Organizational Change & Innovation Culture Development Project in an ICT Company

Organizational Change & Innovation Culture in Ericsson Turkey

MM907 HR Management Course Assignment

Hasan Basri AKIRMAK

Rev PA5


Contents

1 SYNOPSIS .............................................................................................. 3

2 DESIRED END STATE ........................................................................... 3 2.1 Assessment of External Fit: New Strategy for New Environment ............ 3 2.2 Assessment of Internal Fit: Organizational Changes for Innovation ........ 4

3 ASSESSMENT OF READINESS FOR CHANGE ................................... 5 3.1 Gap Analysis Activities ............................................................................ 5 3.2 Gap Analysis Results ............................................................................... 6

4 ACTIVITIES TO INITIATE CHANGE, ADOPT NEW BEHAVIORS & STABILIZE .............................................................................................. 6

4.1 Innovation Culture Change - Action Plan ................................................. 7 4.2 Innovation Culture Change - Project Phases ........................................... 7 4.3 Phase 1 - Accomplishments .................................................................... 8 4.4 Phase 1 - Results .................................................................................. 13 4.5 Summary and Next Steps ...................................................................... 13

5 References ........................................................................................... 14


1 SYNOPSIS

This article analyses the organization culture change project for Innovate Everyday Principle performed by Ericsson Turkey Change Agents. I was elected as a change agent in February. We are a team 4 change agents and I act as the driver for Innovate Everyday Cultural Value. The change project will continue till the end of 2011.

To provide some background info: The Change Agents Program has been employed in Ericsson Turkey since 2009 for certain cultural values. The change agents focus on the people and culture aspects of an organization and they are expected to reach out to all employees through a number of initiatives that will motivate employees, increase customer satisfaction and the perception of Ericsson in the market1.

In 2011, a new cultural value called ‘Innovate Everyday’ was included in the program. The following chapters explain the Innovate Everyday Cultural Change Project and apply the concepts learned in this course [1].

2 DESIRED END STATE

In order to understand the Innovate Everyday Organization Culture project, a brief summary of the organizational changes performed by Ericsson globally for ‘innovation at the edge’ is explained.

2.1 Assessment of External Fit: New Strategy for New Environment

The telecommunications industry had different characteristics in the last decade. There were a few telecom operators (customers) in each market and a number of vendors. From an organizational perspective, Ericsson in year 2000 was highly centralized where the Business Units (organized by product categories) in Headquarters had full control of product development, marketing and sales.

1 For more info on the Change Agent Program, please refer to the essay submitted by Selçuk Kavak for EMBA 2011.


The market has been changing since then. The IT & Telecom industries converge, meaning vendors specialized in one industry can address the other. The consumers (our customer’s customer) are more empowered. They demand more services, applications. They demand customization of the services and applications to the local tastes, shorter time to market with less cost. The new market trends resulted in a larger number of customers demanding diverse products. To adapt to the environment, Ericsson revisited the strategy. As of last year, the new organization was divided into 10 regions. Each region had authority on creating own strategy, solution portfolio, marketing and sales activities.

From an innovation perspective, one challenge to adapt to the new environment was to find out how Ericsson could address the needs of hundreds of customers (not necessarily in the telecoms domain) with thousands of solutions, each adapted to the individual needs of each customer. The solution is to spread innovation from the R&D organizations to all parts of the organization and down to the edges: to the regions. The aim is to create an environment that encourages all organizational units to contribute and then follow up on ideas.

In fact in 2010, with the sponsorship of the Ericsson CEO, ‘innovation’ was included in the company’s mission statement: Innovating to empower people, business, and society.

2.2 Assessment of Internal Fit: Organizational Changes for Innovation

Innovaro –a consulting company with expertise in innovation- claims that common traits of innovation leaders are: Strategic focus, insight, collaboration, process and organization [2]. Below is a summary of the organizational changes performed for innovation. Understanding the organizational changes gives us hints for setting the expectations on our organizational culture change project.

Tasks: The major tasks related to innovation were developing new products, services and business models (business innovation), continuously improving and simplifying processes (process innovation), attracting skilled workforce to the company (talent innovation) and increasing the brand value of Ericsson (brand innovation). The expectation from the regions is to drive each innovation locally. The expectation from the global functions is to synchronize regional activities and manage globalization of selected innovations.

People: The major expectations from the workforce is to come up with ideas for business, process, talent or brand innovation regularly inline with the 2015 strategy. The expectation for Ericsson Turkey is 5 ideas per employee per year on average2. The quality of the ideas shall be evaluated by the comments/votes and the rate of implementation. The employees are also expected to challenge status quo, try out new ways of working; don’t be afraid of taking risks or making mistakes.

2 Source: Top Management. The Number of Ideas per Person is 0.1 before the start of the change project.


Structure: In order to align innovation tasks with people, certain new organizational structures are introduced in all regions. For instance, a global platform is introduced for the collaborative idea management [3]. For each region, Idea Box Managers are appointed for screening and follow-up of each idea. A new body called New Business Development and Innovation (NBDI) for seed funding of selected ideas for execution is introduced for each region. Senior management is included in NBDI council. A process for managing idea submissions in a funnel is introduced (Idea Generation, Selection and Funding). Virtual teams are created for review of submitted ideas.

