You will read the assigned case discussion at the end of the chapter and use the questions as a guideline for each submission. All case studies should include an introductory and concluding paragraph, as well as headings. All Case Studies should include an introductory and concluding paragraph, as well as headings. All Case Studies should include a biblical perspective with scripture included relevant to the topics covered in the Case Study scenario. Case Studies 1, will be in current APA format, 4–5 pages in length, not including the cover, abstract, or reference pages.Casee DiscussionRead “Managing Transformation at National Computer Operations” and prepare answers to the following questions:Prepare an implementation plan for change that would enable Gar Finnvold to create a fully competitive computer service within two years.How could Finnvold conduct an organizational diagnosis that would lead off his implementation? Be specific about how he could ensure mutual engagement.Managing Transformation at National Computer OperationsGar Finnvold knew his organization needed to change, to transform itself over the next two years.24 His 1,000 employees had enjoyed for their entire careers what amounted to monopoly status. They had been the exclusive provider of computer support services to the immense, global enterprises of the U.K.‐based National Banking Group. All that was about to change. National Bank’s newly appointed chairman had decreed that, starting in two years, all bank operations would be free to purchase their computer services from any vendor who could supply excellent value. Finnvold’s operation would be competing against the best in Europe. At the same time, Finnvold would be free to market his computer operations on the outside, to build a customer base external to the bank.Finnvold’s excitement at the challenge of transforming his National Computer Operations (NCO) into a truly world‐class competitor was matched by his anxiety (see Exhibit 3‐6 for a partial organization chart). As the longtime manager of computer operations, he understood only too well that NCO was unprepared to compete, not internally and certainly not externally. Internal bank customers had complained for years of the high‐cost/low‐responsiveness cultureExhibit 3-6 Partial Organization Chart—National Computer Operations.of the NCO. Buffered by their monopoly status, NCO’s computer technicians didn’t worry much about whether the customer perceived them as providing value. We understand better than the customer both what that customer needs and how much they should be willing to pay for it. We’ll define value.In two years, Finnvold knew that equation would be reversed. Given a free-market choice to seek the best provider of computer services, would they re‐up with NCO? Not likely, he thought.At least inside the bank, NCO enjoyed a substantial cost advantage over potential external interlopers. National tax laws exempted bank operations from having to pay a nearly 20 percent tax on internally provided services. That tax advantage evaporated when NCO left the safety of the bank to hunt external customers.What’s more, no one at any level in NCO possessed real general management experience. No one, Finnvold included, had ever run a freestanding commercial enterprise with all that implied: managing costs, customers, and operations within a fiercely competitive environment. Was two years even close to enough time to undergo the radical transformation required to make such a venture successful?NCO OperationsListen to how Peter Kapok, a longtime NCO manager, described what his organization was like in the 1990s: “We weren’t client oriented. We very much told our clients what they could and couldn’t have. We came to work for ourselves and did pretty much what we wanted. We simply didn’t consider ourselves working for a client.” The notion that customers might define the ultimate value of their services was alien to NCO.Henri Vieuxtemps, who entered the computer operations in 1988, recalled his amazement at how little the operation resembled a true business. “What surprised me,” he said, “was that money was no object. Service was not a major consideration.” What might be called the arrogance of technology permeated NCO’s approach to the business. “We spent money on technology that really didn’t matter,” continues Vieuxtemps, “not to the customer anyway. It was just something that appealed to us. In fact, we didn’t think of internal clients as customers at all. They were just other departments in the bank.”Vieuxtemps may have believed that the culture of NCO was fundamentally flawed, but to many of his fellow managers, things were going quite nicely. National Bank, after all, had eliminated the need for NCO to respond to market forces. Think of the situation in which NCO found itself: Guaranteed customers who would always cover the costs that the computer operation passed along, assured profitability.It’s little wonder that for most of NCO’s managers, effectiveness was not measured by organizational performance or client satisfaction. Their focus turned inward instead. How can I build up my functional domain? Enhance my personal career?