a story of successful lasting change
KION Management Consulting
In this introduction we will first look at the context and objectives for this whitepaper, and secondly, explain some aspects of professional European football as a business, to better understand the context for the case study.
Context and Objectives
Our objective in this paper is to describe the change process undertaken by FC Barcelona Football Club, from 2003 onwards, using PMI's practice guide, Managing Change in Organizations: A Practice Guide (Project Management Institute, 2013) as a framework and providing those interested in organizational change with lessons learned and some inspirational achievements of FC Barcelona in the last few years. This FC Barcelona Enterprise-wide change was delivered through what we can define as a “FC Barcelona Transformation Program.”
Our objective in this research is to help companies and professionals to develop their own change framework and plan through the examples and lessons learned by the FC Barcelona case study, using PMI's practice guide as the framework and source for guidelines.
FC Barcelona, with over 100 million registered fans around the world, is a football club and one of the top global sports brands. World class sports organizations have become, in the last 20 to 30 years, powerful entertainment industry giants that play in a global consumer world, in a similar way to other players such as Disney or Time Warner, all of them competing for the leisure time of millions of customers.
However, while in some sports leagues, such as the American NBA (National Basketball Association), the clubs follow certain standard hiring and compensation procedures for players, the top European football clubs show different approaches, depending not only on the country the club belongs to, but even may display different organizational structures and management approaches on a club by club basis.
In addition to the lack of standards in this business, decisions about multimillions in Euro invested in recruiting football players are often taken by football clubs executives based on intuition and emotions as the real drivers. On this, one of the leading executives of FC Barcelona Transformation Program includes in his book a conversation with one of the resigning FC Barcelona executives, who states that when starting the transition of responsibilities: “Don't you come here expecting to introduce management techniques or apply business logic. All that matters here is whether the ball enters the net or not. It's all down to luck” (F.Soriano, 2012, p. 2).
Organizational strategy and business processes implementation, as the ones described in this case study, have been deployed in top professional football clubs only very recently, during the last 10 years. This implementation in FC Barcelona was part of a large carefully planned organizational change that started in 2003, and is now under a sustain change phase (author's hypothesis).
As the PMI practice guide indicates, a change life cycle framework “is a concurrent set of subprocesses where multiple activities take place” (PMI, 2013, p.19). The sets of sub-processes that help guide the deployment of an enterprise-wide organizational change can be identified and mapped when studying the FC Barcelona Transformation Program launched in 2003, as presented in the following table:
|Change Life Cycle||PMI Practice Guide||FC Barcelona Case Study|
|Formulate Change||“Identifying and clarifying the need for change, assessing readiness for change and delineating the scope of change” (p. 18)||Both need and urgency for change were clear to all stakeholders; executives created back then a vision that continues to guide the club strategy today|
|Plan Change||“Defining the change approach and planning stakeholder engagement as well as transition and integration” (p.18)||A structured portfolio with many short and mid-term projects was launched; the club organizational chart evolved from functional to matrix structure in three months|
|Implement Change||“Preparing the organization for change, mobilizing the stakeholders, and delivering project outputs” (p.18)||After some short-term wins, FC Barcelona reached World Record results after three years (13 of 16 championships) with the Coach Pep Guardiola (2008–2012)|
|Manage Transition||“Transitioning the outputs into business operations, measuring the adoption rate and the change outcomes and benefits, and adjusting the plan to address discrepancies” (p.18)||Some aspects of the planned change have been altered mainly due to financial reasons (for example, nonprofit sponsor (UNICEF) was replaced by a commercial airline company)|
|Sustain Change||“On an ongoing basis through communication, consultation and representation of the stakeholders; conducting sensemaking activities; and measuring benefits realization” (p.18)||The message “More than a Club” and the value proposition of a team that has the strategic objective of “Enjoy Best Football” is continuously spread around the world, especially through social networks|
The intense organizational transformation that FC Barcelona started back in 2003 is now through the managing transition and sustaining the change phases (author's hypothesis), because the key stakeholders involved in the acceptance of change (what the PMI practice guide defined as recipients)often base their perception on the results of the last game, rather than a patient acceptance of long-term goals (we may find some coincidences with the Stock Exchange here). This is the unstable climate—very specific to football—that sometimes makes a sustainable change difficult to implement in such organizations. Intensifying the conducting sensemaking activities process may assist in consolidating and sustaining this change.
