Research & Occasional Paper Series: CSHE.10.13 UNIVERSITY OF CALIFORNIA, BERKELEY http://cshe.berkeley.edu/ DOING MUCH MORE WITH LESS: Implementing Operational Excellence at UC Berkeley June 2013 Andrew J. Szeri, Richard Lyons, Peggy Huston and John Wilton * UC Berkeley ABSTRACT Copyright 2013 Andrew J. Szeri, Richard Lyons, Peggy Huston, and John Wilton, all rights reserved. Universities are undergoing historic change, from the sharp downward shift in government funding to widespread demands to document performance. At the University of California Berkeley, this led to an operational change effort unlike any the university had ever attempted, dubbed Operational Excellence. The authors describe their experiences designing and leading this change effort, with emphasis on practical advice for similar efforts at other universities. Keywords: US Higher Education, Productivity, Organizational Restructuring, Campus Budgets, Personnel Organizational change is always hard to accomplish. Change at universities is even more difficult: decision rights are less tightly defined; constituencies are more varied; organizational boundaries are more ambiguous. Research universities tend to be more decentralized, which makes a centrally driven change effort more difficult to lead. There is also often a culture that results in a high degree of risk aversion. At the University of California (UC) Berkeley, we, and hundreds of others on campus, have engaged for the last few years in an operational change effort unlike any our university had ever attempted. Our goal: to significantly reduce operating costs, while maintaining or improving support services, and protecting the core academic activities of our students and faculty. This has included centralizing services, restructuring and in some instances reducing administrative staff, and consolidating procurements, but also attempting to shift the organizational culture of Berkeley. In the following, we describe the Operational Excellence (OE) program using a change management lens and as campus leaders in helping to develop and implement what we view as dramatic shifts in Berkeley administrative culture and operations. Our review starts with identifying the sources of urgency - the “burning platform,” essentially a need for immediate administrative reforms in large part brought on by the budgetary challenges facing Berkeley. We then review specific OE program initiatives and provide observations on common errors identified in past studies of change that we attempted to avoid. Finally, we provide practical advice for similar efforts at other universities, much of which generalizes to other complex organizations. Our advice includes areas where, looking back, Berkeley could have done things better, or differently. While the jury is still out - we are on track but have not yet reached our goals - we have much to share about what we have learned. A. THE BURNING PLATFORM Lack of a shared sense of urgency is the number one reason change efforts fail, according to Kotter 1 . Both financial stresses and a perception that UC Berkeley had to pursue better methods of serving members of our community provided our “burning platform.” The authors had leading roles in the development and implementation of Operational Excellence at UC Berkeley. Andrew J. Szeri is Dean of the Graduate Division, Professor of Mechanical Engineering, and Faculty Head of the Operational Excellence Program, UC Berkeley (UCB), Richard Lyons is Dean of the Haas School of Business and Professor of Business, UCB, Peggy Huston is Director of the Operational Excellence Program Office, UCB, John Wilton is Vice Chancellor of Administration and Finance, UCB. The authors thank George Breslauer, Ron Coley, Jeannine Raymond, Jennifer Chizuk, Katherine Mitchell, Stephanie Metz and Caryl Miller at Berkeley, and John Douglass (CSHE, Berkeley), Rowan Miranda (University of Michigan) and James Wilson (University of Virginia) for helpful comments and suggestions on the manuscript. Updated version posted on June 24, 2013.