GM541 Unit 2 Uptime Contract Change Classification Example

Not a Technology Upgrade: A Unit 2 Change Classification Analysis of a Refrigeration Service Firm's Program

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Purdue University Global

GM541: Organizational Transformation and Change Leadership

Unit 2 Change Classification Analysis

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[Date]

The refrigeration service firm, its program and every figure are composite and illustrative; the frameworks and studies cited are real.

The Program as Executives Presented It

Ardent Cold Service maintains refrigerated display cases, walk-in coolers and compressor racks for about 300 grocery stores in three states, with roughly 140 field technicians working fixed routes. Its executives announced the connected-service program as a three-part upgrade.

Part 1, sensors. A monitoring package fitted to about 4,000 refrigeration systems, reporting temperatures, compressor run times and alarm codes every five minutes.

Part 2, a monitoring room. A remote center staffed by analysts who watch the data, flag systems drifting toward failure and send technicians before a case warms.

Part 3, new contracts. Service agreements sold on guaranteed uptime and food-safe temperatures, with penalties if a case runs warm for more than a set period, rather than the current contracts, which promise a monthly visit to each store and charge for repairs.

The executive presentation described all three as "modernizing how we deliver service."

Two Typologies

Dean Anderson and Linda Ackerman Anderson distinguish three types of change by their end state. Developmental change improves what an organization already does. Transitional change replaces an existing state with a known new one, through a defined project. Transformational change moves toward a future that cannot be fully specified at the start and requires shifts in mindset and culture as well as in structures and systems (Anderson & Ackerman Anderson, 2010).

W. Warner Burke and George Litwin's model of organizational performance and change separates transformational factors, the forces outside the firm together with its purpose, its top leadership and its culture, from transactional factors, which include structure, management practices, systems, work unit climate and the motivation of individuals. Changes driven through transformational factors require different leadership from changes driven through transactional ones (Burke & Litwin, 1992).

Classifying the Parts

The sensors. The end state is known: every system fitted, reporting to a central database. The project has a scope, a budget and a completion date. Technicians will learn to read sensor data, but their basic work, diagnosing and repairing refrigeration equipment, continues. Under Anderson and Ackerman Anderson's typology, this is transitional. Under Burke and Litwin, it touches systems, a transactional factor.

The monitoring room. Also largely transitional. It creates a new unit with defined roles and procedures, and it changes how work is assigned. But it changes management practices and structure, transactional factors, and its end state can be designed in advance.

The contracts. Here the classification changes. Selling uptime instead of visits changes what the company promises its customers, how it earns revenue and what its people are judged on. Technicians who have measured a good month by stores visited will be judged on systems that never warm. Account managers who have defended price by counting visits will need to sell an outcome. The end state cannot be fully specified, because nobody yet knows how the company will price risk, handle penalties or redesign routes when visits are no longer the unit of service. Under Anderson and Ackerman Anderson, this is transformational. Under Burke and Litwin, it touches mission, strategy and culture.

The sensors change how Ardent finds problems; the contracts change what Ardent is in the business of selling, and only the second is a transformation.

Why Classifying the Whole Misled Executives

Calling the whole program a technology upgrade made sense when looked at from the sensors, which were the most visible and expensive part. But classifying the whole by its most visible part hid the most consequential one. Both typologies agree that the contracts carry the transformational content. Researchers on the shift from selling products to selling outcomes, sometimes called servitization, note that it reshapes customer relationships, revenue models and internal capabilities together, and that firms often underestimate the organizational change it requires (Vandermerwe & Rada, 1988).

Evidence That the Contracts Are Transformational

Three early signals support the classification. Account managers have resisted selling the new contracts to existing customers, because they do not know how to explain a price that no longer maps to visits. Technicians in the pilot zone have continued to visit stores the system scheduled out, as Unit 4 will examine. And the finance team has not yet settled how to account for uptime penalties, which suggests the company's systems were not designed for the commitments it is starting to make. None of these is a technical problem with sensors. All of them are signs that the contracts change assumptions about what the company does.

What the Verdict Means for Leading the Next Phase

If the program were only transitional, a project plan with milestones, training and a communication schedule would be enough. Because the contracts are transformational, the next phase needs more. Leaders will have to engage technicians and account managers in defining what good service means under the new model, rather than announcing it. They will have to expect the culture of the firm, built around the visible presence of the technician, to resist in ways that look like noncompliance but reflect deeply held beliefs. And they will need to treat the end state as something discovered during the change, revising contracts, routes and measures as experience accumulates.

A Test Case From the Pilot Zone

One store in the pilot zone shows why the distinction matters in practice. Under its old contract, the store paid for a monthly visit and for repairs. Under the new uptime contract, it pays a fixed fee, and Ardent owes a credit for every hour a case runs warm. In the pilot's second month, a seafood case drifted warm overnight. The sensor flagged it, the monitoring room dispatched a technician and the case was back to temperature in ninety minutes. Under the old contract, that would have been a billable repair. Under the new one, it cost Ardent the technician's time and a small credit. The same event, handled by the same technician with the same tools, meant something entirely different to the business. That is what a transformational change looks like at the level of a single service call.

Limits of the Analysis

Typologies simplify. Some elements of the monitoring room, such as analysts making decisions technicians once made, may carry more transformational weight than this analysis credits. And the classification relies on executives' presentation and early signals rather than on a full year of the new contracts.

Conclusion

The connected-service program is not one kind of change. Its sensors and monitoring room are transitional, changing systems and structure toward a known end state. Its contracts are transformational, changing mission, strategy and culture toward an end state nobody can fully specify. Leading the program as a technology upgrade would leave its most consequential part unmanaged.

References

Anderson, D., & Ackerman Anderson, L. (2010). Beyond change management: How to achieve breakthrough results through conscious change leadership (2nd ed.). Pfeiffer.

Burke, W. W., & Litwin, G. H. (1992). A causal model of organizational performance and change. Journal of Management, 18(3), 523-545. https://doi.org/10.1177/014920639201800306

Vandermerwe, S., & Rada, J. (1988). Servitization of business: Adding value by adding services. European Management Journal, 6(4), 314-324. https://doi.org/10.1016/0263-2373(88)90033-3