Unit 5 ‘Complete”

1. In a narrative form, discuss the key facts and critical issues presented in the case. Specifically, highlight the critical issues facing the Bank of America's I & D team.

The case study of Bank of America as presented in the Harvard Business Review, Bank of America (BoA) experienced many issues found in organizations as they interject change in efforts to continually evolve. BoA, in the early 2000’s, was a juggernaut in the global banking and financial industry. Being one of the world’s largest financial institutions, it had to continuously pursue ways to improve, innovate, and remain the leader in its class. As banking competition increased, the number of branches began to decrease. Recognizing this, BoA set out to create a team that would be charges with the task of keeping the bank evolving, account holders growing, and to find innovations that kept them the leader of in the industry. The Innovations & Development (I&D) team was created.

The I&D team reviewed the banks history of growth and acquisitions, evaluated its competition, and developed ideas and innovated programs that would theoretically keep the bank moving forward. As these ideas evolved, they needed to be tested in the market prior to implementing the new programs company wide. The leadership of the bank decided to create a small number of test sites that would allow the I&D team to implement their improvement strategies while having a minor effect on the company as a whole.

As in most organizations, implementing changes always creates both positive and negative situations; not only from a functional point of view, but most critically in the way it effects the production, motivation, and attitude of the employees. Some key issues that the team faced were they were given the opportunity to innovate and develop with a very small budget, staff, and small number of test facilities relative to the companies size and financial resources. This created an element of apprehension from the beginning. Also, the test sites were not an accurate cross section of the diversity of environments in the company. The team had, from the beginning, an uphill battle to convince the CEO that the I&D initiative would positively impact the organization, as is the case in most companies. Other issues that had to be overcome were the acceptance of change from both the employees and the banks customers.

2a. Identify the issue you consider to be the most critical for the I & D team to address and discuss how the Systems Model of Change might be applied to resolving that issue.

The Innovation & Development team of Bank of America faced many issues as it developed and implemented changes. Of those issues, the lack of a strategic plan was evident and contributed to the overall success and acceptance of its changes. The I&D team failed to have a clear Systems Model of Change which allowed for their approach to lean more toward a trial and error, or shotgun approach to change. In the System Model of Change framework organizational changes, which is the end result of the I&D team, the I&D team failed to define their target elements of change. Target elements of change are the drivers or elements of change that a team can identify and change to have an effect on an organization. Over a period of time the employees that were not in the test facilities began to feel like they were left out, or not important enough for the new, innovative ideas.

The team would have been well served by having a more focused vision and strategic goals for their development of programs to improve their banking experiment for the customer. In doing this, they would have had fewer ‘trial and error’ programs that would have had a quicker, more positive impact on the organization.

2b. Consider the sales associates' incentive system. How could Lewin's Change Model be applied to the sales associates to produce improved customer service?

As part of the I&P teams process, it had to find a way to motivate the employees to accept the changes to the ways things had been done in the past. Compensation is an easy target when change in behavior or motivation is necessary. During the development of the Change Model, Kurt Lewin stated the following:

To understand any situation it was necessary that: ‘One should view the present situation – the status quo – as being maintained by certain conditions or forces’ (Lewin, 1943a, p. 172). Lewin (1947b) postulated that group behaviour is an intricate set of symbolic interactions and forces that not only affect group structures, but also modify individual behavior. Therefore, individual behaviour is a function of the group environment or ‘field’, as he termed it. Consequently, any changes in behaviour stem from changes. be they small or large, in the forces within the field (Lewin, 1947a). (Burnes, 2004)

From this study and observation of change, Lewin developed the Change Model, which consist of three stages; unfreezing, changing, and refreezing. In Bank of Americas case, part of the change was to change the way that the personnel at the test facilities would be compensated. The desired results were not achieved because of the carte blanche implementation. Using the 3 step model of Lewin, the employees old behaviors and their attitudes would have been replaced, thus the unfreezing effect. The I&D team seemed focused and very good with the step of change within the model, doing things differently, changing procedures, and physical environments.

A significant body of anecdotal evidence suggests that issues related to refreezing, such as poorly designed reward systems and failure of managers to monitor and follow-up, often impede effective change (Bossidy and Charan 2002; Charan and Colvin 1999). Change scholars have occasionally observed relationships between refreezing activities such as monitoring-based control and change achievement (Ford and Greer 2005; Kotter and Schleisinger 1979). In their study of Lewin’s (1947) model, Zand and Sorenson (1975) found a strong relationship between refreezing and implementation success. (Greer, 2009)

As suggested by Greer, implementing the change step, in this case, the way the employees were being compensated for the task that they performed, i.e. helping customer with various services, without unfreezing the employees’ previous behaviors, resulted in the experiment being reversed back to the original compensation plan.

Burnes, B. (2004). Kurt Lewin and the Planned Approach to Change: A Re-appraisal. Journal of Management Studies, 981-982.
Greer, B. M. (2009). Managing Change in Supply Chains: A Process Comparison. Journal of Business Logistics, 47-63.

2c. discuss whether Bank of America's Atlanta I & D unit can be considered to be a "Learning Organization."

To be a learning organization it must be one that proactively creates, acquires, and transfers knowledge and that changes its behavior on the based on that knowledge. Based on those criteria, BoA’s Atlanta I&D team is a learning organization. The teams’ vision as stated by Amy Bradey, senior VP and I&D team executive, is to develop “creative ideas to increase customer satisfaction and grow revenues.” Reviewing the work of the I&D team, one areas that the team could improve upon is transferring the new knowledge and processes beyond the test facilities. Once the new processes were claimed as a success or a new standard, it seems as though the process was not rolled out to the other branches quickly, creating some dissension and jealousy among non-participating branches.

3. Assume that you are Brady or Butler and you have been asked to formulate a recommendation on taking on additional branches. Present your recommendation and thoroughly explain your reasons.

In increasing the number of pilot branches, it is imperative that the I&D team employ a strategy for managing the change that will take place. The innovations that the I&D team are able to create will be implemented into the pilot branches utilizing a systems approach model of change. By understanding the changes and the impact it will have on the organization, the I&D team will formulate a mission statement so it can measure the level of success. A strategic plan will be developed and followed to keep the process on task and in line with the overall vision of the organization. With a focused target of change, the team will be able to minimize the ripple effect of change that evident when organizational change takes place. In continuing the effort to be the industry leading bank with the best customer service available, it is in the recommendation of the I&D team that number of test or pilot branches be increased.