Systems: The adaptation of the systems influencing innovation such as recruitment, selection, training, performance appraisal or rewarding schemes are ongoing.

Culture: Our CEO would like to see Ericsson as a bold innovator that is consistently delivering tremendous value to its customers, shareholders and employees. In our change project, we aim to think globally and locally, and then act accordingly. That is, we shall find a balance between the dominant innovation cultures of Ericsson global, and adapt to the local culture if necessary.

3 ASSESSMENT OF READINESS FOR CHANGE

When we were assigned to be the Change Agents for the Innovate Everyday Cultural Value, we performed a survey of the organizational change activities within Ericsson.

3.1 Gap Analysis Activities

During February, we analyzed the global audit results on innovativeness performed in 2010 for the Group Function Strategy and Marketing by an external company. The results were based on the annual employee survey, which was extended to measure the innovation perception and capabilities of employees.

During March and April, we performed a similar situation analysis for Ericsson Turkey.

If the innovation is observed as a market place of ideas, there are idea sellers (individual employees), idea buyers (account management, client engagement, marketing organizations) and the market regulators, who promote certain themes for ideation. We interviewed all the stakeholders (around 20 employees from 8 different organization units with different roles and seniority). We collected feedback on issues and their proposed solutions. We further interviewed 20 people, who already submitted at least one innovative idea to the innovation process.

Finally, we performed a survey on innovation and organization culture of IBM, IDEO, Apple, Google and innocentive.com from Internet. We also studied the 8 Step Change Management Process of John P. Kotter [4].


3.2 Gap Analysis Results

Some of the negative findings for Ericsson Turkey are as follows:

No common understanding of innovation (What kind of innovation?)

Expectations of management on innovation not clear to employees (What is expected from me?)

No urgency (Why now?)

No clear incentives for innovation

Lack of resources for innovation (e.g. lack of time, lack of seed funding for implementation).

Assignment-driven culture stifles exploration, risk-taking

Customer & user insights weak

Supporting processes is on average are either not known, or is either complicated or needs improvement

Lack of execution of ideas

Some of the positive findings for Ericsson Turkey are as follows:

High personal commitment of employees

Top management support (Our wishes may have been rejected from other parts of the organization, but the top management always supported our recommended actions)

Some organization units already possess the innovation culture traits (e.g. local R&D, some Engagement Practice & Account Management organizations.)

4 ACTIVITIES TO INITIATE CHANGE, ADOPT NEW BEHAVIORS & STABILIZE

After understanding the desired end state, and analyzing the as is situation, I came up with an action plan to reach our goal of molding innovate everyday cultural value into our DNA.


4.1 Innovation Culture Change - Action Plan

The action points were organized into 3 groups. Actions we - as Innovate Everyday Culture Change Agents - can do ourselves, actions we can coordinate with other stakeholders, and actions which we have no control, but we can only recommend to other stakeholders. We focused mainly on the ‘do’ and ‘coordinate’ activities.

4.2 Innovation Culture Change - Project Phases

To spread the desired ‘Innovate Every Day’ principle into the organizational culture, I recommended a step by step approach3 .

3 Kotter’s 8 Step Model also suggests ‘Create Urgency’ as the first step of a change project. However, we had difficulty in

finding it, as there is no real crisis situation right now for Ericsson Turkey (e.g. low profitability, business decline etc.)


4.3 Phase 1 - Accomplishments

The Phase 1 (Market Place Creation) has been executed during June and July. It includes creation of an internal marketing campaign called ‘FİKİR VAR LİMİT YOK” (There’s Idea – There’s No Limit) which includes the following:

Activity Expected New

Behavior

Rationale Detailed Info

Communication with

Posters

Awareness on

innovation

expectations.

Consistent goals

and language.

Clear

communication is

critical to get buy-

in.

Common

vocabulary.


Awareness Activities with

Creative Ads on LCD

Screens, and mini

Promotions (e.g.

invitation for a rock

concert).

Awareness on

innovation

expectations,

rewards and

recognitions,

short term

success cases.

Continuous

communication

through different

channels makes

innovation a hot

topic, reaches

more audience

(segmentation of

audience).

Creation of alternative

communication channels

in social media

(facebook, twitter)

Creation of a

coalition as

Kotter suggests

[4].

Reward the

active

contributors.

Promote them

toward peers

and managers.

Also provide a

trendy

communication

channel (mail or

Facebook

Innovation club

acts as a

recognition tool for

active contributors

(your idea

submission is seen

by your peers and

your managers)


newsletter is not

sticky any more)

Innovation Awards Reward not only

implemented

ideas, but also

other

categories.

Instead of waiting

for the HR

organization to

update the reward

scheme, we gave

little awards to

several

contributors as this

is also sufficient

for many cases.