Key Stakeholders in the Business of Football
Before entering into the details of the lessons we can learn from the FC Barcelona Transformation Program, it is necessary to understand to some extent the particular nature of football as a business. Let's take a look at the primary stakeholders and how they relate to the function and activities (in italics) described by the Managing Change in Organizations: A Practice Guide (PMI, 2013, p. 11):
- Football Players (Recipients): The players are by far the stakeholders who benefit the most from the football business. They form a star system, similar to Hollywood actors. Some play leading roles, some play secondary roles, and therefore their compensation depends on their reputation as players, and of course, their performance. There is a good practice that indicates that salaries for football players have to account at most for 68% of the overall budget (the good practice being between 50% and 65%). This is because the ultimate purpose for football clubs is not profitability, but winning championships; therefore, you have to pay the price for the best talent, since profit and loss is not the driver—winning games and championships each year is. FC Barcelona has a more sustainable and cost-effective approach through its unique Football University (“La Masia” – The Farmhouse) an innovative and educational model for young football players. We will discuss this model in the Sustain Change section.
- Football Clubs Executives (Governance Board and Sponsors): Most clubs never started as a business but as a friends club. FC Barcelona was founded in 1899 by Joan Gamper, a Swiss businessman that had a passion for football. This initial motivation and perception of this activity as a game has often perpetuated a decision model based on personal reasons, i.e., likes and dislikes, rather than strategic intent (“It's all down to luck”).
The success of the change program in a implementing a revenue-driven strategy and a more professional organization, has proven to be a driver also in increasing the sports results. The success in FC Barcelona from the perspective of sports competition in the last 10 years (with a world record of championships in 2008), has been accompanied by a significant increase in revenues (from 123 million euros in 2003 to 450 million euros in 2010); despite these figures, profitability in most football clubs including FC Barcelona, remains very low. The Key Performance Indicator (KPI) in the business of European football is winning the top competitions: European Champions League, Home Country League, and the Clubs World Cup.
- Marketing Sponsors (Agents): Worldwide brands use the high media coverage for football games to advertise products and services, mainly by a shirt sponsorship deal to expand their brands. The marketing revenues, and therefore the importance of sponsors and branding is growing everyday especially thanks to media coverage, and the explosion of social media sites. For them, the objective is to have its sponsored club winning as many competitions as possible, just like club members and fans. In the FC Barcelona Transformation Program they acted as agents for FC Barcelona to deliver the vision that was a roadmap for the change program.
- Members and Fans (Recipients): FC Barcelona has over 100,000 paying members that through five year-period elections choose the management team democratically and therefore their influence is significant. However, during day-to-day operations, they exert little influence. Their most important role is the role of consumers. This is an indirect revenue stream for the club, since they are the end users behind broadcasts and advertising (marketing sponsors). The communication and stakeholder management of these customers has been the most challenging and still complex issue for the FC Barcelona executives, due to the continuous need for immediate sports results.
A Change Management Framework for the FC Barcelona Transformation Program
FC Barcelona executives applied a structured approach to the FC Barcelona Transformation Program, and a very detailed action plan that was developed in around-the-clock meetings that took weeks of brainstorming and strategy definition. In the sections below, we will look at these actions using the PMI framework in its particular application to the program level.
As described in the PMI practice guide formulate change deals with “translating an organization's strategic plan into tangible objectives that are aligned with stakeholders' needs and expectations”:
- Identify/clarify need for change
- Assess readiness for change
- Delineate Scope for change
(PMI, 2013, p. 19, 20)
Identify/Clarify need for Change – FC Barcelona, Four years without Championships (2003)
Participant/ Reader Question: Is your company in an urgent need for change? Can you clearly describe the need for change? A key success factor in FC Barcelona was a common understanding of the urgency for a change.
The situation of FC Barcelona in 2003 was a difficult one, both from a business and sports perspective:
- 13th position in the worldwide rank of football clubs, according to revenues
- Football players’ salaries represented 88% of the revenues (benchmark being 50% to 65%)
- In the last four seasons, not a single championship had been achieved
- 73 million Euro was the profit and loss for the year 2003 and the club had a bad credit reputation
All stakeholders were in agreement that a change was necessary, and urgent. The existing management board resigned and general elections took place. The winners were a coalition of 15 young executives—most of them successful entrepreneurs and business executives—labelled as the “Powerpoint Generation,” since they wanted to bring all their business knowledge into the club's management. (Author's interview with Mr. Marc Ingla, VP Marketing, Feb 2014)
Assess Readiness for Change—A Total Replacement of the Top Management—”Revolution Rather Than Evolution” from Functional to Strong Matrix in Three Months
Managing Change in Organizations: A Practice Guide describes the need for an assessment of readiness of “organizational systems, structures, culture, and people” (PMI, 2013, p. 20). The new executive board made a quick assessment and as one of his key members describes “we chose revolution over evolution” (F.Soriano, 2012, p. 45); most managers were replaced and the club was structured in what can be considered a strong matrix organization.
