December 2004

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Guest Commentary

Robin MacGillivray is president of Business Communications Services for SBC in the Western Region. This article is based on testimony presented to the California Little Hoover Commission’s public hearing on the California Performance Review proposals for reorganizing state government.

California’s Little Hoover Commission has the formidable task of making recommendations on Governor Schwarzenegger’s plan to reorganize state government under the California Performance Review.

The Commission recently asked me to provide testimony on the topic of  “practical lessons on transformational change in large organizations.”

I was pleased to be able to share what I have learned about change based on my experiences in the telecommunications business – which is arguably the nation’s most profoundly transformed industry over the past 20 years.

In that time period, I have had the opportunity to hold leadership roles in one spinoff, two mergers and three major initiatives designed to radically re-engineer core processes at SBC, one of the largest companies operating in California.

The telecommunications revolution has spawned an environment that continuously innovates, delivering new services to consumers, such as wireless and broadband communications.

It has also created a competitive marketplace that has driven quality up and prices down.

The CPR has the same potential to markedly improve the quality of state services and, at the same time, reduce costs for Californians.

At the core of each of the “change events” I’ve experienced at Pacific Bell and SBC were four fundamental questions:

1. What are our core competencies? What is it that we do well – and must continue to do well – in order to succeed and grow? And what is non-essential to our success that should be stopped or delegated to others?

2. What organizational structure will best execute these competencies?

3. In what technology must we invest in order to accomplish our aims?

4. What rules and/or policies are needed to reinforce, govern and enable our efforts?

These “change events” at SBC have resulted in some significant accomplishments. SBC has been able to streamline our operations as well as rationalize our supply sources.

We’ve made decisions to stop doing some things ourselves – like fleet repair, food services, building services, landscaping – and engage experts in their fields to handle on our behalf.

We’ve made the choice to change the way we do things, such as revamping our supply chain and realigning work groups. And we’ve increased our focus in key areas, like investing in technology to drive up productivity.

Some of these actions have brought about incremental improvement; others have been transformational. Our strategic sourcing efforts alone have lead to more than $1 billion in savings.

Based on my own experiences and lessons, I believe that meaningful transformation can occur in state government, if its leaders prioritize what they choose to take on and then address the following 10 items:

1. Significant change cannot be accomplished by issuing an order. To enact a new vision, leaders must create a “burning platform” that will motivate the organization to jump from the comfort of “today”, into a different “tomorrow.” Followers want leaders to help them understand why must we change?

2. Speaking of leaders, it is essential that there be one! Followers want to know, who’s in charge? It is critical that this leadership be constant and consistent.  Those conferred with driving the change can’t just be a random collection (or worse, a politically motivated collection) of individuals – they must be integrated, inspired and empowered teams selected to accomplish specific results.

3. These leaders and teams must then create and share a framework or blueprint for accomplishing change. Followers want leaders to tell them what are we going to do, when?

4. There must be a clear articulation of measurable goals. Followers want leaders to tell them how will we know we’ve succeeded?

5. There must be quantifiable intermediate milestones to assess progress toward the ultimate goals.

6. There must be a schedule of reporting tied to those intermediate goals to ensure that the transformation remains on track.

7. While the process is under way, a “cheerleader” must be entrusted with the role of maintaining momentum and belief in the program.

8. “Early wins” must be spotlighted in order to keep participants enthusiastic and confident of attaining the ultimate goals.

9. A definitive ending point must be declared. You have to not only know where you want to go, you have to know when you’ve arrived. Benchmarks need to be established to evaluate success.

10. Finally, successful change must be “celebrated” in order to recognize the   achievement of transformation, as well as to cement the perception that the project has succeeded.

Can an organization as large as the State of California really do this? I believe the answer is yes.

SBC, with more than 160,000 employees, has accomplished profound changes. And so can the CPR. Californians can get better value for their tax dollars and improved services by following a strategic plan for transformational change.