5 Awards given in All-Employee Meeting. The winners were announced

in different communication channels (Innovation Club, Intranet, LCD

Screens)

› Most Active Contributor

› Most Popular Idea

› Implemented Idea

› Most Innovative Collaboration

Innovation Day Show top

management

commitment

All employee

meeting is a huge

event (500+

employees meet in

a hotel for half a

day). Spending 45

minutes on

innovation

stresses the

importance.

› As part of the All Employee Meeting (~500+ Participants)

– A Customer CXO made a Keynote Speech on Innovation

– One of our colleague’s 8 yrs old daughter told an

Icebreaker Story on Creativity (Courage of a child to take

risks and give it a try)

– I gave a pitch on Innovation Change Agent Activities on

Innovate Everyday principle


Innovation Assist Service Employees are

not

overwhelmed by

the processes.

Change agents

who are

Informal teams

can have more

credibility in the

eye of the

employees, as

they are not

‘selling’

concepts.

Change agents

may promote

certain activities

but demote

others.

Simplified idea

submission brings

more ideas.

Face to face

meetings is

effective in

communicating the

desired new

behaviors.

As part of this service, we go to department meetings to communicate

the expectations on Innovate Everyday principle. We have already

reached 100 employees in such meetings (~20 % of workforce).

Innovation Assist service is ready to answer questions such as:

› How can I contribute?

› Where do I find time and money?

› How can I submit my idea?

› Who can I discuss my ideas with?

› Where can I learn more about innovation?

› Where can I find tools, best practices and inspiration?

Innovation Index Report

of Organizational Units

KPI to measure

performance

Giving

organizational

units the means to

The submitted ideas were analyzed, and a report was presented, which

assists line managers to evaluate their innovation contribution.


measure

themselves will

make it easier to

improve

themselves.


4.4 Phase 1 - Results

After 5 months of active work, the positive effect of our activities is clearly observed. To illustrate, there is a ~40 % increase in Idea Submissions after our Market Place Creation Phase Launch 4 (e.g. Posters, Innovation Club in Facebook, Innovation Day Activities in

all Employee Meeting).

Almost 30 % of our workforce became voluntarily part of Innovation Club in Facebook.

4.5 Summary and Next Steps

The overall progress for the 2011 project is still far away from the desired state. We spent 5 months for the phase 1, and only 4 months are remaining for the 3 phases.

As of 23 June, the situation according to the Innovation Diffusion Curve [5] is as depicted in the figure below. This is also due to the fact that the organizational culture change needs a lot of time and energy, and the change agents are performing activities on voluntary basis. Another reason is that, the other phases are more challenging to design and implement compared to awareness creation activities.

Figure 1 - Innovation Diffusion Curve - Ericsson Turkey Status (23 June 2011)

Many challenges stay in front of us unsolved: Do we have good ideas? Do we have the simple processes to harness them? Do we have the speed and courage to turn them into meaningful change and new business?

4 Period: 27 May – 24 July


The remaining activities for fostering Innovate Everyday Principle our organization culture are as follows:

More Transition Devices shall be used to support the Innovation Change Agents.

The Knowledge, Skills and Abilities of employees on innovation shall be developed with appropriate training. (In fact a training event called Innovation Campus is being organized.)

The resistance of employees who do not want to leave comfort zones shall be overcome.

As mentioned in the course, more Short Term Wins should be communicated to employees.

Success as well as responsible failure shall be celebrated (e.g. award the biggest failure)

Innovation Focus themes shall be announced to steer innovation activities (business, process, talent and brand innovation).

The face-to-face workshops shall be continued for the remaining parts of the organization to keep momentum.

The supporting systems influencing innovation such as recruitment, selection,

training, performance appraisal or rewarding schemes are still being developed. We as the Innovation Change Agents shall monitor their progress and provide bottom-up feedback to HR organization for the organizational design of these systems.

5 References

[1] Lane, H.W., Maznevski, M.L., DiStefano, J, & Dietz, J. (2009), Managing Change in Global Organizations. In International Management Behavior: Leading with a Global Mindset (6th Ed), Oxford England, Wiley

[2] Innovaro Consulting, http://innovaro.com

[3] Everyone Innovates Everyday – Collaborative Idea Management at Ericsson, The Management Exchange (McKinsey), http://www.managementexchange.com/story/everyone-innovates-everyday-collaborative-idea-management-ericsson

[4] Kotter, John P., Leading Change, Harvard Business Press

[5] Moore, Geoffrey A., Crossing the Chasm, Harper Business Essentials

http://innovaro.com/

http://www.managementexchange.com/story/everyone-innovates-everyday-collaborative-idea-management-ericsson

http://www.managementexchange.com/story/everyone-innovates-everyday-collaborative-idea-management-ericsson


Disclaimer:

As this article contains confidential information, the company specific information provided in the article shall not be disclosed to third parties without written consent from Ericsson Turkey.

Organizational Change & Innovation Culture Development Project in an ICT Company

Leadership & Management