There were considerations to the possibility of applying a strong cost-cutting plan and after some years of sacrifice once the club could recover financially, go gradually for more aggressive goals (evolution). The decision was to implement an action plan including both an aggressive cost cutting program, and an aggressive revenue generation program.
As Soriano explains, “we organized ourselves into projects, with working groups for specific tasks for example we organized a new Barcelona Supporters Customer Service Office in three months; we went from having 13 telephone numbers and answering only 50% calls to responding 90% of all calls within 30 seconds” (F.Soriano, 2012, p.70).
Participant/ Reader Question: When facing an urgent need for change, how should we approach it? Do we choose evolution? Or should we prefer revolution?
Delineate Scope for Change —A Virtuous Circle: Best Football Team, Sports Results, Revenues, Brand Awareness, Social Growth—More Than a Club
The expected outcomes for this change were summarized by FC Barcelona executives into a so called “virtuous circle”. If FC Barcelona's core business is playing football, then FC Barcelona must play the best football and the results will follow through a “virtuous circle” chain.
As the PMI practice guide explains, “The process (Delineate Scope of Change) involves three steps:
- Organize and prioritize the high-level objectives (critical success factors of CSFs) of the change program
- Create measurable performance indicators (key performance indicators or KPIs) for each of the objectives
- Clarify and agree on the specific outcomes and capabilities that the program will deliver and produce a document (roadmap or benefits register) that outlines them”
The Roadmap and Vision that FC Barcelona undertook is represented in Exhibit 1
Exhibit 1 – The Barça “virtuous circle”
Despite the economic pressures and urgency for results, FC Barcelona was both focused on short term results, as well as on lasting change, a change driven by highly ethical values. The Vision Statement—More Than a Club—is a summary of the key historical values the club wants to present as guidelines: democracy, fair play, humility, and team orientation above individual success. Players that over the last few years did not follow this approach were simply rejected and transferred to other teams regardless of how exceptional their talent and playing abilities were.
A study published in 2000, on how businesses can learn from sports organizations presented a model named “Peak Performing Organization Theory” that, as we will see, is highly applicable to what the new management board implemented:
- “Purpose: the greatest imaginable challenge, the inspirational dream and the focus
- Practice: creating the future, sharing the dream and family
- Potency: harmony, passion and flow
- Performance: the last detail, game-breaking ideas, and exceeding organizational best”
(Gilson, Pratt, Roberts, Weymes, 2000, p.296)
Participant/ Reader Question: What is your compelling Vision? What does your roadmap look like? Could you define performance indicators in your change program or project? A key success factor in FC Barcelona was a compelling and motivating vision, which went beyond short term results.
As described in Managing Change in Organizations: A Practice Guide, plan for change includes both the “what” and the “how” of change, “so that people, process, technology, structure, and cultural issues are all integrated into the overall portfolio, program, or project plan”:
- Define the change approach
- Plan stakeholder engagement
- Plan transition and integration
(PMI, 2013, p. 20 & 21)
Define the Change Approach
In this step, no “alignment with the culture of the organization took place. The Club was previously managed very much as a small business, with top executives assuming a large portion of the decisions using a directive leadership style. A total new culture was implemented from day one, with a reorganization of responsibilities and, despite the financial difficulties, the club undertook a complete renovation of the offices where old “cigar clubs” rooms were replaced with a modern office layout, aligned with the organizational program. The message was: this club will be managed as a customer-oriented business, by professionals and by projects. This message was delivered on a daily basis, through all communications channels to internal and external stakeholders. (Interview with Mr. Marc Ingla, VP Marketing, Feb 2014)
Plan Stakeholder Engagement
Focus on this step was specially placed on the marketing sponsors’ area, where all contracts were either renegotiated or cancelled, and the number of sponsors greatly reduced. This reduced the number of stakeholders and maximized the relationship with them, thus reducing complexity. The stakeholders that also were labelled as high priority were the 80,000 paying club members that had not been properly managed and due to poor sports results and lack of spectacular players, had stopped going to the FC Barcelona Stadium. (Interview with Mr. Marc Ingla, VP Marketing, Feb 2014)
Plan Transition and Integration
The plan can be summarized in the program work breakdown structure (WBS), with the program leaders’ names, represented in Exhibit 2.
