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TABLE OF CONTENTS § The CPP Story:
Setting the Stage ABOUT THE AUTHORS Nagah Ramadan is the executive vice president of RCC Consultants, Inc. He served as commissioner for the Cleveland Department of Public Utilities from 1994 to 1997, during the transformation effort described in this volume. He has also served as the capital programs director for the Suez Canal Authority. His educational achievements include an MBA from Cleveland State University and a BSEE from University of Alexandria, Egypt, and he is a PhD candidate for a doctorate in executive management at Case Western Reserve University. Patrick Parker-Roach is a vice president in the Enterprise Customer Management practice of Technology Solutions Company. He has 23 years of experience in business process reengineering, business development management, marketing, knowledge engineering, computer science, educational design and delivery, and electrical engineering. His clients include Intel, McDonnell Douglas (Space Station Proposal Team), First Data Resources, World Bank, AGIP Oil, and Cleveland Public Power, and he logged 15 years with Digital Equipment Corporation as an internal consultant. He has a decade of experience in Artificial Intelligence (AI) and knowledge-based systems as they apply to business problems. Pat is also a consultant member of the Society for Organizational Learning. Carl Klempner is also a vice president in the Enterprise Customer Management practice of Technology Solutions Company. His skills in the business, education, and high-technology areas combine 36 years of experience in engineering, management of educational research and design, service organization management, knowledge engineering, and marketing and business process reengineering. Carl has consulted to Cleveland Public Power, Chemical Bank, Intel, and numerous government organizations. Carl has also received many awards and certificates of recognition throughout his career, including one as a participant in the Lunar Excursion Module (LEM) program, the project to put a man on the moon. EXCERPTS The CPP Story: Setting
the Stage Cleveland Public Power (CPP) is the municipal electric power company for the City of Cleveland, Ohio, in the U.S. Since it was founded in 1908, CPP has been locked in a bitter, competitive battle with an investor-owned electric utility, Cleveland Electric Illuminating Company (CEI), of First Energy Corporation. The two companies compete on a street-by-street, house-by-house basis. In fact, it is not unusual to see two sets of power poles lining the same street. Historically, CPP has serviced the older neighborhoods within Cleveland proper, while CEI has serviced the northeast Ohio neighborhoods and the more lucrative commercial and industrial accounts. In 1987, CPP received funding through a large bond issue, and decided to embark on a program aimed at expanding CPP's coverage across the City. As a direct result of this expansion effort, CPP's service area expanded from 35 percent to nearly 50 percent between 1987 and 1995. Although the physical effort of putting up poles, stringing cable, and putting meters on homes progressed well, CPP began feeling the growing pains of the expansion. And although customer demand throughout the expansion effort proved high, customer satisfaction ratings fell. CPP's operating systems and organizational structure simply could not keep pace with the company's expanding power delivery system and increases in demand. In February 1995, the Mayor of the City of Cleveland appointed a new commissioner to address CPP's problems. During his first month on the job, the commissioner embarked on a major transformation effort to address the performance issues. He also realized that he needed to maneuver CPP into a better position to meet another looming challenge: deregulation of the electric power industry. The Assessment "We looked at
the way cars were sold and serviced, we got all the problems and failures
on the table, and then we built a system to eliminate every one of them." CPP took a very similar approach to Dick Chitty's at Lexus. The company looked at the way electricity was bought, sold, delivered, and serviced. In addition to identifying all the problems and breakdowns associated with these processes, CPP also identified the things that it had done right. Then CPP plotted a course of action designed to eliminate problems and breakdowns and celebrate and reinforce successes. A good navigator at sea will tell you that there are three main ingredients necessary to plot a successful course: knowing where you are, knowing where you want to go, and knowing what will affect your journey. As CPP began the first stage of its reinvention effort-—assessing current reality—-it incorporated all three of these concepts. First, the general environment was reviewed in order to lay an early foundation for the assessment. This "Getting Ready" phase included what was perhaps the most important decision of the effort: to put the reinvention work into the hands of the people in the organization who actually do the work. Next, the change team did an in-depth "Analysis of Current Reality" at CPP. They documented how work was performed, and what worked well and what did not. Then the team arrived at a shared "Future Vision" for CPP. This vision embodied the principles and values of CPP and set a long-range point on the horizon that CPP could steer toward. Finally, the team incorporated the business' environmental conditions and current realities into their future vision. In this way, they created a realistic short-term (five-year) "design" for realizing the vision. This design was documented as a roadmap for the overall transformation effort, and was implemented over the next 20 months (see "CPP's Transformation Design"). The diagram "CPP's Transformation Design" illuminates the fact that the reinvention team was working in a highly dynamic environment. Within this setting, the very