lastly, Faslane implemented effective leadership strategies,
clear communication process, kept good relationship with the stakeholders and
was able to maintain successful human resource and because of this, it became
able to meet its objective and proved itself as the base home for submarines fleet in the entire
UK.
References:
Anon., n.d Naval Basis [Online] Available at: http://www.royalnavy.mod.uk/The-Fleet/Naval-Bases/Clyde [Accessed 10 January 14]
Anon., n.d. Force Field Analysis - Kurt Lewin. [Online] Available at: http://www.change-management-coach.com/force-field-analysis.html [Accessed 12 January 2014].
Babcock International. 2011. Marine
& Technology Division Clyde Operational efficiency in a mission critical
environment. [Online] Available at: http://www.babcockinternational.com/media/205608/glb168368_-_case_study_-_partnering_-_print_file.pdf. [Accessed 10 January 14].
Johnson, G. Whittington, R. & Scholes. K. (2011) “Exploring Strategy”, 9thedition, Prentice Hall.
J. Kotter, ‘What leaders really do’, Harvard Business Review, December (2001), pp. 85–96.
Kotter International The 8-step Process for Leading Change. [Online] Available at: http://www.kotterinternational.com/our-principles/changesteps [Acessed 12 January 2014]
Mind Tools., n.d. The McKinsey 7s Framework. [Online] Available at: http://www.mindtools.com/pages/article/newSTR_91.htm [Accessed 12 January 2014]
Pat Naughtin. Leading change by John P Kotter. [Online] Available at: http://www.metricationmatters.com/docs/LeadingChangeKotter.pdf [Accessed 12 January 2014]
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