INFO PAPER TO CIO

PLEASE SEE BELOW FOR ATTACHMENTS THAT ARE NEEDED TO COMPLETE THIS ASSIGNMENT!!!!!!!

Congratulations! The executives are taking your information system proposal (ATTACHMENT 1) seriously. In fact, they think it has the potential to transform the way the organization works.

The CIO asked you to read Connelly (ATTACHMENT 2) to think about what resources you’ll need to get your new information system up and running. Please also review the five case studies in (ATTACHMENT 3) so you can recommend a change management pattern for your company to follow.

Write a memo (or information paper) to the CIO that describes how to implement your information system into the organization. Please focus on these topics:

1. How much of the implementation work can you handle? What additional resources (people, information, time, money, etc.) will expedite the process so you don’t end up like Susie Jeffer?

2. Outline a change management strategy: What new equipment and software are necessary? What training and support will the staff need? How will the staff complete their work during the transition period? Do you anticipate other areas of resistance?

3. The CIO is very skeptical, so provide evidence that your assessment is accurate and complete. It can be difficult to admit to personal limitations!

Your memo (or info paper) should be 3–5 pages long.

References:

Basu, K. K. (2015). The Leader’s Role in Managing Change: Five Cases of Technology-Enabled Business Transformation. Global Business & Organizational Excellence, 34(3), 28-42. doi:10.1002/joe.21602.

Connelly, B., Dalton, T., Murphy, D., Rosales, D., Sudlow, D., & Havelka, D. (2016). Too Much of a Good Thing: User Leadership at TPAC. Information Systems Education Journal, 14(2), 34-42.

1
THE CEO’S CHALLENGE

MEMO

To: Executives of This Company

From: I.T Employer

Date: 17th January, 2017

Subject: Request to change the information system.

Due to the poor performance that the Company has experience as the result of the use of the decision support system (DSS), I am requesting that the Company shift to an executive information system. The rationale for this is because the executive system has features that can effectively deal with the issues are currently experienced with our information systems. The executive information system back, it has features that allows the system to support senior administrative data and requirements in the decision-making process (Laudon & Laudon, 2016). The executive information system has displays and clear interface that present reporting abilities and this is essential in effecting the work of this particular information system.

In addition, the executive information system will keep confidential information that will not be accessed by senior management or in the event that any other party wants to intrude will have to have security details from one of the executives. The restriction with this proposed information system will ensure that the intended quality of data is preserved and any form of information accessibility it will be noticed this will help eliminate some of the issues that we are witnessing right now.

The present DSS does not execute its role independently it has to depend on other information systems which means that a failure in the attached information system to the DSS will cause the breakdown of the same (Aronson et al., 2005). Therefore, the problem experienced right now may have its origin on other information that DSS relies on which is not the case with executive because it has the features that allow it to perform the same roles without shouldering on another system.

The computer information system is used in most of the retail banking sections where the management wants to ascertain if the customers are indeed served as required by their workers. The evidence from these banks indicates the effectiveness of this information system when it comes to carrying out its roles. These banks have saved more money because the computer system carries various functions independently which is not the case with the DSS that our company has used for a long time spending heavily.

I look forward to hearing back from management with regard the information and recommendations I have made about my preferred information system.

Regards,

IT EMPLOYER

Analyst

References

Aronson, J.E., Liang, T.P., & Turban, E. (2005). Decision support systems and intelligent systems

Laudon, K.C., & Laudon, J.P. (2016). Management information system. Pearson Education India

Information Systems Education Journal (ISEDJ) 14 (2)

ISSN: 1545-679X March 2016

Teaching Case

Too Much of a Good Thing:

User Leadership at TPAC

Brett Connelly

connelbe@miamioh.edu

Tashia Dalton
daltontm@miamioh.edu

Derrick Murphy

murphyd1@miamioh.edu

Daniel Rosales

rosaledh@miamioh.edu

Daniel Sudlow
sudlowdj@miamioh.edu

Douglas Havelka

douglas.havelka@miamioh.edu

Information Systems & Analytics
Miami University

Oxford, Ohio, 45255, USA

Abstract

TPAC is a small third party health claims business that was seeking avenues for revenue growth and
opportunities to increase efficiency. One course of action that management selected to achieve these
goals was a change in the software application used to process claims. The new application was

adopted to increase the speed and accuracy of claims processing. Given the enthusiastic motivation of
the claims department manager, Susie Jeffer, and the importance of the new application to the Claims

department; Susie was selected to lead the project. The case details the challenges the organization
faced by selecting a leader for this critical project that had no project leadership experience or IT
background. The implications of this decision on the business operations are presented and then
solutions to the situation are explored. This case is targeted for an MBA IT management or strategy
course; but could be used in an introductory course, a systems development course, or a senior-level

undergraduate IS/T capstone course.

Keywords: teaching case, systems selection, project management, leadership

http://www.isedj.org/

mailto:connelbe@miamioh.edu

mailto:daltontm@miamioh.edu

mailto:murphyd1@miamioh.edu

mailto:rosaledh@miamioh.edu

mailto:sudlowdj@miamioh.edu

mailto:douglas.havelka@miamioh.edu

Information Systems Education Journal (ISEDJ) 14 (2)
ISSN: 1545-679X March 2016

1. INTRODUCTION

It was a Monday morning in late October, a chill

wind was in the air. Susie Jeffer leaned back in
her chair, reflecting that her over-priced Chai
tea latte and dry scone were not going to be
enough to get her through the difficult meeting
scheduled in the next hour with the company
president.

Recently hired as a claims manager, Susie Jeffer
had joined TPAC after 15 years in the healthcare
industry. TPAC is a small third party health
claims business located in El Paso, Texas. The
company recently hired a new President with

over 20 years’ experience from a large third

party health claims competitor and was planning
to grow the business. To facilitate this growth, a
review of the IT (information technology)
infrastructure had been performed and a
recommendation made to update the claims
processing software application to lower costs
which would allow TPAC to compete with its

larger competitors and attract new customers.

The previous claims processing system did not
have necessary capabilities to meet client needs.
TPAC had become known for its flexibility in
customizing benefit plan designs to help clients
provide their employees an affordable benefit

package that fit within the company’s budget.

The previous system did not have the ability to
auto adjudicate claims without manual
intervention. Auto-adjudication is the ability to
approve (or deny) a claim based on the facts of

the claim and the benefits plan, without needing
a human to validate it. Being a small company,
it was difficult for TPAC to expand business
without a claims system that could auto
adjudicate claims. The primary benefit of having
a system that requires less manual intervention
is to allow the Benefit Administrators (claims

processors) the ability to focus on clients’ higher
value needs; such as reports, claim
adjustments, phone calls and other necessary
tasks. The current system was restricting

TPAC’s potential to capture a larger market.

From Jeffer’s perspective, she had done her level

best to implement the President’s new vision for
TPAC. It had taken great courage volunteering
to take responsibility for the implementation of
the new IT system without any prior background
in IT. Further, she had been the sole TPAC
associate to receive the training on the new

system! Further still, the training had only
lasted two weeks – she was doing her best with

what she’d been given. As far as she was
concerned, her best had been stellar.