Exhibit 2 – The Barça top executives in the change program
These programs were led by these young—yet experienced—executives that have had previous experience in these areas, in the sports and non-sports business, and that could bring their managerial and process skills to the program. The president (Joan Laporta), in total contrast with the previous presidents (who used a more directive style), delegated program-specific decisions and showed the leadership capabilities as defined in Managing Change in Organizations: A Practice Guide:
- “Anticipates change,
- Generates confidence,
- Initiates action,
- Liberates thinking, and
- Evaluates results.”
(PMI, 2013, p.40)
Participant/ Reader Question: How would the change initiative be structured? As a portfolio or programs and projects? As a Program? Who are going to be the sponsors, leaders, etc.? How will you foster delegation?
As described in the PMI practice guide, implement change concerns “the process of successfully delivering project outputs to the business”:
- Prepare organization for change
- Mobilize stakeholders
- Deliver project outputs
(PMI, 2013, p. 21)
Prepare Organization for Change
The radical change consisted of subordinating the organizational structure to the FC Barcelona Transformation Program itself represented by Exhibit 2. Although we can consider that FC Barcelona developed a strong matrix structure due to the existence of departments, there were no differences whatsoever between the management structure and the change program structure, the three top executives managed both the departments and the programs, as previously explained, and FC Barcelona's structure during the initial years of implementation was a highly projectized organization, a very innovative approach for the business of football.
The club members and club supporters and fans around the world were the primary stakeholders that were mobilized. A specific program was put together under the name of “The Great Challenge” (“El Gran Repte” – in the Catalan language) under the marketing and communication program that included an innovative project to create a new identity card and other imaginative actions such as the “Free Seat,” to give the possibility to the members of buying ticket packages or commercializing their own seat when not attending the games. This project was sponsored by technology and mobile companies, and dramatically increased the number of spectators. Paying members increased from 106,000 to 120,000 in a few months, but also the people attending the games were not limited exclusively to the members any more thanks to this “reselling” initiative under the Great Challenge Project.
Deliver Project Outputs
As one of the transformation leaders indicates, “80% of the changes we made to achieve this extraordinary transformation were made in our 1st year” (F. Soriano, 2012, p. 191). For a reason of brevity, we will review the project results by describing the results delivered at the program level under the manage transition phase.
Participant/ Reader Question: How do you plan to mobilize stakeholders? Do you have a “Great Challenge” project such as FC Barcelona? Are you ready to redefine the organization's chart to adjust it to the change, or is it going to be the opposite?
As described in Managing Change in Organizations: A Practice Guide, “the transition process links the change initiative with the operations side of the business” by:
- Transition outputs into business
- Measure adoption rate and outcomes/benefits
- Adjust plan to address discrepancies
(PMI, 2013, p. 21)
Transition Outputs into business
The nature of football, and in fact of any business, is running the day-to-day operations while applying the changes of the program. All capabilities that were established in the change program were integrated into the business and continue to operate to this day. The FC Barcelona tactics and approach when playing football (focus on “quality” play over short-term results) remain the same 10 years later.
Measure adoption rate and outcomes/benefits
Results will be summarized below by the programs previously presented in Figure 2.
l.-Financial Program: It is useful to use the Manchester Football Club as a benchmark for revenues, one of the world leaders in this aspect, and an inspiration for what FC Barcelona modeled at the beginning of the program. Let's compare the evolution of Bar$a and Manchester since the FC Barcelona transformation program in the following table:
|FC Barcelona||123 M €||450 M €|
|Manchester United||251 M €||367 M €|
A cost-cutting project concurrent to a revenue-generating project in 2003, were the triggers to this remarkable growth (more than triple) and, now in 2014, consolidated, financial stability.
“What do you call the Barcelona style of play? It's call Tiki Taka football, which more or less means touch- touch. The tiki taka style of play is characterized by possessing the ball for large portions of the game, moving the ball quickly from one player to the next and in and out of the opponent, breaking them down with short passes. It is a huge game of keep away, with the other team acting as the ‘piggy in the middle.'” (Soccer training, 2014)
The FC Barcelona coaches (T. Beguiristain and F.Ryjkaard) recovered the ideas brought to the club by former player and coach Johann Cruyff and Coach Laureano Ruiz 20 years ago, a sports strategy named “Total Football,” that continues to this day and has made FC Barcelona football a universally recognized playing style.
While this strategy was not invented as part of the change program, its reinforcement and stability was a key strategy when hiring players and especially when reinforcing the training program for young players.
