Leadership and change management in Toyota's ERP system implementation

Business Management Critical Reflection

Critical Reflection of Leadership and Change Management on an it System Implementation

The Information Systems (IS) Department of Toyota Motor Sales USA (TMS) had become overwhelmed with the many committed projects to the sales force, service, and dealer organizations, yet had not been able to define accountability for results. This situation was made even more challenging due to the fact that a new Enterprise Resource Planning (ERP) system was being implemented throughout TMS, requiring significant change to IS, Marketing, Services, Operations and Sales roles throughout the company. Despite these many projects and the impending ERP project that was one of the largest in the company's history, the IS Department failed to deliver any of them on deadline, earning a reputation as unresponsive and not connected to the broader TMS business (Wailgum, 2005). The breakdown of responsibility between requests of the department and their performance was due to the IS Department having little accountability regarding the completion of projects and a strong resistance to change. The need for consistent leadership and the development and execution of strategies to overcome resistance to change was coming to a break point quickly. As the new ERP system was badly needed as the coordination point for all major IS projects in progress and planned. The many challenges of the PeopleSoft ERP implementation including the finalization of a distributed order management system, parts forecasting system design and launch, advanced warranty management system completion and financial document management project (Wailgum, 2005). All of these projects would eventually tie into the Dealer Daily Extranet Initiative, a massive project designed to give TMS Dealers in the U.S. The latest and most up-to-date information available. The roll-out of this system would require migration from IBM as/400-based systems that had become antiquated both in terms of the applications developed for them, and the connectivity required of dealers to get information from them. Migrating employees off of the IBM as/400 system in IS would require massive re-training efforts so these more senior members of the programming and support teams could use the new system. Most importantly, there was the need to define strategies for minimizing and alleviating the strong resistance to change that many of these senior IS staff members felt. As is common in many ERP implementations, these professionals felt their jobs were in jeopardy, and when combined with fears of being outsourced and the perception of age discrimination, many refused to cooperate and provide the necessary knowledge to make the projects successful (Allen, 2008). The costs of making change to process, systems and peoples' roles permanent is the largest cost item in many it projects, often to a 10:1 scale (Brenner, 2008).Despite these challenges and the barriers that quickly went up and became galvanized in IS culture quickly, TMS was facing increasingly aggressive competition throughout their dealer channels in the U.S. And throughout North America. The urgency to get TMS transformed into a vital link in the global lean manufacturing strategies of Toyota Motor Company made the leading of change management processes crucial (Bacheldor, Sullivan, 2004). The lack of leadership and the need for greater involvement of the employees to overcome resistance to technological change is the single most prevalent factor in ERP system implementation failures (Kemp, Low, 2008).

Statement of the Problem

The many systemic problems that IS was experiencing were emanating from the lack of leadership and the need for a much higher level of task ownership on the part of IS employees. In conjunction, there is the need for creating more accountabil8ty throughout the organization, to ensure that deadlines are met and project schedules move forward. Change management as the primary planning perquisite is a critical success factor for ERP implementations as well (Ngai, Law, Wat, 2008). The IS Department at TMS was without leadership, a workable plan for overcoming resistance to change, and no plans for how to increase accountability for results of existing projects. Because of these shortcomings, the IS Department did not have the necessary guidance to be focused on the unmet needs of those internal departments that were reliant on it to get systems, processes and new IS projects completed to assist them in fulfilling their business goals. As a result, even when projects were completed, they were often missing key features that the business units needed. With no accountability was defined on a project-by-project basis, no recognition for projects completed was part of the IS Department culture. As a result of all these factors, IS was becoming increasingly isolated and lacked the effectiveness necessary to help other departments that dependent on it to get to shared strategic goals. The ERP project, strategic in scope and critical for the synchronization of all systems, only made the urgency significantly greater for these problems to be resolved.

Problem Analysis

The culture of TMS had steadily grown less and less accountable and capable of change as globally their parent company, Toyota Motor Company, achieved exceptionally high levels of success. Complacency and the enforcements of the status quo, even to the point of missing deadlines and lacking internal controls, had begun to permeate TMS as a result. Leadership had degraded to the point of enforcing the status quo and seeing their existing information systems platforms as sufficient for their dealer channels.