However, Jeffer was still fuming over senior
management’s recent criticism concerning the
lack of programming she had put into the new
system. If more capabilities were to be wrung
out of the system, she would need a team to
implement additional upgrades.

Jeffer’s upcoming meeting with company
president Sandy Davis had her worried, since
Davis had become critical of Jeffer’s handling of
the implementation. Davis unabashedly voiced
the opinion that TPAC now found itself back in

the same spot they had been with the old

system: it needed manual intervention, it was
error prone, and it slowed claims turnaround. As
she sipped at her Chai tea, Jeffer contemplated
the long hours of work ahead. How will her
employees adapt? Will her customers see a
benefit? Or, will the company lose customers
rather than grow the business?

2. THE ROLE OF A TPA

The traditional value stream (Exhibit 1) within
the health care industry was for an employer to
find a health care insurance company like Blue
Cross, Anthem, or United Health Care to provide

health benefits, assume payment risk, and

process claims and payments for employees and
service providers. This value chain came at a
very expensive premium cost to the employer.
As health care costs continue to rise, employers
have been searching for ways to reduce the cost

of employee healthcare.

A recent change in the value stream (Exhibit 2)
in the administration of health care for
employees has been for the employer to assume
all payment risk as a self-insured company and
contract a Third Party Administrator (TPA) that

will handle the health claims and payments.

The TPA is neither the insurer nor the insured.
Their task is to handle the administration of an

agreed upon benefits plan that includes the
processing, adjudication, and negotiation of
claims. They also provide record keeping and

general maintenance of the plan. The only
difference in a TPA role versus a fully insured
carrier is the TPA doesn’t fund the payment of
the claims; rather, the payment of claims is
funded by the client.

The two main drivers for the use of third party
administrators is lowering health care costs and

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better plan design for company specific
employee demographics and needs. Savings are
significant because the company only pays for
the administration of actual claim costs versus

an insurance benefits’ offerings that may or may
not be used. Insurance company administration
of claims is also much higher than a specialized
TPA (whose focus is only on creating and
administering the plan).

The TPA’s have specialized software and

processes that allow for timely and less
expensive alternatives than the insurance
companies. Typical cost savings a company can
expect when moving from a fully insured plan to
a self-insured plan with a TPA can be seen in

Exhibit 3. An added benefit to the TPA business

model is that it shelters the company from any
concern of HIPAA (privacy) violations.

3. TPA PROCESSES

The claims system is programmed to process
claims according to the plan design. One of the

major benefits of being self-insured is that each
client (employer) can customize their healthcare
plan based on the needs of their company and
their budget. This means clients are not sold
“cookie cutter” plans that may include features
that are not needed or may not include features
that are very desirable. As each client’s plan is

designed uniquely for them, the claims

processing system needs to be a robust system
without plan setup limitations.

Every client has a different plan design which
includes items such as:

 Eligibility – Determines the requirements

of the employer regarding the number of
hours an employee must work to receive
benefits.

 Dependent Age.

 Timely Filing – Each employer

determines the length of time within
which a claim must be filed in order to

be considered for processing (standard 1
year).

 Plan Design – This includes deductible,
copays, and coinsurance

 Benefit Structure – this includes the
definition of services that are covered or
excluded and defines visit maximums on

necessary services (physical,

occupational, and speech therapy; and
chiropractic services).

The goal of the system is to auto-adjudicate as

many claims as possible, thus limiting the need
for manual intervention while maintaining the
quality guidelines. Auto-adjudication simply
involves checking each of the claims for required
information and restrictions and determining the
amounts to be paid.

Also, the system needs to be able to
accommodate any client’s “reasonable” request.
The more adaptive the system, the more able
the claims administrator is to retain clients and
increase future business. Providing quality

healthcare for employees is expensive;

therefore, employers need to rely on innovative
TPA companies to assist in cost containment
solutions.

4. NEW CLAIMS SOFTWARE APPLICATION

SELECTION PROCESS

As TPAC’s new president, Sandy Davis’ first
decision was to upgrade the IT infrastructure;
and specifically the claims processing
application. Davis convinced the board that a
new system was necessary to achieve revenue
growth and capture top-tier clients. A new
application would increase flexibility for creating

benefit plans and offer scalability allowing TPAC

to grow by capturing larger volume clients.

With the prior system, each claim was manually
processed by a Benefits Administrator. Since
there was no auto processing of claims, the old

system allowed room for more errors and
inconsistency. There were instances where
claims for the same procedure were handled
differently: one claim was entirely covered,
another partially covered, and a third denied.
Ultimately, this slowed the process of claims
processing and inflated the claims error

percentage.

Davis tasked the Executive Management Team
to narrow the choices for the new system. An

industry consultant was retained to assist the
Executive Management Team in exploring the
alternative software solutions that would

adequately fit their needs. Following weeks of
debate, the options for the new application had
been narrowed down to two: TreatFirst’s
Excaliber system and BigHealth’s Benefitica IT
suite.

The system finalists were very comparable.
They both met the requirements for benefit plan

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design flexibility and allowed for Consumer
Driven Service products to be linked to each
client rather than requiring a separate
application to administer Health Savings

Accounts, Flexible Spending Accounts, and
COBRA (COBRA is health insurance that must be
provided to employees when they are
terminated).

TreatFirst’s main disadvantage was that
Excaliber took more time to set-up each benefit

plan. However, this was mainly true because
the application allowed the benefit plan design to
be more detailed, thus increasing the accuracy
rate of claims processing as well as tightening
up measures to increase the auto adjudication

rate. With the Excaliber system, TPAC could

place more clients on the system without having
to hire more Benefits Administrators to handle
the additional work load.

On the other hand, BigHealth’s Benefitica
application was easier to use when building the
benefit plans. There was less coding to be done

which resulted in less time setting up a plan.
The Benefitica system still increased efficiencies
and also had a higher auto-adjudication rate.
However, the integrated details in TreatFirst’s
Excaliber were marketed as having a higher
accuracy rate.

The Executive Team invited the five Team Leads

from each department to test the applications.
After each lead was given a demonstration of
both systems’ capabilities, the Executive Team
interviewed them for feedback. Team Leads
cast their vote on which application they thought

would best deliver functionality and
performance.

Despite their desire to get broad-based input
from all of the departments that would be
affected by the new application, the voting was
rigged. Although each Team Lead had their

opportunity to vote, the voting wasn’t kept
confidential. Since the Executive Management
Team had already cast their votes, the decision
came down to the five Team Leads. Jeffer, the

Claims Lead made no qualms about her choice.
(Jeffer would have primary oversight of the
application, it is a claims application and she is

the claims manager.) She cajoled the four other
leads to vote for her choice. The persuasion
worked, as they felt pressured to vote for her
preferred system.

The voting over, Davis revealed that TPAC would

pursue Jeffer’s choice: the BigHealth system.
Feeling confident by her win and eager for a

promotion, Jeffer volunteered to take on the
configuration and implementation of the
Benefitica IT application. Seeing potential in
Jeffer, Davis tasked her with creating a roadmap

for configuration and implementation of the new
software.