Only one year after the change program was implemented, FC Barcelona won Spanish and European Leagues and reached the highest results only three years later when the team won an amazing number of 13 championships out of 16 during the four year contract of probably the most admired coach of our time, Pep Guardiola (now coach for FC Bayern Munich)
FC Barcelona focused on the process as well as on the results, and on the leadership before focusing on the team players. In past years, many decisions on how to organize the team and the selection of players had been a task undertaken by the team managers and coaches along with the top club executives. The new management team decided that team decisions and the selection of players had to be a 100% responsibility of the football specialists. While the management board worked on the overall strategy and transformation program, the team manager coach and the team coach would be the decision makers.
Participant/ Reader Question: How do you plan to make the change process an enjoyable endeavour? Will you focus on results as well as on the process and motivate recipients and collaborators through this “Enjoyable Process”? One of the key factors for FC Barcelona today is the objective of spectacular, enjoyable, attractive football, and results will come as a consequence, more than as specific goals.
A strong innovation spirit entered the club along with the change, mainly due to the technology and marketing expertise brought into the club by the new executives that led this FC Barcelona transformation program and the social networks revolution (especially Facebook) that has taken place during the same period as when the change was being implemented. The results of this program have contributed greatly to brand awareness: the number of supporters, the increase in retribution by sponsors, and the “virtuous circle” has truly taken place, “FC Barcelona is the first sports club anywhere in the world to be able to boast more than 100 million followers on its social networks. The club is gaining about 100,000 new followers a day on its different social networks and is the number one sports club on each of Facebook, Twitter, Instagram, Google+, YouTube, the biggest platforms in the world.” (FC Barcelona, 2014)
Adjust Plan to Address Discrepancies
Probably the most significant adjustment to the original plan has been the award of a primary sponsorship contract to a private airline (Qatar Airways), having reduced the exposure to the former sponsor UNICEF (a not for profit collaboration), because revenues were not a part of the agreement with UNICEF. A continuous need to cover the costs of new players made the management take this decision.
As described in PMI practice guide sustain change deals with, “sustaining the change through a number of ongoing activities that exceed the traditional scope of projects and programs:
- Ongoing communication, consultation, and representation of stakeholders
- Conduct sensemaking activities
- Measure benefits realization
(PMI, 2013, p. 21)
The FC Barcelona Talent University – “La Masia”
In this area and as a key contribution to the FC Barcelona for sports as well as business organizations, we will look at the educational model that has, in the opinion of many experts, become the key for sustaining the new model as a consequence of the FC Barcelona transformation program:
Literally, ‘Masia’ is a Catalan word meaning a country farmhouse. The former Masia was a very old farmhouse next to the Camp Nou that in 1979 was converted into a residence for young footballers. That stone building was eventually too small and was replaced by a modern 6,000 m2 building at the Ciutat Esportiva Joan Gamper training ground, called ‘La Masia, Oriol Tort Training Centre.' About a hundred young people live there, where they receive a full education, including sport- and training-in-life skills, and where they are given a loving and caring upbringing just like they would in their own homes. (www.fcbarcelona.com)
FC Barcelona has a number of talent seekers that recruit young players (10 years old) and train them until 10% of them achieve entry into the professional team. Since 90% do not achieve this, the children follow normal education and play and practice football after classes. The system has produced some wonderful players over the years, from to Pep Guardiola to Carles Puyol, Xavi Hernández, Andrés Iniesta and Leo Messi (the best player in the world for several years). In the 2013-2014 season, 17 of the 25 players in the first team squad are former residents of La Masia. This model is very different from other leading teams, such as Manchester United or Real Madrid, that base their teams almost entirely on hiring—and paying transfers to—the best players from around the world.
The values in which the young team players are educated play a role as important as their technical training. The club considers that this will benefit the player regardless of whether he makes it to the professional team or not. Carles Folguera, the school's director, states that:
it is possible to become a world class football player and a good person at the same time. We teach the boys the same principles that any wise parent would teach to their children…These principles are respect, responsibility, commitment, work, discipline, self-demanding and, above all, humility. (Folguera, 2011)
La Masia: The value of having values.0 Retrieved on Feb 1, 2014 from http://www.totalbarca.com/2011/youth/la-masia-the-value-of-having-values/
Participant/ Reader Question: Do you have your “Masia'? How do you develop your company talent? Do you need to re-evaluate your hiring strategy? Have you considered having a formal definition of values for your change program?
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© 2014, Jordi Teixido, PMP
Originally published as a part of the 2014 PMI Global Congress Proceedings – Dubai, UAE