“We were an organization of little empire builders,” Kapok observed. “The more people you had working for you, the more likely you were to get promoted. There were few performance measures, and almost no coordination of our efforts.” The functional silos of the organization were so powerful, said Kapok, that NCO’s own staff “didn’t quite consider ourselves working for the same operation. If someone from one unit went to someone from another to ask for help, they were considered a nuisance. We certainly never considered the impact of any of this on our costs.”NCO’s high spending, “customer—what customer?” attitude could only lead to resentment on the part of client operations within the bank. That resentment finally boiled over into open rebellion. The bank’s new chairman hired a consulting firm to evaluate internal computer operations. The findings were as disturbing as they were predictable. “They confirmed our worst fears,” recalled an NCO manager. “We were moribund.”Until the consulting report provided irrefutable evidence to the contrary, computer operations managers felt they did an excellent job of providing these services to the bank. “If you had asked us how we were doing,” admitted Gar Finnvold, “we would have said, ‘We meet our customer service levels most of the time. We are improving our unit costs year‐on‐year. And of course we’re adding value.’ ” It was only later that Finnvold came to recognize that customers held a view of NCO’s effectiveness that stood in diametric opposition to the opinion of NCO’s managers. “Our customers were saying, ‘You’re too expensive. Your damn system is always breaking down. And what added value?’ ”At the time of the consulting report, computer operations were billing approximately $240* million annually (within an overall annual information technology expenditure of $1.5 billion), almost entirely to internal bank customers. Although NCO offered myriad services, including processing, project management, and technical support and consultancy, they pointed with pride to two distinct competencies. The first was facilities management. “NCO can take the responsibility for all or part of a company’s Information Technology requirement,” announced their official literature, “which can include every aspect from providing the workforce and premises to the systems and services.” The second vital core competency was disaster recovery. “NCO provides planning and backup facilities for unforeseen crises or disasters such as fire and flood. Planning and backup facilities can be provided either separately or together and can be offered in either a ‘hot start’ or ‘cold start’ environment.”* Figures given in equivalent U.S. dollars.The ChallengeThe bank’s new chairman quickly recognized that NCO customers and managers held completely different views of value. He knew that his first task was to force NCO managers to adopt the customer perspective. The way to do that, he reasoned, was to inject market forces into NCO’s protected, monopoly‐like world.Using the consulting report as a driver, he first designated NCO as a profit center. He made clear that NCO would be expected to pare costs severely. Within a year, NCO dramatically downsized its workforce from 1,500 to 1,000. The chairman then called on Gar Finnvold to oversee more sweeping change, change that would be governed by two new ground rules:NCO could actively and aggressively market its services to external customers.In two years, all of the bank’s internal units would be allowed to purchase computer services from outside vendors.NCO, in other words, would have to become fully competitive in order to survive.Finnvold said he welcomed the challenge, particularly the notion of becoming a true market competitor. “I had this gut feel that we should try to sell external from day one,” he said. “If we didn’t, we’d never learn the lesson of what being commercial is all about. It was the way out of our cocooned environment.” He believed that there were external customers waiting to snatch up NCO’s services. The facilities management business was expected to grow 50 percent annually worldwide. NCO planned on being part of that growth. “We thought we really had things to sell and that we were the best,” said Finnvold.Endnotes1. Information on Hewlett‐Packard is from Peter Burrows, Backfire: Carly Fiorina’s High‐Stakes Battle for the Soul of Hewlett‐Packard (New York: Wiley, 2003) and George Anders, Perfect Enough: Carly Fiorina and the Reinvention of Hewlett‐Packard (New York: Penguin Putnam, 2003).2. Hurd quoted in Laurie J. Flynn, “Hewlett Chief Has No Plans but Says All Is on the Exhibit,” New