5. TRAINING AND IMPLEMENTATION

The following week, Jeffer was on a plane to
New York to receive training at BigHealth’s

corporate office. She received training on all of
Benefitica’s functionality, as well as how to
configure the software to best fit TPAC’s
customized needs. Two weeks later, on the
plane ride back to El Paso, Jeffer quickly

sketched a roadmap for master data conversion,

training, and implementation of Benefitica IT.

Concerning an implementation plan, Jeffer
ranked the clients on a schedule based on their
size (A-D, A being largest, D being smallest),
and planned to convert the larger clients first
hoping to realize improvements in productivity

as quickly as possible. The conversion process
involved duplicating all the unique attributes for
each client’s Summary Plan Description into a
unique plan profile in Benefitica IT.

Jeffer was excited from her training and ready to
get started on data conversion. She began the

process of taking the Summary Plan Description,

the guidelines of each client’s plan, and
translating the data into Benefitica’s plan profile
manager. After working 70 hours the first week,
Jeffer’ enthusiasm quickly waned as she realized
the magnitude of the workload.

As the Claims department manager, Jeffer
oversaw 10 Benefit Administrators (BA). She
changed her conversion strategy, delegating the
benefit plan set-up and data entry load to the
BAs. Over the next week she scheduled several
lunch-and-learns to familiarize the BAs with this

additional responsibility.

Each BA was tasked with completing benefit plan
profiles for clients according to the client’s

personalized Summary Plan Description. As
each plan profile consisted of numerous
attributes and settings the data entry was time

consuming and prone to user error. The process
was rushed because the number of clients
assigned to each Benefits Administrator was
roughly 15 to 1, with daily work still needing to
be completed. As accuracy was vital, any
incorrect setups resulted in claims being

processed incorrectly.

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6. PROBLEMS ARISE

Problems started to arise when the first batch of
clients; i.e. Group A, the largest clients TPAC

had, went live on Benefitica. Each client
transferred to the new system without incident;
however, the process was so quick that there
was not enough time to iron out any issues
before the next client went live.

With the new claims processing system, the auto

adjudication rate was expected to increase to at
least 90%. When a claim is auto-adjudicated
through the system, the claim should be
processed and paid correctly with no errors. If a
claim doesn’t meet all the requirements to go

through the adjudication process, then it is

pended for manual intervention.

During the benefit plan set-up these tight
measures were not configured, which allowed
more claims to adjudicate through the system
and led to more errors. The industry accuracy
rate was 96%, a metric shared with every

prospective or current client. The increase in
errors meant an increase in manual intervention
for claims adjustment. It also resulted in
increased calls from members, clients, and
providers concerning incorrect claim processing.

Because of the extra errors and an already

heavy workload, the BAs grew agitated with

claims manager Susie Jeffer. Since the Benefits
Administrators had daily contact with the clients
and their employees, this required each BA to
take extra time out of the day to explain to
upset clients why there were errors.

This created friction internally from senior
management all the way through the company.
David, a Senior Benefits Administrator, could not
understand why after so much time and effort
there were so many issues and increased work.
The new claims application was presented to his

team as a change that would make their lives
easier. Instead, the team received an increased
work load which required more and more
overtime. When Susie approached David about

the amount of overtime the team was using,
David could not control his emotions. David
could not understand why Susie did not

comprehend the volume of errors and problems
with the new system. As David continued to
document the errors and issues, Susie did not
believe these errors were due to the new
application and denied that they were due to any
type of implementation error. She flatly stated

these were not system related errors. Instead
of reviewing the issue log, Susie ignored the

errors. Instead she continued to forge ahead
with the remaining client benefit plans. She was
adamant that her project plan would meet the
original deadlines.

Due to the deteriorating climate in the claims
department, the Director of Operations decided
it was time to take part in the weekly BA
meetings. She hoped to drill down to the
underlying problem and to understand what was
happening from the source. Although she quickly

realized the issue was related to the
implementation of the new application; she
added fuel to the fire by defending Susie. The
team was furious.

7. THE FALLOUT

The Director of Operations began “mentoring”
Susie to help fix issues, but glossed over the
gravity of the situation to Senior Leadership to
protect Susie’s job (and her own reputation as
well, she had been a supporter of Susie as a
promising manager). Although system

implementation was completed after nine
months, issues were still being addressed and
claim adjustment rates were at an all-time high.
This had ramifications throughout the entire
company. Phone calls for adjustments were
increasing, Account Management was receiving
requests for meetings by unsatisfied clients, and

the overall morale was very poor.

In spite of it all, TPAC managed to retain its
current clients and actually added new ones. As
the company grew, the need for additional IT
support was recognized and a new system

administrator was hired. Jeff, the new system
administrator, spent 6 months working with
Susie to learn the system. After that time, Jeff
was still not confident in her ability to manage,
maintain, and enhance the system’s
performance.

Jeff finally convinced the Director of Operations
to fund him for Benefitica training. He received
training for four weeks. From this, he realized
that there were many capabilities of the system

that were not being used. In fact, the way TPAC
was currently using the new application was not
an improvement from the old system. Website

functionality for employee self-service was not
being utilized to its full capacity to allow clients
to enroll employees online. This lack of
functionality was creating problems on the
eligibility side. While claims should be processed
at a 90% auto-adjudication rate with a 98%

accuracy rate, instead they were experiencing
rates under 50% with 60% accuracy; this was

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Information Systems Education Journal (ISEDJ) 14 (2)
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occurring primarily because the employee
enrollments were not accurate and up-to-date.

These circumstances and other considerations

led the Director of Operations to resign. A new
Director of Operations, Rita, was hired. Rita had
prior experience with another TPA and was very
familiar with the new claims processing
application. Her knowledge and expertise
appeared to be extremely valuable to TPAC.

She was shocked when she discovered the
issues TPAC was having with the software. She
could not believe TPAC was even surviving with
the way the system was functioning. She
immediately brought this knowledge to the

Senior Management team.

In addition, Rita tried to mentor and counsel
Susie. She “confronted” Susie with all of the
issues and her response (or lack of response) to
them. Despite all this, Susie remained confident
and felt she had not made any serious mistakes;
except selecting the wrong system.

Given Rita’s goal to make substantial
improvements in claims processing, specifically
improving the auto-adjudication and accuracy
rates, she worked directly with Jeff. Susie was
still on the project management team, but they
had tasked her with leading the BAs to improve

daily operations rather than any application

related tasks.

8. SEEKING SOLUTIONS

Rita was under pressure from leadership to

terminate Susie. Although unsure, Rita felt this
was a bit of scapegoating by upper
management. She thought they were looking for
someone to blame for the unsuccessful project
to alleviate some of the clients’ concerns. And

Susie did appear to be a bit clueless at this
point.

Rita didn’t feel as if she was in the role long

enough to make the decision to terminate Susie.
Rita contemplated how to handle the situation,
she decided to task Jeff to go back through each
client setup and do a thorough audit of each
plan to ensure they were setup accurately.