While the IS department had grown complacent and began to accept a lack of accountability for results, the department began to lose the more ambitious, driven and valuable managers and vice presidents as they grew frustrated with the lack of results and performance. As accountability had atrophied due to leaders cycling through the department, the culture began to be more accepting of conflicting responsibilities and unrealistic expectations. Not surprisingly after years of this the IS department began to lose its credibility, with a new CIO brought in to turn around the deteriorating situation (Wailgum, 2005).

The new CIO had a formidable challenge to change what had slowly become cultural norms within the company first, and second, infuse a high level of accountability into the IS department. Making the IS department more teamed and accountable to their internal customers, the business departments, would need to also be accomplished quickly for IS to deliver value to TMS.

The greatest challenge for the CIO to confront was to overcome the resistance to change and lack of accountability that had permeated the company's culture. Cultures are undergoing more transformation that ever before, creating exceptionally high levels of stress in many organizations (Mohan, Xu, Ramesh, 2008). Cultures are defined as a set of values, beliefs, assumptions, principles, myths, legends, and norms that define how people think, decide, perform, and achieve their goals inside companies. Schein (1996) defines culture as..."a basic set of assumptions that defines for us what we pay attention to, what things mean, and how to react emotionally to what is going on, and what actions to take in various kinds of situations."

Second, the challenge of infusing a higher level of accountability to specific projects and minimizing the resistance to change will take significant effort on the part of the CIO and her team of senior managers and vice presidents. Infusing ownership for specific projects is critical for any shared set of objectives to be accomplished (Aguirre, Calderone, Jones, 2004). Breaking down the barriers and resistance to change needs to begin with the CIO and her staff genuinely internalizing and becoming passionate about integrating their development efforts, timelines and responsibilities with the internal customers, the business units. The hardest side of change management is in getting others to internalize the need to change and change their perception of what the cultural expectations are in their organizations (Sirkin, Keenan, Jackson, 2005). Trust, transparency and complete candor including sharing with employees the precise reasons why the IS department needs to change are foundational to the communications strategies the CIO and her senior managers create to resolve these problems.

Third, there has been a gradual degradation of the project management processes in IS itself due to the high level of complacency that has set in. For any change management strategy to be complete there needs to be the introduction of lean, efficient processes to ensure that change is lasting (Stanev Krappe, Ola, Georgoulias, Papakostas, Chryss-olouris, Ovtcharova, 2008).

Recommendations

The CIO at the time, Barbara Cooper, realized that the continual lack of accountability and alignment of the IS Department she managed to the business departments and visions was hurting TMS' ability to be competitive in the U.S. market. She immediately needs to redefine the roles of each IS team members, placing the highest performers in parallel roles to the internal business units that needed the most assistance from IS. Starting with Parts and Service, she needs to place the most talented IS team members in these departments to thoroughly understand the unmet process and system needs the business unit had.

Next, she needs to work to create more efficient development processes within IS, so that business units' projects could be managed to a higher degree of accountability and performance. Thirdly, IS was to be managed on an entirely new set of metrics of performance including the use of dashboards (Wailgum, 2005) where accountability is measured and performance and results are rewarded. Fourth, projects that are aligned to business needs are to be reviewed every ninety days in a formal auditing process to make sure they stayed consistent with the original business requirements. Finally, Executive Committees need to be created and assist in prioritizing the need for each project, paring down what was needed and deleting what wasn't. The Executive Committee then became the arbiter of projects, which greatly will simplify how priorities are set within the IS Department. Once all these strategies have been undertaken, the new CIO will be able to begin to do what is the most difficult task, and that is changing the culture of IS at TMS. This is going to require a continual use of dashboards to infuse a high degree of accountability for performance, to the process and system level. Only by integrating the top IS performers throughout business units, infusing them projects with a high level of accountability, and creating a culture that centered on serving business units, can the IS department transform themselves into a productive contributor of the TMS organization.

Conclusion

Confronting a culture that has lapsed into complacency and lack of accountability directly only increases the resistance to change. Becoming confrontational only creates more resistance to change. Instead of aggressively attacking the lack of accountability, the CIO responsible for running the IS department concentrated first on gaining a higher level of task and process ownership by first illustrating genuine commitment to change by re-aligning the highest performers in her department to the critical relationships with business unit counterparts. Second, she fully explained that change was critical from a project basis in terms of measuring performance to a set of shared and common metrics, which would be captured on dashboards where both business units and IS teams could track progress. Third, the creation of the Executive Committee to arbitrate priorities is critical for ensuring a high degree of clarity on the projects. The combined effects of all these factors together eventually will begin to change the culture and insure a higher level of accountability and performance.