York Times, March 31, 2005, p. C11. In 2010, Hurd himself was asked to resign as the result of a sexual harassment probe. The board soon hired Leo Apotheke to replace Hurd. Apotheke had been CEO of SAP until he was asked to resign by the German software giant’s board.3. Many of the concepts in this chapter are based on Michael Beer and Bert Spector, “Organizational Diagnosis: Its Role in Organizational Learning,” Journal of Counseling and Development 71 (July–August 1993), pp. 642–650.4. See, for example, Paul E. Lawrence and Jay Lorsch, Developing Organizations: Diagnosis and Action (Reading, MA: Addison‐Wesley, 1969); Jay R. Galbraith, Designing Complex Organizations (Reading, MA: Addison‐Wesley, 1973); David A. Nadler and Michael L. Tushman, “A Diagnostic Model for Organizational Behavior,” in Edward E. Lawler and Lyman W. Porter, eds., Perspectives on Behavior in Organizations (New York: McGraw‐Hill, 1977); Michael B. McCaskey, “A Framework for Analyzing Work Groups,” in Leonard A. Schlesinger, Robert G. Eccles, and John J. Gabarro, eds., Managing Behavior in Organizations: Text, Cases, Readings (New York: McGraw‐Hill, 1983), pp. 4–24.5. David A. Nadler, “Role of Models in Organizational Assessment,” in Edward E. Lawler III, David A. Nadler, and Cortlandt Cammann, eds., Organizational Assessment: Perspectives on the Measurement of Organizational Behavior and the Quality of Work Life (New York: Wiley, 1980),pp. 125–126.6. Elizabeth Wolfe Morrison and Frances J. Milliken, “Organizational Silence: A Barrier to Change and Development in a Pluralistic World,” Academy of Management Review 25 (October 2000), pp. 706–725; James R. Detert, Ethan R. Burris, and David A. Harrison, “Debunking Four Myths about Employee Silence,” Harvard Business Review (June 2010), p. 26.7. Moskal, “Is Industry Ready for Adult Relations?”8. Richard E. Walton, Interpersonal Peacemaking; Confrontations and Third‐party Consultation (Reading, MA: Addision‐Wesley, 1969).9. Beer and Spector, “Organizational Diagnosis.”10. In a previous edition of the text, the source of this questionnaire was misidentified. Thanks to Professor Preziosi for calling our attention to the error and allowing us to use the properly attributed questionnaire.11. Jack K. Fordyce and Raymond Weil, “Methods for Finding Out What Is Going On,” in Wendell L. French, Cecil H. Bell, Jr., and Robert A. Zawacki, eds., Organization Development: Theory, Practice, and Research (Dallas, TX: Business Publications, Inc., 1978), p. 121.12. Andrew O. Manzini, Organizational Diagnosis: A Practical Approach to Company Problem Solving and Growth (New York: AMACOM, 1988), p. 39.13. Beer and Spector, “Organizational Diagnosis.”14. E. E. Lawler, D. A. Naddler, C. Cammann, Organizational Assessment, pp. 337–343.15. See, for example, Severyn Bruyn, The Human Perspective in Sociology: The Methodology of Participant Observation (Englewood Cliffs, NJ: Prentice‐Hall, 1966); Robert Bogdan, Participant Observation in Organizational Settings (Syracuse, NY: Syracuse University Press, 1972); Patricia A. Adler and Peter Adler, “Observation Techniques,” in Norman Denzin and Yvonna S. Lincoln, eds., Handbook of Qualitative Research (Newbury Park, CA: Sage, 1994), pp. 377–392; James P. Spradley, Participant Observation (New York: Holt, 1997).16. David A. Nadler, Feedback and Organization Development: Using Data‐Based Methods (Reading, MA: Addison‐Wesley, 1977).17. Beer and Spector, “Organizational Diagnosis.”18. Michael I. Harrison and Arie Shirom, Organizational Diagnosis and Assessment: Bridging Theory and Practice (Thousand Oaks, CA: Sage, 1999), p. 25.19. Beer and Spector, “Organizational Diagnosis,” p. 648.20. See also Nadler, Feedback and Organization Development.21. The material on after‐action reviews comes from Department of Army, A Leader’s Guide to After‐Action Reviews. (Training Circular 25‐20) (Washington, D.C.: Headquarters, Department of Army, September 1993); Lloyd Baird, John C. Henderson, and Stephanie Watts, “Learning from Action: An Analysis of the Center for Army Lessons Learned (CALL),” Human Resource Management 36 (Winter 1997), pp. 385–395; Paul Wright, “Learn as You Go Through the After Action Review,” Knowledge Management Review (March–April 1998), pp. 4–6; Lloyd Baird, Phil Holland, and Sandra Deacon, “Imbedding More Learning into the Performance Fast Enough to Make a Difference,” Organizational Dynamics (Spring 1999), pp. 19–32; Marilyn J. Darling and Charles S. Parry, “After‐Action Reviews: Linking Reflection and Planning in a Learning Practice,” Reflections 3 (2001), pp. 64–72.22. A Leader’s Guide to After‐Action Reviews, p. 1.23. Based on Wright, “Learn as You Go,” p. 4.24. All names are disguised. This case is based on the research conducted for Bert Spector, Taking Charge and Letting Go: A Breakthrough Strategy for Creating and Managing the Horizontal Company (New York: Free Press, 1995).