Rita spent the weekend in her office trying to

weigh all of her options. The busy season with
open enrollment was just around the corner and
a decision needed to be made Monday morning.
Some of the questions Rita pondered as she
prepared for the meeting with Susie on Monday

included the following questions:

 Should Susie be fired? Was she really a bad

employee or was she just put into a role that
wasn’t compatible for her?

 How could Rita justify this action to

leadership without letting Susie go? Should

she?

 At this point, Susie was still on the project
team and making changes to the software,
she was one of the only people in the
company with deeper knowledge of how the
software worked. Should Susie remain on

the project? Should she be moved? What

role should have?

 Should Rita be concerned that there is a risk

to the company that Susie will sabotage
other areas of the company out of spite and

anger? What should she do to mitigate this
risk?

Editor’s Note:

This paper was selected for inclusion in the journal as the EDSIGCon 2015 Best Case. The
acceptance rate is typically 10% for this category of cases based on blind reviews from six or more

peers.

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Information Systems Education Journal (ISEDJ) 14 (2)
ISSN: 1545-679X March 2016

Exhibit 1 – Traditional Value Stream

Employee Doctor Doctor
Health
Care

Insurance

Employer

Medical

Claim

Payment
Payment

Claim

Makes Insurance Premium Payments

(Insurance makes payments to Health care provider)

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Exhibit 2 – New Value Stream: TPA replacing Health Care Insurance

Employee Doctor Doctor
Third Party

Administrator

Employer

Medical
Claim

Payment
Payment
Claim

Employer Pays TPA for claims administration

(Employers makes payments to Health care provider)

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Exhibit 3 – Potential savings with a TPA

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The Leader’s Role in Managing
Change: Five Cases of
Technology-Enabled Business
Transformation K A L L O L K U M A R B A S U
Transformation is critical for any organization to
succeed, and technology-enabled change has become
a widespread means of improving responsiveness to
competition and customer satisfaction. In the cur-
rent climate of economic uncertainty, the impera-
tives that are instrumental in pushing organizations
to consider transformation include innovation, busi-
ness agility to adapt to external changes efficiently
and effectively, the alignment of information tech-
nology (IT) and business strategy, and global de-
mand and support for new ideas and new opportuni-
ties. The critical success factor for such initiatives lies
in effective leadership to manage the changes associ-
ated with both people and processes. A review of the
various aspects of leadership and change manage-
ment and an analysis of five case studies in technol-
ogy transformation identify the common leadership
parameters that can lead to the effective and efficient
adoption of change. C ⃝ 2015 Wiley Periodicals, Inc.

The contemporary globalized business environ-
ment demands not just incremental improvements
but periodic transformations, particularly when
a firm relies on technology for its competitive
advantage. Consequently, enterprises increasingly
need to think about fundamental change—business
transformation—to gain or maintain competitive
advantage. Global annual information technology
(IT) expenditure has exceeded $2.5 trillion (Gart-
ner, 2014), yet less than half of large-scale IT trans-
formation initiatives ever come close to realizing
the anticipated benefits. KPMG (2003) reported that

among 230 of the largest global companies it sur-
veyed, 57 percent had to write off at least one IT
project in the past 12 months, and only 41 percent
were able to determine how much the failure had
cost their organization.

In most of these cases, failure was attributed to
leadership. The magnitude, urgency, and nature
of the transformation; the capabilities and failings
of the organization; and the personal style of the
leader all influence the nature of a CEO’s role
(Aiken & Keller, 2007). A transformational model
of leadership is gaining prominence in organizations
characterized by geographically dispersed busi-
nesses, technological diversity, and a fast-changing
environment.

Change requires creating a new system and then in-
stitutionalizing the new approaches (Kotter, 1996).
Research has demonstrated that there is a posi-
tive relationship between transformational leader-
ship and employees’ commitment to the organiza-
tional change effort (Bass & Riggio, 2005) and to
the leader (Kark & Shamir, 2002). Transformation
efforts inevitably lose steam if leaders fail to create
the desired mind-sets on the part of employees or to
ensure that the right people are spending the right
amount of time on driving necessary changes.

Although transformational change management and
leadership are intertwined, there has been lit-
tle research that focuses on the nature of this

2 8

C ⃝ 2 0 1 5 W i l e y P e r i o d i c a l s , I n c .
P u b l i s h e d o n l i n e i n W i l e y O n l i n e L i b r a r y ( w i l e y o n l i n e l i b r a r y. c o m )
G l o b a l B u s i n e s s a n d O r g a n i z a t i o n a l E x c e l l e n c e ● D O I : 1 0 . 1 0 0 2 / j o e . 2 1 6 0 2 ● M a r c h / A p r i l 2 0 1 5

relationship and attempts to identify the character-
istics of the leaders who implement such change.

Managing

Change

The notion of change can mean different things
to different people. Planned change models assume
that leadership is the primary source of organiza-
tional change, and that leaders deliberately initiate
change in response to perceived opportunities. In
contrast, those who argue for emergent change claim
that change cannot be anticipated or planned for
in advance (Mintzberg & Waters, 1985). Similarly,
Orlikowski’s (1996) situated change model claims
that organizational change is grounded in micro-
level changes, which are enacted over time as actors
attempt to make sense of the world in which they
act. The focus here is only on planned change.

Change Management Versus Business Transformation

The process of managing some major or minor
change in a business, change management is usu-
ally ongoing. Business transformation, however, is
organizational change on a more fundamental scale.
Although the term business transformation can be
applied to a division or function, it is normally
reserved for changes that affect a whole business.
Viewed in this way, business transformation is the
end and change management is the means, while
change management, partnered with project man-
agement, provides the engine for its implementation.

Business transformation involves large-scale inter-
vention from senior management, driven by situa-
tional factors and technological or internal changes
that affect all dimensions of the organization, with
the long-term goal of increasing the performance of
the entire company. It starts with pivoting the com-
pany’s business model to its core competency (which
can be quite different from what the company actu-
ally does), and getting rid of everything that does not
contribute to value generation around the reshaped
value generation model through technology. It can
be done in waves—turnaround, stabilization, and
revitalization—over two to three years. The exis-

tence of a transformational leader is critical to such a
large-scale transformation, which usually questions
not just the processes but also the fundamental busi-
ness model.

A standard technology change adoption cycle
consists of:

● A business preparation stage, focusing on spon-
sorship and communication;

● Deployment, focusing on training and perfor-
mance support (enablement); and

● A sustainability stage, which includes perfor-
mance management activities (ownership).

Most technology transformations involve resistance
to change, expressed through the behavior of organi-
zational members who refuse to accept a particular
change in the organization.

This can be related to Ruddle’s (1999) four-
quadrant change model (see Exhibit 1 on page 30).
The push is created through facilitation, awareness,
and an integrated approach to managing change in-
volving all stakeholders. The pull is created when
top management is fully aligned and mobilized and
stakeholders are involved and/or represented in the
decision-making process.