act of analyzing the organization sparked change. As changes occurred, the team incorporated them into subsequent plans and thereby set the stage for deliberate, continuous improvement. Below is a more detailed discussion of the four phases of the assessment stage. Getting Ready The commissioner was aware of the situation's complexity when he embarked on this work. For example, he knew that given the political forces swirling around the public power industry, the competitive environment, and looming deregulation, CPP would have to effect its transformation speedily. Yet there were many constraints to reinventing CPP. The commissioner knew of some of them; others quickly became apparent. As one example, the commissioner had previous experience working in both the public and private sectors. He knew that public and private enterprises were profoundly different in how they made decisions, measured results, and rewarded and motivated people. He also knew that miscommunication within organizations was common. He spotted a potential communication problem when he noticed that, in CPP's headquarters building, different functions were physically separated by locked doors. To walk to a different department, employees had to be given the appropriate key-card access privilege. Involving the Whole Organization To reverse this compartmentalization, the commissioner decided to engage the entire organization in the reinvention process. His rationale was that if CPP wanted to achieve sustainable transformation, the people who would have to implement it and live with the results would need to embrace that transformation. He therefore removed the key-card access locks and then selected a team to represent the organization in this initial assessment work. The team comprised a complete cross-section of CPP's population and included management and lineworker representatives from each major function-—Customer Service, Trouble, Engineering, Maintenance, Marketing and Sales, Meter Reading, Computer Operations, Engineering and Design Contractors, Personnel, and Administration. Other demographic and cultural attributes factored in to ensure a balanced cross-section included gender, union membership, civil service membership, seniority, and so forth. CPP also engaged two outside process consultants to guide the team through the assessment effort. Gathering Information As the next major step in the "Getting Ready" phase, the process consultants conducted one-on-one interviews with members of the new team. This was the only individual work done during the assessment, and the interviewers established confidentiality contracts with each person interviewed. The consultants drew heavily on the work of Harry Levinson on analyzing and diagnosing organizational effectiveness in their design of the interviews. The purpose of the interviews was to get a general "lay of the land," uncover a sense of culture at CPP, and reveal any "landmines" that might be lurking just under the surface of the organization. The interviews also gave the team members an opportunity to vent feelings and articulate any hidden pressures or concerns that might have been building. These interviews showed that CPP was an organization with few regards and few measurements. (For example, it had no internal customer satisfaction metrics.) There were so many layers of organizational decisions—-some by prior administrations, some by old management teams, and some by City ordinance—that it was all but impossible to truly understand how CPP operated. Perhaps most striking, however, the interviewers discovered that CPP had a soul. This soul was embodied in the collective drive of its staff to serve the citizens of Cleveland. This powerful bond with fellow citizens came through clearly during the interviews, and showed up in the CPP staff members' day-to-day approach to work. Learning from The Beer Game As the next step in "Getting Ready," the process consultants helped prepare the team to work effectively as one unit. The interview process had highlighted some old feuds and animosities between various functions that, in some cases, had been simmering for as long as a decade or more. The consultants knew they had to create an environment in which people could talk freely about issues and not get caught up in personal conflicts or blame—an atmosphere that would endure through the assessment phase and beyond. To open a conversation about such an environment, the consultants turned to The Beer Distribution Game, a device developed by John Sterman and colleagues at MIT. In a fun but very real way, The Beer Distribution Game demonstrates how structure drives behavior in organizational settings. It shows that even the best-intentioned efforts to optimize a group's performance within an organization can lead to suboptimal performance by the whole organization. A shared understanding of the connections between structure and behavior reduces the common tendency to try to place blame, and thereby frees people to share their own thoughts and ideas openly in a group setting. After playing The Beer Distribution Game on the Friday night before the formal assessment kick-off, the team raised an almost unanimous cry of "That's us!" Everyone realized that no matter how skilled the management team was, CPP would not get any better unless the organization's overall structure changed. Years later, team members still recall the lessons of that night and use them to get through difficult situations in a positive, productive way. Armed now with a solid understanding of the norms, behaviors, and other cultural forces at play at CPP, the team designed a plan for assessing the organization's current situation. The plan called for five two-day meetings over five weeks, a schedule that would balance the need for speed with the necessity to keep the organization running. CPP was now ready to move into the "meat" of the assessment phase: "Analyzing Current Reality."
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