Most technology transformations involve resistance
to change, expressed through the behavior of
organizational members who refuse to accept a
particular change in the organization (Cheng &
Petrovic-Lazarevic, 2004). Leon (2008) ascribed 69
percent, 28 percent, and 13 percent failure rates of
enterprise systems to people, process, and techno-
logical problems, respectively. This shows the impor-
tance of people issues in such system implementa-
tions. The common areas of resistance of employees
for technology transformation are summarized in
Exhibit 2 on page 31.

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Exhibit 1. Ruddle’s Change Management Model

On Leadership and Change Implementation

Able leadership is critical for enacting a radical
change in an organization. The specific leader-
ship parameters that are associated with successful
change adoption are often unclear, and leadership
style and performance are mediated by the organi-
zation’s culture.

Brown and Eisenhardt (1997) identified three key
characteristics of successful managers in continu-
ously changing organizations:

● Providing clear responsibility and priorities with
extensive communication and freedom for indi-
viduals to improvise and be creative;

● Exploring the future using a variety of simula-
tions, which enables leaders to anticipate and
shape the future; and

● Linking current projects to the future with pre-
dictable time-paced intervals and a synchronized
transition mechanism.

Eisenbach, Watson, and Pillai (1999) further explain
that this last characteristic enables employees to syn-
chronize their energies with one another, creating
a focused flow of attention that enhances perfor-
mance. Ruddle (1999) combined the change man-
agement and transformational approaches to arrive
at four different management styles, each dependent
on the degree of change and the level of uncertainty
about the future (see Exhibit 3 on page 31).

Transformational leadership implies leaders with the
power to motivate, stimulate, and influence the be-
havior of people to transform the “soft variable”
of transformational rearrangement—that is, an

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Exhibit 2. Areas of Change Resistance

Resistance Area Description

Lack of awareness Lack of awareness about the change, why it is needed, or how it will affect them. Limited
participation, during program design and build phase, or lack of clarity about the new
roles and responsibilities, or limited or untimely communications about the milestones
of the project, leading to confusion and apprehension among stakeholders.

Comfort with the status quo and
fear of the unknown

Mature workforce, tend to be complacent and/or entrenched in the current way of doing
business.

Organizational history and culture Organization’s past performance with change projects influences the employees’
perception of the current change project. A technology project is often seen merely as
the “flavor of the month” and employees expect it go away like those in the past.

Opposition to the new
technologies, requirements and
processes introduced by the
change

Changes may increase the performance requirements and measurement of employees’
work or employees feel the change would not solve the problems they were
experiencing. Lack of motivation or knowledge to take on the revised roles—perceived
resistance from employees to move to a new platform.

Fear of job loss Perceiving the change as a threat to job security; apprehensions of end users moving from
highly customized disparate systems/manual set of processes to a unified system.

Source: Cheng & Petrovic-Lazarevic (2004).

inner qualitative or mental change of the organiza-
tion, which is the key to the successful management
of transformational changes.

Case Studies Point to Common Leadership Traits

The following case studies from a variety of in-
dustries reflect technology-enabled business trans-

formations. How leaders managed the change with
respect to performance and culture has been ana-
lyzed in order to identify the commonalities of lead-
ership behavior that lead to successful change adop-
tion. The sources of the case studies are given in
Exhibit 4 on page 32. A summary of the findings
is presented in Exhibit 5 on page 33. As the case

Exhibit 3. Management Styles

Journey Description

Operational Improvement (OI) Incremental changes with high degrees of certainty, with narrow financial and operational
targets and a centralized and disciplined approach to change. Our study does not
include this.

Evolutionary Learning (EL) Characterized by many of the quality management approaches using the transformational
process success factors of involvement and ownership. Huge efforts are expended to
understand consumer needs and competitive improvements. Uncertainty may exist in
the precise direction of these changes.

Programmatic Leadership (PL) A radical shift in outcomes is needed, in both strategy and capabilities, and a planned
and prescribed approach might achieve the fastest result since outcome is certain.

Transformational Leadership (TL) A radical shift in strategy and capabilities in an uncertain world. Leadership needs to own
and understand the whole journey and adjust course wherever required. The leadership
processes and capabilities need alignment to the whole reorganization.

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Exhibit 4. Sources for Case Studies

Case Study Sector Source

A Utilities Ruddle (1999)
B Health Care McKinsey (2013)
C Financial Services Padmanabhan (2012)
D Technology McKinsey (2011)
E Manufacturing Motwani et al. (2005)

studies reveal, transformational leadership and
change management are intertwined.

Case Study A: Business and Technology Transforma-

tion in Utilities

In 1994, the management of a leading water ser-
vice company in the United Kingdom looked to
business and technology transformation to explore
new ways of working with new customers and
to provide greater commercial focus, flexibility,
and growth. The motivation for this was provided
by the global financial crisis and tighter regula-
tory price control. As with other transformations,
“there are patterns of sequence such as crisis, ex-
ploration, awakening, followed by visioning and en-
gagement with the organization” (Ruddle, 1999,
p. 138).

The transformation resulted in fundamental shifts in
processes, behaviors, ways of working, and the en-
abling mechanisms of the organization. The change
took more than three years and demonstrated both
emergent and intentional change as it evolved. Con-
textual issues like politics, governance, and organi-
zational structure influenced success at a number of
points. The leadership team remained largely un-
changed. The members’ experience was limited to
single large projects but not of such a massive com-
plex scale. The resulting leadership style “meant
more emphasis on factors such as vision, coaching,
empowering the front line to lead change, balancing

change co-ordination and control with local own-
ership, and use of balanced scorecards” (Ruddle,
1999, p. 139).

The leaders faced dissatisfaction in the workforce
and lack of consistent ownership and values across
the company. Early involvement of all stakehold-
ers and consistent and continuous communica-
tion were the keys to success for the initiative.
Ruddle (1999) summarized the factors influencing
the successful transformation at the company as
follows:

● Establishing a business case for readiness to
change;

● Having a clear, well-articulated, and owned
strategic intent and vision;

● Energetic, involved, and visionary leadership
demonstrated in the top team;

● Focusing on customer propositions and the core
processes and capabilities to deliver them;

● Ownership of the values outlined throughout the
organization;

● Alignment of the enabling factors, particularly re-
ward, performance, and structural mechanisms;

● Change style that used high-level outcomes across
a spectrum of balanced measures; and

● Exploring and experimenting with new ways
of working to shape intent for success of the
program.

Case Study B: Market-Driven Technology Transforma-

tion in Health Care

HCA, one of the world’s leading health care fa-
cilities operators, embarked on multiple initiatives
over a period of years to deploy technology solu-
tions to improve health care. Significant projects in-
cluded establishing a clinical data warehouse and
a big data resource to support predictive model-
ing. The organization’s leaders also aimed to lever-
age “size and scale to drive cost efficiencies, us-
ing our multi-market positions to test new and
innovative ideas, using our collective operating

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Exhibit 5. Summary of Case Studies

Construct A B C D E

Industry Segment Utilities Health Care Financial Services Technology Manufacturing
Scope of Change Organization;

phase-wise
Organization;

single operation
Organization;

phase-wise
IT only; phase-wise

Transformation
Type

Business Business Technology Technology Technology

Top Management
Commitment

Yes Yes Yes

Yes Yes

Driver for
Transformation

Industry crisis;
reactive

Responding to
market changes;
proactive

Merger; proactive Tap new market;
proactive

Technology
change;
proactive

Journey
Management

Navigation to
enablement

Leadership to
ownership

Navigation to
leadership

Leadership to
ownership
Leadership to
ownership

Journal
Management
Style

Programmatic Transformational Evolutionary Transformational Programmatic

Stakeholder
Management

Yes Yes Yes Yes Adequate

Vision Clarity Yes Yes Yes Yes Improvement
Integrated

Planning
Yes Yes Big challenge to

align IT and
business

Yes Yes

Relentless Impact
Assessment

Yes Yes Somewhat Yes Yes

Leadership and
Accountability

Yes Yes, fully
accountable

Yes Yes Yes

Aligned
Performance and
Culture

Yes Yes Collaborative
innovation

No Yes, semi-cautious

Training and
Awareness
Communication

Yes Yes Yes Yes Medium to high

intellect to drive best clinical and management
practices across the enterprise” (McKinsey, 2013).
They implemented strategic pilot initiatives to en-
sure people closest to execution could provide in-
put and solutions based on their collective experi-
ence to ensure effective skills transfer and planning.
Specialists met with staff to mentor them and trans-
fer knowledge and staff were trained in proven best-
practice processes.

The significant leadership characteristics identified
from this case study are:

● Identification of improvement opportunities.
Leadership recognized the opportunities in the
industry.

● Rightsizing. The right team, with the right skills
was in place to execute the plan with the abili-
ties to adapt appropriately, when circumstances
changed.

● Detailed plan. A clear and detailed operating plan
was in place with appropriate metrics and check-
points (balancing both short-term and long-term
goals) and was communicated across the organi-
zation.

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● Alignment of technology with business. The oper-
ations team was made an integral part of strategic
planning and development.

● CEO’s regular interaction with employees. Rela-
tionships with people across all levels ensured bet-
ter buy-in of a new initiative.

Case Study C: Industry-Focused Technology Transfor-

mation in Financial Services

As in other parts of the world, the banking sector
in India strongly emphasizes technology and inno-
vation. Initially used to provide support for internal
requirements pertaining to bookkeeping and trans-
actions processing, technology soon enabled banks
to provide better quality services at greater speed.
Internet banking and mobile banking made it pos-
sible for customers to access banking services from
anywhere at any time.

The banking sector is an example in which IT infras-
tructures have had implications for economic devel-
opment. A customer is now empowered to choose
a service from a range of providers. Customers are
increasingly individualistic and choosy and have
started to demand transactions on their own terms.
The predicted entry of nonbanks in retail bank-
ing has made this scenario even more competitive
(Padmanabhan, 2012).

Lenovo’s acquisition of IBM’s PC operations implied
a technology transformation to support the new op-
erating model, spread across 160 countries, and the
need for standardization of operations.

The significant leadership characteristics identified
from this case study are:

● Planning for increasing customer-centric prod-
ucts and intensifying competition. This may also
imply a change in strategy for marketing high-

technology products that result in a probable
change in mission and vision in some cases.

● Achieving a balance among people, process, and
technology involved in the transformation. “This
may also mean that you have to press the pause
button while engaging the top management once
in a while, for effectively bridging gaps between
the IT and business teams,” said G. Padmanab-
han, executive director of Reserve Bank of India,
at a conference of the Institute for Development
& Research in Banking Technology in Hyderabad
(Padmanabhan, 2012). The support of top man-
agement for IT was crucial.

● Technological transformation leaders drive the
scientific and technological innovation processes
in high-technology industries to improve opera-
tions by innovation. The entire organization gets
involved in the innovation process and is aligned
with the organization’s strategy.

Case Study D: Postmerger Technology Transformation

in the Technology Sector

Lenovo’s acquisition of IBM’s PC operations im-
plied a technology transformation to support the
new operating model, spread across 160 countries,
and the need for standardization of operations.
Legacy IT systems were replaced by a global en-
terprise resource planning (ERP) system to stan-
dardize processes while remaining receptive to local
variations and statutory requirements (McKinsey,
2011).

The PC market has traditionally had a very thin
profit margin. The new IT solutions were needed to
enable the company’s global operating model with
new business capabilities and support the newly di-
versified customer base and global back-end opera-
tions. There was a clear need to link business strat-
egy with the IT transformation road map. Rather
than outsourcing, the focus was on building an in-
ternal team. The major releases of the new sys-
tem were delivered on schedule and on budget.
Standardized global operations for finance and the
supply chain were launched and migrated to all

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strategic platforms. Overall, IT spending as a per-
centage of revenue dropped from 2.8 percent in
2008 to 1.3 to 1.4 percent in 2010 because of the
initiative.

The significant leadership characteristics identified
from this case study are:

● Because it had a globally dispersed and trans-
formation inexperienced team, the people strat-
egy was to gradually build the internal IT team.
Culture integration was critical. According to the
company’s vice president of human resources,
“It’s not about what Lenovo used to do or what
IBM used to do, but rather what we want to do to-
gether, combining the best of both organizations”
(Tang, 2007, p. 43).

● IT-business alignment was important, as was un-
derstanding that not all business requirements
can be accommodated. The initial focus was
on delivery of functionalities that are critical to
business operations; fancy features/enhancements
were secondary.

● Supportive leadership from the very beginning
was key to success.

● Robust monitoring and continuous impact assess-
ment led to resource coordination and benefits
realization. The responsibility and scope of the
ERP implementation project was clearly defined
and controlled. The project team was balanced be-
tween IT professionals and end users.

● Change champions/agents were deployed who
consistently advocated the benefits of ERP sys-
tems to engender commitment.

● There was a clear understanding of the busi-
ness model, as well as a deep understanding
of the legacy systems that were being phased
out.

Case Study E: ERP-Enabled Business Transformation

in Manufacturing

To support its newly developed centralized sup-
ply chain and year 2000–compliant general ledger
system, a supplier of wiring harnesses for the auto-

motive industry with facilities in the United States,
Mexico, and Canada embarked on a plan to imple-
ment ERP.

A team-approach was followed that eventually re-
ceived consensus to proceed at a corporate level. A
learning environment was established based on ap-
propriately responding to technological changes or
learning from other organizations that had achieved
best practices in the industry (Motwani, Subrama-
nian, & Gopalakrishna, 2005). The significant lead-
ership characteristics identified from this case study
are:

● Communication was open, leading to information
sharing, cross-functional training, and personnel
movement within the organization. Use of exter-
nal information included employees, consultants,
and customers.

● Three crucial teams were deployed to ensure suc-
cessful implementation: a strategic thinking team,
a functional consultant/business analyst team, and
an operations team.

● Leaders worked very closely with the ERP vendor
during the implementation process with appropri-
ate process metrics.

● Leaders had accepted that there would be glitches
and did not point fingers when they occurred; in-
stead, lessons-learned documents were compiled
to avoid repetition of mistakes.

● Managers were able to take all employees in their
fold. Thus, they willingly went the extra mile to
support the project. Change champions were de-
ployed for change advocacy.

Requirements for Effective Leadership

The data from these case studies highlight the key
factors that enable leaders to successfully foster
change. The particular actions taken at various
stages of each organization’s experience were an-
alyzed to fashion a set of success criteria for the
change process. The success characteristics can also

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Exhibit 6. Employee Resistance to Change Under Four Management Styles

Management Style

Employee Resistance Mitigated through OI EL PL TL
Case B Case D Case A, F Case C, E

Lack of awareness Integrated planning and
teams

Awareness communication

Yes Yes Yes Yes

Comfort with the status
quo and fear of the
unknown

Vision clarity
Leadership and

accountability

Yes Yes Yes Yes

Organizational history
and culture

Relentless impact
assessment

Yes Yes Yes Yes

Opposition to the new
technologies,
requirements, and
processes introduced
by the change

Stakeholder engagement
Leadership and

accountability
Yes Yes Yes Yes

Fear of job loss Training and awareness
communication

Yes Yes Yes Yes

indicate measures of success for the change process
itself. The leadership characteristics identified as be-
ing common to all the case studies are discussed be-
low. Referring to the management styles outlined
in Exhibit 3 and the sources of employee resistance
to change outlined in Exhibit 2, Exhibit 6 summa-
rizes how leadership behavior can mitigate sources
of employee resistance to technology transformation
assignments.

Stakeholder Engagement

Authentic transformational leadership builds gen-
uine trust between leaders and followers. The
preceding case studies demonstrate that effec-
tive change happens only when top-down in-
sight/leadership meets bottom-up drive (commit-
ment to execution, the opposite of resistance). The
case studies show that the early involvement of peo-
ple affected by change and the commitment and
buy-in of senior management are very important for
successful implementation. Aligning and mobilizing
leaders and the commitment of middle management
are also viewed as important.

Employees need to fundamentally rethink and re-
shape the business while continuing daily opera-
tions. This has to be done as a cooperative relation-
ship, not as a project delivered by management. User
involvement is critical. Only by owning the problem,
and by being seen to own the problem, can a team
collectively engage with the issues and want to move
it forward by finding solutions. Once the vision is
out, leaders need to constantly reinforce it and get
every individual engaged. Success comes from tak-
ing change to employees, encouraging debate about
it, reinforcing it, and prompting people to infuse
it with their own personal meaning (case study E).
When organizational participants are empowered to
act as effective leaders and followers based on core
values and a common vision, the chances of excep-
tional outcomes are bolstered.

Vision Clarity

Leading by example is imperative, as is clarity about
what the organization wants to achieve. A leader
is expected to own the change. Personalized sto-
ries of successful transformation written in “human

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language” work much better than dry presenta-
tions. More than 70 percent of ERP implementa-
tions fail because of lack of leadership commitment.
In case studies D and E, top management publicly
and explicitly established the project as their top
priority.

A clear understanding of the business model, the
multitude of IT cost drivers, and how to earn the trust
of business executives is needed to push the trans-
formation forward.

After the initial business case is made, the lead-
ers’ responsibility is to continuously reinforce suc-
cesses and thus earn stakeholder confidence. Leaders
should “pursue their transformation journeys indi-
vidually, but collectively discuss and reinforce their
personal objectives in order to create an environ-
ment of challenge and support” (Aiken & Keller,
2007). In congruence with the findings of Keller and
Price (2011), all the case studies demonstrate the
necessity for inspirational leadership and strategic
clarity.

Leadership requires a high degree of what is some-
times termed emotional quotient (EQ). A connection
at the emotional level helps a team find courage and
gain acceptance, changing from a culture of fear and
doubt into one of planning and action. There is in-
creasing evidence that EQ plays a huge part in lead-
ership roles, which gives leaders their competitive
edge. A comprehensive benefits realization program
linked to the achievement of the vision would en-
able measurement of the business benefits and thus
ensure that the next generation of top management
personifies the new approach (Kotter, 1996).

Integrated Planning

A common factor for all the preceding success sto-
ries is building strong and committed top managers
who can work as a team and align themselves to

overall corporate goals. Just installing a system with-
out a proper business case fails to deliver results.
Component systems need to be analyzed along the
lines of the primary value streams of the enterprise,
with data sharing and removal of redundant pro-
cesses. Resolving organization-wide acceptance and
people issues associated with these solutions is criti-
cal. In case study E, a critical success factor was the
staff’s acceptance and assimilation of the process in-
novations and work practice complexities that the
system produced. In-depth business process reengi-
neering/global design, followed by in-depth training,
coaching, and aiding of personnel at all levels, is
crucial.

A clear understanding of the business model, the
multitude of IT cost drivers, and how to earn the
trust of business executives is needed to push the
transformation forward (case study D). Business-
IT alignment is critical. The CIO needs to identify
the organizational impacts and communicate them
to business leaders well in advance in order to ob-
tain their buy-in and preparation. Careful selection
of motivated and high-performing managers also is
crucial. EMC CEO Tucci has said he had to take
public action to tackle the “whiff of arrogance” that
used to characterize certain parts of the company
(Aiken & Keller, 2007).

Once a core team is selected, the members need to
be aligned in a clear direction through a charter that
chronicles desired actions. McKinsey suggests the
following rule of thumb: 80 percent of the team’s
time should be devoted to dialogue, with the remain-
ing 20 percent invested in being presented to. Face-
to-face meetings with a well-structured agenda en-
sure the effectiveness of dialogues. The best leaders
never forget that GNSP = HLOS (the greater num-
ber of successful people equals a higher level of or-
ganization success).

Powerful Business Case and Impact Assessment

Technology transformation is a long exercise
and, thus, demands collective motivation and

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commitment. As Brown and Eisenhardt (1997)
found, programs that track progress through metrics
and milestones are much more likely to be success-
ful, for they allow significant deviation from plans
to be identified and acted upon. All the case studies
follow the same general phases. A steering commit-
tee conducts reviews, encompassing any deviations
from plans, identifying root causes of such devia-
tions, and taking corrective action; having a single
point of contact for all these activities is crucial.

Equally, the long-term objectives of the firm should
not be overlooked in the relentless pursuit of quick
gains. Many transformations fail because CEOs go
for quick gains in order to secure their position
but lose sight of the big picture. Change readi-
ness assessments preceding a transformation effort
can be helpful. This helps to understand current
performance, and to identify problems, risks, is-
sues, and ways of mitigating these. An assessment—
such as the Lean Enterprise Self-Assessment Tool, or
LESAT (Nightingale, 2005)—is usually conducted
by a third-party facilitator and addresses enterprise
strategic planning, focusing on the value stream, de-
veloping lean structures, and refining transforma-
tion plans.

Understanding employee attitudes and continuously
communicating throughout the phases of unfreez-
ing, change, and refreezing (Lewin, 1951) ensures
that old habits do not resurface. Often, leaders suc-
cumb to their initial reaction to push back and use
positional power in an attempt to force buy-in. That,
of course, rarely works, and leaders are left with be-
nign support (and sometimes malicious obedience).
In the case studies above, change impact sessions to
coach the users on what they should start, stop, or
continue doing in the new system produced results.

Leadership and Accountability

Ultimately, when individuals make decisions about
how hard they will work to support a technology
transformation, they seem to rely on their own per-
sonal view of the leader who makes the request. Do

I buy into the leader’s vision? Is the leader trust-
worthy? Is this the kind of leader who can help me
navigate the turbulent waters of change? The com-
bination of leader’s charisma and vision can moti-
vate employees at the highest level. Charisma can
enhance the morale of employees, while vision com-
plements this by directing attention toward chal-
lenging and worthwhile goals. A trusted leader will
also be insightful, tapping into a mix of intuition,
experience, and knowledge. Risk is embraced, pro-
vided it does not put the entire enterprise under
threat. Resistance to transformation should never be
publicly punished; rather, dialogues should be initi-
ated for a peaceful understanding of concerns. As
seen in these cases, this factor can be compared to
Butler’s concept of “leading change” (Butler, 2003),
with the overall boundary considered as “possibility
space.”

Ultimately, when individuals make decisions about
how hard they will work to support a technology
transformation, they seem to rely on their own per-
sonal view of the leader who makes the request.

Leaders need to have a top-down knowledge of busi-
ness operations to navigate complexities, make in-
formed decisions, and be accountable for the same.
For example, in case study D, the CFOs who were
strong sponsors of change worked with IT on two
rounds of dry runs before changing ledger sys-
tems. Transformational leaders need to concentrate
on values such as integrity and fairness with a
responsibility for their own organization and the re-
sulting impact on society.

Aligned Performance and Culture

A transformational change requires the involvement
of all related parties, and a culture that promotes
team decision making will help to minimize cyni-
cism and resistance. In the case of the transforma-
tion of IBM from a mainframe maker to a provider

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of integrated hardware, networking, and software
solutions, the new CEO, Samuel Palmisano initiated
the company’s transformation via a bottom-up rein-
vention of IBM’s core values (Rouse, 2006). The val-
ues included dedication to every client’s success, in-
novation that matters, and trust and personal re-
sponsibility for all relationships. Processes and prac-
tices were then aligned, or realigned, with these val-
ues.

In case study B, the CEO believed that a company’s
receptivity to change follows the culture enforced
by the leader. That implies “a continued statement,
restatement, communication, and validation of the
company’s mission and values, which includes rein-
forcing its culture” (McKinsey, 2013). In addition,
another aspect of culture is how the organization
deals with failure and missed opportunities.

If the company culture is important to realizing the
strategic vision but is not moving in the same direc-
tion, or is being asked to move too often, misalign-
ment can occur. Culture and strategy need to be re-
aligned to ensure that the people and systems sup-
port the strategy. In case study D, the company had
a military-style culture that was threatened by the
merger. The global business had a team with a va-
riety of cultural backgrounds and experiences. The
resulting culture mutated to a patient one to build
buy-in for decisions and to be more open-minded in
adopting a different leadership and communication
style.

Specific Training and Awareness Communication

The leader will get engagement only if everybody
understands the common goal, accepts it, and can
clearly identify what theypg are supposed to do and
can do to contribute toward its achievement. This
requires constant communication in different ways
to tap into unconditional acceptance and to trig-
ger intrinsic motivation. Communication through-
out the program is required across all levels (both
horizontal and vertical) to maintain productivity.
Technology transformations are often long and frus-

trating. So in all the cases, systematic company-wide
communication was used, and customer and vendor
briefing sessions were conducted to keep external
stakeholders abreast of progress. Unless communi-
cation is effective, even a well-crafted change strat-
egy will go awry. N. R. Narayana Murthy, former
CEO of Infosys, said, “The first responsibility of a
leader is to create mental energy among people so
that they enthusiastically embrace the transforma-
tion” (Aiken & Keller, 2007).

Training and storyboarding facilitated by leadership
is another important aspect of this. In case study E,
employees were aided by training sessions available
both day and night. The open bilateral communica-
tion (surveys and company internal social network-
ing sites) encouraged by management gave users a
sense of ownership of the system and the feeling that
they had room within their role to do their best.

The leader will get engagement only if everybody
understands the common goal, accepts it, and can
clearly identify what they are supposed to do and can
do to contribute toward its achievement.

Technology transformations that have extensive
training programs are much more likely to succeed.
Training strategy can be a mix of classroom ses-
sions (virtual or physical), e-learning training pro-
grams, application simulations, and performance-
based learnings. This ensures an ongoing training
program that addresses both social/relational and
technical skills.

The Leader’s Role in Managing Transformational

Change

Transformation requires resolute action and the
classic virtues of commitment, single-mindedness,
passion, adaptability, and hard work. The case
studies presented here show that organizations

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Exhibit 7. Critical Success Factors in Business Transformation

need to have distinctive leadership capabilities to
manage radical discontinuity. Exhibit 7 lists the
critical success factors for an effective transforma-
tion, the key activities and deliveries for each of
them, and the likely results when any of these fac-
tors is missing.

All key stakeholders need to be engaged in under-
standing problems facing the organization and in
seeking solutions. A committed top management
team should be pulled together exclusively for the
initiative. HR managers should engage in building
new competencies.

Ideally, leaders should state the direction of a par-
ticular initiative and work with their teams to de-
termine how best to get there. This also empowers
line managers and team leaders to own the change
with their teams. Afterward, positive behavior will

need to be reinforced and the adoption of change
monitored.

Communication skills in both directions are cru-
cial. Leaders may have to have tough conversations
about emotionally charged subjects. Leaders have to
realize they are part of the system they are trying to
change. Too often, they think they are just there to
approve the program, write the check, and review
the results. In actuality, they have to understand the
change, decide to move the organization in the direc-
tion of the change, and pay attention to the change
every day until it becomes the culture. Leaders need
to understand that in order for their teams to follow,
there needs to be an understanding of the changes
taking place and the benefits of the same.

Organizational culture mediates the association
between leadership style and performance, and

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changes to cultural traits affect effectiveness and effi-
ciency. Competitive and innovative cultures that are
sensitive to external conditions have a strong and
positive impact on organizational performance and
sustainable competitive advantage (Barney, 1991).
Both leadership and culture are critical to under-
standing organizations. To make them effective,
managers cannot ignore one or be complacent about
the other. The results from this comparative study
of five firms suggest that an implementation pro-
cess backed by careful change management, innova-
tion, and cultural readiness is likely to be successful.
Understanding such parameters will enable business
leaders and managers to be better prepared for such
transformations.

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Kallol Basu is a business consultant at Tata Consultancy Ser-
vices with nine years of experience in business process reengi-
neering, process mapping and modeling, change manage-
ment, large program management, and process improvement.
Currently pursuing doctoral research in organization change
management at KEDGE Business School, Marseille, he holds
a master’s degree in business administration, is PMP-certified,
and regularly authors papers for various international man-
agement journals. He can be reached at kallolkbasu@
yahoo.com.

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